Document:

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                                                                   EXHIBIT 10.34

                       INTANGIBLE ASSET PURCHASE AGREEMENT

                          DATED AS OF JANUARY 25, 2003

                                     BETWEEN

                         MIGUEL ANGEL PACHUR SALGADO AND
                          OSCAR GUADALUPE DE LEON ULLOA

                                       AND

                          HOME INTERIORS & GIFTS, INC.

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                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                              Page No.
                                                                                                              --------

<S>                                                                                                           <C>
ARTICLE 1 PURCHASE OF ASSETS......................................................................................1

   SECTION 1.1          PURCHASE AND SALE OF ASSETS...............................................................1
      (a)      Customers and Accounts.............................................................................1
      (b)      Books and Records..................................................................................1
      (c)      Insurance Proceeds; Warranty Rights................................................................1
      (d)      Scheduled Contracts................................................................................1
      (e)      Intellectual Property..............................................................................2
      (f)      Software Licenses..................................................................................2
      (g)      Permits............................................................................................2
      (h)      Goodwill...........................................................................................2
   SECTION 1.2          PURCHASE PRICE............................................................................2
   SECTION 1.3          DEFERRED PAYMENTS.........................................................................2
   SECTION 1.4          LIABILITIES...............................................................................3
   SECTION 1.5          GROSS SALES STATEMENT.....................................................................4
   SECTION 1.6          SPECIFIC TRANSFERS........................................................................4
      (a)      Acknowledgements and Files.........................................................................4
      (b)      Trademarks.........................................................................................4
      (c)      Scheduled Contracts................................................................................4

ARTICLE 2 CLOSING.................................................................................................5

   SECTION 2.1          CLOSING...................................................................................5
   SECTION 2.2          TRANSFER OF ASSETS; PAYMENT...............................................................5
   SECTION 2.3          CLOSING DOCUMENTS.........................................................................5

ARTICLE 3 REPRESENTATIONS AND WARRANTIES..........................................................................6

   SECTION 3.1          REPRESENTATIONS AND WARRANTIES OF SELLER..................................................6
      (a)      Authority; Noncontravention........................................................................6
      (b)      Title to Properties; Liens.........................................................................6
      (c)      Customers and Suppliers............................................................................6
      (d)      Intellectual Property..............................................................................7
      (e)      Product Warranties.................................................................................7
      (f)      Disclosure.........................................................................................7
      (g)      Consents and Approvals.............................................................................7
      (h)      Financial Statements...............................................................................8
      (i)      Undisclosed Liabilities............................................................................8
      (j)      Absence of Certain Changes or Events with respect to Sellers.......................................8
      (k)      Taxes..............................................................................................8
      (l)      Compliance with Environmental Laws.................................................................9
      (m)      Transactions With Related Parties..................................................................9
   SECTION 3.2          REPRESENTATIONS AND WARRANTIES OF HIG.....................................................9
</Table>

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<Table>
<S>                                                                                                           <C>
      (a)      Organization, Standing and Corporation Power of HIG...............................................10
      (b)      Authority; Noncontravention.......................................................................10

ARTICLE 4 ADDITIONAL AGREEMENTS..................................................................................10

   SECTION 4.1          REASONABLE EFFORTS; NOTIFICATION.........................................................10
   SECTION 4.2          FEES AND EXPENSES; TAXES.................................................................11
   SECTION 4.3          AGREEMENTS CONCERNING THE OPERATIONS AFTER CLOSING.......................................11
      (a)      Scheduled Contracts...............................................................................11
      (b)      Notifications and Customers Transfers.............................................................11
      (c)      Transfer of Assets and Rights, as well as Business Operation......................................11
   SECTION 4.4          MAINTENANCE OF EXISTENCE.................................................................11
   SECTION 4.5          ENVIRONMENTAL............................................................................12
   SECTION 4.6          INFORMATION FOR TAX RETURNS..............................................................12

ARTICLE 5 CONDITIONS PRECEDENT...................................................................................12

   SECTION 5.1          CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING..............................12
      (a)      Authorizations, Consents, and Approvals...........................................................12
      (b)      No Injunctions or Restraints......................................................................12
      (c)      Asset Purchase Agreement..........................................................................12
   SECTION 5.2          CONDITIONS TO OBLIGATIONS OF HIG.........................................................12
      (a)      Representations and Warranties....................................................................12
      (b)      Performance of Obligations of Seller..............................................................13
      (c)      Opinion of Counsel................................................................................13
      (d)      Delivery of Notarial Instruments and Invoices.....................................................13
   SECTION 5.3          CONDITIONS TO OBLIGATIONS OF SELLER......................................................13
      (a)      Representations and Warranties....................................................................13
      (b)      Performance of Obligations of HIG.................................................................13
   SECTION 5.4          FRUSTRATION OF CLOSING CONDITIONS........................................................13

ARTICLE 6 TERMINATION, AMENDMENT AND WAIVER......................................................................13

   SECTION 6.1          TERMINATION..............................................................................13
   SECTION 6.2          EFFECT OF TERMINATION....................................................................14
   SECTION 6.3          AMENDMENT................................................................................14
   SECTION 6.4          EXTENSION: WAIVER........................................................................14

ARTICLE 7 INDEMNIFICATION........................................................................................14

   SECTION 7.1          INDEMNIFICATION..........................................................................14
      (a)      By Seller.........................................................................................14
      (b)      By HIG............................................................................................15
      (c)      Direct Liability..................................................................................15
      (d)      Third Party Claim.................................................................................15
   SECTION 7.2          RIGHT TO SET-OFF.........................................................................16

ARTICLE 8 GENERAL PROVISIONS.....................................................................................16

   SECTION 8.1          SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS....................................16
   SECTION 8.2          NOTICES..................................................................................16
</Table>

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<Table>
<S>                                                                                                           <C>
   SECTION 8.3          DEFINITIONS..............................................................................18
   SECTION 8.4          INTERPRETATION; GOVERNING LANGUAGE.......................................................19
   SECTION 8.5          COUNTERPARTS; FACSIMILES.................................................................19
   SECTION 8.6          ENTIRE AGREEMENT: NO THIRD PARTY BENEFICIARIES...........................................20
   SECTION 8.7          GOVERNING LAW............................................................................20
   SECTION 8.8          ASSIGNMENT...............................................................................20
   SECTION 8.9          ENFORCEMENT..............................................................................20
   SECTION 8.10         EXHIBITS AND SCHEDULES...................................................................20
   SECTION 8.11         ARBITRATION..............................................................................21
   SECTION 8.12         CURRENCY AND PAYMENT.....................................................................21
   SECTION 8.13         CONFIDENTIALITY..........................................................................21
</Table>

EXHIBITS

Exhibit "A" - Employment Agreement
Exhibit "B" - Noncompetition Agreement
Exhibit "C" - Opinion of Counsel for Seller

SCHEDULES

Schedule 1.1(a) - Customers and Accounts
Schedule 1.1(d) - Scheduled Contracts
Schedule 1.1(f) - Software Licenses
Schedule 1.1(g) - Permits
Schedule 1.6(c) - Scheduled Contracts
Schedule 3.1(c) - Customers and Suppliers
Schedule 3.1(d) - Intellectual Property
Schedule 3.1(e) - Product Warranties
Schedule 3.1(g) - Consents and Approvals
Schedule 3.1(h) - Financial Statements
Schedule 3.1(j) - Absence of Certain Changes or Events
Schedule 3.1(m) - Transactions with Related Parties
Schedule 4.3(b) - Tempus and Bulco Customers Catalog

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                       INTANGIBLE ASSET PURCHASE AGREEMENT

         THIS INTANGIBLE ASSET PURCHASE AGREEMENT (this "Agreement") is made as
of January 25, 2003, by and among MIGUEL ANGEL PACHUR SALGADO ("Pachur") and
OSCAR GUADALUPE DE LEON ULLOA ("Leon") and HOME INTERIORS & GIFTS, INC., a Texas
corporation ("HIG"). Pachur and Leon, are sometimes collectively referred to as
"Seller." Other capitalized terms used in this Agreement are defined or
cross-referenced to the applicable definition in Section 8.3 of this Agreement.

                                    ARTICLE 1
                               PURCHASE OF ASSETS

         SECTION 1.1 Purchase and Sale of Assets. Upon the terms and subject to
the conditions set forth in this Agreement, Seller shall sell to HIG at Closing,
all of the intangible assets that were or have been used or held for use by or
on behalf of Bulco, S.A. de C.V., a Mexican corporation ("Bulco"), and/or Tempus
Corporation, S.A. de C.V., a Mexican corporation ("Tempus"), in connection with
their metal, ceramics and glass design, fabrication, manufacturing and sales
businesses and all activities related thereto (the "Business"), free and clear
of all Liens, other than the Bancomext Liens as defined in that certain Asset
Purchase Agreement, dated January 25, 2003 among Sellers, HI Metals and Tempus
(the "Asset Purchase Agreement"), which shall be released after Closing as
contemplated by Section 3.2 of the Asset Purchase Agreement, including, without
limitation, the following assets (collectively, the "Intangible Assets"), which
Intangible Assets were acquired by Seller from Bulco and Tempus immediately
prior to the execution and consummation of this Agreement:

                  (a) Customers and Accounts. All past and current customers and
accounts of the Business, including, without limitation, those customers and
accounts listed on Schedule 1.1(a) hereto;

                  (b) Books and Records. Except for the accounting and financial
records of Tempus and Bulco (the "Accounting and Financial Records"), all books,
records, computer records, ledgers, files, documents, correspondence, lists,
plats, architectural plans, drawings and specifications, creative materials,
advertising and promotional materials, studies, reports, and other printed or
written materials relating to the Business;

                  (c) Insurance Proceeds; Warranty Rights. All insurance
proceeds and insurance claims relating to the Business or all or any part of the
tangible assets of the Business and, to the extent transferable, the benefit of
and the right to enforce the covenants and warranties, if any, that Seller is
entitled to enforce with respect to the Business or all or any part of the
tangible assets of the Business against Seller's predecessors in title to the
tangible assets of the Business.

                  (d) Scheduled Contracts. The contracts and agreements
described on Schedule 1.1(d) hereto (the "Scheduled Contracts") and all rights
(including right of refund and offset), privileges, deposits, sums of money due,
claims, causes of action and options relating or pertaining to the Scheduled
Contracts or any thereof.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 1

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                  (e) Intellectual Property. All copyrights, trademarks, trade
secrets, trade names, telephone numbers, data, service marks, licenses,
franchises, distributorships, labels, logos, covenants by others not to compete,
rights, privileges and any registrations or applications for registrations of
the foregoing, and any right to recovery for infringement thereof (including
past infringement) and any and all goodwill associated therewith or connected
with the use thereof and symbolized thereby (the "Intellectual Property").

                  (f) Software Licenses. All software licenses, descriptions of
which are attached as Schedule 1.1(f) hereto.

                  (g) Permits. All Permits, copies of which are attached to
Schedule 1.1(g) hereto.

                  (h) Goodwill. All goodwill of the Business.

         SECTION 1.2 Purchase Price. Subject to the terms and conditions of this
Agreement, in consideration for HIG's acquisition of the Intangible Assets, HIG
shall pay to Seller deferred payments in an aggregate amount not in excess of
Two Million Five Hundred Fifty Thousand and NO/00 Dollars (U.S.$2,550,000.00),
pursuant to Section 1.3 below (the "Purchase Price"). Each installment of the
Purchase Price shall be paid ninety-five percent (95%) to Pachur and five
percent (5%) to Leon.

         SECTION 1.3 Deferred Payments.(a) Subject to Section 7.2 below, if the
Gross Sales (hereinafter defined) derived by HI Metals, S.A. de C.V., a Mexico
corporation ("HI Metals") or other HIG Affiliates, (such Affiliates including,
without limitation, HI Ceramics, S.A. de C.V. and Brenda Buell & Associates,
Inc.) from the metal, glass and ceramics manufacturing and fabricating
facilities of the Business existing either on or after the date hereof
(collectively, the "Facilities") for the calendar year ending December 31, 2003
is greater than the sum of U.S. $25,000,000.00, HIG will make a payment of U.S.
$850,000.00 to Seller within ninety (90) days following December 31, 2003.
Subject to Section 7.2 below, if the Gross Sales derived from the Facilities for
the calendar year ending December 31, 2004 is greater than the sum of U.S.
$45,000,000.00, HIG will make a payment of U.S. $850,000.00 to Seller within
ninety (90) days following December 31, 2004. Subject to Section 7.2 below, if
the Gross Sales derived from the Facilities for the calendar year ending
December 31, 2005 is greater than the sum of U.S. $50,000,000.00, HIG shall make
a cash payment of U.S. $850,000.00 to Seller within ninety (90) days following
December 31, 2005. For purposes of this Agreement, the term "Gross Sales" shall
mean gross revenue exclusive of taxes, shipping and other charges, other than
the wholesale price of the finished goods being sold, which price, for purposes
of this Section 1.3, shall not be deemed to be less than the sum of the cost of
the goods sold plus 30%. All aspects of the calculation of Gross Sales will be
in accordance with U.S. GAAP. Notwithstanding the foregoing provisions of this
Section 1.3, (a) if the $25,000,000.00, $45,000,000.00 or $50,000,000.00 Gross
Sales thresholds are not achieved for any of the 2003, 2004 or 2005 calendar
years, HIG shall nevertheless make the following payments to Seller if at least
the corresponding percentage of such threshold is achieved:

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 2

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<Table>
<Caption>
      Percentage of Threshold Achieved                       Amount of Payment
      --------------------------------                       -----------------

<S>                                                          <C>
                      70%                                       $425,000.00

                      85%                                       $637,500.00;
</Table>

(b) A Stockholder shall not be entitled to receive his portion (i.e. 95% in the
case of Pachur and 5% in the case of Leon) of any of the payments pursuant to
Section 1.3(a) after the occurrence of any of the following events: (i) if he
shall resign as an employee of HI Services de Mexico, S.A. de C.V. ("HI
Services") or of such other HIG Affiliate by whom he may later be employed, or
(ii) if HI Services terminates his employment For Cause (hereinafter defined).
It is understood that the resignation by or termination For Cause of one Seller
shall not effect the right of the other Seller to any payment under Section
1.3(a) to which he is entitled, provided that the Gross Revenue standards
required for such payment are satisfied. Further, the death or disability
(pursuant to the definition of disability set forth in the Federal Labor Law and
Social Security Law) of a Seller shall not effect the right of such Seller or
Seller's heirs to payments under Section 1.3(a), provided that the Gross Revenue
standards required for such payment are satisfied. For purposes of this
Agreement, the term "For Cause" means: (i) a Seller's breach of this Agreement
or any other document, agreement or contract to which such Seller and HIG, HI
Services or another HIG Affiliate are a party, which is not remedied within
thirty (30) days after the giving of written notice specifying such breach; (ii)
a Seller's intentional failure to adhere to any written policy of HI Services
(or such other HIG Affiliate by whom he may later be employed), which is not
remedied within thirty (30) days after the giving of written notice by the
employer specifying such failure; (iii) a Seller's appropriation (or attempted
appropriation) of a material business opportunity of HI Services or another of
HIG's Affiliates, including, without limitation, attempting to secure or
securing, any personal profit in connection with any transaction entered into on
behalf of HI Services or another of HIG's Affiliates; (iv) a Seller's commission
of (or attempt to commit) an act of fraud, illegality, theft or willful
misconduct toward HI Services or another of HIG's Affiliates; (v) a Seller's
conviction of, the indictment for (or its procedural equivalent), or the
entering of a guilty plea or plea of no contest or deferred adjudication with
respect to, a felony, the equivalent thereof, or any other crime with respect to
which imprisonment is a possible punishment; (vi) a Seller's absence from his
duties without the consent of the President of HI Services (or such other HIG
Affiliate by whom he may later be employed) for more than ten (10) consecutive
business days for reasons other than vacation authorized under this Agreement,
illness or injury; or (vii) the intentional failure of a Seller to carry out, or
comply with, in any material respect any directive of the President or Board of
Directors of HI Services (or such other HIG Affiliate by whom he may later be
employed) which is not remedied within thirty (30) days after receipt of written
notice from the employer specifying such failure.

         SECTION 1.4 Liabilities. In connection with the purchase of the
Acquired Assets, and subject to and upon all the terms and condition of this
Agreement, at Closing, HIG shall not assume or agree to pay, perform and
discharge any liabilities or obligations of Bulco or Tempus. HIG is not
assuming, and shall have no liability for, and Seller agrees that Bulco and
Tempus have retained and are solely responsible for, the payment, performance,
and discharge of all liabilities of Bulco and Tempus, whether accrued, absolute,
contingent or otherwise (collectively, the "Retained Liabilities").Seller shall
indemnify and hold HIG harmless from and against the Retained Liabilities.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 3

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         SECTION 1.5 Gross Sales Statement. Within thirty (30) days after the
expiration of each of the 2003, 2004 and 2005 calendar years, HIG shall deliver
to Seller a written statement (the "Gross Sales Statement") setting forth the
Gross Sales derived from the Facilities for the subject calendar year, and such
supporting information as shall be reasonably necessary for Seller to confirm
such Gross Sales. The Gross Sales shall be certified by the Chief Financial
Officer of HIG to the effect that such statement reflects the Gross Sales
derived from the Facilities for the subject calendar year and that such Gross
Sales were determined consistent with U.S. GAAP. Within fifteen (15) days after
its receipt of the Gross Sales, Seller shall deliver to the Chief Financial
Officer of HIG a written acceptance of the Gross Sales reflected thereon or a
written notice that Seller desires to review the books and records related to
Gross Sales for such period. Seller shall complete any such requested review
within sixty (60) days after his receipt of the Gross Sales Statement. To the
extent that any such review indicates that the Gross Sales reflected on the
Gross Sales Statement were inaccurate, the Gross Sales shall be increased or
decreased, as the case may be. If HIG and Seller are unable to resolve any
dispute concerning the Gross Sales through the procedure outlined above, such
unresolved dispute shall be submitted for further determination to a regionally
recognized accounting firm located in the United States to be mutually selected
by HIG and Seller, and the determination by such accounting firm shall be made
within ninety (90) days following the submission to them of such dispute and
such determination shall be binding upon Seller and HIG. If HIG and Seller
cannot mutually agree upon such accounting firm, HIG shall select an independent
internationally recognized accounting firm that has not provided services to HIG
or its Affiliates during the previous five (5) year period. Seller and HIG shall
each bear fifty percent (50%) of the fees and expenses of such accounting firm
resolving such dispute.

         SECTION 1.6 Specific Transfers. Without limitation to the general
transfers and assignments described in Section 1.1, Seller hereby transfers and
assigns to HIG the following intangible rights of Seller:

                  (a) Acknowledgements and Files. All the necessary
acknowledgements and documents stored at calle Lerdo de Tejada # 749, Predio El
Lechugal, Santa Catarina, Nuevo Leon, and in general all the documents owned by
them and including all the books, records, computer files, expedients,
documents, mailing lists, drawings, architectural sketches, specifications,
advertising materials and promotional material, studies, reports, and other
printed or written materials concerning the Business, Tempus or Bulco, and in
general all the files and paperwork other than accounting records stored at such
address, and any other document or information useful to HIG or its Affiliates
in the management and operation of the Business .

                  (b) Trademarks. All the Intellectual Property rights
corresponding to trademarks "Timeless Reflections" and "Ole".

                  (c) Scheduled Contracts. All the rights of Bulco and Tempus
arising under the Scheduled Contracts described in Schedule 1.6(c), including,
without limitation, rights of refund and compensation, privileges, deposits,
claims, causes of action and option related to or belonging to the Scheduled
Contracts or any one of them.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 4

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                                    ARTICLE 2
                                     CLOSING

         SECTION 2.1 Closing. The closing of the purchase and sale of the
Intangible Assets (the "Closing") will take place on or before January 31, 2003
(the "Closing Date"), at the offices of Bell Nunnally & Martin LLP, 3232
McKinney Avenue, Suite 1400, Dallas, Texas 75204-2429, unless another date or
place is agreed to in writing by the parties hereto.

         SECTION 2.2 Transfer of Assets; Payment. At the Closing, Seller shall
do and take all steps reasonable and necessary to transfer, assign and convey to
HIG all of the right, title and interest in and to the Intangible Assets, free
and clear of all Liens, other than the Bancomext Liens, which shall be released
after Closing as contemplated by Section 3.2 of the Asset Purchase Agreement.

         SECTION 2.3 Closing Documents. At the Closing, Seller, as appropriate,
shall deliver, or cause to be delivered, the following items:

                  (a) Schedules to this Agreement that are in form and substance
         satisfactory to HIG.

                  (b) The Employment Agreement in substantially the form
         attached hereto as Exhibit "A", executed by Pachur.

                  (c) The Noncompetition Agreement in substantially the form
         attached hereto as Exhibit "B", executed by Pachur, Leon, Bulco and
         Tempus.

                  (d) Any documents, certificates of title, endorsements,
         assignments and instruments in form and substance satisfactory to HIG
         and its legal counsel, as shall be necessary, advisable or desirable to
         vest in HIG good and marketable title to the Intangible Assets free and
         clear of all Liens;

                  (e) Documents, in form and substance reasonably satisfactory
         to HIG, evidencing the assignment and transfer of the Intangible Assets
         from Bulco and Tempus to Seller; and

                  (f) The Bancomext Authorization (as defined in the Asset
         Purchase Agreement);

                  (g) Duly notarized power of attorney for Pachur to represent
         de Leon in the execution, delivery and performance of this Agreement
         and the Ancillary Documents in Dallas, Texas, U.S.A. granted by de
         Leon; and

                  (h) Copies of all consents, authorizations, orders or
         approvals of and filings or registrations with, and any permits,
         licenses or other authorizations required by, any third party or
         applicable Governmental Entity that are required for, or in connection
         with, the execution and delivery of this Agreement by Seller, the
         registration of HIG's rights in the Intangible Property and the
         consummation by Seller of the transactions contemplated herein.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 5

<PAGE>

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

         SECTION 3.1 Representations and Warranties of Seller. As an inducement
to HIG to enter into this Agreement and to consummate the transactions
contemplated hereby, Seller, and each of them, hereby jointly and severally
represents and warrants to HIG that the following statements are true and
correct as of the date of this Agreement and will be true and correct with equal
force and effect as of the Closing Date.

                  (a) Authority; Noncontravention. Seller has the requisite
power and authority to enter into this Agreement and the other documents,
contracts, agreements and instruments executed and delivered in connection with
this Agreement or otherwise contemplated hereunder (the "Ancillary Documents")
and to consummate the transactions contemplated by this Agreement and the
Ancillary Documents. This Agreement and the Ancillary Documents have been duly
executed and delivered by Seller and constitute a valid and binding obligation
of Seller, enforceable against Seller in accordance with their respective terms.
The execution and delivery of this Agreement and the Ancillary Documents do not,
and the consummation of the transactions contemplated by this Agreement and the
Ancillary Documents and compliance with the provisions of this Agreement and the
Ancillary Documents will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
the loss of any benefit under, or result in the creation of any Liens upon, any
of the properties or assets of Seller under (i) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Seller or his properties or
assets, or (ii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Seller or the Intangible Assets. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Entity, is required in connection with the execution and delivery
of this Agreement and the Ancillary Documents by Seller or the consummation by
Seller of the transactions contemplated by this Agreement and the Ancillary
Documents.

                  (b) Title to Properties; Liens. Seller has good title to all
of the Intangible Assets. All of the Intangible Assets are free and clear of all
Liens. Upon consummation of the transactions proposed herein, HIG will own the
Intangible Assets free and clear of all Liens. The Intangible Assets constitute
all of the intangible assets and properties that are used or useable in the
conduct of the Business as presently being conducted, or as currently
contemplated to be conducted in the future. None of the Intangible Assets are
required to be registered with any Mexican Public Registry. Additionally, none
of the Intangible Assets are subject to any Mexican governmental program, such
as Pitex or maquila, that could limit the transferability of the Intangible
Assets.

                  (c) Customers and Suppliers. Schedule 3.1(c) sets forth a list
of names and addresses of all customers and all suppliers of the Business. There
exists no actual termination or cancellation of any business relationship of the
Business with any customer or group of customers or with any supplier or group
of suppliers listed therein with respect to which the Business has received
written or oral notice of such termination or cancellation, as the case may be.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 6

<PAGE>

                  (d) Intellectual Property. Seller owns, or has validly
licensed or otherwise has the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, copyrights and other proprietary intellectual property
rights and computer programs comprising the Intellectual Property. Schedule
3.1(d) hereto sets forth a description of all Intellectual Property of the
Business, Bulco and Tempus. No claims are pending or, to the Knowledge of
Seller, threatened that the Intellectual Property infringes or otherwise
adversely affects the rights of any person with regard to such Intellectual
Property. To the Knowledge of Seller, no person is infringing the rights of
Seller with respect to any Intellectual Property.

                  (e) Product Warranties. Schedule 3.1(e) hereto contains the
forms of express warranties and guaranties which have been used by Bulco and
Tempus in the Business. Except as set forth on Schedule 3.1(e) hereto, the
Business has not offered any different forms of express product warranties and
guaranties. No events have occurred or facts exist which could result in an
increase to Seller' warranty expenses.

                  (f) Disclosure.

                                    (A) Seller has delivered or made available
                           to HIG complete and accurate copies of all documents
                           listed on the schedules delivered as a part hereof
                           and all other information requested by HIG pursuant
                           hereto. No representation or warranty of Seller
                           contained in this Agreement or any statement in the
                           Schedules hereto contains any untrue statement. No
                           representation or warranty of Seller contained in
                           this Agreement or statement in the Schedules hereto
                           omits to state a material fact necessary in order to
                           make the statements herein or therein, in light of
                           the circumstances under which they were made, not
                           misleading.

                                    (B) There is no fact known to Seller which
                           has specific application to the HIG and which could
                           have a Material Adverse Effect on Bulco or Tempus,
                           but which has not been set forth in this Agreement or
                           the Schedules hereto.

                                    (C) The disclosures in the Schedules hereto
                           shall relate only to the representations and
                           warranties in the Section of this Agreement to which
                           they expressly relate and to no other representation
                           or warranty in this Agreement.

                                    (D) In the event of any inconsistency
                           between the statements in the body of this Agreement
                           and those in the Schedules hereto (other than an
                           exception expressly set forth as such in the
                           Schedules in relation to a specifically identified
                           representation or warranty), those in this Agreement
                           shall control.

