A New Approach to Capital Funding and Profit Improvement

CMFC Self-funding Business LoanFinance

(Legal Agreement 243.0)

This Agreement is between:

Cavendish Management Finance Corporation Ltd., Registration No. 4013695

of 31 Harley Street, London W1G 9QS

hereinafter referred to as "CMFC"

and ...... Registration No......

of......

......

......

hereinafter referred to as "the Client"

The purpose of the Agreement

The purpose is to enter into a staged contractual programme (the “Programme”) whereby CMFC will propose, and the Client may adopt, purchase cost savings which can be linked to the provision of a financing facility from GE Commercial Finance or from another source (the “Financier”)s30 month loan, under which all interest and service chargescapital repayments are normally met by the purchase cost savings. During this Programme, all cost savings (net of third party administration costs) are shared by CMFC and the Client as defined below. Although the Client shall be able to benefit from the Programme without taking out a loan, in the absence of the discipline of loan repayments CMFC will receive additional protection for its income, which will no longer be reduced pro-rata to any major fall in Annual Savings.

1. Stages of the Programme

1.1 The Programme has three stages: the “Audit Stage” (a period of variable length during which potential cost savings are identified and agreed), the “Implementation Stage” (a 30-month period in which the agreed savings are implemented) and the “Consolidation Stage” (an oungoing stage in which the savings are maintained and monitored).

1.2Upon the signing of this Agreement, the Audit Stage will commence. CMFC will conduct a purchase audit of the Client's business and will indicate the level of cost savings it believes it can achieve.

1.2If either CMFC or the Client does not wish to proceed further, the Programme and this Agreement shall terminate, subject only to the provisions of Clause 57 and the continuing provisions of Clause 911.

1.33Before the Contract Period starts, CMFC and the Client will discuss CMFC’s summary of cost savings; the Client will advise of any changes he is unwilling to make and the annual forecast cost savings excluding VAT (the “Annual Savings”) will be agreed. The Client will also advise CMFC if there are any savings which cannot be realised immediately due to stock levels or other factors; such savings will nevertheless be included in the Annual Savings.

1.4CMFC will then produce a schedule of the agreed projected cost savings and how it is proposed they are to be achieved with specified suppliers and in what timescale (the “Designated Supplies Schedule” and “Designated Suppliers”).

1.5 The Programme now enters the Implementation Stage. Before the commencement date the Client’s auditor, or some other agreed third party, may be appointed as the financial overseer (the “Overseer”) of the Programme. If appointed, the Overseer will ensure that, throughout the Programme, all monies are managed in accordance with this Agreement. In addition the Overseer shall be responsible for the conduct of any audit called for under the terms of this Agreement.

1.6If the Client later adopts cost savings suggested by CMFC, the Annual Savings will increase correspondingly from that moment. The Client and CMFC shall also agree any monthly adjustments needed during the Ramp-up Period – this is the period between the commencement of the cost saving implementation and the time when cost savings are expected to reach the Annual Savings level. If CMFC and the Client both wish to proceed, they confirm in writing their agreement.

1.4Before the Contract Period commences the Client’s auditor, or some other agreed third party, may be appointed as the financial overseer (the “Overseer”) of the Programme. If appointed, the Overseer will ensure that, throughout the Programme, all monies are managed in accordance with this Agreement. In addition the Overseer shall be responsible for the conduct of any audit called for under the terms of this agreement.

to enter into a trial period (the “Trial Period”) during which the cost savings will be implemented, validated, benchmarked and documented.

1.4 Before the Trial Period commences the Client’s auditor, or some other agreed third party, shall be appointed as the financial overseer (the “Overseer”) of the Programme. The Overseer will ensure that, throughout the Programme, all monies are managed in accordance with this Agreement.

1.5 By the end of the Trial Period, CMFC will have:

-prepared a detailed summary of the cost savings secured or anticipated and how they have been or are to be achieved;

-indicated to the Client whether a loan will be available and under what terms.

1.6 If the Client wishes a loan to be linked to the cost savings identified, and if such a loan is available immediately or when the Lender agrees to make a loan available subject to the Client providing additional security through the Programme (the “Unsecured Option”), the Programme will enter the “Contract Period” under the “Loan Alternative” as set out in Clause 3. The savings will be paid into the “Contract Period Fund” and disbursed by the Overseer. Any loan is a separate agreement between the Lender and the Client and will be subject to the terms and conditions of the Lender.

1.7 If the Client does not wish a loan to be linked to the cost savings identified, or if no loan is made available to the Client, the Programme will enter the “Contract Period” under the “non-Loan Alternative” as set out in Clause 4. The savings will be paid into the “Contract Period Fund” and disbursed by the Overseer.

1.8 Before the Contract Period starts, CMFC and the Client will discuss CMFC’s summary of cost savings; the Client will advise of any changes he is unwilling to make and the annual forecast cost savings excluding VAT (the “Annual Savings”) will be agreed. CMFC will then produce a schedule of the agreed projected cost savings and how it is proposed they are to be achieved with specified suppliers (the “Designated Supplies Schedule” and “Designated Suppliers”). If the Client later adopts cost savings suggested by CMFC, the Annual Savings will increase correspondingly from that moment.

