SERVICE AGREEMENT

(1)

MURRAY INTERNATIONAL METALS LIMITED a company registered in England under number 01241058 whose registered office is at 95 High Street, Edgware, Middlesex, HA8 7DB (“the Company”); and

(2)

KENNETH COCKBURN of 6 East Comiston, Edinburgh EH10 6RZ (“the Executive”).

1.

DEFINITIONS

1.1

In this agreement and the schedules to it the following expressions shall, unless the context otherwise requires or otherwise as expressly provided, have the following meanings:-

1.1.1

“associated company” any company (or subsidiary thereof as defined in clause 1.1.7) in which any company in the Group is or shall be the holder of not less than 10% of the equity share capital (as defined by Section 744 Companies Act 1985) or to which the Company or any company in the Group renders or shall render substantial managerial, administrative or technical services;

1.1.2

“basic salary” the annual salary payable to the Executive pursuant to clause 4.1;

1.1.3

“Board” the Board of Directors of the Company (or any director or committee of directors duly authorised by the Board of Directors of the Company for the purposes of this agreement);

1.1.4

“Commencement Date” the date hereof;

1.1.5

“Confidential Information” :-

1.1.5.1

any trade secrets, customer lists, trading details or other information of a confidential nature relating to the goodwill and secrets of any company in the Group (including, without limitation, details of the activities, businesses, expansion plans, business strategy, marketing plans, sales forecasts, forward planning programmes, investments, prospective investments (and their terms), research activities, inventions, ideas, computer programs, secret processes, designs, manufacturing processes, financial information, results and forecasts

of any such company and details of its employees and contractors and of the requirements, terms of trade and identity of its suppliers and customers and prospective suppliers and customers); and

1.1.5.2

any other information specifically designated by any company in the Group as confidential; and

1.1.5.3

any information in relation to which any company in the Group owes a duty of confidentiality to any third party;

1.1.6

“directly or indirectly” (without prejudice to the generality of the expression) the Executive acting either alone or jointly whether as principal, agent, shareholder, investor, director, partner, consultant, contractor, manager, employee or otherwise;

1.1.7

“Group” together the Company, any holding company of the Company and any subsidiary and subsidiary undertakings of the Company and of such holding company within the meanings of sections 258, 736 and 736A of the Companies Act 1985 and any associated company;

1.1.8

“holiday year” a calendar year commencing 1 ^st January;

1.1.9

“Invention” (without prejudice to the generality of the expression) any discovery, formula, database right, invention, secret process, improvement in procedure, trade mark, service mark, business name, registered design, design right, patent, copyright work or other intellectual property right made, discovered, created, acquired or produced by the Executive (whether alone or jointly with any other person) in the course of the Executive’s employment or which relates to or is useful in connection with the business or any product or service of the Company or any company in the Group;

1.1.10

“Termination Date” the date of the termination of this agreement;

1.1.11

“working days” weekdays excluding Saturdays, Sundays, bank or other public holidays; and

1.1.12

“WTR” the Working Time Regulations 1998.

1.2

The headings to the clauses of this agreement and the paragraphs of the schedules are for convenience only and have no legal effect and references to the singular shall include a reference to the plural and vice versa where the context so admits or requires.

1.3

References in this agreement to statutory provisions shall, where the context so admits or requires, be construed as including references to the corresponding provisions of any earlier statute (whether repealed or not) directly or indirectly amended, consolidated, extended or replaced by such provisions, or re-enacted in such provisions, or the corresponding provisions of any subsequent statute directly or indirectly amending, consolidating, extending or replacing such provisions, and shall include any orders, regulations, instruments or other subordinate legislation made under the relevant statute.

1.4

References in this agreement to clauses and the schedules are references to clauses of and the schedules to this agreement and references to this agreement include the schedules the provisions of which form part of this agreement and are incorporated herein.

1.5

The provisions of sections 324 and 328 of the Companies Act 1985 shall apply in determining for the purpose of this agreement whether the Executive has an interest in any shares or other securities.

2.

TERM

2.1

The Company shall employ the Executive and the Executive shall serve the Company as from the Commencement Date, subject to the terms and conditions of this agreement, unless and until either party shall give to the other not less than twelve months’ notice in writing to terminate this agreement.

2.2

In any event and without prior notice or compensation this agreement shall determine on the last day of the month in which the Executive attains the age of 65 years.

2.3

The Executive’s period of continuous employment with the Company began on 1 August 1977.

3.

JOB TITLE AND DUTIES

3.1

The Executive shall be employed as Managing Director or in such other capacity of like status as the Board may agree with the Executive and shall report to the Board or such other person as the Board may nominate from time to time.

3.2

The Executive shall be an executive director and, subject always to the control of the Board, shall carry out such duties and (without further remuneration) accept such offices and directorships, notwithstanding the Executive’s job title but consistent with the Executive’s status, as may be assigned to the Executive from time to time by the person to whom he reports and by the Board and such duties and/or offices and/or directorships may relate to the business of the Company or of any company in the Group.