                  (g) Consents and Approvals. Except as set forth in Schedule
3.1(g), the execution, delivery and performance by Seller of this Agreement and
the Ancillary Documents and the consummation of such transactions by Seller
requires no consent, approval, order or

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 7

<PAGE>

authorization of, action by or in respect of, or registration or filing with,
any Governmental Entity or other Person, except for consents, the failure of
which to obtain could not reasonably be expected to have a Material Adverse
Effect.

                  (h) Financial Statements. Schedule 3.1(h) contains all audited
financial statements of Bulco and Tempus for the years ending December 31, 1999,
2000, 2001 and 2002, if available (collectively, the "Financial Statements").
The Financial Statements have been prepared in conformity with Mexican GAAP, and
present fairly, in all material respects, the financial position of and results
of operations, changes in Stockholders' equity and cash flows of Bulco and
Tempus as of and for the periods then ended. The unaudited financial statements
and reports provided by Seller or its Affiliates to HIG for the year ending
December 31, 2002, are true and correct in all material respects.

                  (i) Undisclosed Liabilities. Except (i) as disclosed,
reflected or reserved against in the Financial Statements, or (ii) for
liabilities and obligations incurred in the ordinary course of business
consistent with past practices since the date of the Financial Statements,
neither Bulco nor Tempus has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) required by Mexican GAAP to
be set forth on the Financial Statements.

                  (j) Absence of Certain Changes or Events with respect to
Sellers. Except as set forth in Schedule 3.1(j) hereto, since December 31, 2001,
Bulco and Tempus have conducted their business in the ordinary course, and there
has not been (i) any Material Adverse Change in or to Bulco or Tempus, (ii) any
debt incurred or assumed (other than accounts payable in the ordinary course of
business consistent with past practices), (iii) any granting by Bulco or Tempus
to any employee of Bulco or Tempus of any increase in compensation, except
increases not in excess of five percent (5%) for all employees in the aggregate
in any calendar year, made in the ordinary course of business consistent with
prior practice, or any granting by Sellers to any employee of any severance or
termination pay, (iv) any damage, destruction or loss, whether or not covered by
insurance, that has or could reasonably be expected to have a Material Adverse
Effect, (v) any change in accounting methods, principles or practices by
Sellers, materially affecting their assets, liabilities or business, except
insofar as any have been required by a change in Mexican GAAP, (vi) any
acquisition of real property or undertaking or commitment to undertake capital
expenditures exceeding $25,000.00 in the aggregate, (vii) any cancellation of
any debts owed to or claims held by Bulco or Tempus, other than in the ordinary
course of business consistent with past practices, or (viii) any sale, lease,
transfer or other disposition of, or mortgage, pledge or creation of any
encumbrance on any assets of Bulco or Tempus.

                  (k) Taxes. All Taxes that are due and payable by Seller which
could create a Lien on the Intangible Assets, other than those presently payable
without penalty or interest, have been timely paid, and Seller has timely filed
(and, through the Closing Date, will timely file) all Tax reports and returns
required by law to be filed by Seller. All such Tax reports and returns are
true, complete and correct in all respects with regard to Seller for the periods
covered thereby. Seller is not delinquent in the payment of any Tax. There is no
Tax deficiency asserted against Seller, and there is no unpaid assessment,
proposal for additional Taxes, deficiency or delinquency in the payment of any
of the Taxes of Seller or any violation of any Tax law that could be asserted by
any

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 8

<PAGE>

taxing authority. There are no Tax Liens upon any properties or assets of Seller
nor has notice been given of any event which could lead to any such Lien.

                  (l) Compliance with Environmental Laws. Bulco and Tempus have
in effect all Permits necessary for them to own, lease or operate their
properties and assets and to carry on the Business substantially as now
conducted, and there has occurred no default under any such Permit. Bulco and
Tempus are and have been in compliance with all applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees or orders of any Governmental
Entity.

                           (i) Bulco and Tempus have not received any written
                  communication from a Governmental Entity alleging that Bulco
                  and Tempus are, or the Business' Santa Catarina facility is
                  not, in compliance in any material respect with, or have
                  liability under, any Environmental Laws. Bulco and Tempus
                  hold, and have complied with and are in compliance with, all
                  Permits required for Bulco and Tempus to conduct the Business
                  under Environmental Laws, and Bulco and Tempus are, and the
                  Santa Catarina Facility is, in compliance with all
                  Environmental Laws.

                           (ii) Bulco and Tempus have not at any time
                  maintained, and will not maintain from this date to Closing,
                  any Hazardous Materials within the Business' Santa Catarina
                  facility or their other property, which could affect the
                  Acquired Assets.

                           (iii) Bulco and Tempus have complied with and are in
                  compliance with all federal, state, local and foreign
                  statutes, laws, ordinances, regulations, rules, permits,
                  judgments, orders or decrees applicable to the Business and
                  its assets, and, to the Knowledge of the Seller, there does
                  not exist any basis for any claim or default under or
                  violation of any such statute, law, ordinance, regulation,
                  rule, judgment, order or decree.

                  (m) Transactions With Related Parties. Except as set forth on
Schedule 3.1(m), neither the Seller, nor any spouse, child, parent, sibling or
any other person or entity closely related to or affiliated with the Seller, as
the case may be, nor any employee, officer or director of Tempus or Bulco (i)
owns any equity interest, directly or indirectly in, or is an officer or
director of, any proprietorship, firm, company, corporation, partnership or
other entity which: (a) is a competitor of Tempus or Bulco; (b) is a customer or
supplier of Tempus or Bulco; or (c) has any contractual or business relationship
whatsoever with (i) Tempus or Bulco; provided that the foregoing does not apply
to the ownership by any of them of not more than five percent (5%) of any
outstanding security (or any class thereof) of any corporation or partnership
listed on a United States or Mexican securities exchange or traded
over-the-counter; or (ii) has or claims to have any direct or indirect interest
in any tangible or intangible property of Tempus or Bulco, except with respect
to the Seller as holders of common stock of Tempus or Bulco.

         SECTION 3.2 Representations and Warranties of HIG. HIG hereby
represents and warrants to Seller that the following statements are true and
correct as of the date of this Agreement and will be true and correct with equal
force and effect as of the Closing Date:

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 9

<PAGE>

                  (a) Organization, Standing and Corporation Power of HIG. HIG
is a corporation duly organized, validly existing and in good standing under the
laws of Texas and has the requisite corporate power and authority to carry on
its business as now being conducted.

                  (b) Authority; Noncontravention. HIG has all requisite
corporate power and authority to enter into this Agreement and the Ancillary
Documents and to consummate the transactions contemplated by this Agreement and
the Ancillary Documents. The execution and delivery of this Agreement and the
Ancillary Documents and the consummation of the transactions contemplated by
this Agreement and the Ancillary Documents have been duly authorized by all
necessary corporate action on the part of HIG. This Agreement and the Ancillary
Documents have been duly executed and delivered by HIG and constitutes the valid
and binding obligations of HIG, enforceable against HIG in accordance with their
terms. The execution and delivery of this Agreement and the Ancillary Documents
do not, and the consummation of the transactions contemplated by this Agreement
and the Ancillary Documents and compliance with the provisions of this Agreement
and the Ancillary Documents will not, conflict with, or result in any violation
of the governing documents of HIG. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to HIG in connection with the execution and delivery
of this Agreement and the Ancillary Documents or the consummation by HIG of any
of the transactions contemplated by this Agreement and the Ancillary Documents.

                                    ARTICLE 4
                              ADDITIONAL AGREEMENTS

         SECTION 4.1 Reasonable Efforts; Notification.

                  (a) Upon the terms and subject to the conditions set forth in
         this Agreement, the parties shall use all reasonable efforts to take,
         or cause to be taken, all actions, and to do, or cause to be done, and
         to assist and cooperate with the other parties in doing, all things
         necessary, proper or advisable to consummate and make effective, in the
         most expeditious manner reasonably practicable, the Closing, and the
         other transactions contemplated by this Agreement, including (i) the
         obtaining of all necessary actions or nonactions, waivers, consents and
         approvals from Governmental Entities and the making of all necessary
         registrations and filings (including filings with Governmental
         Entities, if any) and the taking of all reasonable steps as may be
         necessary to obtain an approval or waiver from, or to avoid an action
         or proceeding by, any Governmental Entity, (ii) the obtaining of all
         necessary consents, approvals or waivers from third parties, (iii) the
         defending of any lawsuits or other legal proceedings, whether judicial
         or administrative, challenging this Agreement or the consummation of
         any of the transactions contemplated by this Agreement, including
         seeking to have any stay or temporary restraining order entered by any
         court or other Governmental Entity vacated or reversed, and (iv) the
         execution and delivery of any additional instruments necessary to
         consummate the transactions contemplated by, and to fully carry out the
         purposes of, this Agreement.

                  (b) Seller shall give prompt notice to HIG, and HIG shall give
         prompt notice to Seller, of (i) any representation or warranty made by
         such party contained in this Agreement

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 10

<PAGE>

         that has become untrue or inaccurate in any material respect, or (ii)
         the failure by it to comply with or satisfy any covenant, condition or
         agreement to be complied with or satisfied by it under this Agreement;
         provided, however, that such notification shall not, in and of itself,
         excuse or otherwise affect the representations, warranties, covenants
         or agreements of the parties or the conditions to the obligations of
         the parties under this Agreement.

         SECTION 4.2 Fees and Expenses; Taxes.

                  (a) Except as set forth in Subsection 4.2(b):

                           (i) if the Closing and purchase of the Intangible
                  Assets are consummated, all fees and expenses (other than
                  duties, taxes, recordation fees and notary public fees, which
                  shall be split by the parties) incurred by HIG in connection
                  with the Closing, this Agreement and the transactions
                  contemplated by this Agreement (the "Expenses") shall be paid
                  by HIG and all Expenses incurred by Seller shall be paid by
                  Stockholders, and

                           (ii) if the Closing and purchases of the Intangible
                  Assets are not consummated, all Expenses shall be paid by the
                  party incurring such expenses.

                  (b) In the case of a breach of this Agreement by any party,
         all reasonable fees and expenses incurred by the prevailing,
         nonbreaching party or parties in connection with such breach, shall be
         paid by the party breaching this Agreement.

         SECTION 4.3 Agreements Concerning the Operations After Closing. The
parties agree to the following with respect to the operations of the Business
after Closing:

                  (a) Scheduled Contracts. Seller transfers and assigns to HIG
all contract rights with customers and suppliers that are Scheduled Contracts
existing at the time of the Closing,.

                  (b) Notifications and Customers Transfers. Seller transfers
and assigns to HIG the customer list of Bulco and Tempus and shall notify within
five (5) days following Closing, that new purchase orders, as well as
undelivered purchase orders, shall be made thereafter with HI Metals. and Seller
will use best efforts to inform customers in such a way that customers will be
comfortable in doing business with HIG and HIG Affiliates. The Tempus and Bulco
customer list is attached hereto as Schedule 4.3(b).

                  (c) Transfer of Assets and Rights, as well as Business
Operation. Seller commits to consult with personnel of HIG and HIG Affiliates
about the manufacturing operations and other business affairs of Tempus and
Bulco, in order to assist in the transfer and assignment to HIG of the control
of the Business. Seller shall spend such time at the plant located at Lerdo de
Tejada # 749, Predio El Lechugal at Santa Catarina, Nuevo Leon, as reasonably
requested by HIG, in order to assist HIG in keeping such plant operating
efficiently..

         SECTION 4.4 Maintenance of Existence. Tempus and Bulco shall preserve
and maintain their corporate existence under the laws of the Mexico for a period
of at least three (3) years after

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 11

<PAGE>

the Closing Date. Tempus and Bulco shall change their corporate names to a name
reasonably acceptable to HIG within thirty (30) days after Closing.

         SECTION 4.5 Environmental. Seller agrees at their sole expense prior to
Closing to properly clean the Hazardous Materials located in the back yard
located behind Tempus warehouse No. 8 and to dispose of such Hazardous Materials
in accordance with all applicable Environmental Laws.

         SECTION 4.6 Information for Tax Returns. Seller shall cooperate with
HIG after the Closing by providing HIG, promptly upon request, with access to
and copies of the Accounting and Financial Records and such other records and
information regarding the Assets and/or the business operations of Tempus and
Bulco as may reasonably be requested from time to time by HIG in connection with
the preparation or audit of its or its Affiliates federal, state and local
income and other Tax returns, and audits, disputes, refund claims or litigation
relating thereto. In such connection, Seller will afford HIG's representatives,
including independent tax advisers and others, access to books and records or
relating to such assets and operations.

                                    ARTICLE 5
                              CONDITIONS PRECEDENT

         SECTION 5.1 Conditions to Each Party's Obligation to Effect the
Closing. The respective obligations of each party to effect the Closing are
subject to the satisfaction, or waiver on or prior to the Closing Date of the
following conditions:

                  (a) Authorizations, Consents, and Approvals. Any
authorizations, consents, approvals, orders or waivers required to be obtained,
and all filings, notices or declarations required to be made with any Federal,
foreign, state or local governmental regulatory agency, shall have been obtained
or made.

                  (b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
Closing shall be in effect; provided, however, that each of the parties shall
have used such party's reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.

                  (c) Asset Purchase Agreement. The execution and delivery of
the Asset Purchase Agreement of even date herewith by and among Tempus, Seller
and HI Metals, S.A. de C.V. and the simultaneous closing of the transactions
described therein.

         SECTION 5.2 Conditions to Obligations of HIG. The obligations of HIG to
effect the Closing and to purchase the Intangible Assets pursuant to this
Agreement shall, at the option of HIG, be subject to the satisfaction, on or
prior to the Closing Date, of the following conditions:

                  (a) Representations and Warranties. The representations and
warranties of Seller, set forth in this Agreement, in each case as of the date
of this Agreement, and as of the Closing Date as though made on and as of the
Closing Date, shall be true and correct, and HIG shall have received

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 12

<PAGE>

a certificate to such effect, signed on behalf of Seller with respect to
representations and warranties of Seller.

                  (b) Performance of Obligations of Seller. Seller shall have
performed all obligations required to be performed by Seller under this
Agreement and the Ancillary Documents at or prior to the Closing Date, and HIG
shall have received a certificate to such effect signed by Seller..

                  (c) Opinion of Counsel. HIG shall have received written
opinions, dated as of the Closing Date, from counsel for Seller substantially in
the form of Exhibit "C" hereto.

                  (d) Delivery of Notarial Instruments and Invoices. Subject to
the terms of this Agreement, Seller shall have delivered and shall have caused
such instruments of transfer or conveyance, and of assignment, as are reasonably
requested by HIG to vest in HIG good and marketable title to the Intangible
Assets, free and clear of all Liens, including, without limitation, a notarial
instrument, executed by a properly empowered notary public and Seller,
evidencing the transfer of the real property and invoices, executed by Seller,
evidencing the transfer of the Intangible Assets.

         SECTION 5.3 Conditions to Obligations of Seller. The obligations of
Seller to effect the Closing and to transfer and convey the Intangible Assets
pursuant to this Agreement shall, at the option of Seller, be subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:

                  (a) Representations and Warranties. The representations and
warranties of HIG set forth in this Agreement, in each case as of the date of
this Agreement, and as of the Closing Date as though made on and as of the
Closing Date, shall be true and correct, and Seller, shall have received a
certificate to such effect signed on behalf of HIG by an authorized officer of
HIG.

                  (b) Performance of Obligations of HIG. HIG shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Closing Date, and Seller shall have received a certificate to
such effect, signed on behalf of HIG by an authorized officer of HIG.

         SECTION 5.4 Frustration of Closing Conditions. HIG and Seller may not
rely on the failure of any condition set forth in this Article 5 to be
satisfied, if such failure was caused by such party's failure to act in good
faith or to use its reasonable efforts to cause the Closing to occur.

                                    ARTICLE 6
                        TERMINATION, AMENDMENT AND WAIVER

         SECTION 6.1 Termination. This Agreement may be terminated at any time
prior to the Closing Date without liability:

                  (a) by the unanimous written consent of HIG and Seller;

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 13

<PAGE>

                  (b) by HIG or Seller if the Closing shall not have occurred on
         or before March 31, 2003, unless the failure to effect the Closing is
         the result of a material breach of this Agreement by the party seeking
         to terminate; and

                  (c) by HIG or Seller:

                           (i) if any Governmental Entity shall have issued an
                  order, decree or ruling or taken any other action permanently
                  enjoining, restraining or otherwise prohibiting the Closing
                  and such order, decree, ruling or other action shall have
                  become final and nonappealable as long as the party seeking to
                  terminate is not liable for the issuance of such order,
                  decree, ruling or action; and

                           (ii) in the event of any breach by HIG, on the one
                  hand, or by Seller, on the other hand, of its or his
                  respective agreements, representations or warranties contained
                  herein and the failure of such party to cure such breach
                  within ten (10) days after receipt of notice from any other
                  party requesting such breach to be cured.

         SECTION 6.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 6.1, this Agreement shall forthwith become void
and have no effect, without any liability or obligation on the part of any
party, other than the provisions of this Section 6.2 and Article 7. In the event
that HIG or Seller shall terminate this Agreement pursuant to Section 6.1(b) or
(c) hereof, the rights of the parties, as the case may be, to pursue any and all
rights they may have at law or equity or hereunder shall survive unimpaired.

         SECTION 6.3 Amendment. This Agreement may be amended by the parties at
any time prior to the Closing Date by an instrument in writing signed on behalf
of each of the parties hereto.

         SECTION 6.4 Extension: Waiver. At any time prior to the Closing Date,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement, or (c) waive compliance with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.

                                    ARTICLE 7
                                 INDEMNIFICATION

         SECTION 7.1 Indemnification. By Seller. From and after the Closing
Date, Seller, shall, jointly and severally, (i) indemnify and hold harmless the
HIG and its Affiliates and their officers, directors, employees, affiliates,
successors and assigns and attorneys from and against any and all losses which
it or such persons may suffer or incur, resulting from, related to or arising
out of (a) any misrepresentation or breach of warranty of Seller contained in or
made pursuant to this Agreement or any of the Ancillary Documents; (b) any
breach by Seller or Seller's Affiliates of any of his agreements or obligations
contained in or made pursuant to this Agreement or any of the Ancillary
Documents; and (c) any liability or obligation arising out of the Intangible
Assets as conducted prior

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 14

<PAGE>

to the Closing and not expressly assumed by HIG pursuant to this Agreement,
including, without limitation, the Retained Liabilities; and (ii) reimburse HIG
and its Affiliates and each of their respective officers, directors, employees
and attorneys for any and all reasonable fees, costs and expenses related
thereto (including without limitation, reasonable legal expenses).

                  (b) By HIG. From and after the Closing Date, HIG shall (i)
indemnify and hold harmless each Seller and his heirs, personal representatives,
administrators, and trustees, from and against any and all losses, which any of
them may suffer or incur, resulting from, related to or arising out of (a) any
misrepresentation or breach of warranty of HIG which is contained in or made
pursuant to this Agreement; (b) any breach by HIG of any of its agreements or
obligations contained in or made pursuant to this Agreement; and (c) any and all
claims or litigation arising out of any of the foregoing; and (ii) reimburse
each Seller and his heirs, personal representatives, administrators, and
trustees for any and all reasonable fees, costs and expenses related thereto
(including, without limitation, reasonable legal expenses).

                  (c) Direct Liability. In the event that the person or entity
seeking indemnification under this Article 7 (the "Indemnified Party") shall
become aware of an event which will give rise to or result in an Indemnifiable
Loss, he, she or it shall, within thirty (30) days thereafter, give written
notice to the party from whom indemnification under this Article 7 is sought
(the "Indemnifying Party") of the amount of the Indemnifiable Loss, together
with sufficient information to enable the Indemnifying Party to determine the
accuracy and nature of the claimed Indemnifiable Loss (the "Indemnity Notice").
The failure of the Indemnified Party to give the Indemnifying Party an Indemnity
Notice shall not release the Indemnifying Party from liability under this
Article 8; provided, however, that the Indemnifying Party shall not be liable
for losses which would not have been incurred but for the delay in the delivery
of, or the failure to deliver, the Indemnity Notice. Within thirty (30) days
after the receipt by the Indemnifying Party of the Indemnity Notice, the
Indemnifying Party shall either (i) pay to the Indemnified Party an amount equal
to the Indemnifiable Loss, or (ii) object to such claim, in which case the
Indemnifying Party shall give written notice to the Indemnified Party of such
objection together with the reasons therefor, it being understood that the
failure of the Indemnifying Party to so object shall preclude the Indemnifying
Party from asserting any claim, defense or counterclaim relating to the
Indemnifying Party's failure to pay any Indemnifiable Loss.

                  (d) Third Party Claim. In the event the facts giving rise to
the claim for indemnification under this Article 7 shall involve any action or
threatened claim or demand by any third party against the Indemnified Party (a
"Third Party Claim"), within the earlier of, as applicable, ten (10) days after
receiving notice of the filing of a lawsuit or thirty (30) days after receiving
notice of the existence of a claim, demand, suit or proceeding (each a "Claim")
giving rise to the claim for indemnification, the Indemnified Party shall send
written notice of such Claim to the Indemnifying Party (the "Claim Notice"). The
failure of the Indemnified Party to give the Indemnifying Party the Claim Notice
shall not release the Indemnifying Party from liability under this Article 7;
provided, however, that the Indemnifying Party shall not be liable for losses
incurred by the Indemnified Party which would not have been incurred but for the
delay in the delivery of, or the failure to deliver, the Claim Notice. Except as
set forth below, the Indemnifying Party shall be entitled to defend such Claim
in the name of the Indemnified Party at his or its own expense and through
counsel of his or its own choosing. The Indemnifying Party shall give the
Indemnified Party notice in writing within

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 15

<PAGE>

ten (10) days after receiving the Claim Notice from the Indemnified Party in the
event the Claim is one involving an instituted suit or proceeding, or otherwise
within thirty (30) days, of his or its intent to do so. If the Indemnifying
Party chooses to defend or prosecute a Third Party Claim, all the Indemnified
Parties shall cooperate in the defense or prosecution thereof. Such cooperation
shall include the retention and (upon the Indemnifying Party's request) the
provision to the Indemnifying Party of records and information that are
reasonably relevant to such Third Party Claim, and making employees available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Whether or not the Indemnifying Party assumes
the defense of a Third Party Claim, the Indemnified Party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the Indemnifying Party's prior written consent, which consent
shall not be unreasonably withheld, delayed or conditioned. The Indemnified
Party may elect, by notice in writing to the Indemnifying Party, to continue to
participate through his or its own counsel, at his or its expense, but the
Indemnifying Party shall have the right to control the defense of the Claim with
counsel reasonably acceptable to the Indemnified Party. In the event that the
Indemnifying Party is controlling the defense of the Claim and shall have
negotiated a settlement thereof, which proposed settlement is final and
unconditional as to the parties thereto and contains an unconditional release of
the Indemnified Party, without the Indemnified Party being liable for damages of
any kind or nature or being otherwise required to pay any amount of money to any
third party and does not include the imposition of any restrictions on the part
of the Indemnified Party or require that the Indemnified Party make an admission
of guilt or liability or deliver a confession of judgment, or any other
non-financial obligation which, in the reasonable judgment of the Indemnified
Party, renders such settlement unacceptable, the Indemnified Party shall consent
to such settlement.

         SECTION 7.2 Right to Set-Off. To secure the indemnification provided
for in Section 7.1(a) hereof, and to compensate HIG for any claim having as its
basis the indemnification provided for in Section 7.1(a) hereof, HIG and its
Affiliates shall have a right of set-off from any sum due to Seller, Bulco or
Tempus or any of their Affiliates, including sums due under this Agreement or
any of the Ancillary Documents.

                                    ARTICLE 8
                               GENERAL PROVISIONS

         SECTION 8.1 Survival of Representations, Warranties and Covenants. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Closing Date.

         SECTION 8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally when received if or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 16

<PAGE>

                  (a)      if to HIG, to:

                           Home Interiors & Gifts, Inc.
                           1649 Frankford Road West
                           Carrollton, Texas 75007
                           Attn:  Michael D. Lohner

                           with a mandatory copy to:

                           William E. Swart, Esq.
                           Bell Nunnally & Martin LLP
                           3232 McKinney Avenue, Suite 1400
                           Dallas, Texas 75204-2429

                  (b)      if to Seller to:

                           Mr. Miguel Angel Seller Salgado
                           c/o Bulco, S.A. de C.V.
                           Lerdo de Tejada 749
                           Predio El Lechugal
                           Santa Catarina, N.L.
                           66350, Mexico

                           Mr. Oscar Guadalupe de Leon Ulloa
                           c/o Bulco, S.A. de C.V.
                           Lerdo de Tejada 749
                           Predio El Lechugal
                           Santa Catarina, N.L.
                           66350, Mexico

                           with a mandatory copy to:

                           C.P. Raul Martinez Gandara
                           Rio Moctezuma numero 110 interior 8
                           Colonia del Valle
                           San Pedro Garza Garcia, N.L.
                           C.P. 66220

                           and

                           Lic. Carlos Arias Lozano
                           Nicolas Bravo numero 7171 Sur
                           Colonia Maria Luisa
                           Monterrey, N.L.
                           C.P. 64040

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 17

<PAGE>

         SECTION 8.3 Definitions. For purposes of this Agreement, the following
terms shall have the following respective meanings:

         "Accounting and Financial Records": As defined in Section 1.1(b)
         hereof.

         "Affiliate": With respect to HIG, any corporation, partnership, limited
         liability company or other entity of which 25% of the equity or voting
         power is controlled directly or indirectly by Home Interiors & Gifts,
         Inc., a Texas corporation ("HIG"), or another Affiliate of HIG, or
         which owns 51% or more of the equity of voting power of HIG (the "HIG
         Parent"), or which is an Affiliate of the HIG Parent, and with respect
         to Seller, any corporation, partnership, limited liability company or
         other entity of which 25% of the equity or voting power is controlled
         directly or indirectly by Pachur or Leon, or another Affiliate of
         Pachur or Leon.

         "Ancillary Documents": As defined in Section 3.1(a) hereof.

         "Bancomext Authorization": As defined in Section 2.2 hereof.

         "Business": As defined in Section 1.1 hereof.

         "Claim": As defined in Section 7.1(d) hereof.

         "Claim Notice": As defined in Section 7.1(d) hereof.

         "Closing": As defined in Section 2.1 hereof.

         "Closing Date": As defined in Section 2.1 hereof.

         "Environmental Laws" means, as of the Closing Date, any applicable
         treaties, laws, regulations, enforceable requirements, order, decrees
         or judgments issued, promulgated or entered into by any Governmental
         Entity, which relate to (x) pollution or protection of the environment
         or (y) Hazardous Materials generation, storage, use, handling, disposal
         or transportation and any similar or implementing state or local law,
         and all amendments or regulations promulgated thereunder.