2.Operation of the Programme during the Trial Period

2.1Unless otherwise agreed by both parties, the Trial Period shall last for three months.

2.2Both parties shall agree an administration fee with the Overseer.

2.3All cost savings resulting from CMFC proposals shall be paid by the Client into a fund controlled by the Overseer within seven days of each month end.

2.4When the Programme proceeds to the Contract Period phase, the Client and CMFC are each entitled to 50% of the savings (net of the Overseer’s fee) achieved in the Trial Period. CMFC’s share will be disbursed by the Overseer at the end of the Trial Period. The Client’s share will also be disbursed at this time unless Additional Security is required under the Unsecured Option, in which case it will be placed in the Loan Collateral Reserve and remain there until security is no longer required by the Lender.

32.Operation Financial elements of the Programme during the Contract Period (Loan Alternative)

23.1Before the Implementation Stage commencesBefore the Contract Period commences, a “Finance Schedule” shall be drawn up which will form part of this Agreement and which will be countersigned by CMFC, the Client and (if appointed) the Overseer. The Finance Schedule will define inter alia:

-the Annual Savings at the start of the Contract Period;

-the “Monthly Savings” for each of the 30 months of this stage of the Programme (calculated as one twelfth of the totalcurrent Annual Savings), as adjusted during the Ramp-up Period that have been implemented);

-details of the finance package from the Financier or other source. It is normal for a separate commission to be paid by the Financier to CMFC, and the amount of any such commission will be declared in these details;loan and its provider (the “Lender”),including: the amount of the loan (which shall not exceed the Annual Savings), the month of the final repayment instalment (which shall be 30 months from the start of the Contract Period) and the Lender’s interest rate basis;

- if the Lender requires additional security from the Client for the loan (the “Unsecured Option”), the amount so required (the “Additional Security”);

- the “Overseer’s Fee”;

-a statement of the planned monthly disbursement by the Client to the Overseer if appointed, or to CMRFC direct if notthe Overseer.

23.2WThe Client undertakes, within seven days of each month end, the Overseer if appointed, or the Client if not, shall to make a “Monthly Payment” to CMFC into the Contract Period Fund equal to CMFC’s agreed share (as defined in Clause 2.3) of the current Monthly Savings in that month (with any subsequent modifications provided for in this Agreement)as defined in 3.3 below and to pay 30 such instalments during the Contract Perioduntil the completion of the Implementation Stage. Payment shall be made either directly to CMFC or, if an Overseer is appointed, to the Overseer, who will then pay CMFC.

2.3The Client and CMFC shall each be due 50% (after deduction of the Overseer’s Fee, if any) of the first £30,000 of Monthly Savings. The Client shall be due 60% of the next £20,000 (CMFC 40%), 70% of the following £20,000 (CMFC 30%), 80% of the next £20,000 (CMFC 20%) and 90% of any Monthly Savings in excess of £90,000 (CMFC 10%).

2.4Subject to agreement between the FinancierGE Commercial Finance (or other funder) and the Client, the Overseer if appointed may use the Client’s share of the Monthly Payment to pay the interest and service charges on the finance facility, returning any surplus to the Client.

2.5 After 30 instalments as defined above have been fully paid to CMFC the end of the initial Contract Period, the Implementation Stage shall automatically end and the Consolidation Stage commence, in which CMFC will continue to monitor the effectiveness of the cost savings. Within seven days of each month end, the Overseer if appointed, or the Client if not, shall pay CMFC a fee of 25% of whatever was the the share passed to CMFC will reduce by 75%Monthly Payment in month 30 of the Implementation Stage.

2.6The Consolidation Stage (and therefore the Programme) shall continue until the Programme terminates in accordance with Clause 6.

23.3The Client and CMFC shall each be due 50% (after deduction of the Overseer’s Fee) of the first £30,000 of Monthly Savings. The Client shall be due 60% of the next £20,000 (CMFC 40%), 70% of the following £20,000 (CMFC 30%), 80% of the next £20,000 (CMFC 20%) and 90% of any Monthly Savings in excess of £90,000 (CMFC 10%). These sums shall be termed the “Client Entitlement” and the “CMFC Entitlement” respectively.

23.4If appointed, the Overseer The Overseer will use the client’s share disburse the Monthly Payment as follows: his own fee, the CMFC Entitlement, the Client Entitlement. The Client Entitlement will be used for payment of the loan interest and service chargesscheduled repayment of the capital and will be paid directly to the Lender. Any surplus will, subject to Clause 3.5, be returned to the Client, unless otherwise agreed between GE and the client (further funding may be desired).. Any deficit will be paid directly by the Client to the Lender.