         "Expenses": As defined in Section 4.2(a) hereof.

         "Facilities": As defined in Section 1.3 hereof.

         "Financial Statements": As defined in Section 3.1(h) hereof.

         "GAAP": means those generally accepted accounting principles and
         practices, applied on a consistent basis, which are recognized as such
         by the applicable financial accounting standards boards of the U.S. or
         Mexico and/or their respective successors and which are applicable in
         the circumstances as of the date in question.

         "Governmental Entity": Any court or any foreign, federal, state,
         municipal or other governmental department, commission, board, bureau,
         agency, authority or instrumentality.

         "Gross Sales". As defined in Section 1.3 hereof.

         "Gross Sales Statement": As defined in Section 1.5 hereof.

         "Hazardous Materials" means all explosive or regulated radioactive
         materials or substances, hazardous or toxic substances, wastes or
         chemicals, petroleum or petroleum distillates, asbestos or asbestos
         containing materials and all other materials or chemicals regulated
         pursuant to any Environmental Law.

         "Indemnified Party": As defined in Section 7.1(c) hereof.

         "Indemnifying Party": As defined in Section 7.1(c) hereof.

         "Indemnity Notice": As defined in Section 7.1(c) hereof.

         "Intangible Assets": As defined in Section 1.1 hereof.

         "Intellectual Property": As defined in Section 1.1(e) hereof.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 18

<PAGE>

         "Knowledge of Seller" means, with respect to the Seller, the current
         actual knowledge of a person.

         "Liens": All mortgages, deeds of trust, claims, liens, security
         interests, pledges, leases, conditional sale contracts, rights of first
         refusal, options, charges, liabilities, obligations, agreements,
         easements, rights-of-way, powers of attorney, limitations,
         reservations, restrictions and other encumbrances of any kind.

         "Material Adverse Change" or "Material Adverse Effect": Any change
         (individually or in the aggregate) that has a material adverse effect
         on the business, results of operations or financial condition of Seller
         that is likely to result in a cost, expense, charge or liability equal
         to or greater than $$10,000.00.

         "Order": Any judgment, writ, decree, injunction, order, stipulation,
         compliance agreement or settlement agreement issued or imposed by,
         entered into with, a Governmental Entity, whether or not having the
         force of law.

         "Permits": All permits, authorizations, certificates, approvals,
         registrations, variances, exemptions, rights-of-way, franchises,
         privileges, immunities, grants, ordinances, licenses and other rights
         of every kind and character (a) under any (1) federal, state, local or
         foreign statute, ordinance or regulation, (2) Order or (3) contract
         with any Governmental Entity or (b) granted by any Governmental Entity.

         "Person": An individual, partnership, joint venture, corporation,
         company, limited liability company, bank, trust, unincorporated
         organization, Governmental Entity or group.

         "Purchase Price": As defined in Section 1.2 hereof.

         "Retained Liabilities": As defined in Section 1.4 hereof.

         "Scheduled Contracts": As defined in Section 1.1(d) hereof.

         "Taxes": Any federal, state, local or foreign income, sales, excise,
         real or personal property franchise, capital stock, gross receipts,
         license, payroll, employment, unemployment, social security, stamp,
         occupation, intangible, estimated tax or other taxes, assessments,
         fees, levies, imposts, duties, deductions or other charges of any
         nature whatsoever (including, without limitation, interest and
         penalties) imposed by any law, rule or regulation.

         "Third Party Claim": As defined in Section 7.1(d) hereof.

         SECTION 8.4 Interpretation; Governing Language. When a reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. This Agreement is in
the English language only, and all communications between the parties relative
to this Agreement shall be conducted in the English language only. Any version
of this Agreement in the Spanish language, whether or not executed by the
parties, is and shall be prepared solely for the benefit of Seller and
Stockholders and shall be considered a non-binding translation of the Agreement.

         SECTION 8.5 Counterparts; Facsimiles. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Facsimile
signatures shall be effective.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 19

<PAGE>

         SECTION 8.6 Entire Agreement: No Third Party Beneficiaries. This
Agreement constitutes the entire agreement and supersedes all prior
representations, agreements or understandings among the parties with respect to
the subject matter of this Agreement both written and oral. This Agreement is
not intended to confer upon any person other than the parties any rights or
remedies hereunder.

         SECTION 8.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas, regardless of the
laws that might otherwise govern under applicable principles of conflict of laws
thereof; provided, however, that to the extent the law of Mexico expressly
provides for application of the law of Mexico to real property and personal
property situated within Mexico, the law of Mexico shall apply to that limited
extent. Each of the parties hereby agrees that the laws of the State of Texas
bear a reasonable relationship to the transaction. Buyer is a Texas corporation.

         SECTION 8.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by Seller without the prior written
consent of the other. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.

         SECTION 8.9 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Texas, County of Dallas, or in any Texas State court located in the
County of Dallas, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit himself, herself or itself to the personal jurisdiction of
any Federal court located in the State of Texas, County of Dallas, or any Texas
State court located in the County of Dallas, in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement, (b)
agrees that he, she or it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that he, she or it will not bring any action relating to this Agreement
or any of the transactions contemplated by this Agreement in any court other
than a Federal court located in the State of Texas, County of Dallas, or a Texas
State court located in the County of Dallas.

         SECTION 8.10 Exhibits and Schedules. Any matter set forth on any
Schedule shall be deemed set forth on all other Schedules to the extent
relevant. Except when the context requires otherwise, any reference in this
Agreement to any Article, Section, clause, Schedule or Exhibit shall be to the
Articles, Sections and clauses of, and Schedules and Exhibits to, this
Agreement. The words "include," "includes" and "including" are deemed to be
followed by the phrase "without limitation." Any reference to the masculine,
feminine or neuter gender shall include such other genders and any reference to
the singular or plural shall include the other, in each case unless the context
otherwise requires. All Exhibits and Schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. When a

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 20

<PAGE>

reference is made in this Agreement to a Section, Exhibit or Schedule, such
reference shall be to a Section of, or an exhibit or Schedule to, this Agreement
unless otherwise indicated.

         SECTION 8.11 Arbitration. The parties agree that except as otherwise
set forth in this Agreement, any disputes arising out of or in connection with
this Agreement shall be finally settled by arbitration under the then current
rules of arbitration of the United Nations Commission for International Trade
Law ("UNCITRAL"). There shall be three arbitrators. Each of Buyer and Seller
shall select one arbitrator at will, and the third arbitrator shall be selected
by the two arbitrators previously chosen by Buyer and Seller. The arbitration
shall take place in Dallas, Texas and shall be conducted in English. The
decision of the arbitrators shall be final and shall be enforceable in any court
of competent jurisdiction. The non-prevailing party in arbitration will pay its
own expenses, the fees of each arbitrator, the administrative costs of the
arbitration and the expenses, including reasonable attorneys' fees and witness
fees and costs, incurred by the other party to the arbitration. Each party
hereby irrevocable consents to the jurisdiction of the UNCITRAL solely for the
purposes of arbitration described in this Section 8.11.

         SECTION 8.12 Currency and Payment. All amounts payable hereunder shall
be calculated and payable in United States dollars.

         SECTION 8.13 Confidentiality. The parties hereto agree to keep this
Agreement and the subject mater hereof confidential and, except as required in
connection with the enforcement of the terms and provisions hereof as required
by law, not to disclose same to any third parties without the prior written
consent of the parties hereto.

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 21

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.

                                SELLER:

                                /s/ MIGUEL ANGEL PACHUR SALGADO
                                ---------------------------------------
                                Miguel Angel Pachur Salgado

                                /s/ MIGUEL ANGEL PACHUR SALGADO
                                ---------------------------------------
                                Oscar Guadalupe de Leon Ulloa
                                Legal Representative and power of attorney

                                HIG:

                                HOME INTERIORS & GIFTS, INC.
                                a Texas corporation

                                By:  /s/ KENNETH J. CICHOCKI
                                   ------------------------------------
                                    Kenneth J. Cichocki,
                                    Senior Vice President

INTANGIBLE ASSET PURCHASE AGREEMENT - PAGE 22

<PAGE>
                                                                     EXHIBIT "A"

                                                        BN&M Draft dated 1/25/03

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into effective
as of JANUARY ____, 2003, by and between HI SERVICES DE MEXICO, S.A. DE C.V., a
Mexico corporation (together with its successors and assigns, the "Company"),
and MIGUEL ANGEL PACHUR SALGADO (the "Executive").

                                    RECITALS:

         WHEREAS, Tempus Corporation, S.A. de C.V., a Mexico corporation
("Tempus"), and HI Metals, S.A. de C.V. ("HI Metals") an affiliate of the
Company, entered into that certain Asset Purchase Agreement (herein so called)
of even date herewith pursuant to which, in pertinent part, HI Metals purchased
the tangible assets of Tempus; and

         WHEREAS, after the consummation of the transactions contemplated under
the Asset Purchase Agreement, the Company desires to employ the Executive, and
the Executive desires to be employed by the Company, on the terms and conditions
set forth herein;

         NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

                                   AGREEMENT:

         1. EMPLOYMENT PERIOD. The Company agrees to employ the Executive, and
the Executive agrees to be employed by the Company, in accordance with the terms
and conditions of this Agreement, for an unspecified term in such position as
the Board of Directors of the Company shall prescribe. The Executive agrees that
regardless of the term for which this Agreement is executed, he will perform his
services for the Company for at least three (3) years from the date of execution
of the same. Regardless of the date on which this Agreement is executed, the
same will be effective, as will the employment that the same establishes, as of
the date first set forth above.

         2. TERMS OF EMPLOYMENT.

                  (a) Position and Duties.

                           (i) During the term of this Agreement, the Executive
                  shall have such powers and duties as may from time to time be
                  assigned or delegated to him by the President of the Company,
                  or, in the absence of such assignment or delegation, will have
                  such powers and duties as are normally associated with and
                  inherent with such position. The Executive shall be bound to
                  carry out any other work related to his main obligation
                  provided that his salary is not modified, and shall also be in
                  charge of any other activities the performance of which is
                  required to take place outside the working center. The
                  Executive shall always abide by the instructions of his
                  superiors, the provisions of the Internal Working Regulations
                  of the Company, if applicable, as well as any other provisions
                  and orders at the discretion of the Company.

EMPLOYMENT AGREEMENT - PAGE 1

<PAGE>

                           (ii) During the term of this Agreement, excluding any
                  periods of vacation and sick leave to which the Executive is
                  entitled, the Executive agrees to devote all of his business
                  time to the business and affairs of the Company and, to the
                  extent necessary to discharge the responsibilities assigned to
                  the Executive hereunder, to use the Executive's best efforts
                  to perform faithfully, effectively and efficiently such
                  responsibilities. The Executive will use his best efforts to
                  promote the success of the Company's business, and will
                  cooperate fully with the management of the Company.

                  (b) Compensation.

                           (i) Base Salary. During the term of this Agreement,
                  the Executive shall receive, at such intervals and in
                  accordance with such Company policies as may be in effect from
                  time to time, an annual salary (pro rata for any partial year)
                  equal to _____________ Mexican pesos equal to U.S. $150,000.00
                  converted at__________ (the "Annual Base Salary"), payable in
                  equal installments each fifteen (15) days as required by the
                  Mexican Labor Law. The Annual Base Salary shall be subject to
                  appropriate increase, as determined in the sole and absolute
                  discretion of the Board of Directors of the Company in the
                  advancement of the best interests of the Company.

                           (ii) Salary Receipt. Every pay day, the Executive
                  shall execute a receipt prepared by the Company in the
                  Company's favor, covering all of the salary he earned up to
                  that date, on the understanding that the execution of the
                  receipt shall imply his agreement that the salary received
                  covers all of the work performed, and that he shall not claim
                  payment of any amount, as he must claim said payment to which
                  he believes he is entitled, precisely upon executing the
                  receipt. The Executive's execution of the receipt, shall
                  constitute a release for the Company for any salary or
                  benefits to which the Executive might be entitled for his
                  services rendered up to that date, even though the receipt
                  does not so state.

                           (iii) Annual Bonus. The Executive shall be eligible
                  to receive, for each calendar year commencing with the
                  calendar year ending December 31, 2003, an annual bonus up to
                  thirty percent (30%) of the Annual Base Salary, which annual
                  bonus shall be determined by the Board of Directors of the
                  Company from time to time within its sole and absolute
                  discretion (the "Annual Bonus"). Each Annual Bonus shall be
                  paid in cash in accordance with the Company's policies in
                  effect from time to time. The Annual Bonus will be reduced, at
                  the option of the

EMPLOYMENT AGREEMENT - PAGE 2

<PAGE>

                  Company, by amounts paid to Executive as a Christmas bonus and
                  by other bonuses, if any, required to be paid to Executive by
                  Federal Labor Law.

                           (iv) Stock Options. On or before June 30, 2003, Home
                  Interiors shall grant to the Executive non-qualified stock
                  options to purchase 40,000 shares of Common Stock of Home
                  Interiors & Gifts, Inc., a corporation formed under the laws
                  of the State of Texas, United States of America and an
                  affiliate of the Company ("HIG"), at an exercise price of U.S.
                  $19.42 per share. The stock options will be evidenced by a
                  separate Option Agreement and will be granted pursuant to, and
                  subject to the terms and conditions of HIG's 2002 Stock Option
                  Plan for Key Employees. The options will vest and become
                  exercisable in the manner and at the times provided in the
                  Option Agreement. HIG or the Company, as appropriate, shall
                  include the profit of such options on the date of exercise
                  (i.e. the difference between the exercise price and the fair
                  market value) in the income deemed to have been paid to the
                  Executive .

                  (c) Compulsory Days Off. The Executive shall enjoy the
         compulsory days off established in the Federal Labor Law, provided with
         full paid salary.

                  (d) Vacations. The Executive shall enjoy vacations for each
         year of services rendered, as provided in Article 76 of the Federal
         Labor Law, understanding that said vacation period will be granted
         after a full year of services rendered. The Company shall determine the
         period within the year in which the Executive shall be allowed to take
         his vacation, and the Executive shall ask for said period at least a
         month in advance.

                  (e) Christmas Bonus. As prescribed by Federal Labor Law, the
         Executive shall receive payment of 15 (fifteen) days of his Annual Base
         Salary as a Christmas bonus, which shall be paid by the Company before
         the twentieth of December of each year. For any calendar year in which
         Executive is not employed by the Company for the entire calendar year,
         the Christmas bonus shall be reduced for that year in proportion to the
         amount of time Executive was not employed by the Company.

                  (f) Weekly Days Off. The Executive shall enjoy two weekly days
         off with full paid salary; both parties agree that the day off shall be
         the Saturday and Sunday of each week; the salary for the days off is
         included in the Annual Base Salary. The Executive expressly authorizes
         the Company to change his weekly day off, depending on the Company's
         needs.

                  (g) Expenses. During the term of the Executive's employment,
         the Executive shall be entitled to receive prompt reimbursement for all
         reasonable expenses incurred by the Executive at the request of, or on
         behalf of, the Company in the performance of the Executive's duties
         pursuant to this Agreement, and in accordance with the Company's
         policies, practices and procedures. The Executive must file expense
         reports with respect to such expenses in accordance with the Company's
         policies.

EMPLOYMENT AGREEMENT - PAGE 3

<PAGE>

         3. TERMINATION OF EMPLOYMENT.

                  (a) Death or Disability. The Executive's employment shall
         terminate automatically upon the Executive's death during the term of
         this Agreement. If the disability (as defined in the Federal Labor Law
         and the Social Security Law) of the Executive has occurred during the
         term of this Agreement, the Company and the Executive shall comply with
         the provisions set forth in the Federal Labor Law and the Social
         Security Law applicable to such disability.

                  (b) Termination by the Company. Subject to the provisions set
         forth in the Federal Labor Law, the Company may terminate the
         Executive's employment during the term of this Agreement without Cause.
         Further, the Company may terminate the Executive's employment during
         the term of this Agreement for Cause immediately upon written notice
         (following expiration of the cure period, if any, described below) to
         Executive of Company's intention to do so. For purposes of this
         Agreement, the phrase "for Cause" means: (i) the Executive's breach of
         this Agreement or any other document, agreement or contract to which
         the Executive or his affiliates and the Company or its affiliates are a
         party, which is not remedied within fifteen (15) days after receipt of
         written notice from the Company specifying such breach; (ii) the
         Executive's failure to adhere to any material written policy of the
         Company, which is not remedied within fifteen (15) days after receipt
         of written notice from the Company specifying such failure; (iii) the
         Executive's appropriation (or attempted appropriation) of a material
         business opportunity of the Company, including, without limitation,
         attempting to secure or securing, any personal profit in connection
         with any transaction entered into on behalf of the Company; (iv) the
         Executive's commission of (or attempt to commit) an act of fraud,
         illegality, theft or willful misconduct toward the Company in the
         course of employment with the Company that relates to the Company's
         assets, activities, operations or other employees; (v) the Executive's
         conviction of, the indictment for (or its procedural equivalent), or
         the entering of a guilty plea or plea of no contest or deferred
         adjudication with respect to, a felony, the equivalent thereof, or any
         other crime with respect to which imprisonment is a possible
         punishment; (vi) the intentional failure of the Executive to carry out,
         or comply with, in any material respect any directive of the Board of
         Directors consistent with the terms of this Agreement, which is not
         remedied within fifteen (15) days after receipt of written notice from
         the Company specifying such failure; or (vii) any of the just causes
         set forth by Article 47 of the Federal Labor Law.

                  (c) Notice of Termination. Any termination by the Company (for
         Cause or otherwise) shall be communicated by Notice of Termination to
         the other party hereto given in accordance with Section 10(a).

                  (d) Date of Termination. "Date of Termination" means (i) the
         date of receipt of a Notice of Termination or any later date specified
         therein, and (ii) if the Executive's employment is terminated by reason
         of death or Disability, the date of death of the Executive or the date
         of disability, as the case may be.

EMPLOYMENT AGREEMENT - PAGE 4

<PAGE>

         4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

                  (a) Termination by the Company Other Than For Cause. If the
         Company terminates the employment of Executive without Cause (other
         than or in connection with death or Disability), the Company shall pay
         to the Executive: (i) the Executive's applicable Annual Base Salary
         through the Date of Termination to the extent not theretofore paid
         ("Accrued Obligations"); and (ii) monthly severance payments of
         _________________ [MEXICAN PESOS/U.S. DOLLARS], payable in accordance
         with the Company's regular pay schedule, from the date of termination
         of employment through the earlier to occur of the date twelve (12)
         months following the Date of Termination and January ___, 2006, instead
         of, and not in addition to, the legal severance established by the
         Federal Labor Law. Subject to the provisions set forth in the Federal
         Labor Law and the Social Security Law, an election by the Company not
         to extend the initial term beyond its initial expiration date shall not
         be considered a termination without Cause for purposes of this Section
         4(a), and Company shall have no obligation to pay severance pay to the
         Executive pursuant to this Section 4(a).

                  (b) Termination by the Company for Death or Disability. If the
         Executive's employment is terminated by reason of the Executive's death
         or Disability during the term of this Agreement, the Company shall pay
         the amounts established in the Federal Labor Law. Subject to the
         provisions set forth in the Federal Labor Law and the Social Security
         Law, the Company shall have no further payment obligations to the
         Executive or his legal representatives under this Agreement.

                  (c) Termination by the Company for Cause. Subject to the
         provisions set forth in the Federal Labor Law and the Social Security
         Law, if the Executive's employment shall be terminated by the Company
         for Cause during the term of this Agreement, the Company shall have no
         further payment obligations to the Executive other than for payment of
         Accrued Obligations.

         5. FULL AND FINAL RELEASE. The Company's obligations pursuant to
Section 4 above are subject to the Executive's execution of a full and final
release of the Company, in form and substance satisfactory to the Company.

         6. FULL SETTLEMENT, MITIGATION. Subject to the provisions set forth in
the Federal Labor Law and the Social Security Law, the amounts payable to the
Executive under Section 4(a)(ii) of this Agreement shall be reduced by the
amount of any compensation earned by the Executive during the period in which
severance is paid. The Company shall not be liable to the Executive for any
damages in addition to the amounts payable under Section 4 arising out of the
termination of the Executive's employment, for any reason, prior to the end of
the term of this Agreement.

         7. SURRENDER OF MATERIALS UPON TERMINATION. Upon termination of the
Executive's employment, for any reason, the Executive shall immediately return
to the Company all originals and/or copies, in whatever form, of any and all
Proprietary Information and any other property of the Company and its
affiliates, which are in the Executive's possession, custody or control, whether
or not provided by the Company.

EMPLOYMENT AGREEMENT - PAGE 5

<PAGE>

         8. SUCCESSORS.

                  (a) This Agreement is personal to the Executive and shall not
         be assignable by the Executive. This Agreement shall inure to the
         benefit of and be enforceable by the Executive's legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
         binding upon the Company and its successors and assigns.

                  (c) The Company may assign this Agreement to any successor in
         interest that agrees to perform this Agreement in the same manner and
         to the same extent that the Company would be required to perform if no
         such succession had taken place.

         9. EFFECT OF AGREEMENT ON OTHER BENEFITS. The existence of this
Agreement shall not prohibit or restrict the Executive's entitlement to full
participation in the employee benefit and other plans or programs in which
employees of the Company are eligible to participate, following adoption by the
Company of such employee benefit and other plans and programs.

         10. MISCELLANEOUS.

                  (a) Notice. All notices and other communications hereunder
         shall be in writing and shall be given by hand delivery to the other
         party or by registered or certified mail, return receipt requested,
         postage prepaid, addressed as follows:

                  If to the Executive:

                  Miguel Angel Pachur Salgado
                  via Salaria 226-1
                  Col. Fuentes del Valle
                  Garza Gacia,
                  N.L. 66220, Mexico

                  If to the Company:

                  HI Services de Mexico, S.A. de C.V.
                  c/o Home Interiors & Gifts, Inc.
                  1649 Frankford Road West
                  Carrollton, Texas 75007
                  Attn:  Michael D. Lohner

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressee.

                  (b) Severability. If any provision of this Agreement is held
         to be illegal, invalid or unenforceable under present or future laws
         effective during the term of this Agreement, such provision shall be
         fully severable; this Agreement shall be construed

EMPLOYMENT AGREEMENT - PAGE 6

<PAGE>

         and enforced as if such illegal, invalid or unenforceable provision had
         never comprised a portion of this Agreement; and the remaining
         provisions of this Agreement shall remain in full force and effect and
         shall not be affected by the illegal, invalid or unenforceable
         provision or by its severance from this Agreement. Furthermore, in lieu
         of such illegal, invalid or unenforceable provision there shall be
         added automatically as part of this Agreement a provision as similar in
         terms to such illegal, invalid or unenforceable provision as may be
         possible and be legal, valid and enforceable.

                  (c) Withholding. The Company may withhold from any amounts
         payable under this Agreement such Federal, state or local taxes as
         shall be required to be withheld pursuant to any applicable law or
         regulation.

                  (d) Obligations Contingent on Performance. The obligations of
         the Company hereunder, including its obligation to pay the compensation
         provided for herein, are contingent upon the Executive's performance of
         the Executive's obligations hereunder.

                  (e) Waiver. The Executive's or the Company's failure to insist
         upon strict compliance with any provision of this Agreement or the
         failure to assert any right the Executive or the Company may have
         hereunder shall not be deemed to be a waiver of such provision or right
         or any other provision or right of this Agreement.

                  (f) Territory. Pursuant to the Company's activities and
         considering the nature of his duty, the Executive is bound to perform
         his services anywhere within Mexican Territory or abroad, and shall do
         his job in any other position without prejudice of his wages.

                  (g) Confidential Executive. As a consequence of the
         confidential nature of the activities that the Executive will be
         performing and that consequently, law requirements are met, both
         parties agree that the Executive is, and for all legal purposes will be
         considered as a confidential employee.

                  (h) Training and Instruction. The Company shall train and
         instruct the Executive as provided in the Federal Labor Law pursuant to
         the training and instruction program agreed upon with and approved by
         the Labor authorities.

                  (i) Language. This Agreement is in the English and Spanish
         language, and all communications between the parties relative to this
         Agreement shall be conducted in the English language only. Any version
         of this Agreement in the English language, whether or not executed by
         the parties, is and shall be prepared solely for the benefit of the
         Executive and shall be considered a non-binding translation of the
         Agreement.

                  (j) Currency and Payment. Unless otherwise agreed, all amounts
         payable hereunder shall be calculated and payable in Mexican pesos.

                  (k) Applicable Law. Both parties agree that everything which
         is not expressly provided for hereunder shall be governed by the
         Federal Labor Law and that for every thing regarding the construction,
         execution and fulfillment of this Agreement they

EMPLOYMENT AGREEMENT - PAGE 7

<PAGE>

         expressly submit to the jurisdiction and competence of the Conciliation
         and Arbitration Board of the City of Mexico, D.F.

                  (l) General Information. For the purposes of Article 25 of the
         Federal Labor Law, the Company declares that it is a Mexican company,
         incorporated according to the Laws of the Republic of Mexico and is
         engaged in _________________________________, domiciled at
         ________________________________ and the Executive declares that he is
         a _________ national, __ years, domiciled at
         _________________________________ which he declares further is his
         address for service of process purposes under the Federal Labor Law,
         this Agreement and the relations hereunder. The Executive shall advise
         the Company of any change of address; if he fails to do so, he accepts
         that any process served at said address shall be valid.

                  (m) Entire Agreement; Amendments. The provisions of this
         Agreement constitute the complete understanding and agreement between
         the parties with respect to the subject matter hereof and supersede all
         prior agreements and understandings, oral or written, between or among
         the parties hereto. This Agreement may not be amended orally, but only
         by an agreement in writing signed by the parties hereto or their
         respective successors and legal representatives.

                  (n) Counterparts. This Agreement may be executed in one or
         more counterparts, each of which will be deemed to be an original copy
         of this Agreement and all of which, when taken together, will be deemed
         to constitute one and the same Agreement.

                  (o) Section Headings, Construction. The captions or headings
         of Sections in this Agreement are provided for convenience only and are
         not part of the provisions hereof and shall have no force or effect.
         Whenever the terms "hereof", "hereby", "herein", or words of similar
         import are used in this Agreement they shall be construed as referring
         to this Agreement in its entirety rather than to a particular section
         or provision, unless the context specifically indicates to the
         contrary. Any reference to a particular "Section" or "paragraph" shall
         be construed as referring to the indicated section or paragraph of this
         Agreement unless the context indicates to the contrary. The use of the
         term "including" herein shall be construed as meaning "including
         without limitation."

                             SIGNATURE PAGE FOLLOWS

EMPLOYMENT AGREEMENT - PAGE 8

<PAGE>

         EXECUTED to be effective as of January _____, 2003.

                                      EXECUTIVE:

                                      /s/ MIGUEL ANGEL PACHUR SALGADO
                                      -----------------------------------------
                                      Miguel Angel Pachur Salgado

                                      COMPANY:

                                      HI SERVICES DE MEXICO, S.A. DE C.V.,
                                      a Mexico corporation

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

EMPLOYMENT AGREEMENT - PAGE 9

<PAGE>
                                                                     EXHIBIT "B"

                            NONCOMPETITION AGREEMENT

         THIS NONCOMPETITION AGREEMENT (the "Agreement") is entered into
effective as of January _____, 2003, by and among HI SERVICES DE MEXICO, S.A. DE
C.V., a Mexico corporation ("HI Services"), HI METALS, S.A. DE C.V., a Mexico
corporation ("HI Metals"), HOME INTERIORS & GIFTS, INC., a Texas corporation
("HIG") (HI Metals, HI Services and HIG, together with their successors and
assigns, the "HIG Companies"), MIGUEL ANGEL PACHUR SALGADO ("Pachur"), OSCAR
GUADALUPE DE LEON ULLOA ("de Leon"), TEMPUS CORPORATION, S.A. DE C.V., a Mexico
corporation ("Tempus"), and BULCO, S.A. DE C.V., a Mexico corporation ("Bulco")
(Pachur, de Leon, Tempus and Bulco hereinafter defined as the "Pachur Parties").

                                    RECITALS:

         WHEREAS, HIG and Pachur and de Leon entered into that certain
Intangible Asset Purchase Agreement on or about the date hereof (the "Asset
Purchase Agreement") pursuant to which, in pertinent part, HIG purchased
substantially all of Bulco's intangible assets;

         WHEREAS, HI Services and Pachur entered into that certain Employment
Agreement (herein so called) on or about the date hereof; and

         WHEREAS, the HIG Companies and the Pachur Parties desire to enter into
this Agreement in connection with the execution and delivery of the Asset
Purchase Agreement and the Employment Agreement;

                                   AGREEMENT:

         NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

         1. EXISTENCE AND REPRESENTATION.

                  (a) Existence of Tempus Tempus is a Mexico corporation,
         constituted through Public Contract Number 3,254 - three thousand two
         hundred and fifty-four - dated on December 1, 1995, granted before the
         faith of Licenciado (Attorney) Jose Luis Trevino Manrique, Notary
         Public Number 97 with practice in the City of Monterrey, N.L.

                  (b) Representation of Tempus. Pachur justifies his
         representation of Tempus, with the Public Contract Number 11,826, dated
         on January 16, 2003, granted before the faith of Licenciado (attorney)
         Hector Villegas Olivares, Notary Public Number 122 with practice in the
         City of Monterrey, N.L.

                  (c) Existence of Bulco. Bulco is a Mexico corporation,
         constituted through Public Contract Number 4,195 - four thousand one
         hundred and ninety-five - dated on July 17, 1997, granted before the
         faith of Licenciado (Attorney) Jose Luis Trevino Manrique, Notary
         Public Number 97 with practice in the City of Monterrey, N.L.

                  (d) Representation of Bulco. Pachur justifies his
         representation of Bulco, with the Public Contract Number 11,827, dated
         on January 16, 2003, granted before the faith

<PAGE>

         of Licenciado (attorney) Hector Villegas Olivares, Notary Public Number
         122 with practice in the City of Monterrey, N.L..

                  (e) Existence of HI Metals. HI Metals is a Mexico corporation,
         constituted through Public Contract Number 32,804 - thirty-two thousand
         eight hundred and four - dated on December 16, 2002, granted before the
         faith of Licenciado (Attorney) Jose Maria Morera Gonzalez, Notary
         Public Number 102 for the Federal District with practice in the City of
         Monterrey, N.L.

                  (f) Representation of HI Metals. Kenneth J. Cichocki justifies
         his representation of HI Metals, with the Public Contract Number
         33,069, dated December 23, 2002, granted before the faith of Licenciado
         (attorney) Jose Maria Morera Gonzales, Notary Public Number 102 with
         practice in the City of Monterrey, N.L.

                  (g) Existence of HI Services. HI Services is a Mexico
         corporation, constituted through Public Contract Number 33,076 -
         thirty-three thousand and seventy-six - dated on January 24, 2003,
         granted before the faith of Licenciado (Attorney) Jose Maria Morera
         Gonzalez, Notary Public Number 102 for the Federal District with
         practice in the City of Monterrey, N.L.

                  (h) Representation of HI Services. Kenneth J. Cichocki
         justifies his representation of HI Services, with the Public Contract
         Number 33,100, dated January 28, 2003, granted before the faith of
         Licenciado (attorney) Jose Maria Morera Gonzales, Notary Public Number
         102 with practice in the City of Monterrey, N.L..

                  (i) Existence of HIG. HIG is a Texas corporation, formed with
         the Secretary of State of Texas on December 3, 1957 and possessing
         Charter No. 0014349000.

                  (j) Representation of HIG. HIG is represented by Kenneth J.
         Cichocki, Senior Vice President of HIG.

         2. CHANGE OF NAME.

                  (a) Business Name Waiver and Change. Pachur and de Leon,
         acting as the sole stockholders of Tempus and Bulco, commit themselves
         to change the corporate names of Tempus and Bulco within ninety (90)
         days following the date of this Agreement, and waive in this Agreement
         the rights of usage and seniority of the names "Tempus Corporation" and
         "Bulco", in order to allow the HIG Companies to elect to use such names
         as their property with the good will and seniority corresponding to
         these businesses. Likewise, the Pachur Parties agree not to publicly
         use the names "Tempus Corporation" and "Bulco" following the Closing of
         the Asset Purchase Agreement.

                  (b) Corporate Purposes Change. Pachur and de Leon as the sole
         stockholders of Tempus and Bulco commit themselves to change the
         corporate purposes of Tempus and Bulco within a term of ninety (90)
         days counted following the Closing of the Asset Purchase Agreement, to
         a purpose not inconsistent with this Agreement.

         3. COOPERATION. The Pachur Parties, jointly and severally, agree as
follows:

NONCOMPETITION AGREEMENT - PAGE 2

<PAGE>

                  (a) Suppliers. The Pachur Parties agree to recommend to all
         suppliers, whether verbally or in writing, that following the Closing
         of the Asset Purchase Agreement, all such suppliers do business with HI
         Metals. The names of Tempus' and Bulco's suppliers are attached hereto
         as Exhibit "A".

                  (b) Employees. The Pachur Parties shall use best efforts to
         maintain good employee morale on the parts of the persons who until the
         Closing of the Asset Purchase Agreement were employees of Tempus.

         4. RESTRICTIVE COVENANTS.

         As a material inducement to the HIG Companies to enter into and perform
their obligations under this Agreement, the Asset Purchase Agreement and the
Employment Agreement, the Pachur Parties covenant and agree, as follows:

                  (a) For a period commencing on the date hereof and ending two
         (2) years following the date that Pachur's employment with HI Services
         or an affiliate of HI Services terminates (the "Restricted Period");
         provided, however, that the Restricted Period shall not be less than a
         period of five (5) years following the date hereof, the Pachur Parties
         shall not, directly or indirectly, alone or in conjunction with any
         other corporation, firm, partnership, person, venture or other entity
         (except as a holder of an aggregate of not more than five percent (5%)
         of the outstanding stock of a corporation or partnership whose stock or
         partnership interests are listed on a national securities exchange or
         traded over the counter on NASDAQ) own, manage, operate, join, control,
         work for, permit the use of their names by, consult with or engage in
         any activity anywhere within the United States of America or Mexico
         (the "Territory"), that is in any way competitive with any aspect of
         the business, as presently conducted or as conducted by the HIG
         Companies during the term of this Agreement.

                  (b) The covenant contained in Section 4(a) above shall be
         deemed to be a series of separate and severable covenants, one for each
         state located in the Territory. Except for geographic coverage, each
         such separate covenant shall be deemed identical in terms with the
         covenant contained in Section 4(a). If, in any judicial proceeding, a
         court should refuse to enforce all of the separate covenants deemed
         included in Section 4(a) because taken together they cover too
         extensive a geographic area, then it is intended that those of such
         covenants which, if eliminated, would permit the remaining separate
         covenants to be enforced in such proceedings shall, for the purpose of
         such proceeding, be deemed eliminated from the provisions hereof.

                  (c) The covenant contained in Section 4(a) above shall be
         deemed to be a series of separate and severable covenants, one for each
         successive month during the terms of said covenants. If, in any
         judicial proceeding, a court should refuse to enforce all of the
         separate covenants because taken together they cover too long a period
         of time, then the last of such covenants in time which, if eliminated,
         would permit the remaining separate covenants to be enforced in such
         proceeding shall, for the purpose of such proceeding, be deemed
         eliminated from the provisions hereof.

NONCOMPETITION AGREEMENT - PAGE 3

<PAGE>

                  (d) Any and all Proprietary Information (hereinafter defined)
         which the Pachur Parties heretofore obtained or may hereafter obtain
         with respect to the conduct and/or details of any portion of the
         business conducted by the HIG Companies or any of their affiliates, or
         their respective successors, shall be held inviolate and shall not be
         revealed to any competitor of the HIG Companies or any other person,
         partnership, firm, corporation or entity. The Pachur Parties shall not
         make any use of such Proprietary Information, except for and on behalf
         of the HIG Companies. "Proprietary Information" shall mean knowledge
         and information, relating to any portion of the business of the HIG
         Companies or their affiliates whether written or oral, which: (i) is
         not generally available to the public; (ii) gives or may give any
         competitive advantage to the HIG Companies with respect to the
         operation of the business or their successors; or, (iii) if disclosed,
         could give any advantage to a competitor of the business or their
         successors or could otherwise be deleterious to any portion of the
         business.

                  (e) During the Restricted Period, the Pachur Parties will not,
         directly or indirectly, request, induce, influence or solicit any
         employee, customer, or supplier of the HIG Companies or any affiliate
         of the HIG Companies known by the Pachur Parties, as the case may be
         (through the exercise of due diligence), to cease being an employee,
         customer or supplier of the HIG Companies or any affiliate of the HIG
         Companies, or to terminate or alter his or her employment or business
         relationship with the HIG Companies.

                  (f) The parties recognize that the goodwill and going concern
         value of the business being purchased and acquired by the HIG Companies
         are very closely related to the special, unique and extraordinary
         knowledge and skill of the Pachur Parties and that the consummation by
         the HIG Companies of this Agreement will be in reliance upon the
         unconditional assurance of the Pachur Parties that they will fully
         comply with the terms of this Agreement, particularly, but not limited
         to, such terms as they relate to covenants and undertakings not to
         engage in competition or to divulge information. Further, the period of
         protection of the HIG Companies against the competition of the Pachur
         Parties and the geographical area within which such protection is
         essential has been agreed by the parties to be reasonable and
         necessary. Therefore, if the Pachur Parties shall at any time breach or
         in any manner violate any such covenant, then the HIG Companies in
         addition to, but not in substitution for, any and all other relief to
         which the HIG Companies may be entitled either at law or in equity,
         shall be entitled to equitable relief against the Pachur Parties by way
         of injunction to restrain the Pachur Parties from such breach and to
         compel compliance by the Pachur Parties with their obligations
         hereunder. The Pachur Parties do hereby waive any proof: (i) that such
         breach will cause irreparable injury to the HIG Companies, or, (ii)
         that there is no adequate remedy at law.

                  (g) In the event that a court of competent jurisdiction shall
         refuse to enforce the provisions of the restrictive covenant set forth
         in Section 4(a) of this Agreement because it deems the length of time
         or the geographical area to be excessive or unreasonable, then the time
         period or the geographical area, or both, shall be deemed to be amended
         to conform to such time period and geographical area as such court
         shall determine to be reasonable and not excessive.

NONCOMPETITION AGREEMENT - PAGE 4

<PAGE>

                  (h) The period of time applicable to any covenant in Section 4
         will be extended by the duration of any violation by the Pachur Parties
         of such covenant.

                  (i) The Pachur Parties will, while the covenant under Section
         4 is in effect, give written notice to the HIG Companies, within ten
         (10) days after accepting any other employment or consulting
         arrangement, of the identity of the Pachur Parties' new employer or
         contractor and all of the material duties and services to be provided
         by the Pachur Parties in such employment or retention. The HIG
         Companies may notify such new employer that the Pachur Parties are
         bound by this Agreement and, at the HIG Companies' election, furnish
         such new employer with a copy of this Agreement or relevant portion
         thereof.

                  (j) The covenants by the Pachur Parties in this Section 4 are
         essential elements of this Agreement, and without the Pachur Parties'
         agreement to comply with such covenants, the HIG Companies would not
         have entered into this Agreement or employed or continued the
         employment of the Pachur Parties. The HIG Companies and the Pachur
         Parties have independently consulted their respective counsel and have
         been advised in all respects concerning the reasonableness and
         propriety of such covenants, with specific regard to the nature of the
         business conducted by the HIG Companies.

         5. SUCCESSORS.

                  (a) This Agreement is personal to the Pachur Parties and shall
         not be assignable by the Pachur Parties. This Agreement shall inure to
         the benefit of and be enforceable by the Pachur Parties' legal
         representatives.

                  (b) This Agreement shall inure to the benefit of and be
         binding upon the HIG Companies and their successors and assigns.

                  (c) The HIG Companies may assign this Agreement to any
         successor in interest that agrees to perform this Agreement in the same
         manner and to the same extent that the HIG Companies would be required
         to perform if no such succession had taken place.

         6. MISCELLANEOUS.

                  (a) Notice. All notices and other communications hereunder
         shall be in writing and shall be given by hand delivery to the other
         party or by registered or certified mail, return receipt requested,
         postage prepaid, addressed as follows:

NONCOMPETITION AGREEMENT - PAGE 5

<PAGE>

                  If to the Pachur Parties:

                  Miguel Angel Pachur Salgado
                  Oscar Guadalupe de Leon Ulloa
                  TEMPUS CORPORATION, S.A. DE C.V.,
                  BULCO, S.A. DE C.V.,
                  Lerdo de Tejada 749
                  Predio el Lechugal
                  Santa Catarina, N.L. 66350, Mexico

                  If to the HIG Companies:

                  HI Metals de Mexico, S.A. de C.V.
                  c/o Home Interiors & Gifts, Inc.
                  1649 Frankford Road West
                  Carrollton, Texas 75007
                  Attn:  Michael D. Lohner

                  With Mandatory Copy to:

                  Chair of Board of Directors
                  Home Interiors & Gifts, Inc.
                  1649 Frankford Road West
                  Carrollton, Texas 75007

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressee.

                  (b) Severability. If any provision of this Agreement is held
         to be illegal, invalid or unenforceable under present or future laws
         effective during the term of this Agreement, such provision shall be
         fully severable; this Agreement shall be construed and enforced as if
         such illegal, invalid or unenforceable provision had never comprised a
         portion of this Agreement; and the remaining provisions of this
         Agreement shall remain in full force and effect and shall not be
         affected by the illegal, invalid or unenforceable provision or by its
         severance from this Agreement. Furthermore, in lieu of such illegal,
         invalid or unenforceable provision there shall be added automatically
         as part of this Agreement a provision as similar in terms to such
         illegal, invalid or unenforceable provision as may be possible and be
         legal, valid and enforceable.

                  (c) Waiver. The Pachur Parties' or the HIG Companies' failure
         to insist upon strict compliance with any provision of this Agreement
         or the failure to assert any right the Pachur Parties or the HIG
         Companies may have hereunder shall not be deemed to be a waiver of such
         provision or right or any other provision or right of this Agreement.

                  (d) Language. This Agreement is in the English and Spanish
         language, and all communications between the parties relative to this
         Agreement shall be conducted in

NONCOMPETITION AGREEMENT - PAGE 6

<PAGE>

         the English language only. Any version of this Agreement in the Spanish
         language, whether or not executed by the parties, is and shall be
         prepared solely for the benefit of the Pachur Parties and shall be
         considered a non-binding translation of the Agreement.

                  (e) Governing Law; Venue. This Agreement shall be construed,
         interpreted and enforced in accordance with the laws of the State of
         Texas, without giving effect to the choice of law provisions thereof.
         Any judicial proceedings brought by or against any party on any dispute
         arising out of this Agreement or any matter related thereto shall be
         brought in the state or federal courts of Dallas County, Texas, and no
         other court shall have jurisdiction over such a dispute. By execution
         and delivery of this Agreement, each of the parties accepts for itself
         the exclusive jurisdiction and venue of the aforesaid courts as trial
         courts, and irrevocably agrees to be bound by any judgment rendered
         thereby in connection with this Agreement after exhaustion of all
         appeals taken (or by the appropriate appellate court if such appellate
         court renders judgment).

                  (f) Entire Agreement; Amendments. The provisions of this
         Agreement constitute the complete understanding and agreement between
         the parties with respect to the subject matter hereof and supersede all
         prior agreements and understandings, oral or written, between or among
         the parties hereto. This Agreement may not be amended orally, but only
         by an agreement in writing signed by the parties hereto or their
         respective successors and legal representatives.

                  (g) Counterparts. This Agreement may be executed in one or
         more counterparts, each of which will be deemed to be an original copy
         of this Agreement and all of which, when taken together, will be deemed
         to constitute one and the same Agreement.

                  (h) Section Headings, Construction. The captions or headings
         of Sections in this Agreement are provided for convenience only and are
         not part of the provisions hereof and shall have no force or effect.
         Whenever the terms "hereof", "hereby", "herein", or words of similar
         import are used in this Agreement they shall be construed as referring
         to this Agreement in its entirety rather than to a particular section
         or provision, unless the context specifically indicates to the
         contrary. Any reference to a particular "Section" or "paragraph" shall
         be construed as referring to the indicated section or paragraph of this
         Agreement unless the context indicates to the contrary. The use of the
         term "including" herein shall be construed as meaning "including
         without limitation."

                  (i) Confidentiality. The parties hereto agree to keep this
         Agreement and the subject matter hereof confidential and, except as
         required in connection with the enforcement of the terms and provisions
         hereof or as required by law, not to disclose same to any third parties
         without the prior written consent of the other parties hereto.

                            (SIGNATURE PAGE FOLLOWS)

NONCOMPETITION AGREEMENT - PAGE 7

<PAGE>

         EXECUTED to be effective as of the date first set forth above.

THE PACHUR PARTIES:              PACHUR:

                                 /s/ MIGUEL ANGEL PACHUR SALGADO
                                 -----------------------------------------------
                                 Miguel Angel Pachur Salgado

                                 DE LEON:

                                 /s/ MIGUEL ANGEL PACHUR SALGADO
                                 -----------------------------------------------
                                 Oscar Guadalupe de Leon Ulloa
                                 By: Miguel Angel Pachur Salgado
                                 His: Legal Representative by Power of Attorney

                                 TEMPUS:

                                 TEMPUS CORPORATION, S.A. DE C.V.,
                                 a Mexico corporation

                                 By: /s/ MIGUEL ANGEL PACHUR SALGADO
                                     -------------------------------------------
                                     Miguel Angel Pachur Salgado,
                                     Legal Representative

                                 BULCO:

                                 BULCO, S.A. DE C.V.,
                                 a Mexico corporation

                                 By: /s/ MIGUEL ANGEL PACHUR SALGADO
                                     -------------------------------------------
                                     Miguel Angel Pachur Salgado,
                                     Legal Representative

NONCOMPETITION AGREEMENT - PAGE 8

<PAGE>

THE COMPANIES:                   HI SERVICES:

                                 HI SERVICES DE MEXICO, S.A. DE C.V.,
                                 a Mexico corporation

                                 By:
                                     -------------------------------------------
                                     Kenneth J. Cichocki, Legal Representative

                                 HI METALS :

                                 HI METALS DE MEXICO, S.A. DE C.V.,
                                 a Mexico corporation

                                 By:
                                     -------------------------------------------
                                     Kenneth J. Cichocki, Legal Representative

                                 HIG:

                                 HOME INTERIORS & GIFTS, INC.,
                                 a Texas corporation

                                 By:
                                     -------------------------------------------
                                     Kenneth J. Cichocki, Senior Vice President
                                     of Finance and Chief Financial Officer

NONCOMPETITION AGREEMENT - PAGE 9

<PAGE>

                                   EXHIBIT "A"

                      List of Tempus' and Bulco's Suppliers

EXHIBIT "A" TO NONCOMPETITION AGREEMENT - PAGE SOLO

<PAGE>
                                                                    EXHIBIT C

                   [GONZALEZ, HERNAND                     ]
                           ASOCIADOS, LETTERHEAD
                                                                January 30, 2003

HI Metals, S.A. de C.V.
c/o Home Interiors & Gifts, Inc.
1649 Frankford Road West
Carrollton, Texas 75007

Dear Sirs:

         RE:      PURCHASE BY HI METALS, S.A. DE C.V. ("BUYER") OF THE ASSETS
                  OF TEMPUS CORPORATION. S.A. DE C.V. AND BULCO, S.A. DE C.V.
                  ("SELLERS")

We have acted as counsel for the Sellers in connection with the sale of all the
Sellers's assets to Buyer, pursuant to an Asset Purchase Agreement made as of
January 25, 2003, (the "Asset Purchase Agreement") between Buyer and the Sellers
and Messrs. Miguel Angel Pachur Salgado and Oscar Guadalupe De Leon Ulloa (the
Shareholders"), and an Intangible Asset Purchase Agreement made as of January
25, 2003, (the "Intangible Asset Purchase Agreement") between Buyer and the
Shareholders. The Asset Purchase Agreement and the Intangible Asset Purchase
Agreement are jointly referred as the "Asset Purchase Agreements" Terms used in
this opinion that are defined in the Asset Purchase Agreement and are not
otherwise defined herein will have the same meaning herein as in the Asset
Purchase Agreements.

MATERIALS REVIEWED

         We have examined originals or copies, certified or otherwise identified
         to our satisfaction, of:

         (a)      the Asset Purchase Agreements;

         (b)      the Non-Competition Agreement between Sellers and Buyer made
                  as of January 29, 2003, (the "Non-Competition Agreement"); and

         (c)      the Employment Agreement made as of January 29, 2003, (the
                  "Employment Agreement").

         The Asset Purchase Agreements, the Non-Competition Agreement and the
Employment Agreement are hereinafter collectively referred to as the
"Agreements".

ASSUMPTIONS AND FACT RELIANCE

         We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such public and corporate records, certificates,
instruments and other documents and have considered such questions of law as we
have deemed relevant and necessary as a basis for the opinions hereinafter
expressed. In such examination we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to original documents of all documents submitted to us as
copies, whether facsimile, photostatic, certified or otherwise.

         We have also assumed that each of the Agreements have been duly
authorized, executed and delivered by, and constitute a valid and legally
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms.

<PAGE>

OPINIONS

         Based and relying upon the foregoing, and subject to the qualifications
hereinafter expressed, we are of the opinion that:

         1.       The Sellers are corporations incorporated and subsisting under
                  the laws of the United Mexican States ("Mexico"), and the
                  Shareholders are citizens of Mexico, of age, and in full
                  capacity to execute legal documents.

         2.       The articles of the Sellers contain no restrictions on the
                  powers that the Seller may exercise on the transfer of assets.

         3.       The execution, delivery and performance of each of the
                  Agreements have been duly authorized by all necessary
                  corporate action on the part of the Sellers.

         4.       Each of the Asset Purchase Agreements, the Non-Competition
                  Agreement and the Employment Agreement constitute a valid and
                  legally binding obligation of the Sellers and the
                  Shareholders, enforceable against the Sellers and the
                  Shareholders in accordance with its terms.

         5.       The execution and delivery by the Sellers and the Shareholders
                  of each of the Agreements and the performance by the Sellers
                  and the Shareholders of their respective obligations
                  thereunder will not:

                  (a)      contravene or results in a breach of or constitute a
                           default under the articles or by-laws of the Sellers;
                           or

                  (b)      contravene any law or regulation of the United
                           Mexican States applicable therein.

                  6. All necessary consents, approvals, orders and
                  authorizations of, and registrations, declarations or filings
                  with, any governmental authority in Mexico required for the
                  execution and delivery by the Sellers and the Shareholders of
                  the Agreements and the performance by the Sellers and the
                  Shareholders of their respective obligations thereunder have
                  been obtained.

QUALIFICATIONS

         The opinions expressed above are subject to the following
qualifications:

         (a)      this opinion is limited to the laws of Mexico applicable
                  therein;

         (b)      the enforceability of each of the Agreements is subject to
                  applicable bankruptcy, insolvency, reorganization and other
                  laws of general application limiting the enforcement of
                  creditors' rights generally; and

         (c)      the validity and enforceability of provisions inserted in any
                  agreement or instrument that purport to sever from the
                  agreement or instrument any provision that is prohibited or
                  unenforceable under applicable law without affecting the
                  enforceability or validity of the remainder of the agreement
                  or instrument would be determined only in the discretion of
                  the court.

<PAGE>

         This opinion is furnished solely for the benefit of the addressees in
connection with the purchase of the Assets and may not be circulated to, or
relied upon by, any other person or used for any other purpose.

                                      Yours very truly,

                                      /s/ LIC. CARLOS E. ARIAS LOZANO
                                      LIC. CARLOS E. ARIAS LOZANO

Bravo 717 Sur Col. Ma. Luisa Monterrey, N.L. C.P. 64040 Tels/Fax.8344-45-29<PAGE>
                                                                   EXHIBIT 10.35

                            ASSET PURCHASE AGREEMENT

                          DATED AS OF JANUARY 24, 2003

                                      AMONG

                  CERAMICA Y VIDRIO DE NUEVO LEON, SA. DE C.V.

                        MAQUILADORA PRODUR, S.A. DE C.V.,

                  INDUSTRIAS TROMEX CORPORATION, S.A. DE C.V.,

                                       AND

                            HI CERAMICS, S.A. DE C.V.