3.5The Contract Period for the Unsecured Option is divided into two phases: the pre-loan phase, during which a reserve (the “Loan Collateral Reserve”) is accumulated for a pre-agreed period to meet the Lender’s security requirements and the post-loan phase, during which the loan is repaid and the Lender’s security requirements continue to be applied to the outstanding amount. In the pre-loan phase, the Client’s share of the Monthly Payments will be disbursed to the Loan Collateral Reserve, and in the post-loan phase this Reserve will be maintained at the required security level.

3.6If the Client repays the loan capital in full before the end of the Contract Period, the Monthly Payment between then and the end of the Contract Period shall not be altered.

4.Operation of the Programme during the Contract Period (non-Loan Alternative)

4.1Before the Contract Period commences, a “Finance Schedule” shall be drawn up which will form part of this Agreement and which will be countersigned by CMFC, the Client and the Overseer. The Finance Schedule will define inter alia:

-the Annual Savings at the start of the Contract Period;

-the “Monthly Savings” (calculated as one twelfth of the Annual Savings at the start of the Contract Period, unless the Annual Savings have been recalculated in accordance with Clause 6.3, in which case the Monthly Savings shall be the average of the Annual Savings currently obtaining and the Annual Savings at the start of the Contract Period);

-the “Overseer’s Fee”.

4.2The Client undertakes, within seven days of each month end, to make a “Monthly Payment” into the Contract Period Fund equal to the current Monthly Savings and to pay 30 such instalments during the Contract Period.

4.3The Client and CMFC shall each be due 50% of the first £30,000 of Monthly Savings. The Client shall be due 60% of the next £20,000 (CMFC 40%), 70% of the following £20,000 (CMFC 30%), 80% of the next £20,000 (CMFC 20%) and 90% of any Monthly Savings in excess of £90,000 (CMFC 10%). These sums shall be termed the “Client Entitlement” and the “CMFC Entitlement” respectively.

4.4The Overseer will disburse the Monthly Payment as follows: his own fee, the CMFC Entitlement, the Client Entitlement.

35.The calculation of cost savings

35.1Cost savings shall be determined by either the simple difference between the price from the new Designated Supplier and the previous price paid to the old supplier as applied to the current level of supplies, or the level of savings made with an unchanged Designated Supplier as a result of new purchasing arrangements or strategies introduced by CMFC. When such savings are anticipated, an objective method of measuring the quantum will be agreed between the Client and CMFC on a case-by-case basis. If the savings are made due to the application of other systems, methods or strategies then the quantum will be evaluated by the Overseer.

53.2If a Designated Supplier notifies an increase in price or if a specification change is proposed, the Client may decide either to accept the new prices or specification or to withdraw that supplier from the Designated Supplies Schedule. CMFC may attempt to provide the Client with an alternative source of supply but shall be under no obligation to do so. If the Client decides to accept the new prices and/or specification offered by the Designated Supplier or an alternative suggested by CMFC, the cost savings due to CMFC shall be calculated to maintain the same percentage saving on the new price as obtained relative to the old price.

35.3If the Client makes a minor specification amendment such that there is no material change to the function, fit or usage of any item for a product included in the Designated Supplies Schedule and still receives a similar cost saving then this shall be deemed to continue the cost saving in the Designated Supplies Schedule.

46.Protection of the Client’s interests

46.1The Client need not accept any cost saving proposal made by CMFC nor use any supplier introduced by CMFC. If a proposal is accepted but is later found by the Client to be unsatisfactory, the Client may at any stage revert to the previous supplier or ask CMFC to help to negotiate new arrangements. However the Client must notify and re-examine alternatives with CMFC for any changes he proposes that will reduce the Annual Savings by more than 5% in total.

46.2It is the Client’s responsibility of both parties to satisfy himself themselves that the agreed Annual Ssavings agreed at the end of the Trial Period continue to beare achieved during the Contract Implementation PeriodStage. There are two grounds on which variations to the Annual Savings and/or Monthly Savings may be made during this stage:

4.2.1 If the aggregate level of Annual Savings has materially changed since it was previously defined;

4.2.2 If the timing of the implementation of one or more of the individual savings has materially changed since it was previously defined.

4.3If either party If the Client believes that one or both of these elements has changed significantly, he will bring it to the attention of the other. If both parties so agree, a revised sum will be set for the Annual Savings and/or the Monthly Savings, with any consequent change to the Monthly Payment taking effect on the 1st of the following month.

4.4If both parties cannot so agree, either party the savings have materially reduced, he may request an fresh audit of the cost savings, which will be carried out by CMFC in conjunction with the Overseer, if appointed, or otherwise with the Client’s auditors. This audit will establish both the current forecast 12-month level of savings,(taking into account seasonal variations,)and the current timetable of implementation, and may result in a revision of the Annual Savings and/or Monthly Savings. If both CMFC and the client can agree on changes to the cost saving level, an audit will not be necessary. If the level of savings during the Ramp-up Period cannot be agreed by the Client and CMFC, an audit can be requested by either party.