<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                           Page No.
                                                                                                           --------
<S>                                                                                                        <C>
ASSET PURCHASE AGREEMENT..........................................................................................1

ARTICLE 1 PURCHASE OF ASSETS......................................................................................1

   SECTION 1.1       PURCHASE AND SALE OF ASSETS..................................................................1
   SECTION 1.2       INITIAL PAYMENT AT SECOND CLOSING............................................................2
   SECTION 1.3       DEFERRED PAYMENT FOLLOWING SECOND CLOSING....................................................2
   SECTION 1.4       LIABILITIES..................................................................................3
   SECTION 1.5       HOLD-BACK OF XANADU FUNDS....................................................................3

ARTICLE 2 CLOSINGS................................................................................................3

   SECTION 2.1       CLOSINGS.....................................................................................3
   SECTION 2.2       TRANSFER OF ASSETS TO SELLER AT THE FIRST CLOSING............................................4
   SECTION 2.3       TRANSFER OF ASSETS TO BUYER AT THE SECOND CLOSING; PAYMENT...................................5
   SECTION 2.4       VALUE ADDED TAX..............................................................................6

ARTICLE 3 REPRESENTATIONS AND WARRANTIES..........................................................................6

   SECTION 3.1       REPRESENTATIONS AND WARRANTIES OF ORIGINAL OWNERS............................................6
      (a)   Organization, Standing and Corporate Power of Produr..................................................6
      (b)   Organization, Standing and Corporate Power of Tromex..................................................6
      (c)   Authority; Noncontravention...........................................................................7
      (d)   Financial Statements..................................................................................7
      (e)   Undisclosed Liabilities...............................................................................7
      (f)   Litigation............................................................................................8
      (g)   Taxes.................................................................................................8
      (h)   Brokers...............................................................................................8
      (i)   Compliance with Laws; Environmental Laws..............................................................8
      (j)   Title to Properties; Liens............................................................................8
      (k)   Owned and Leased Real Property........................................................................9
      (l)   Employee Relations....................................................................................9
      (m)   Insurance............................................................................................10
      (n)   Customers and Suppliers..............................................................................10
      (o)   Leased Personal Property.............................................................................11
      (p)   Acquired Assets are Freely Transferable..............................................................11
      (q)   Transactions With Related Parties....................................................................11
      (r)   Material Agreements..................................................................................11
      (s)   No Additional Representations........................................................................12
   SECTION 3.2       REPRESENTATIONS AND WARRANTIES OF SELLER....................................................12
      (a)   Organization, Standing and Corporate Power of Seller.................................................13
      (b)   Authority; Noncontravention..........................................................................13
      (c)   Undisclosed Liabilities..............................................................................13
      (d)   Absence of Certain Changes or Events with respect to Seller..........................................13
      (e)   Litigation...........................................................................................14
      (f)   Taxes................................................................................................14
      (g)   Brokers..............................................................................................14
      (h)   Compliance with Laws; Environmental Laws.............................................................14
      (i)   Title to Properties; Liens...........................................................................14
      (j)   Owned and Leased Real Property.......................................................................15
      (k)   Accounts Receivable..................................................................................16
</Table>

                                       -i-
<PAGE>

<Table>
<S>                                                                                                        <C>
      (l)   Employees............................................................................................16
      (m)   Insurance............................................................................................16
      (n)   Leased Personal Property.............................................................................16
      (o)   Transactions With Related Parties....................................................................16
      (p)   Material Agreements..................................................................................16
      (q)   No Additional Representations........................................................................18
   SECTION 3.3       REPRESENTATIONS AND WARRANTIES OF BUYER.....................................................18
      (a)   Organization, Standing and Corporate Power of Buyer..................................................18
      (b)   Authority; Noncontravention..........................................................................18
      (c)   Litigation...........................................................................................19
      (d)   Brokers..............................................................................................19
      (e)   Disclosure...........................................................................................19
      (f)   No Additional Representations........................................................................19

ARTICLE 4 COVENANTS RELATING TO CONDUCT OF BUSINESS..............................................................19

   SECTION 4.1       CONDUCT OF BUSINESS BY SELLER...............................................................19
   SECTION 4.2       OTHER ACTIONS...............................................................................20

ARTICLE 5 ADDITIONAL AGREEMENTS..................................................................................20

   SECTION 5.1       ACCESS TO INFORMATION; CONFIDENTIALITY......................................................20
   SECTION 5.2       REASONABLE EFFORTS; NOTIFICATION............................................................21
   SECTION 5.3       FEES AND EXPENSES; TAXES....................................................................21
   SECTION 5.4       PUBLIC ANNOUNCEMENTS........................................................................22
   SECTION 5.5       BANK ACCOUNTS...............................................................................22
   SECTION 5.6       CREDIT LINE.................................................................................22
   SECTION 5.7       PAYMENT OF INDEBTEDNESS.....................................................................22
   SECTION 5.8       EMPLOYEE MATTERS............................................................................23

ARTICLE 6 CONDITIONS PRECEDENT TO FIRST CLOSING..................................................................23

   SECTION 6.1       CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE FIRST CLOSING...........................23
      (a)   Authorizations, Consents, and Approvals..............................................................24
      (b)   No Injunctions or Restraints.........................................................................24
   SECTION 6.2       CONDITIONS TO OBLIGATIONS OF SELLER.........................................................24
      (a)   Representations and Warranties.......................................................................24
      (b)   Performance of Obligations of Original Owners........................................................24
      (c)   Performance of Obligations of Buyer..................................................................24
      (d)   Directors Authorizations.............................................................................24
      (e)   No Suit or Judgment..................................................................................24
      (f)   Delivery of Notarial Instruments and Invoices........................................................24
   SECTION 6.3       CONDITIONS TO OBLIGATIONS OF BUYER..........................................................25
      (a)   Representations and Warranties.......................................................................25
      (b)   Performance of Obligations of Original Owners and Seller.............................................25
      (c)   Directors Authorizations.............................................................................25
      (d)   No Suit or Judgment..................................................................................25
      (e)   Opinion of Counsel...................................................................................25
      (f)   Board and Lender Authorizations......................................................................25
      (g)   Mortgagee's Policy of Title Insurance................................................................25
   SECTION 6.4       CONDITIONS TO OBLIGATIONS OF ORIGINAL OWNERS................................................25
      (a)   Representations and Warranties.......................................................................26
      (b)   Performance of Obligations of Seller and Buyer.......................................................26
   SECTION 6.5       FRUSTRATION OF CLOSING CONDITIONS...........................................................26
</Table>

                                      -ii-
<PAGE>

<Table>
<S>                                                                                                        <C>
ARTICLE 7 CONDITIONS PRECEDENT TO SECOND CLOSING.................................................................26

   SECTION 7.1       CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE SECOND CLOSING..........................26
      (a)   Authorizations, Consents, and Approvals..............................................................26
      (b)   No Injunctions or Restraints.........................................................................26
   SECTION 7.2       CONDITIONS TO OBLIGATIONS OF BUYER..........................................................26
      (a)   Representations and Warranties.......................................................................26
      (b)   Performance of Obligations of Seller.................................................................27
      (c)   Board Authorizations.................................................................................27
      (d)   No Suit or Judgment..................................................................................27
      (e)   Opinion of Counsel...................................................................................27
      (f)   Material Adverse Change..............................................................................27
      (g)   Board and Lender Authorizations......................................................................27
      (h)   Delivery of Notarial Instruments and Invoices........................................................27
      (i)   Payment and Compromise of Indebtedness...............................................................27
      (j)   Cancellation of Lien Securing the Xanadu Debt........................................................27
      (k)   Owner's Policy of Title Insurance....................................................................28
   SECTION 7.3       CONDITIONS TO OBLIGATIONS OF SELLER.........................................................28
      (a)   Representations and Warranties.......................................................................28
      (b)   Performance of Obligations of Buyer..................................................................28
   SECTION 7.4       FRUSTRATION OF CLOSING CONDITIONS...........................................................28

ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER......................................................................28

   SECTION 8.1       TERMINATION.................................................................................28
   SECTION 8.2       EFFECT OF TERMINATION.......................................................................29
   SECTION 8.3       AMENDMENT...................................................................................29
   SECTION 8.4       EXTENSION: WAIVER...........................................................................29
   SECTION 8.5       PROCEDURE FOR TERMINATION...................................................................29

ARTICLE 9 INDEMNIFICATION........................................................................................29

   SECTION 9.1       INDEMNIFICATION.............................................................................29
      (a)   By Seller and the Original Owners....................................................................29
      (b)   By Buyer.............................................................................................30
      (c)   Direct Liability.....................................................................................30
      (d)   Third Party Claim....................................................................................30
      (e)   Limitation of Indemnity..............................................................................31
   SECTION 9.2       RIGHT TO SET-OFF............................................................................32
   SECTION 9.3       LIMITATIONS ON LIABILITY IN CONNECTION WITH FAILURE TO MAKE ADVANCES........................32

ARTICLE 10 GENERAL PROVISIONS....................................................................................32

   SECTION 10.1         SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS....................................32
   SECTION 10.2         NOTICES..................................................................................32
   SECTION 10.3         DEFINITIONS..............................................................................34
   SECTION 10.4         INTERPRETATION; GOVERNING LANGUAGE.......................................................36
   SECTION 10.5         COUNTERPARTS; FACSIMILES.................................................................36
   SECTION 10.6         ENTIRE AGREEMENT: NO THIRD PARTY BENEFICIARIES...........................................36
   SECTION 10.7         GOVERNING LAW............................................................................36
   SECTION 10.8         ASSIGNMENT...............................................................................37
   SECTION 10.9         ENFORCEMENT..............................................................................37
   SECTION 10.10        EXHIBITS AND SCHEDULES...................................................................37
   SECTION 10.11        ARBITRATION..............................................................................37
   SECTION 10.12        CURRENCY AND PAYMENT.....................................................................38
</Table>

                                      -iii-
<PAGE>

EXHIBITS

Exhibit A - Xanadu Release
Exhibits B-1 and B-2 - No-Lien Certificates
Exhibit C - Property Tax Invoices

SCHEDULES

Schedule 1.1(a) - Acquired Assets
Schedule 1.1(b) - Excluded Assets
Schedule 1.4 - Assumed Liabilities
Schedule 2.2(iii) - Property Requiring Import Permit
Schedule 3.1(d) - Financial Statements
Schedule 3.1(f) - Litigation
Schedule 3.1(g) - Taxes
Schedule 3.1(h) - Brokers of Original Owners
Schedule 3.1(k) - Real Property
Schedule 3.1(l) - Employee Relations
Schedule 3.1(m) - Insurance
Schedule 3.1(n) - Customers and Suppliers
Schedule 3.1(o) - Leases
Schedule 3.1(p) - Freely Transferable Assets
Schedule 3.1(r) - Material Agreements
Schedule 3.2(c) - Undisclosed Liabilities
Schedule 3.2(g) - Brokers of Seller
Schedule 3.2(j) - Real Property
Schedule 3.2(m) - Insurance
Schedule 3.2(n) - Leases
Schedule 3.2(p) - Material Agreements
Schedule 3.3(d) - Brokers of Buyer
Schedule 5.3 - Expenses
Schedule 5.7 - Payment of Indebtedness

                                      -iv-
<PAGE>

                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of January
24, 2003, among CERAMICA Y VIDRIO DE NUEVO LEON, S.A. DE C.V., a Mexico
corporation ("Seller"), MAQUILADORA PRODUR, S.A. DE C.V., a Mexico corporation
("Produr"), INDUSTRIAS TROMEX CORPORATION, S.A. DE C.V., a Mexico corporation
("Tromex"), and H I CERAMICS, S.A. DE C.V., a Mexico corporation ("Buyer").
Produr and Tromex are sometimes referred to as the "Original Owners." Other
capitalized terms used in this Agreement are defined or cross-referenced to the
applicable definition in Section 10.3 of this Agreement.

                                    ARTICLE 1
                               PURCHASE OF ASSETS

         SECTION 1.1 Purchase and Sale of Assets.

         (a) Upon the terms and subject to the conditions set forth in this
Agreement, at the First Closing (as defined in Section 2.1), Original Owners
shall sell to Seller, all of the assets of every type and description, real,
personal and mixed, tangible or intangible (if any such intangible assets
exist), and wherever located, used or held for use by or on behalf of Original
Owners, in connection with their ceramics, glass and metal fabrication
businesses as they are currently conducted on the date hereof (together, the
"Business"), together with all property acquired by Original Owners hereafter to
and through the First Closing, including, without limitation, the assets listed
on Schedule 1.1(a) (the "Acquired Assets"), in consideration of the payment by
Seller on behalf of the Original Owners of certain liabilities of Original
Owners not to exceed FIVE MILLION THREE HUNDRED SEVENTY-FIVE THOUSAND AND NO/100
DOLLARS ($5,375,000.00) in the aggregate (the "Designated Liabilities"). The
Designated Liabilities shall include, without limitation, Taxes due by Original
Owners, amounts due by Original Owners to trade creditors, amounts due to
employees of Original Owners, and amounts due by Original Owners to Home
Interiors & Gifts, Inc., a Texas corporation, under that certain Pagare
(Promissory Note) dated December 19, 2002, executed by Produr and that certain
Account Transfer Agreement dated December 19, 2002, in the stated principal
amount of $1,000,000.00 executed by Produr and Tromex (collectively, the "Home
Interiors Debt"), and the Xanadu Debt. The term "Xanadu Debt" shall be defined
as amounts due by Original Owners to Xanadu Candle International, Ltd., a
British Virgin Islands corporation, under that certain Reconocimiento de Adeudo
dated December 1, 2002, as amended January 24, 2003, among Original Owners and
Xanadu. The amount of the Xanadu Debt will be adjusted by audit performed by
Buyer so that it includes only sums advanced to or for the direct benefit of
Original Owners and interest at eight percent (8%); however, in no event shall
the Xanadu Debt exceed the sum of U.S. One Million Two Hundred Twenty Six
Thousand Nine Hundred Forty-Seven and 28/100 Dollars ($1,226,947.28). The
definition of the Xanadu Debt noted herein shall control over any other
definition noted in any other document executed by the parties on the same date
herewith.

         (b) Upon the terms and subject to the conditions set forth in this
Agreement, at the First Closing, Seller shall grant to Buyer an irrevocable
option to purchase the Acquired Assets (the

ASSET PURCHASE AGREEMENT - PAGE 1
<PAGE>

"Option"), in consideration of the agreement by Buyer to establish a revolving
line of credit (the "Credit Line") for the benefit of Seller in the maximum
amount of FIVE MILLION THREE HUNDRED SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS
($5,375,000.00), in strict accordance with Section 5.6. However, the Option
shall not entitle Buyer to purchase accounts receivable of Seller, and all
accounts receivable of Original Owners and Seller together with those other
assets listed on Schedule 1.1(b) shall be excluded from assets to be sold to
Buyer (the "Excluded Assets").

         (c) Upon the terms and subject to the conditions set forth in this
Agreement, at the Second Closing (as defined in Section 2.1), upon the exercise
by Buyer of the Option, Seller shall sell to Buyer, all of the assets of every
type and description, real, personal and mixed, tangible or intangible, and
wherever located, used or held for use by or on behalf of Seller, in connection
with the Business, including, without limitation, the Acquired Assets and all
property acquired following the date of the First Closing and through the date
of the Second Closing, but excluding the Excluded Assets, in consideration of
the payment by Buyer to Seller of the following amounts (the "Option Exercise
Price"):

                  (i) The Initial Payment (as defined in Section 1.2); and

                  (ii) The Deferred Payment (as defined in Section 1.3).

The Acquired Assets shall be transferred by Seller to Buyer free of Liens of any
kind or character. It is understood by the parties that immediately prior to the
Second Closing a Lien will exist in favor of Buyer to secure the Credit Line and
a Lien will exist in favor of Xanadu to secure the Xanadu Debt; however, all
releases and other instruments evidencing the release of Lien securing the
Xanadu Debt, satisfactory to Buyer in its sole discretion, shall be provided to
Buyer at Closing as a condition to Buyer's obligation to effect the Second
Closing.

         SECTION 1.2 Initial Payment at Second Closing. At the Second Closing,
following repayment by the Seller to Buyer of the amount due under Section 5.6,
with respect to the Credit Line, Buyer will pay to the Seller in cash the
Initial Payment, which shall be an amount equal to:

         (a) the Repayment Amount; PLUS

         (b) fifty percent (50%) of the value of unsold inventory manufactured
by the Original Owners and Seller during the month of January 2003 and on hand
on the date of the Second Closing, which shall be valued at the lesser of
wholesale value and fair market value; PLUS

         (c) fifty percent (50%) of the amount (if positive) calculated by
subtracting (i) the Repayment Amount from (ii) $5,375,000.00.

         SECTION 1.3 Deferred Payment Following Second Closing. If (a) the
Revenue of Buyer from all sources other than HIG and HIG Affiliates for the
fiscal year ending December 31, 2003 is greater than U.S.$10,000,000.00, and (b)
the Revenue of Buyer for the fiscal year ending December 31, 2003 received from
Pottery Barn is $7,000,000.00 or more, Buyer will make a payment of
U.S.$125,000.00 to the Seller (or its designee), within thirty days following
completion

ASSET PURCHASE AGREEMENT - PAGE 2
<PAGE>

of internal audits necessary for the calculation of Revenue, but not later than
ninety (90) days following December 31, 2003, (such potential payment to be
referred to as the "Deferred Payment"). "Revenue" shall mean gross revenue from
sales of inventory of Buyer made in the ordinary course of business (but
excluding Revenue from sales to HIG and HIG Affiliates). Calculation of Revenue
will be in accordance with U.S. GAAP.

         SECTION 1.4 Liabilities. In connection with the purchase of the
Acquired Assets at the First Closing, Seller shall assume the Home Interiors
Debt and the Xanadu Debt. In connection with the purchase of the Acquired Assets
at the Second Closing, Buyer shall only assume only those liabilities
specifically listed on the attached Schedule 1.4 ("Assumed Liabilities").
Schedule 1.4 shall be updated at Closing, subject to approval by Buyer in its
sole discretion. Seller agrees that it will be solely responsible for the
satisfaction and discharge of all liabilities of Seller other than the Assumed
Liabilities, that accrue prior to as well as after the Second Closing Date, and
further, if necessary, Seller will contribute a portion of the Initial Payment,
or cause Xanadu to accept reduced payment of the Xanadu Debt or otherwise
provide sufficient funds to make satisfactory arrangements with all creditors,
such that all material liabilities of Original Owners and Seller (other than the
Xanadu Debt) are satisfied and all Liens on Acquired Assets are released, prior
to or simultaneously with the Second Closing. Buyer agrees that it will be
solely responsible for the satisfaction and discharge of all Assumed
Liabilities. Buyer further agrees that it will be solely responsible for all
liabilities relating to the Business which arise following the Second Closing
Date.

         SECTION 1.5 Hold-back of Xanadu Funds. Seller will cause Xanadu to
allow the sum of Two Hundred Thousand and No/100 Dollars ($200,00.00) otherwise
payable to Xanadu in satisfaction of the Xanadu Debt to be remitted to and held
by Buyer at the Second Closing in order to satisfy the claims of unpaid
creditors of Original Owners or Seller arising prior to the Second Closing Date
("Creditor Claims"), to the extent that (a) such liabilities have not been paid
in full or compromised and paid in accordance with an agreement by such creditor
to accept less than full payment as of the date of the Second Closing, and (b)
Buyer agrees to effect the Second Closing, notwithstanding the existence of such
unpaid liabilities of Original Owners or Sellers as of the date of the Second
Closing. Nothing in the preceding sentence shall be construed as a waiver by
Buyer of any of its rights under this Agreement before, at, or following the
Second Closing. Funds so held by Buyer shall not accrue interest in favor of
Xanadu. Seller and Xanadu shall be entitled for ninety (90) days following
Closing to control the negotiation and settlement of Creditor Claims and Buyer's
consent to any compromise and settlement of Creditor Claims shall not be
unreasonably withheld. Buyer shall be entitled to establish a reserve of any
portion of the funds held, to pay Creditor Claims, prior to entering into a
compromise and settlement with any such creditor (the "Creditor Reserve").
Twelve (12) months following the Second Closing, Buyer shall remit to Xanadu or
Xanadu's designee all remaining sums which were not used to pay Creditor Claims
or are not included in a Creditor Reserve.

                                    ARTICLE 2
                                    CLOSINGS

         SECTION 2.1 Closings. The purchase by Buyer of the Acquired Assets will
be affected through two closings. The first closing ("First Closing") will take
place on or before January 24,

ASSET PURCHASE AGREEMENT - PAGE 3
<PAGE>

2003 (the "First Closing Date"), at the offices of Bell Nunnally & Martin LLP,
3232 McKinney Avenue, Suite 1400, Dallas, Texas, 75204, unless another time,
date or place is agreed to in writing by the parties thereto. The second closing
("Second Closing") will take place on or before February 17, 2003 (the "Second
Closing Date"), at the offices of Bell Nunnally & Martin LLP, 3232 McKinney
Avenue, Suite 1400, Dallas, Texas, 75204, unless another time, date or place is
agreed to in writing by the parties thereto.

         SECTION 2.2 Transfer of Assets to Seller at the First Closing.At the
First Closing, the Original Owners shall do and take all steps reasonable and
necessary to transfer, assign and convey to Seller all of the right, title and
interest of Original Owners in and to the Acquired Assets. On and following the
First Closing, the Acquired Assets will be free of any Lien, except for the a
first priority Lien securing liabilities of Seller to Buyer arising under the
Credit Line and remaining unpaid Home Interiors Debt, if any, as described in
Section 5.6 and a subordinate Lien securing the Xanadu Debt.

         At the First Closing the Original Owners shall deliver, or cause to be
delivered the following items:

                  (i) Certified copies of the Original Owners' incorporation
         deeds, as well as evidence of registration of the same in the Public
         Registry of Commerce;

                  (ii) Certified copies of the public deeds through which the
         powers of attorney of Original Owners' legal representatives to
         complete the transactions noted herein are evidenced;

                  (iii) Copies of all permits, authorizations or licenses to be
         granted by any Governmental Entities necessary in order for the
         Acquired Assets to be transferred by Original Owners to Seller,
         including without limitation any permit (pedimentos de importacion)
         necessary to transfer any imported asset (the "Import Permit"),
         provided, however, it is agreed by the parties that with respect to the
         property described in Schedule 2.2(iii) (the "Imported Property") the
         required Import Permit shall have been requested promptly following the
         First Closing and received prior to the Second Closing;

                  (iv) A notarial instrument, executed by a properly empowered
         notary public and the Original Owners, in form and substance
         satisfactory to Seller and Buyer and their legal counsel, evidencing
         the conveyance to Seller of good and marketable title in fee simple
         absolute to the Real Property;

                  (v) Invoices, executed by Original Owners, in form and
         substance satisfactory to Seller and Buyer and their legal counsel, to
         convey to Seller good and marketable title to all personal and
         intangible property; and

                  (vi) Such other documents, certificates of title,
         endorsements, assignments and instruments in form and substance
         reasonably satisfactory to Seller and Buyer and their legal counsel, as
         shall be reasonably necessary to vest in Seller title to the Acquired
         Assets.

ASSET PURCHASE AGREEMENT - PAGE 4
<PAGE>

         At the First Closing the Seller shall deliver, or cause to be delivered
the following items:

                  (i) Certified copies of the Seller's incorporation deeds, as
         well as evidence of registration of the same in the public registry of
         commerce;

                  (ii) Certified copies of the public deeds through which the
         powers of attorney of Seller's legal representatives to complete the
         transactions noted herein are evidenced;

                  (iii) The agreements and instruments described in Section 5.6,
         executed by Seller, in form and substance satisfactory to Buyer and its
         legal counsel, to establish the Credit Line and to secure payment of
         the Credit Line by all Acquired Assets; and

                  (iv) Such other documents, certificates of title,
         endorsements, assignments and instruments in form and substance
         reasonably satisfactory to Buyer and its legal counsel, as shall be
         reasonably necessary, advisable or desirable to grant to Buyer a first
         priority Lien on and the Option.

         SECTION 2.3 Transfer of Assets to Buyer at the Second Closing; Payment.
At the Second Closing, upon exercise by Buyer of the Option and full payment of
that portion of the Purchase Price due at the Second Closing, Seller shall do
and take all steps reasonable and necessary to transfer, assign and convey to
Buyer all of the right, title and interest of Seller in and to the Acquired
Assets. Buyer shall deliver to Seller the Initial Payment in cash at the Second
Closing. On and following the Second Closing, the Acquired Assets will be free
of any Lien, and the Lien securing the Xanadu Debt will be released at the
Second Closing, whether or not the Xanadu Debt is paid in full. If all
conditions to the Second Closing are satisfied, and that portion of the Purchase
Price due at the Second Closing has been paid in full, Seller shall cause Xanadu
to agree to such Release of Lien in substantially the form attached to this
Agreement as Exhibit "A" (the "Xanadu Release"). At the Second Closing, Seller
shall deliver, or cause to be delivered, the following items:

                  (i) Certified copies of the Seller's incorporation deeds, as
         well as evidence of registration of the same in the public registry of
         commerce;

                  (ii) Certified copies of the public deeds through which the
         powers of attorney of Seller's legal representatives to complete the
         transactions noted herein are evidenced;

                  (iii) Copies of all permits, authorizations or licenses needed
         to be granted by any Governmental Entities in order for the Acquired
         Assets to be transferred by Seller to Buyer, including, without
         limitation, the Import Permit referenced in Section 2.2(iii);

                  (iv) A notarial instrument, executed by a properly empowered
         notary public and the Seller, in form and substance satisfactory to
         Buyer and its legal counsel, evidencing the conveyance to Buyer of good
         and marketable title in fee simple absolute to the Real Property, free
         of any Lien;

ASSET PURCHASE AGREEMENT - PAGE 5
<PAGE>

                  (v) Invoices, executed by Seller, in form and substance
         satisfactory to Buyer and its legal counsel, to convey to Buyer good
         and marketable title to all personal and intangible property, free of
         any Lien; and

                  (vi) Such other documents, certificates of title,
         endorsements, assignments and instruments in form and substance
         reasonably satisfactory to Buyer and its legal counsel, as shall be
         reasonably necessary to vest in Buyer title to the Acquired Assets.

         SECTION 2.4 Value Added Tax. It is agreed that if Value Added Tax is
incurred at the First Closing as a result of the transfer of the Acquired Assets
from Original Owners to Seller, then Seller shall bear responsibility for
payment and be entitled to all refunds or other tax benefits relating to
Seller's payment of the Value Added Tax. Further, it is agreed that if Value
Added Tax is incurred at the Second Closing as a result of the transfer of the
Acquired Assets from Seller to Buyer, then Buyer shall bear responsibility for
payment and be entitled to all refunds or other tax benefits relating to Buyer's
payment of the Value Added Tax at the Second Closing.

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

         SECTION 3.1 Representations and Warranties of Original Owners. As an
inducement to Seller and Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, Original Owners hereby jointly and
severally represent and warrant to Seller and Buyer that the following
statements are true and correct as of the date of this Agreement and will be
true and correct with equal force and effect as of the First Closing Date and,
as applicable, thereafter.

                  (a) Organization, Standing and Corporate Power of Produr.
Produr is a corporation, duly organized and validly existing under the laws of
the United Mexican States, as evidenced in Public Deed No. 20,356 dated March 9,
1988, before Mr. Jesus Montano Garcia, Notary Public No, 60 for the Federal
District, duly registered with the Public Registry of Commerce of Monterrey,
Nuevo Leon, under No. 499 Folio 165, Volume 303, Book No. 3, second auxiliary,
Commerce Section, and has the requisite corporate power and authority to carry
on its business as now being conducted. Its legal representative in this act,
Mr. Harold Lynn Blankemeyer, has sufficient authority to execute this Agreement
as evidenced in the Public Deed described above, which authority to date has not
been revoked nor amended or limited in any manner whatsoever.

                  (b) Organization, Standing and Corporate Power of Tromex.
Tromex is a corporation, duly organized and validly existing under the laws of
the United Mexican States, as evidenced in Public Deed No. 704 dated February
20, 1981, before Mr. Ramiro A. Bravo Rivera, Notary Public No. 18 for Monterrey,
Nuevo Leon, and duly registered with the Public Registry of Commerce of
Monterrey, Nuevo Leon, under No. 410 Folio 259, Volume 243, Book No. 3, second
auxiliary, Commerce Section, and has the requisite corporate power and authority
to carry on its business as now being conducted. Its legal representative in
this act has sufficient power and authority in order to execute this Agreement
as evidenced in Public Deed No. 5190 granted on March 17, 1993, by Mr. Carlos
Rousseau Garza, Notary Public No. 74 of Guadalupe, Nuevo Leon, which true first
copy was recorded before the Public Registry of Commerce at Monterrey, Nuevo
Leon,

ASSET PURCHASE AGREEMENT - PAGE 6
<PAGE>

under commercial folio 1816, Volume 199-37, Book No. 4, third auxiliary,
Commerce Section, which authority to date has not been revoked or amended or
limited in any manner whatsoever.

                  (c) Authority; Noncontravention. Original Owners have the
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by Original Owners and the consummation by Original
Owners of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Original Owners,
including, but not limited to the authorizations granted by the Board of
Directors Meetings of Original Owners to execute this Agreement on behalf of
Original Owners, including powers of attorney for acts of domain or a valid
special power of attorney to enter into this specific transaction. This
Agreement has been duly executed and delivered by Original Owners and
constitutes a valid and binding obligation of Original Owners, enforceable
against Original Owners in accordance with its terms. The execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to the
loss of any benefit under, or result in the creation of any Liens upon (except
as set forth in Section 5.6), any of the properties or assets of Original Owners
under (i) the incorporation deeds or bylaws of Original Owners, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Original
Owners or their properties or assets or any other Material Agreement, or (iii)
any judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Original Owners or their properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity, is required by or with respect to Original Owners
in connection with the execution and delivery of this Agreement by Original
Owners or the consummation by Original Owners of the transactions contemplated
by this Agreement.

                  (d) Financial Statements. Schedule 3.1(d) contains the
unaudited balance sheets of Original Owners as of December 31, 2001 and for the
eleven (11) month period ending November 30, 2002, as prepared by Original
Owners and the related statements of operations for the fiscal years then ended,
including the footnotes thereto, (collectively, the "Financial Statements").
Such Financial Statements have been prepared in conformity with Mexican GAAP,
and present fairly, in all material respects, the financial position of and
results of operations, changes in Stockholders' equity and cash flows of
Original Owners as of and for the periods then ended.

                  (e) Undisclosed Liabilities. Except (i) as disclosed,
reflected or reserved against in the Financial Statements, or (ii) for
liabilities and obligations incurred in the ordinary course of business
consistent with past practices since the date of the Financial Statements,
Original Owners do not have any Knowledge of material liabilities or obligations
of any nature (whether accrued, absolute, contingent or otherwise) required by
Mexican GAAP to be set forth on the Financial Statements of Original Owners. No
facts or circumstances exist whereby any employee, officer, director or agent of
Original Owners would be entitled to make a material claim for indemnification
under the incorporation deed or bylaws of Original Owners or under the Federal
Labor Law or other applicable law of Mexico.

ASSET PURCHASE AGREEMENT - PAGE 7
<PAGE>

                  (f) Litigation. Except as set forth in Schedule 3.1(f), there
is no suit, action or legal proceeding pending or, to the Knowledge of Original
Owners, threatened against or affecting Original Owners, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Original Owners.

                  (g) Taxes. Except as set forth in Schedule 3.1(g), all Taxes
that are due and payable by Original Owners have been timely paid, and Original
Owners have timely and accurately filed (and, through the First Closing Date,
will timely and accurately file) all Tax reports and returns required by law to
be filed by Original Owners.

                  (h) Brokers. Except as set forth in Schedule 3.1(h), no
broker, investment banker, financial advisor or other person, the fees and
expenses of which will be paid by Original Owners, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Original Owners.

                  (i) Compliance with Laws; Environmental Laws. Original
                  Owners have in effect all Permits necessary for them to own,
                  lease or operate their properties and assets and to carry on
                  the Business substantially as now conducted, and there has
                  occurred no default under any such Permit. Original Owners are
                  and have been in compliance with all applicable statutes,
                  laws, ordinances, regulations, rules, judgments, decrees or
                  orders of any Governmental Entity, which could result in a
                  material fine or a forfeiture or other Material Adverse
                  Effect.

                           (ii) Original Owners have not received any written
                  communication from a Governmental Entity alleging that
                  Original Owners are not in compliance in any material respect
                  with, or have liability under, any Environmental Laws.
                  Original Owners hold, and have complied with and are in
                  compliance with, all Permits required for Original Owners to
                  conduct their business under Environmental Laws, and Original
                  Owners are in compliance with all Environmental Laws.

                           (iii) Original Owners have not at any time
                  maintained, any Hazardous Materials within their property,
                  which could affect the Acquired Assets.

                  (j) Title to Properties; Liens. Original Owners have good
title to, or valid leasehold interests in, all of their tangible properties and
assets, including, without limitation, the Acquired Assets. All such tangible
assets and properties, other than assets and properties in which they have a
leasehold interest, are free and clear of all Liens, except those in favor of
Home Interiors & Gifts, Inc., Buyer and Xanadu. Upon consummation of the
transactions proposed herein to be consummated at the First Closing, Seller will
own the Acquired Assets free and clear of all Liens except for a first priority
Lien in favor of Buyer and a subordinate Lien securing the Xanadu Debt. In
connection with First Closing, Original Owners shall provide evidence reasonably
satisfactory to Buyer that indicate whether the Acquired Assets are imported and
whether their sale relates to a first sale. The Acquired Assets constitute all
of the assets and properties, real, personal, tangible and intangible that are
used or useable in the conduct of the Business as presently being conducted.

ASSET PURCHASE AGREEMENT - PAGE 8
<PAGE>

None of the Acquired Assets are required to be registered with any Mexican
Public Registry. Additionally, none of the Acquired Assets are subject to any
Mexican governmental program, such as Pitex or maquila, that could limit the
transferability of the Acquired Assets.

                  (k) Owned and Leased Real Property. Schedule 3.1(k) contains a
list and brief description of all of the owned and leased real property of
Original Owners (the "Real Property"). The Real Property constitutes all real
properties used or occupied by Original Owners in connection with the Business.
Except as set forth on Schedule 3.1(k), with respect to the Real Property:

                           (i) No portion thereof is subject to any pending
                  condemnation proceeding by any public or quasi-public
                  authority and, to the Knowledge of Original Owners, there is
                  no threatened condemnation proceeding with respect thereto as
                  evidenced by the No-Lien Certificate issued by the Public
                  Registry of Property of Monterrey, Nuevo Leon and of
                  Guadalajara, Jalisco, Mexico, attached hereto as Exhibit "B-1
                  and B-2";

                           (ii) All buildings and structures located on the Real
                  Property, as well as the operation and maintenance thereof,
                  comply in all material respects with all applicable legal
                  requirements, and do not violate in any material respect the
                  rights of any third party and, except as set forth in Schedule
                  3.1(k), all buildings and structures are in good and operable
                  condition, in all material respects;

                           (iii) Except as set forth in Schedule 3.1(k), no
                  written notice of any increase in the assessed valuation of
                  the owned Real Property and no written notice of any
                  contemplated special assessment has been received by Original
                  Owners and, to the Knowledge of Original Owners, there is no
                  threatened increase in assessed valuation or threatened
                  special assessment pertaining to any of the Real Property;

                           (iv) There are no contracts, agreements, instruments,
                  licenses, commitments, leases or similar document, written or
                  oral, to which Original Owners are a party, granting to any
                  one or more persons the right of use or occupancy of any
                  portion of the parcels of the Real Property;

                           (v) There are no persons (other than Original Owners
                  and Seller) in possession of the Real Property; and

                           (vi) Original Owners have complied in paying any and
                  all property taxes and all other rights and fees regarding the
                  Real Property as evidenced by the corresponding invoices for
                  the last five (5) years attached hereto as Exhibit "C".

                  (l) Employee Relations. Schedule 3.1(l) hereto sets forth a
list of (x) all employees, commission salespersons and independent contractors
of Original Owners as of December 31, 2002, (y) then current annual compensation
of, and a description of fringe benefits provided by Original Owners to any such
employees, commission salespersons and independent contractors, and (z) any
increase, effective on or after

ASSET PURCHASE AGREEMENT - PAGE 9
<PAGE>

                  December 31, 2002, in the rate or manner of compensation of
                  any employees, commission salespersons or independent
                  contractors.

                           (ii) Original Owners have no employment, consulting,
                  labor union or collective bargaining agreement with any
                  director, officer or employee of Original Owners, except as
                  set forth on Schedule 3.1(l).

                           (iii) Original Owners are and have complied with all
                  laws, rules and regulations which relate to hiring,
                  termination, wages, hours, discrimination in employment,
                  working conditions, including without limitation, laws, rules
                  and regulations relating to equal employment opportunities,
                  fair employment practices and occupational health and safety,
                  and collective bargaining and are not liable for any material
                  arrears of wages or any Taxes (including penalties) for
                  failure to so comply with any of the foregoing.

                           (iv) Except as set forth on Schedule 3.1(l), Original
                  Owners have duly paid all taxes and contributions in
                  connection with their actual or former employees, including
                  those related with the Mexican Social Security Institute
                  (IMSS), National Workers Housing Fund (INFONAVIT) and the
                  Retirement Administration System (SAR).

                           (v) There is no unfair labor practice charge or
                  material complaint against Original Owners pending before any
                  Governmental Entity. There is no charge or complaint against
                  Original Owners pending, or to the Knowledge of Original
                  Owners, threatened under any Legal Requirement. There is no
                  labor strike, dispute or stoppage, or any union organizing
                  campaign or petition for certification actually pending or, to
                  the Knowledge of Original Owners, threatened against or
                  involving Original Owners. No labor grievance has been filed
                  with Original Owners, has arisen out of or under a collective
                  bargaining or other labor agreement and is pending, and no
                  claim therefore has been asserted. Original Owners have not
                  experienced any work stoppage over the past two years.

                  (m) Insurance. Schedule 3.1(m) sets forth a list of all
policies of insurance maintained, owned or held by or for the benefit of
Original Owners on the date hereof. Original Owners shall use reasonable efforts
to keep or cause such insurance or comparable insurance to be kept in effect
through the Closing Date. Original Owners have complied with their obligations
under each of such insurance policies, and to the Knowledge of Original Owners,
have not failed to give any notice or present any claim thereunder in a due and
timely manner.

                  (n) Customers and Suppliers. Schedule 3.1(n) sets forth a list
of names and addresses of all customers and all suppliers, individually
accounting for $50,000.00 or more of Original Owners' sales or purchases during
the twelve (12) calendar months prior to December 31, 2002. To the Knowledge of
the Original Owners, there exists no actual termination or cancellation of the
business relationship of Original Owners with any material customer or material
group of

ASSET PURCHASE AGREEMENT - PAGE 10
<PAGE>

customers or with any supplier or group of suppliers listed therein with respect
to which Original Owners have received written or oral notice of such
termination or cancellation, as the case may be.

                  (o) Leased Personal Property. Schedule 3.1(o) contains a list
of all leases involving aggregate lease payments over the life of such lease in
excess of $1,000.00 under which Original Owners are a lessee of or holds or
operates any personal property owned by any third person, and true, complete and
correct copies (or, in the case of oral leases, written descriptions) of such
leases have been previously furnished to Buyer.

                  (p) Acquired Assets are Freely Transferable. Except as set
forth on Schedule 3.1(p), all of the Acquired Assets that were imported into
Mexico are freely transferable.

                  (q) Transactions With Related Parties. Neither the
Stockholders of the Original Owners, nor any spouse, child, parent, sibling or
any other person or entity closely related to or affiliated with the
Stockholders of the Original Owners, as the case may be, nor any employee,
officer or director of Original Owners (i) owns any equity interest, directly or
indirectly in, or is an officer or director of, any proprietorship, firm,
company, corporation, partnership or other entity which: (a) is a competitor of
Original Owners; (b) is a customer or supplier of Original Owners; or (c) has
any contractual or business relationship whatsoever with either (i) Original
Owners (provided that the foregoing does not apply to the ownership by any of
them of not more than five percent (5%) of any outstanding security (or any
class thereof) of any corporation or partnership listed on a national securities
exchange); or (ii) has or claims to have any direct or indirect interest in any
tangible or intangible property of Original Owners, except with respect to the
Stockholders of Original Owners as holders of common stock of Original Owners.

                  (r) Material Agreements. Schedule 3.1(r) contains a true and
complete list of all written and oral contracts, agreements, instruments and
other understandings and commitments to which Original Owners are a party (all
such contracts, agreements, instruments and other understandings and
commitments, together with those listed on the other Schedules hereto, being
collectively called "Original Owners' Material Agreements" herein). Except as
set forth on Schedule 3.1(r), Original Owners are not a party to any of the
following, whether written or oral:

                           (i) distributorship, dealer, sales, advertising,
                  agency, manufacturer's representative or other contract
                  relating to the payment of a commission;

                           (ii) collective bargaining agreement or other
                  contract with or commitments to any labor union or proposed
                  labor union;

                           (iii) contract for future sales;

                           (iv) contract or commitment for the employment of any
                  officer, employee or consultant or any other type of contract
                  or understanding with any officer, employee or consultant,
                  including any agreement or understanding relating to severance
                  payments;

ASSET PURCHASE AGREEMENT - PAGE 11
<PAGE>

                           (v) indenture, mortgage, promissory note, loan
                  agreement, pledge agreement, guarantee or other agreement or
                  commitment for the borrowing of money, for a line of credit or
                  for a leasing transaction of a type required to be
                  capitalized;

                           (vi) contract or commitment for capital expenditures
                  in excess of either $10,000.00 individually, or $25,000.00 in
                  the aggregate;

                           (vii) agreement or arrangement for the sale of any
                  assets, properties or rights or services or products other
                  than the sale thereof in the ordinary course of business at
                  normal profit margins;

                           (viii) contract with respect to the lending or
                  investing of funds;

                           (ix) contract or indemnification with respect to any
                  form of intangible property, including any intellectual
                  property rights or confidential and proprietary information
                  (except prepackaged software used in the ordinary course of
                  business);

                           (x) contract which restricts Original Owners from
                  engaging in any aspect of their business anywhere in the
                  world;

                           (xi) agreement for the acquisition or disposition of
                  any entity or a division of an entity made within the
                  preceding ten (10) years; or

                           (xii) any other contract material to the business of
                  Original Owners.

                           (xiii) All Original Owners' Material Agreements are
                  in full force and effect, constitute legal, valid and binding
                  obligations of the respective parties thereto, and are
                  enforceable in accordance with their respective terms.
                  Original Owners have in all material respects performed all of
                  the obligations required to be performed by it to date
                  pursuant to Original Owners' Material Agreements, and there
                  exists no material default, or any event which upon the giving
                  of notice or the passage of time, or both, would give rise to
                  a claim of a material default in the performance by Original
                  Owners or, to the Knowledge of Original Owners, any other
                  party to any of Original Owners' Material Agreements.

                  (s) No Additional Representations. ORIGINAL OWNERS DO NOT MAKE
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER
WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

         SECTION 3.2 Representations and Warranties of Seller. As an inducement
to Buyer to enter into this Agreement and to consummate the transactions
contemplated hereby, Seller hereby represents and warrants to Buyer that the
following statements are true and correct as of the date of this Agreement
(except as otherwise noted) and will be true and correct with equal force and
effect as of the Second Closing Date.

ASSET PURCHASE AGREEMENT - PAGE 12
<PAGE>

                  (a) Organization, Standing and Corporate Power of Seller.
Seller is a corporation, duly organized and validly existing under the laws of
the United Mexican States, as evidenced in Public Deed No. 145 dated December
16, 2002, before Mr. Fernando Hernandez Gomez, Public Broker No. 9 for the State
of Jalisco, duly registered with the Public Registry of Commerce of Guadalajara,
Jalisco, under Commercial File 16789 and has the requisite corporate power and
authority to carry on its business as now being conducted. Its legal
representative in this act, Mr. Armando Araujo, has sufficient authority to
execute this Agreement as evidenced in the Public Deed described above, which
authority to date has not been revoked nor amended or limited in any manner
whatsoever.

                  (b) Authority; Noncontravention. Seller has the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement by Seller and the consummation by Seller of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Seller, including, but not limited to the
authorizations granted by the Board of Directors Meetings of Seller to execute
this Agreement on behalf of Seller, including powers of attorney for acts of
domain or a valid special power of attorney to enter into this specific
transaction. This Agreement has been duly executed and delivered by Seller and
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of any benefit under, or result in
the creation of any Liens upon (except as set forth in Section 5.6), any of the
properties or assets of Seller under (i) the incorporation deed or bylaws of
Seller, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to Seller or their properties or assets or any other Material
Agreement, or (iii) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Seller or their properties or assets. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity, is required by or with respect to Seller in
connection with the execution and delivery of this Agreement by Seller or the
consummation by Seller of the transactions contemplated by this Agreement.

                  (c) Undisclosed Liabilities. Except for liabilities to Buyer
and the Xanadu Debt, and as set forth in Schedule 3.2(c), Seller does not have
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise). No facts or circumstances exist whereby any employee,
officer, director or agent of Seller would be entitled to make a claim for
indemnification under the incorporation deed or bylaws of Seller or under the
Federal Labor Law or other applicable law of Mexico.

                  (d) Absence of Certain Changes or Events with respect to
Seller. Since the date of Seller's formation, Seller has conducted its business
in the ordinary course, and there has not been (i) any Material Adverse Change
in or to Seller, (ii) any debt incurred or assumed other than the Credit Line
and accounts payable in the ordinary course of business, (iii) any granting by
Seller to any employee of Seller of any increase in compensation, or any
granting by Seller to any employee

ASSET PURCHASE AGREEMENT - PAGE 13
<PAGE>

of any severance or termination pay, (iv) any damage, destruction or loss,
whether or not covered by insurance, that has or could reasonably be expected to
have a Material Adverse Effect on the Acquired Assets, (v) any change in
accounting methods, principles or practices by Seller, materially affecting its
assets, liabilities or business, except insofar as any have been required by a
change in generally accepted accounting principles, (vi) any acquisition of real
property or undertaking or commitment to undertake capital expenditures, (vii)
any cancellation of any debts owed to or claims held by Seller, or (viii) any
sale, lease, transfer or other disposition of, or mortgage, pledge or creation
of any encumbrance on any assets of Seller other than a Lien in favor of Buyer.

                  (e) Litigation. There is no suit, action or legal proceeding
pending or, to the Knowledge of Seller, threatened against or affecting Seller,
nor is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Seller.

                  (f) Taxes. All Taxes that are due and payable by Seller have
been timely paid, and Seller has timely and accurately filed (and, through the
Second Closing Date, will timely and accurately file) all Tax reports and
returns required by law to be filed by Seller.

                  (g) Brokers. Except as set forth in Schedule 3.2(g), no
broker, investment banker, financial advisor or other person, the fees and
expenses of which will be paid by Seller, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller.

                  (h) Compliance with Laws; Environmental Laws. Seller has in
effect all Permits necessary for it to own, lease or operate its properties and
assets and to carry on its business substantially as now conducted, and there
has occurred no default under any such Permit. Seller is and has been in
compliance with all applicable statutes, laws, ordinances, regulations, rules,
judgments, decrees or orders of any Governmental Entity.

                           (ii) Seller has not received any written
                  communication from a Governmental Entity alleging that Seller
                  is not in compliance in any material respect with, or have
                  liability under, any Environmental Laws. Seller holds, and
                  have complied with and are in compliance with, all Permits
                  required for Seller to conduct their business under
                  Environmental Laws, and Seller is in compliance with all
                  Environmental Laws.

                           (iii) Seller has not at any time maintained, and will
                  not maintain from this date to the Second Closing, any
                  Hazardous Materials within its property, which could affect
                  the Acquired Assets.

                  (i) Title to Properties; Liens. Seller has good title to, or
valid leasehold interests in, all of its tangible properties and assets,
including without limitation, the Acquired Assets. All such tangible assets and
properties, other than assets and properties in which it has a leasehold
interest, are free and clear of all Liens, except for Liens in favor of Buyer
and Xanadu. Upon consummation

ASSET PURCHASE AGREEMENT - PAGE 14
<PAGE>

of the transactions to occur at the Second Closing, Buyer will own the Acquired
Assets free and clear of all Liens. In connection with Second Closing, Seller
shall provide invoices that indicate whether the Acquired Assets are imported
and whether their sale relates to a first sale. The Acquired Assets constitute
all of the assets and properties, real, personal, tangible and intangible that
are used or useable in the conduct of the Business. None of the Acquired Assets
are required to be registered with any Mexican Public Registry. Additionally,
none of the Acquired Assets are subject to any Mexican governmental program,
such as Pitex or maquila, that could limit the transferability of the Acquired
Assets.

                  (j) Owned and Leased Real Property. The Real Property
                  constitutes all real properties used or occupied by Seller in
                  connection with its business.

                           (ii) Except as set forth on Schedule 3.1(j), with
                  respect to the Real Property:

                                    (A) No portion thereof is subject to any
                           pending condemnation proceeding by any public or
                           quasi-public authority and, to the Knowledge of
                           Seller, there is no threatened condemnation
                           proceeding with respect thereto as evidenced by the
                           No-Lien Certificate issued by the Public Registry of
                           Property of Monterrey, Nuevo Leon, Mexico, to be
                           provided to Buyer at the Second Closing;

                                    (B) All buildings and structures located on
                           the Real Property, as well as the operation and
                           maintenance thereof, comply in all material respects
                           with all applicable legal requirements, and do not
                           violate in any material respect the rights of any
                           third party and, except as set forth in Schedule
                           3.2(j), all buildings and structures are in good and
                           operable condition, in all material respects;

                                    (C) Except as set forth in Schedule 3.2(j),
                           no written notice of any increase in the assessed
                           valuation of the owned Real Property and no written
                           notice of any contemplated special assessment has
                           been received by Seller and, to the Knowledge of
                           Seller, there is no threatened increase in assessed
                           valuation or threatened special assessment pertaining
                           to any of the Real Property;

                                    (D) There are no contracts, agreements,
                           instruments, licenses, commitments, leases or similar
                           document, written or oral, to which Seller is a
                           party, granting to any one or more persons the right
                           of use or occupancy of any portion of the parcels of
                           the Real Property;

                                    (E) There are no persons (other than Seller)
                           in possession of the Real Property; and

                                    (F) Seller has complied in paying any and
                           all property taxes and all other rights and fees
                           regarding the Real Property.

ASSET PURCHASE AGREEMENT - PAGE 15
<PAGE>

                  (k) Accounts Receivable. All accounts of Seller have arisen
from bona fide arms length transactions by Seller in the ordinary course of
business, and Seller has performed all of its obligations in connection with
such accounts receivable.

                  (l) Employees. Seller has and will have through the date of
the Second Closing, no employees.

                  (m) Insurance. Schedule 3.2(m) sets forth a list of all
policies of insurance maintained, owned or held by or for the benefit of Seller
as of the First Closing Date. Seller shall use reasonable efforts to keep or
cause such insurance or comparable insurance to be kept in effect through the
Second Closing Date. Seller will comply with its obligations under each of such
insurance policies, and will not fail to give any notice or present any claim
thereunder in a due and timely manner.

                  (n) Leased Personal Property. Schedule 3.2(n) contains a list
of all leases involving aggregate lease payments over the life of such lease in
excess of $1,000.00 under which Seller is a lessee of or holds or operates any
personal property owned by any third person, and true, complete and correct
copies (or, in the case of oral leases, written descriptions) of such leases
have been previously furnished to Buyer.

                  (o) Transactions With Related Parties. Neither the
Stockholders of Seller, nor any spouse, child, parent, sibling or any other
person or entity closely related to or affiliated with the Stockholders of
Seller, as the case may be, nor any employee, officer or director of Seller (i)
owns any equity interest, directly or indirectly in, or is an officer or
director of, any proprietorship, firm, company, corporation, partnership or
other entity which: (a) is a competitor of Seller; (b) is a customer or supplier
of Seller; or (c) has any contractual or business relationship whatsoever with
either (i) Seller; provided that the foregoing does not apply to the ownership
by any of them of not more than five percent (5%) of any outstanding security
(or any class thereof) of any corporation or partnership listed on a national
securities exchange; or (ii) has or claims to have any direct or indirect
interest in any tangible or intangible property of Seller, except with respect
to the Stockholders of Seller as holders of common stock of Seller.

                  (p) Material Agreements. Schedule 3.2(p) contains a true and
complete list of all written and oral contracts, agreements, instruments and
other understandings and commitments to which Seller is a party (all such
contracts, agreements, instruments and other understandings and commitments,
together with those listed on the other Schedules hereto, being collectively
called "Seller's Material Agreements" herein). Except as set forth on Schedule
3.2(p), Seller is not a party to any of the following, whether written or oral:

                           (i) distributorship, dealer, sales, advertising,
                  agency, manufacturer's representative or other contract
                  relating to the payment of a commission;

                           (ii) collective bargaining agreement or other
                  contract with or commitments to any labor union or proposed
                  labor union;

ASSET PURCHASE AGREEMENT - PAGE 16
<PAGE>

                           (iii) continuing contract for the purchase of
                  products, materials, supplies, equipment or services under
                  which the undelivered balance thereof has a selling price in
                  excess of $10,000.00 and under which Seller are obligated to
                  perform for a period in excess of ninety (90) days after
                  Closing, which is not terminable by Seller with less than
                  thirty (30) days prior written notice without cost, forfeiture
                  or other liability at or at any time after the Closing;

                           (iv) contract for sales under which the undelivered
                  balance thereof has a selling price in excess of $10,000.00
                  and under which Seller are obligated to perform for a period
                  in excess of ninety (90) days after Closing, which is not
                  immediately terminable by Seller without cost or other
                  Liability at or at any time after the Closing;

                           (v) contract for future sales which is not
                  immediately terminable by Seller without cost or other
                  liability at or at any time after the Closing;

                           (vi) contract or commitment for the employment of any
                  officer, employee or consultant or any other type of contract
                  or understanding with any officer, employee or consultant,
                  including any agreement or understanding relating to severance
                  payments;

                           (vii) indenture, mortgage, promissory note, loan
                  agreement, pledge agreement, guarantee or other agreement or
                  commitment for the borrowing of money, for a line of credit or
                  for a leasing transaction of a type required to be
                  capitalized;

                           (viii) contract or commitment for capital
                  expenditures in excess of either $10,000.00 individually, or
                  $25,000.00 in the aggregate;

                           (ix) agreement or arrangement for the sale of any
                  assets, properties or rights or services or products other
                  than the sale thereof in the ordinary course of business at
                  normal profit margins;

                           (x) contract with respect to the lending or investing
                  of funds;

                           (xi) contract or indemnification with respect to any
                  form of intangible property, including any intellectual
                  property rights or confidential and proprietary information
                  (except prepackaged software used in the ordinary course of
                  business);

                           (xii) contract which restricts Seller from engaging
                  in any aspect of their business anywhere in the world;

                           (xiii) contract or group of related contracts with
                  the same person (excluding purchase orders entered into in the
                  ordinary course of business which are to be completed within
                  three (3) months of entering into such purchase orders) for
                  the purchase or sale of products or services under which the
                  undelivered balance thereof has a selling price in excess of
                  $10,000.00;

ASSET PURCHASE AGREEMENT - PAGE 17
<PAGE>

                           (xiv) any other contract material to the business of
                  Seller.

                           (xv) All Seller's Material Agreements are in full
                  force and effect, constitute legal, valid and binding
                  obligations of the respective parties thereto, and are
                  enforceable in accordance with their respective terms. Seller
                  have in all material respects performed all of the obligations
                  required to be performed by it to date pursuant to the
                  Seller's Material Agreements, and there exists no material
                  default, or any event which upon the giving of notice or the
                  passage of time, or both, would give rise to a claim of a
                  material default in the performance by Seller or, to the
                  Knowledge of Seller, any other party to any of Seller's
                  Material Agreements.

                  (q) No Additional Representations. SELLER DOES NOT MAKE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER WITH
RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

         SECTION 3.3 Representations and Warranties of Buyer. Buyer hereby
represents and warrants to Seller that the following statements are true and
correct as of the date of this Agreement and will be true and correct with equal
force and effect as of the Closing Date:

                  (a) Organization, Standing and Corporate Power of Buyer. Buyer
is a corporation, duly organized and validly existing under the laws of the
United Mexican States, as evidenced in Public Deed No. 32,806 dated December 16,
2002, before Mr. Jose Moria Morera Gonzalez, Notary Public No. 102 for the
Federal District, duly registered with the Public Registry of Commerce of
Monterrey, Nuevo Leon, under No. 12737, Volume 3, first book on December 20,
2002 , and has the requisite corporate power and authority to carry on its
business as now being conducted. Its legal representative in this act, Mr.
Kenneth J. Cichocki, has sufficient authority to execute this Agreement as
evidenced in the Public Deed described above, which authority to date has not
been revoked nor amended or limited in any manner whatsoever.

                  (b) Authority; Noncontravention. Buyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Buyer. This Agreement has been duly executed and delivered by Buyer and
constitutes a valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of the incorporation deed or bylaws of Buyer. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to Buyer in
connection with the execution and delivery of this Agreement or the consummation
by Buyer, of any of the transactions contemplated by this Agreement.

ASSET PURCHASE AGREEMENT - PAGE 18
<PAGE>

                  (c) Litigation. There is no suit, action or proceeding pending
or, to the Knowledge of Buyer, threatened against or affecting Buyer that,
individually or in the aggregate, could reasonably be expected to (i) impair the
ability of Buyer to perform its obligations under this Agreement or (ii) prevent
the consummation of any of the transactions contemplated by this Agreement, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Buyer having, or which, insofar as
reasonably can be foreseen, would have any such effect in the future.

                  (d) Brokers. Except as set forth in Schedule 3.3(d), no
broker, investment banker, financial advisor or other person, the fees and
expenses of which will be paid by Buyer, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer.

                  (e) Disclosure. Buyer, through the conducting of its due
diligence, is not aware of any material inaccuracy in the representations and
warranties of Original Owners and Seller; however, the parties agree that any
Knowledge by Buyer of an inaccuracy in any representation of warranty of
Original Owners and Seller shall not result in any liability of Buyer or
prejudice the right of Buyer to pursue all rights and remedies set forth in this
Agreement.

                  (f) No Additional Representations. BUYER DOES NOT MAKE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER WITH
RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT, EXCEPT FOR THE REPRESENTATIONS
AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

                                    ARTICLE 4
                    COVENANTS RELATING TO CONDUCT OF BUSINESS

         SECTION 4.1 Conduct of Business by Seller. During the period from the
date of this Agreement to the Second Closing Date, Original Owners and Seller,
as applicable, shall carry on the Business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, provided that
Buyer funds on a timely basis requested Advances under the Credit Line in
accordance with Section 5.6. Unless Seller advises Buyer in writing to the
contrary, Seller shall own the Acquired Assets, but Original Owners shall
continue to operate the Business. Further, Original Owners and Seller, as
applicable, shall use all reasonable efforts to preserve intact the Business'
current business organization, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers,
licensors, licensees, distributors and others having business dealings with it
to the end that the goodwill relating to the Business, ongoing business and the
Acquired Assets shall be unimpaired at the Second Closing Date. Without limiting
the generality of the foregoing, but with the exceptions provided in this
Agreement, during the period from the date of this Agreement to the Second
Closing Date, without the prior written consent of Buyer, neither Original Owner
nor Seller shall:

                  (a) acquire or agree to acquire (i) by merging or
         consolidating with, or by

ASSET PURCHASE AGREEMENT - PAGE 19
<PAGE>

         purchasing a substantial portion of the assets of, or by any other
         manner, any business or any corporation, partnership, joint venture,
         association or other business organization or division thereof, or (ii)
         any assets that are material, individually or in the aggregate, to it;

                  (b) mortgage or otherwise encumber or subject to any Lien or
         sell, lease or otherwise dispose of any of its material properties or
         assets (including, without limitation, the Acquired Assets);

                  (c) (i) incur any indebtedness for borrowed money, guarantee
         any indebtedness of another person, issue or sell any debt securities
         or warrants or other rights to acquire any debt securities of it, or
         guarantee any debt securities of another person, except in accordance
         with Section 5.6, or (ii) make any loans, advances or capital
         contributions to, or investments in, any other person;

                  (d) make or agree to make any new capital expenditures;

                  (e) enter into any employment, bonus or severance agreements
         (or amend any of the foregoing) with any of its present employees or
         officers; or

                  (f) amend, modify, terminate or breach any Material Agreement
         or enter into any agreement that would constitute a Material Agreement
         hereunder; or

                  (g) authorize any of, or commit or agree to take any of, the
         foregoing actions.

         SECTION 4.2 Other Actions. Original Owners, Seller and Buyer shall not
take any action that would result in (i) any of the representations and
warranties of such party set forth in this Agreement becoming untrue, or (ii)
any of the conditions to the Closings set forth in Article 6 and Article 7not
being satisfied.

                                    ARTICLE 5
                              ADDITIONAL AGREEMENTS

         SECTION 5.1 Access to Information; Confidentiality. Original Owners and
Seller shall afford to Buyer reasonable access, during normal business hours
during the period prior to the Closing Dates, to Original Owners' and Seller's
respective properties, books, contracts, licenses, commitments, personnel and
operating and other records and, during such period, each of Original Owners and
Seller shall furnish promptly to Buyer all information concerning its business,
properties and personnel as Buyer may reasonably request with regard to the
Business and the Acquired Assets. Each party shall treat in confidence all
documents, materials and other information which it shall have obtained
regarding the other party during the course of the negotiations leading to the
consummation of the transactions contemplated hereby (whether obtained before or
after the date of this Agreement), and, in the event the transactions
contemplated hereby shall not be consummated, each party will return to the
other party all copies of nonpublic documents and materials which have been
furnished in connection therewith. Such documents, materials and information
shall not be communicated to any third person (other than to the respective
counsel, accountants, financial advisors, engineers, or the lenders of any
party). Prior to the Closing, Buyer

ASSET PURCHASE AGREEMENT - PAGE 20
<PAGE>

shall not use any confidential information in any manner whatsoever except
solely for the purpose of evaluating the proposed purchase and sale of the
Acquired Assets, or the negotiation or enforcement of this Agreement or any
agreement contemplated hereby. The obligation of each party to treat such
documents, materials and other information in confidence shall not apply to any
information that (i) is or becomes lawfully available to such party from a
source other than the furnishing party, provided that such confidential
information is not known by the receiving party to be subject to another
confidentially agreement with or other obligation of secrecy to the furnishing
party, (ii) is or becomes generally available to the public other than as a
result of disclosure by such receiving party or its agents, or (iii) is required
to be disclosed under applicable law or judicial process, but only to the extent
it must be disclosed, and after notice to the furnishing party.

         SECTION 5.2 Reasonable Efforts; Notification.

                  (a) Upon the terms and subject to the conditions set forth in
this Agreement, the parties shall use all reasonable efforts to take, or cause
to be taken, all reasonable actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things reasonably
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner reasonably practicable, the Closings, and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of any of the
transactions contemplated by this Agreement, including seeking to have any stay
or temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement.

                  (b) Original Owners and Seller shall give prompt notice to
         Buyer, and Buyer shall give prompt notice to Original Owners and
         Seller, of (i) any representation or warranty made by such party
         contained in this Agreement that has become untrue or inaccurate in any
         material respect, or (ii) the failure by it to comply with or satisfy
         any covenant, condition or agreement to be complied with or satisfied
         by it under this Agreement; provided, however, that such notification
         shall not, in and of itself, excuse or otherwise affect the
         representations, warranties, covenants or agreements of the parties or
         the conditions to the obligations of the parties under this Agreement.

         SECTION 5.3 Fees and Expenses; Taxes.

                  (a) Except as set forth in Schedule 5.3 and Subsection 5.3(b),
         all fees and expenses incurred by the parties in connection with the
         Closings, this Agreement and the transactions contemplated by this
         Agreement (the "Expenses") shall be paid by the party incurring such
         expenses.

ASSET PURCHASE AGREEMENT - PAGE 21
<PAGE>

                  (b) In the case of a willful and material breach of this
         Agreement by any party, all Expenses incurred by the prevailing,
         nonbreaching party or parties in connection with such breach, shall be
         paid by the party breaching this Agreement.

                  (c) Seller shall be responsible for the payment, if any, of
         any and all importation taxes, Value Added Taxes, and other related
         expenses to the Mexican customs and tax authorities necessary to modify
         the import regime on the Acquired Assets from temporary to definitive.

         SECTION 5.4 Public Announcements. Buyer, Original Owners and Seller
will consult with each other before issuing, and will provide to each other the
opportunity to review and comment upon, any press release or other public
statements with respect to the transactions contemplated by this Agreement, and
shall not issue any press release or make any public statement prior to such
consultation and prior to the Closing Dates, except as may be required by
applicable law, court process or obligations pursuant to any listing agreement
with any national securities exchange, in which case the party required to make
the release or announcement shall allow the other parties reasonable time to
comment on such release or announcement in advance of such issuance.

         SECTION 5.5 Bank Accounts. Prior to the Second Closing Date, Seller
will deliver to Buyer a list of all bank accounts, accounts with any other type
of financial institution and safe deposit boxes of Seller and persons authorized
to sign or otherwise act with respect thereto as of the date thereof.

         SECTION 5.6 Credit Line. At the First Closing, Buyer shall establish in
favor of Seller a Revolving Line of Credit which shall provide for advances in
the maximum principal amount at any one time outstanding of $5,375,000.00, on
terms and conditions satisfactory to Buyer in Buyer's sole discretion. The sole
purpose of the Credit Line shall be to fund certain liabilities of Original
Owners in such amounts and on such dates as Buyer shall approve. The Credit Line
shall be evidenced by a Revolving Promissory Note, and payment of amounts due
under the Credit Line shall be secured by a first priority Lien on all Acquired
Assets, as evidenced by a mortgage and pledge of assets executed by Seller. The
Credit Line shall be subject to terms and conditions set forth in the Revolving
Credit Agreement dated January 24, 2003, between Seller and Buyer (the "Credit
Agreement"). All amounts advanced by Buyer to Seller under the Credit Line shall
be due on demand, or if no demand is made, on the Second Closing Date. Principal
outstanding under the Credit Line plus accrued interest and other amounts due,
if any, under the Credit Agreement shall be referred to as the "Repayment
Amount". If the transactions contemplated by this Agreement to occur at the
Second Closing are consummated, then, and only in such event, amounts due under
the Credit Line shall be satisfied through the payment by Seller to Buyer of the
Repayment Amount, less the sum of (a) one-half ( 1/2) of the U.S. GAAP cash
operating loss of the Business for the month of January 2003, and (b) the lesser
of U.S. $50,000.00 and one-half (1/2) of the U.S. GAAP cash operating loss of
the Business for the period from February 1, 2003 through February 7, 2003, as
more fully set forth in the Credit Agreement.

         SECTION 5.7 Payment of Indebtedness. Prior to the Second Closing,
Original Owners, in consultation with Seller, will repay the liabilities
described in Schedule 5.7. At least three (3)

ASSET PURCHASE AGREEMENT - PAGE 22
<PAGE>

business days prior to the Second Closing, Seller shall, unless Buyer agrees
otherwise, obtain from the creditors listed in Schedule 5.7:

                  (a) a letter certifying the entire amount due as of the Second
         Closing Date to each such creditor; and

                  (b) wire transfer instructions for the payoff of such
         liabilities.

         SECTION 5.8 Employee Matters.From the First Closing Date through the
Second Closing Date or earlier termination of this Agreement, Buyer and Original
Owners will consult with each other with respect to communications with
employees or employees' labor unions. The parties intend that Buyer become the
substitute employer for some, but not all of the employees of Original Owners,
if the Second Closing occurs. To that end, Buyer will determine prior to the
Second Closing Date, which employees of Original Owners Buyer desires to employ.
Buyer understands that the employees are represented by a labor union and that
discussions relating to any change of terms of employment for the employees must
be agreed by the labor union, in accordance with Mexican Labor Law. Upon Second
Closing, Buyer will employ the designated employees of Original Owners on the
same terms and conditions as such employees were employed by Original Owners,
unless otherwise agreed by the labor unions, in accordance with Mexican Labor
Law; however, prior to Second Closing, nothing in this Agreement shall be
construed to require Buyer to hire or continue the employment of any particular
number of employees of Original Owners or to continue in effect any particular
employee benefit plan or arrangement of Seller or Original Owners. Prior to the
Second Closing, Buyer shall notify Original Owners and Seller of the employees
whom Buyer does not intend to employ, with the understanding that Original
Owners will lay off such employees. Buyer will pay severance payments for
employees that Original Owners lay off up to $250,000.00. Except for the
employees that Buyer designates to be laid off, Buyer agrees to be the
substitute employer for all employees of Original Owners after the Second
Closing. Buyer agrees that for each employee that it maintains as substitute
employer, it will, unless the employees' labor unions agree otherwise, as it may
be allowed under Mexican Labor Law, allow employees to maintain the seniority
and all other conditions attained by such employees when employed by Original
Owners and otherwise provide benefits required under the employees' labor
agreement with Original Owners and/or the labor union, as the case may be .
However, Buyer shall have no liability whatsoever with respect to any matter
relating to the employment of any person by Seller or Original Owners prior to
the Second Closing Date or the costs of laying off employees of Original Owners
prior to the Second Closing, except for the Assumed Liabilities. Similarly,
Seller and Original Owners shall have no liability whatsoever with respect to
any matter relating to the employment of any person by Buyer after the Second
Closing Date or the costs of laying off employees of Buyer after the Second
Closing.

                                    ARTICLE 6
                      CONDITIONS PRECEDENT TO FIRST CLOSING

         SECTION 6.1 Conditions to Each Party's Obligation to Effect the First
Closing. The respective obligations of each party to effect the Closing are
subject to the satisfaction, or waiver on or prior to the First Closing Date of
the following conditions:

ASSET PURCHASE AGREEMENT - PAGE 23
<PAGE>

                  (a) Authorizations, Consents, and Approvals. Any
authorizations, consents, approvals, orders or waivers required to be obtained,
and all filings, notices or declarations required to be made with any Federal,
foreign, state or local governmental regulatory agency, shall have been obtained
or made.

                  (b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
First Closing shall be in effect; provided, however, that each of the parties
shall have used such party's reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.

         SECTION 6.2 Conditions to Obligations of Seller. The obligations of
Seller to effect the First Closing and to purchase the Acquired Assets pursuant
to this Agreement shall, at the option of Seller, be subject to the
satisfaction, on or prior to the First Closing Date, of the following
conditions:

                  (a) Representations and Warranties. The representations and
warranties of Original Owners, set forth in this Agreement, in each case as of
the date of this Agreement, and as of the First Closing Date as though made on
and as of the First Closing Date, shall be true and correct, and Seller shall
have received a certificate to such effect, signed on behalf of Original Owners
by authorized officers of Original Owners with respect to representations and
warranties of Original Owners.

                  (b) Performance of Obligations of Original Owners. Original
Owners shall have performed all obligations required to be performed by them
under this Agreement at or prior to the First Closing Date, and Seller shall
have received a certificate to such effect signed on behalf of each of Original
Owners by an authorized officer of each.

                  (c) Performance of Obligations of Buyer. Buyer shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the First Closing Date, and Seller shall have received a certificate
to such effect signed on behalf of Buyer by an authorized officer of it.

                  (d) Directors Authorizations. Original Owners shall have
received approval of the sale of the Acquired Assets, pursuant to meetings of
their Board of Directors, as prescribed by the charter and bylaws of Original
Owners.

                  (e) No Suit or Judgment. There shall be no suit or proceeding
instituted to prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby, and there shall be no judgment, order or
decree by any court with proper jurisdiction prohibiting consummation of such
transactions.

                  (f) Delivery of Notarial Instruments and Invoices. Subject to
the terms of this Agreement, Original Owners shall have delivered and shall have
caused such instruments of transfer or conveyance, and of assignment, as are
reasonably requested by Buyer to vest in Seller good and marketable title to the
Acquired Assets, including, without limitation, a notarial instrument, executed

ASSET PURCHASE AGREEMENT - PAGE 24
<PAGE>

by a properly empowered notary public and Original Owners, evidencing the
transfer of the Real Property and invoices, executed by Original Owners,
evidencing the transfer of the Acquired Assets other than the Real Property.

         SECTION 6.3 Conditions to Obligations of Buyer. The obligations of
Buyer to effect the First Closing and to establish the Credit Line pursuant
Section 5.6 of this Agreement shall, at the option of Buyer, be subject to the
satisfaction, on or prior to the First Closing Date, of the following
conditions:

                  (a) Representations and Warranties. The representations and
warranties of Original Owner and Seller, set forth in this Agreement, in each
case as of the date of this Agreement, and as of the First Closing Date as
though made on and as of the First Closing Date, shall be true and correct, and
Buyer shall have received a certificate to such effect, signed on behalf of
Original Owners by authorized officers of Original Owners with respect to
representations and warranties of Original Owners, and signed on behalf of
Seller by an authorized Officer of Seller with respect to representations and
warranties of Seller.

                  (b) Performance of Obligations of Original Owners and Seller.
Original Owners and Seller shall have performed all obligations required to be
performed by them under this Agreement at or prior to the First Closing Date,
and Buyer shall have received a certificate to such effect signed on behalf of
each of Original Owners and Seller by an authorized officer of each.

                  (c) Directors Authorizations. Original Owners shall have
received approval of the sale of the Acquired Assets, pursuant to meetings of
its Board of Directors of Original Owners, as prescribed by the charter and
bylaws of Original Owners.

                  (d) No Suit or Judgment. There shall be no suit or proceeding
instituted to prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby, and there shall be no judgment, order or
decree by any court with proper jurisdiction prohibiting consummation of such
transactions.

                  (e) Opinion of Counsel. Buyer shall have received written
opinions, dated as of the Closing Date, from counsel for Seller in form
reasonably satisfactory to Buyer.

                  (f) Board and Lender Authorizations. Buyer shall have received
approval of the sale and purchase of the Acquired Assets by the Board of
Directors of Buyer, as well as any authorizations, consents or waivers required
to be obtained by Buyer from its lenders in order for Buyer to enter into the
transactions made the subject of this Agreement.

                  (g) Mortgagee's Policy of Title Insurance. Buyer shall have
received a Mortgagee's Policy of Title Insurance in form and content and
containing such exceptions to title as are reasonably acceptable to Buyer.

         SECTION 6.4 Conditions to Obligations of Original Owners. The
obligations of Original Owners to effect the First Closing and to sell the
Acquired Assets pursuant to this Agreement shall,

ASSET PURCHASE AGREEMENT - PAGE 25
<PAGE>

at the option of Original Owners, be subject to the satisfaction, on or prior to
the First Closing Date, of the following conditions:

                  (a) Representations and Warranties. The representations and
warranties of Seller and Buyer, set forth in this Agreement, in each case as of
the date of this Agreement, and as of the First Closing Date as though made on
and as of the Closing Date, shall be true and correct, and Original Owners shall
have received a certificate to such effect, signed on behalf of Seller by an
authorized officer of Seller and Buyer with respect to representations and
warranties of Seller and by an authorized officer of Buyer with respect to
representations and warranties of Buyer

                  (b) Performance of Obligations of Seller and Buyer. Seller and
Buyer shall have performed all obligations required to be performed by them
under this Agreement at or prior to the First Closing Date, and Original Owners
shall have received a certificate to such effect signed on behalf of each of
Seller and Buyer by an authorized officer of each.

         SECTION 6.5 Frustration of Closing Conditions. Buyer, Seller and the
Original Owners may not rely on the failure of any condition set forth on this
Article 6 to be satisfied, if such failure was caused by such party's failure to
act in good faith or to use its reasonable efforts to cause the First Closing to
occur.

                                    ARTICLE 7
                     CONDITIONS PRECEDENT TO SECOND CLOSING

         SECTION 7.1 Conditions to Each Party's Obligation to Effect the Second
Closing. The respective obligations of each party to effect the Second Closing
are subject to the satisfaction, or waiver on or prior to the Second Closing
Date of the following conditions:

                  (a) Authorizations, Consents, and Approvals. Any
authorizations, consents, approvals, orders or waivers required to be obtained,
and all filings, notices or declarations required to be made with any Federal,
foreign, state or local governmental regulatory agency, shall have been obtained
or made.

                  (b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
Second Closing shall be in effect; provided, however, that each of the parties
shall have used such party's reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.

         SECTION 7.2 Conditions to Obligations of Buyer. The obligations of
Buyer to effect the Second Closing and to purchase the Acquired Assets pursuant
to this Agreement shall, at the option of Buyer, be subject to the satisfaction,
on or prior to the Second Closing Date, of the following conditions:

                  (a) Representations and Warranties. The representations and
warranties of Seller, set forth in this Agreement, in each case as of the date
of this Agreement, and as of the Second

ASSET PURCHASE AGREEMENT - PAGE 26
<PAGE>

Closing Date as though made on and as of the Second Closing Date, shall be true
and correct, and Buyer shall have received a certificate to such effect, signed
on behalf of Seller by an authorized officer of Seller with respect to
representations and warranties of Seller.

                  (b) Performance of Obligations of Seller. Seller shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Second Closing Date, and Buyer shall have received a certificate
to such effect signed on behalf of Seller by an authorized officer of Seller.

                  (c) Board Authorizations. Seller shall have received approval
of the sale of the Acquired Assets, pursuant to meetings of its Board of
Directors, as prescribed by the charter and bylaws of Seller.

                  (d) No Suit or Judgment. There shall be no suit or proceeding
instituted to prohibit or otherwise challenge the legality or validity of the
transactions contemplated hereby, and there shall be no judgment, order or
decree by any court with proper jurisdiction prohibiting consummation of such
transactions.

                  (e) Opinion of Counsel. Buyer shall have received written
opinions, dated as of the Second Closing Date, from counsel for Seller in form
reasonably satisfactory to Buyer.

                  (f) Material Adverse Change. From and after the date of this
Agreement, there shall not have been any Material Adverse Change to any of the
operations, financial condition, revenues or properties of Seller and the
Business.

                  (g) Board and Lender Authorizations. Buyer shall have received
approval of the sale and purchase of the Acquired Assets by the Board of
Directors of Buyer, as well as any authorizations, consents or waivers required
to be obtained by Buyer from its lenders in order for Buyer to enter into the
transactions made the subject of this Agreement.

                  (h) Delivery of Notarial Instruments and Invoices. Subject to
the terms of this Agreement, Seller shall have delivered and shall have caused
such instruments of transfer or conveyance, and of assignment, as are reasonably
requested by Buyer to vest in Buyer good and marketable title to the Acquired
Assets, including, without limitation a notarial instrument, executed by a
properly empowered notary public and Seller, evidencing the transfer of the Real
Property and invoices, executed by Seller evidencing the transfer of the
Acquired Assets, other than the Real Property.

                  (i) Payment and Compromise of Indebtedness. Buyer shall have
determined, within its sole discretion, that indebtedness of Original Owners has
been compromised, settled and paid to such an extent that the Acquired Assets
are subject to no Liens and, in the opinion of Buyer, are not subject to any
material claims of any kind, whether valid or invalid.

                  (j) Cancellation of Lien Securing the Xanadu Debt. Seller
shall cause Xanadu to take all steps necessary to effect the cancellation of the
Lien securing the Xanadu Debt, including, but not limited to, executing and
delivering the Xanadu Release.

ASSET PURCHASE AGREEMENT - PAGE 27
<PAGE>

                  (k) Owner's Policy of Title Insurance. Buyer shall have
received a Owner's Policy of Title Insurance in form and content and containing
such exceptions to title as are reasonably acceptable to Buyer.

         SECTION 7.3 Conditions to Obligations of Seller. The obligations of
Seller to effect the Second Closing and to transfer and convey the Acquired
Assets pursuant to this Agreement shall, at the option of Seller, be subject to
the satisfaction, on or prior to the Second Closing Date, of the following
conditions:

                  (a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement, in each case as of the date of
this Agreement, and as of the Second Closing Date as though made on and as of
the Second Closing Date, shall be true and correct, and Seller, shall have
received a certificate to such effect signed on behalf of Buyer by an authorized
officer of Buyer.

                  (b) Performance of Obligations of Buyer. Buyer shall have
performed all obligations required to be performed by it under this Agreement at
or prior to the Second Closing Date, and Seller shall have received a
certificate to such effect, signed on behalf of Buyer by an authorized officer
of Buyer.

         SECTION 7.4 Frustration of Closing Conditions. Buyer, Seller and the
Stockholders may not rely on the failure of any condition set forth on this
Article 7 to be satisfied, if such failure was caused by such party's failure to
act in good faith or to use its reasonable efforts to cause the Second Closing
to occur.

                                    ARTICLE 8
                        TERMINATION, AMENDMENT AND WAIVER

         SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the Second Closing Date without liability:

                  (a) by the unanimous written consent of Buyer, Seller and the
         Original Owners;

                  (b) by Buyer or Seller if the Second Closing shall not have
         occurred on or before February 17, 2002, unless the failure to effect
         the Closing is the result of a material breach of this Agreement by the
         party seeking to terminate;

                  (c) by Buyer, Seller or the Original Owners:

                           (i) if any Governmental Entity shall have issued an
                  order, decree or ruling or taken any other action permanently
                  enjoining, restraining or otherwise prohibiting the First
                  Closing or Second Closing and such order, decree, ruling or
                  other action shall have become final and nonappealable, as
                  long as the party seeking termination of the Agreement is not
                  responsible for the issuance of such order, decree, ruling or
                  action; and

ASSET PURCHASE AGREEMENT - PAGE 28
<PAGE>

                           (ii) in the event of any breach by Buyer, Seller or
                  the Original Owners, respectively, of its or their respective
                  agreements, representations or warranties contained herein and
                  the failure of such party to cure such breach within ten (10)
                  days after receipt of notice from any other party requesting
                  such breach to be cured; and

                  (d) by Buyer prior to the Second Closing if, in Buyer's sole
         discretion in the course and scope of conducting due diligence on the
         Seller, it is of the opinion that the Acquired Assets are
         unsatisfactory for purchase or that the conditions to the Second
         Closing set forth in Section 7.2 cannot be satisfied by February 17,
         2002, provided, however, that Buyer shall provide Seller with written
         notice as to the basis of Buyer's opinion, providing reasonable detail
         of the basis of such opinion, and prior to Buyer's right to terminate
         the Agreement, Buyer shall allow Seller a reasonable period of time,
         not in excess of the later to occur of February 17, 2002, and fourteen
         (14) days following notice, to remedy the matters addressed in such
         notice.

         SECTION 8.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and have no effect, without any liability or obligation on the part of any
party, other than the provisions of this Section 8.2 and Article 9. In the event
that Buyer, Seller or the Original Owners, shall terminate this Agreement
pursuant to Section 8.1(b) or (c) hereof, the rights of the parties, as the case
may be, to pursue any and all rights they may have at law or equity or hereunder
shall survive unimpaired.

         SECTION 8.3 Amendment. This Agreement may be amended by the parties at
any time prior to each Closing Date by an instrument in writing signed on behalf
of each of the parties hereto.

         SECTION 8.4 Extension: Waiver. At any time prior to each Closing Date,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement, or (c) waive compliance with any
of the agreements or conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.

         SECTION 8.5 Procedure for Termination. A termination of this Agreement
pursuant to Section 8.1 in order to be effective, shall require action by its or
their respective Board of Directors or the duly authorized designee of its or
their Board of Directors.

                                    ARTICLE 9
                                 INDEMNIFICATION

         SECTION 9.1 Indemnification.(a) By Seller and the Original Owners.
Subject to the limitations set forth in Section 9.1(e), from and after the First
Closing Date, Seller and the Original Owners, shall, jointly and severally, (i)
indemnify and hold harmless Buyer and Buyer's officers, directors, employees and
attorneys from and against any and all losses which Buyer or such persons may
suffer

ASSET PURCHASE AGREEMENT - PAGE 29
<PAGE>

or incur, resulting from, related to or arising out of (a) any misrepresentation
or breach of warranty of Seller or the Original Owners contained in or made
pursuant to this Agreement; (b) any breach by Seller or the Original Owners of
any of their agreements or obligations contained in or made pursuant to this
Agreement; (c) any material liability or expense related to Buyer being treated
as a substitute employer under Mexican federal labor laws with respect to
Original Owners' or Seller's employees; (d) any material liability or expense
related to the acts or omissions of Seller or the Original Owners as related to
the Acquired Assets, or any liabilities, other than the Assumed Liabilities,
arising out of an event occurring prior to the Second Closing; or (e) any and
all claims or litigation arising out of any of the foregoing; and (ii) reimburse
Buyer and each of its officers, directors, employees and attorneys for any and
all reasonable fees, costs and expenses related thereto (including without
limitation, reasonable legal expenses) ((i) and (ii), collectively, "Buyer's
Indemnifiable Losses").

                  (b) By Buyer. From and after the Second Closing Date, Buyer
shall (i) indemnify and hold harmless Seller and the Original Owners and their
successors and assigns, from and against any and all losses, which any of them
may suffer or incur, resulting from, related to or arising out of (x) any
misrepresentation or breach of warranty of Buyer which is contained in or made
pursuant to this Agreement; (y) any breach by Buyer of any of its agreements or
obligations contained in or made pursuant to this Agreement; and (z) any and all
claims or litigation arising out of any of the foregoing; and (ii) reimburse the
Seller and Original Owners and their officers, directors, employees and
attorneys for any and all reasonable fees, costs and expenses related thereto
(including, without limitation, reasonable legal expenses) ((i) and (ii),
collectively, "Seller's Indemnifiable Losses").

                  (c) Direct Liability. In the event that the person or entity
seeking indemnification under this Article 9 (the "Indemnified Party") shall
become aware of an event which will give rise to or result in an Indemnifiable
Loss, he, she or it shall, within thirty (30) days thereafter, give written
notice to the party from whom indemnification under this Article 9 is sought
(the "Indemnifying Party") of the amount of the Indemnifiable Loss, together
with sufficient information to enable the Indemnifying Party to determine the
accuracy and nature of the claimed Indemnifiable Loss (the "Indemnity Notice").
The failure of the Indemnified Party to give the Indemnifying Party an Indemnity
Notice shall not release the Indemnifying Party from liability under this
Article 8; provided, however, that the Indemnifying Party shall not be liable
for losses which would not have been incurred but for the delay in the delivery
of, or the failure to deliver, the Indemnity Notice. Within thirty (30) days
after the receipt by the Indemnifying Party of the Indemnity Notice, the
Indemnifying Party shall either (i) pay to the Indemnified Party an amount equal
to the Indemnifiable Loss, or (ii) object to such claim, in which case the
Indemnifying Party shall give written notice to the Indemnified Party of such
objection together with the reasons therefore, it being understood that the
failure of the Indemnifying Party to so object shall preclude the Indemnifying
Party from asserting any claim, defense or counterclaim relating to the
Indemnifying Party's failure to pay any Indemnifiable Loss.

                  (d) Third Party Claim. In the event the facts giving rise to
the claim for indemnification under this Article 9 shall involve any action or
threatened claim or demand by any third party against the Indemnified Party (a
"Third Party Claim"), within the earlier of, as applicable, ten (10) days after
receiving notice of the filing of a lawsuit or thirty (30) days after receiving
notice

ASSET PURCHASE AGREEMENT - PAGE 30
<PAGE>

of the existence of a claim, demand, suit or proceeding (each a "Claim") giving
rise to the claim for indemnification, the Indemnified Party shall send written
notice of such Claim to the Indemnifying Party (the "Claim Notice") . The
failure of the Indemnified Party to give the Indemnifying Party the Claim Notice
shall not release the Indemnifying Party from liability under this Article 9;
provided, however, that the Indemnifying Party shall not be liable for losses
incurred by the Indemnified Party which would not have been incurred but for the
delay in the delivery of, or the failure to deliver, the Claim Notice. Except as
set forth below, the Indemnifying Party shall be entitled to defend such Claim
in the name of the Indemnified Party at his or its own expense and through
counsel of his or its own choosing. The Indemnifying Party shall give the
Indemnified Party notice in writing within ten (10) days after receiving the
Claim Notice from the Indemnified Party in the event the Claim is one involving
an instituted suit or proceeding, or otherwise within thirty (30) days, of his
or its intent to do so. If the Indemnifying Party chooses to defend or prosecute
a Third Party Claim, all the Indemnified Parties shall cooperate in the defense
or prosecution thereof. Such cooperation shall include the retention and (upon
the Indemnifying Party's request) the provision to the Indemnifying Party of
records and information that are reasonably relevant to such Third Party Claim,
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder.
Whether or not the Indemnifying Party assumes the defense of a Third Party
Claim, the Indemnified Party shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim without the Indemnifying
Party's prior written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. The Indemnified Party may elect, by notice in writing to
the Indemnifying Party, to continue to participate through his or its own
counsel, at his or its expense, but the Indemnifying Party shall have the right
to control the defense of the Claim with counsel reasonably acceptable to the
Indemnified Party. In the event that the Indemnifying Party is controlling the
defense of the Claim and shall have negotiated a settlement thereof, which
proposed settlement is final and unconditional as to the parties thereto and
contains an unconditional release of the Indemnified Party, without the
Indemnified Party being liable for damages of any kind or nature or being
otherwise required to pay any amount of money to any third party and does not
include the imposition of any restrictions on the part of the Indemnified Party
or require that the Indemnified Party make an admission of guilt or liability or
deliver a confession of judgment, or any other non-financial obligation which,
in the reasonable judgment of the Indemnified Party, renders such settlement
unacceptable, the Indemnified Party shall consent to such settlement.

                  (e) Limitation of Indemnity. Anything herein to the contrary
notwithstanding,

                           (i) neither Buyer, on the one hand, nor Seller and
                  the Original Owners on the other hand, shall be required to
                  indemnify the other for any Indemnifiable Losses unless and
                  until (x) the aggregate amount for which all Indemnifiable
                  Losses such party would otherwise (but for this provision) be
                  liable on account thereof exceeds Fifty Thousand and No/100
                  Dollars ($50,000.00) (the "Threshold Amount"), but following
                  the exceeding of the Threshold Amount the Indemnifying Party
                  shall be liable for all Indemnifiable Losses (including those
                  below the Threshold Amount);

                           (ii) in no event shall Seller and the Original
                  Owners, in the aggregate, be required to indemnify Buyer for
                  Indemnifiable Losses in excess of $5,375,000.00 and

ASSET PURCHASE AGREEMENT - PAGE 31
<PAGE>

                  in no event shall Buyer be required to indemnify Seller and
                  the Original Owners, in the aggregate, for Indemnifiable
                  Losses in excess of $5,375,000.00; and

                           (iii) neither party shall be entitled to make a claim
                  for indemnity with respect to a misrepresentation or breach of
                  warranty after the Expiration Date thereof as set forth in
                  Section 10.1.

         SECTION 9.2 Right to Set-Off. To secure the indemnification provided
for in Section 9.1(a) hereof, and to compensate Buyer for any claim having as
its basis the indemnification provided for in Section 9.1(a) hereof, Buyer shall
have a right of set-off from any sum due to any of Seller as a Deferred Payment
or from any sum due to Original Owners.

         SECTION 9.3 Limitations on Liability in Connection with Failure to Make
Advances. Notwithstanding provisions to the contrary in this Agreement, it is
agreed that if Buyer refuses to advance Five Million Three Hundred Seventy Five
Thousand and No/100 Dollars ($5,375,000.00) under the Credit Line for the
purposes set forth in Section 5.6, Original Owners and Seller shall have no
obligation to Buyer other than repayment of amounts due under the Credit Line.

                                   ARTICLE 10
                               GENERAL PROVISIONS

         SECTION 10.1 Survival of Representations, Warranties and Covenants. The
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Second Closing Date for a period of
two (2) years, except that (i) the representations in Section 3.1(h) and 3.2(f)
shall survive so long as any claim may be made in respect of such matters by a
taxing authority; and (ii) the representations in Section 3.1(j) and 3.2 (h) to
the extent same relate to Environmental Laws shall survive for so long as any
claim may be made in respect of such matters by any third party. The date on
which a representation or warranty ceases to survive as above set forth shall be
its "Expiration Date". This Section 10.1 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Second Closing Date.

         SECTION 10.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally when received if or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

                  (a) if to Buyer, to :

                           H I Ceramics, S.A. de C.V.
                           1649 Frankford Road West
                           Carrollton, Texas 75007
                           United States of America
                           Attn: Michael D. Lohner

ASSET PURCHASE AGREEMENT - PAGE 32
<PAGE>

                           with a mandatory copy to:

                           Mr. Eduardo Siqueiros T.
                           Barrera, Siqueiros Y Torres Landa, S.C.
                           Montes Urales 470 - Piso 1
                           Lomas de Chapultepec
                           Mexico, D.F., 11000, Mexico

                           and

                           William E. Swart
                           Bell Nunnally & Martin LLP
                           3232 McKinney Avenue, Suite 1400
                           Dallas, Texas 75204-2429
                           United States of America

                  (b) if to Original Owners, to:

                           Maquiladora Produr, S.A. de C.V.
                           Km.14, 5-70, Carretera Roosevelt
                           Zona 2 de Mixco
                           Guatemala, Guatemala, C.A.
                           Attn: Armando Araujo

                           and

                           Industrias Tromex Corporation, S.A. de C.V.
                           Km.14, 5-70, Carretera Roosevelt
                           Zona 2 de Mixco
                           Guatemala, Guatemala, C.A.
                           Attn: Armando Araujo

                           with a mandatory copy to:

                           Fernando Hernandez Gomez
                           Hernandez, Mayorquin, Rodriguez Y Castillo
                           Av. Toreros Sur #830
                           Colonia Jardines de Guadalupe
                           Zapopan, Jalisco, Mexico 45030

ASSET PURCHASE AGREEMENT - PAGE 33
<PAGE>

                  (c) if to Seller, to:

                           Ceramica Y Vidrio de Nuevo Leon, S.A. de C.V.
                           Km.14, 5-70, Carretera Roosevelt
                           Zona 2 de Mixco
                           Guatemala, Guatemala, C.A.
                           Attn: Armando Araujo

                           with a mandatory copy to:

                           Fernando Hernandez Gomez
                           Hernandez, Mayorquin, Rodriguez Y Castillo
                           Av. Toreros Sur #830
                           Colonia Jardines de Guadalupe
                           Zapopan, Jalisco, Mexico 45030

         SECTION 10.3 Definitions.For purposes of this Agreement, the following
terms shall have the following respective meanings:

         "Acquired Assets": As defined in Section 1.1(a).

         "Assumed Liabilities": As defined in Section 1.4.

         "Business": As defined in Section 1.1(a).

         "Buyer's Indemnifiable Losses": As defined in Section 9.1(a).

         "Claim": As defined in Section 9.1(d).

         "Claim Notice": As defined in Section 9.1(d).

         "Closings": As defined in Section 2.1.

         "Closing Dates": means the First Closing Date and the Second Closing
         Date.

         "Credit Agreement": as defined in Section 5.6.

         "Credit Line": as defined in Section 5.6.

         "Deferred Payment": As defined in Section 1.3.

         "Designated Liabilities": As defined in Section 1.1(a).

         "Environmental Laws" means, as of the Closing Date, any applicable
         treaties, laws, regulations, enforceable requirements, order, decrees
         or judgments issued, promulgated or entered into by any Governmental
         Entity, which relate to (x) pollution or protection of the environment
         or (y) Hazardous Materials generation, storage, use, handling, disposal
         or transportation, and any similar or implementing state or local law,
         and all amendments or regulations promulgated thereunder.

         "Excluded Assets": As defined in Section 1.1(b).

         "Expenses": As defined in Section 5.3(a).

         "Expiration Date": As defined in Section 10.1.

         "Financial Statements": As defined in Section 3.1(e).

         "First Closing": As defined in Section 2.1.

         "First Closing Date: As defined in Section 2.1.

         "GAAP": means those generally accepted accounting principles and
         practices, applied on

ASSET PURCHASE AGREEMENT - PAGE 34
<PAGE>

         a consistent basis, which are recognized as such by the applicable
         financial accounting standards boards of the U.S. or Mexico and/or
         their respective successors and which are applicable in the
         circumstances as of the date in question.

         "Governmental Entity": Any court or any foreign, federal, state,
         municipal or other governmental department, commission, board, bureau,
         agency, authority or instrumentality.

         "Hazardous Materials" means all explosive or regulated radioactive
         materials or substances, hazardous or toxic substances, wastes or
         chemicals, petroleum or petroleum distillates, asbestos or asbestos
         containing materials and all other materials or chemicals regulated
         pursuant to any Environmental Law.

         "Import Permit": as defined in Section 2.2.

         "Imported Property": as defined in Section 2.2.

         "Indemnified Party": As defined in Section 9.1(c).

         "Indemnifying Party": As defined in Section 9.1(c).

         "Indemnity Notice": As defined in Section 9.1(c).

         "Initial Payment": As defined in Section 1.2.

         "Knowledge": of a party means, the current actual knowledge of a person
         obtained (through the exercise of due diligence of any of its officers
         or agents).

         "Legal Requirement": means any federal, state, local, municipal,
         foreign, international, multi-national, or other administrative order,
         constitution, law, ordinance, principle of common law, regulation,
         statute, or treaty as in effect on the date in question.

         "Liens": All mortgages, deeds of trust, claims, liens, security
         interests, pledges, leases, conditional sale contracts, rights of first
         refusal, options, charges, liabilities, obligations, agreements,
         easements, rights-of-way, powers of attorney, limitations,
         reservations, restrictions and other encumbrances of any kind.

         "Material Adverse Change" or "Material Adverse Effect": Any change
         (individually or in the aggregate) that has a material adverse effect
         on the business, results of operations or financial condition of a
         party that is likely to result in a cost, expense, charge or liability
         equal to or greater than $25,000.00. The use of the term "material" in
         this Agreement shall refer to a fact or circumstance in which the
         damage or loss resulting therefrom would cause a Material Adverse
         Effect.

         "Material Agreements": means Original Owners' Material Agreements and
         Seller's Material Agreements.

         "Option": As defined in Section 1.1(b).

         "Option Exercise Price": As defined in Section 1.1(c).

         "Order": Any judgment, writ, decree, injunction, order, stipulation,
         compliance agreement or settlement agreement issued or imposed by,
         entered into with, a Governmental Entity, whether or not having the
         force of law.

         "Original Owners' Material Agreements": As defined in Section 3.1(r).

         "Permits": All permits, authorizations, certificates, approvals,
         registrations, variances, exemptions, rights-of-way, franchises,
         privileges, immunities, grants, ordinances, licenses and other rights
         of every kind and character (a) under any (1) federal, state, local or
         foreign statute, ordinance or regulation, (2) Order or (3) contract
         with any Governmental Entity or (b) granted by any Governmental Entity.

         "Real Property": As defined in Section 3.1(k).

ASSET PURCHASE AGREEMENT - PAGE 35
<PAGE>

         "Repayment Amount": As defined in Section 5.6.

         "Revenue": As defined in Section 1.3.

         "Second Closing": As defined in Section 2.1.

         "Second Closing Date": As defined in Section 2.1.

         "Seller's Indemnifiable Losses": As defined in Section 9.1(b).

         "Seller's Material Agreements": As defined in Section 3.2(p).

         "Stockholders": means the owners of all shares, options, warrants,
         general or limited partnership interests, membership interests, or
         other ownership interests (regardless of how designated) of or in a
         corporation, partnership, limited liability company, trust, or other
         entity, whether voting or nonvoting, including common stock, preferred
         stock, or any other equity security.

         "Taxes": Any federal, state, local or foreign income, sales, excise,
         real or personal property franchise, capital stock, gross receipts,
         license, payroll, employment, unemployment, social security, stamp,
         occupation, intangible, estimated tax or other taxes, assessments,
         fees, levies, imposts, duties, deductions or other charges of any
         nature whatsoever (including, without limitation, interest and
         penalties) imposed by any law, rule or regulation.

         "Third Party Claim": As defined in Section 9.1(d).

         "Threshold Amount": As defined in Section 9.1(e)(i).

         "Value Added Tax": means the Value Added Tax arising under applicable
         Mexican law.

         "Xanadu": as defined in Section 1.4.

         "Xanadu Debt": as defined in Section 1.4.

         SECTION 10.4 Interpretation; Governing Language. When a reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. This Agreement is in
the English language only, and all communications between the parties relative
to this Agreement shall be conducted in the English language only. Any version
of this Agreement in the Spanish language, whether or not executed by the
parties, is and shall be prepared solely for the benefit of Seller and
Stockholders and shall be considered a non-binding translation of the Agreement.

         SECTION 10.5 Counterparts; Facsimiles. This Agreement may be executed
in one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Facsimile
signatures shall be effective.

         SECTION 10.6 Entire Agreement: No Third Party Beneficiaries. This
Agreement constitutes the entire agreement and supersedes all prior
representations, agreements or understandings among the parties with respect to
the subject matter of this Agreement both written and oral. This Agreement is
not intended to confer upon any person other than the parties any rights or
remedies hereunder.

         SECTION 10.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas, regardless of the
laws that might otherwise govern

ASSET PURCHASE AGREEMENT - PAGE 36
<PAGE>

under applicable principles of conflict of laws thereof; provided, however, that
to the extent the law of Mexico expressly provides for application of the law of
Mexico to real property and personal property situated within Mexico, the law of
Mexico shall apply to that limited extent. Each of the parties hereby agrees
that the laws of the State of Texas bear a reasonable relationship to the
transaction. Buyer is a subsidiary of DWC GP, Inc., a Texas corporation.

         SECTION 10.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by Seller without the prior written
consent of the other. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.

         SECTION 10.9 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court located in the
State of Texas, County of Dallas, or in any Texas State court located in the
County of Dallas, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit himself, herself or itself to the personal jurisdiction of
any Federal court located in the State of Texas, County of Dallas, or in any
Texas State court located in the County of Dallas, in the event any dispute
arises out of this Agreement or any of the transactions contemplated by this
Agreement, (b) agrees that he, she or it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court
and (c) agrees that he, she or it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a Federal court located in the State of Texas, County of Dallas, or a
Texas State court located in the County of Dallas.

         SECTION 10.10 Exhibits and Schedules. Any matter set forth on any
Schedule shall be deemed set forth on all other Schedules to the extent
relevant. Except when the context requires otherwise, any reference in this
Agreement to any Article, Section, clause, Schedule or Exhibit shall be to the
Articles, Sections and clauses of, and Schedules and Exhibits to, this
Agreement. The words "include," "includes" and "including" are deemed to be
followed by the phrase "without limitation." Any reference to the masculine,
feminine or neuter gender shall include such other genders and any reference to
the singular or plural shall include the other, in each case unless the context
otherwise requires. All Exhibits and Schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. When a reference is made in this Agreement to a Section,
Exhibit or Schedule, such reference shall be to a Section of, or an exhibit or
Schedule to, this Agreement unless otherwise indicated.

         SECTION 10.11 Arbitration. The parties agree that except as otherwise
set forth in this Agreement, any disputes arising out of or in connection with
this Agreement shall be finally settled by arbitration under the then current
rules of arbitration of the United Nations Commission for International Trade
Law ("UNCITRAL"). There shall be three arbitrators. Each of Buyer and Seller
shall select one arbitrator at will, and the third arbitrator shall be selected
by the two arbitrators

ASSET PURCHASE AGREEMENT - PAGE 37
<PAGE>

previously chosen by Buyer and Seller. The arbitration shall take place in
Dallas, Texas and shall be conducted in English. The decision of the arbitrators
shall be final and shall be enforceable in any court of competent jurisdiction.
The non-prevailing party in arbitration will pay its own expenses, the fees of
each arbitrator, the administrative costs of the arbitration and the expenses,
including reasonable attorneys' fees and witness fees and costs, incurred by the
other party to the arbitration. Each party hereby irrevocable consents to the
jurisdiction of the UNCITRAL solely for the purposes of arbitration described in
this Section 10.11.

         SECTION 10.12 Currency and Payment. All amounts payable hereunder shall
be calculated and payable in United States dollars.

                             SIGNATURE PAGE FOLLOWS

ASSET PURCHASE AGREEMENT - PAGE 38
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.

                                       ORIGINAL OWNERS:

                                       MAQUILADORA PRODUR, S.A. DE C.V.,
                                       a Mexico corporation

                                       By: /s/ ARMANDO ARAUJO
                                          --------------------------------------
                                       Name:  Armando Araujo
                                       Title: President

                                       INDUSTRIAS TROMEX CORPORATION, S.A. DE
                                       C.V., a Mexico corporation

                                       By: /s/ ARMANDO ARAUJO
                                          --------------------------------------
                                       Name:  Armando Araujo
                                       Title: President

                                       SELLER:

                                       CERAMICA Y VIDRIO DE NUEVO LEON,
                                       S.A. DE C.V., a Mexico corporation

                                       By: /s/ ARMANDO ARAUJO
                                          --------------------------------------
                                       Name:  Armando Araujo
                                       Title: President

ASSET PURCHASE AGREEMENT - PAGE 39
<PAGE>

                                       BUYER:

                                       H I CERAMICS, S.A. DE C.V.
                                       a Mexico corporation

                                       By: /s/ KENNETH J. CICHOCKI
                                          --------------------------------------
                                       Name:  Kenneth J. Cichocki
                                       Title: Legal Representative

ASSET PURCHASE AGREEMENT - PAGE 40
<PAGE>
                                   EXHIBIT "A"

                                 Xanadu Release

<PAGE>

                                  EXHIBIT "B-1"

                              No-Lien Certificates

<PAGE>

                                  EXHIBIT "B-2"

                              No-Lien Certificates

<PAGE>

                                   EXHIBIT "C"

                              Property Tax Invoices

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