3.3

The Executive shall (in addition to observing the Executive’s implied duty of fidelity and duties as a director at law to which the Executive is subject):-

3.3.1

use all proper means to the best of the Executive’s ability to maintain and improve the business of the Company and the companies in the Group and further their respective reputations and interests;

3.3.2

faithfully, efficiently and diligently perform those duties and exercise such powers as are consistent with them which shall from time to time be assigned to or vested in the Executive;

3.3.3

comply with all lawful and reasonable directions, restrictions, rules and regulations from time to time laid down or adopted by the Board;

3.3.4

at all times promptly give to the Board (in writing, if so requested) such information, advice and explanations as it may require in connection with matters relating to the Executive’s employment under this agreement or with the business of the Company or any company in the Group;

3.3.5

immediately disclose to the Board (in writing if so requested) all facts and matters which may or do give rise to a conflict between the Executive’s personal interests and those of the Company or the Group;

3.4

The Executive shall devote himself exclusively to the performance of his duties during normal working hours (8.30am to 5.30pm Monday to Friday inclusive of one hour for lunch daily) and at all other times which may be necessary for the proper performance of his duties except in the case of illness or accident. It is agreed and acknowledged that any additional hours worked by the Executive outside normal business hours fall within Regulation 20(2) WTR on the basis that they are not measured or predetermined and can be determined by the Executive and accordingly that Regulation 4(1) WTR does

not apply to such additional hours. In the event that any additional hours worked by the Executive outside normal working hours are not covered by Regulation 20(2) WTR, the Executive agrees that the limit in Regulation 4(1) WTR shall not apply to the Executive. The Executive shall be entitled to withdraw such agreement by giving 3 months’ prior written notice to the Company.

3.5

The Executive’s place of employment shall be within a radius of 50 miles of Murray Works, Newbridge Industrial Estate, Midlothian. The Executive shall undertake such travel both within and outside the United Kingdom as may be necessary for the proper performance of the Executive’s duties but shall not be obliged (except for occasional visits in the ordinary course of his duties) to reside outside the United Kingdom.

3.6

Notwithstanding any other provision of this agreement, the Company shall not be under any obligation to vest in or assign to the Executive any powers or duties and may without the need to give any reason for so doing during any period of notice served or purported to be served under this agreement:-

3.6.1

require the Executive to perform:-

3.6.1.1

all his normal duties; or

3.6.1.2

a part only of his normal duties and no other; or

3.6.1.3

such other duties as it may require and no others; or

3.6.1.4

no duties whatever; and

3.6.2

suspend or exclude the Executive from all or any premises of the Company and any company in the Group; and

3.6.3

require the Executive not to contact any customers, clients, suppliers or employees of the Company or any company in the Group in connection with the business of the Company or any Company in the Group; and

3.6.4

require the Executive immediately to resign from any directorships which the Executive holds in the Company and any company in the Group (and if the appropriate resignation shall not be signed and delivered to the Board within seven days after such request the Executive agrees that the Board may appoint any director of the Company to sign such notice of resignation for and on behalf of the Executive and in the Executive’s name for such purpose);

3.6.5

require the Executive to return to the Company all documents and other materials (including copies) belonging to the Company or any company in the Group.

3.6.6

The Executive’s salary will not cease to be payable (in whole or in part) nor will the Executive cease to be entitled to any other benefits under this agreement nor will the Executive cease to be bound by any express obligations pursuant to this agreement (save as specifically varied by this clause 3.6) by reason only of such requirement as is described in this clause 3.6 and, for the avoidance of doubt, the Executive shall remain bound by his duty of good faith to the Company and the provisions of clause 12 of this agreement.

3.7

If the Executive fails to make himself available for work during any period of notice of termination of the Executive’s employment, other than pursuant to clause 3.6 or in accordance with clauses 6 or 7 or with the prior written permission of the Board, the Executive shall not be entitled to any payment of salary or to any benefits in respect of such absence.

3.8

The Executive shall under no circumstances whatsoever either directly or indirectly receive or accept for his own benefit any commission, rebate, discount, gratuity or profit from any person, company or firm having business transactions with any company in the Group unless previously agreed with the Board.

4.

REMUNERATION

4.1

The basic salary (which shall accrue from day to day) shall be £300,600.00 per annum payable by bank credit transfer in equal monthly instalments in arrears not later than on the last day of each month. The basic salary shall be deemed to be inclusive of any director’s fees and other emoluments which the Executive may receive or be entitled to receive from the Company or any company within the Group save as otherwise provided for in this Agreement. After the first anniversary of the Commencement Date, the Executive’s salary shall be reviewed and shall increase to not less than £334,000.00 per annum. Thereafter, although the Company shall be under no obligation to increase the salary payable hereunder, the salary shall be subject to review at least once in each year.

4.2

Any benefits provided by the Company or any company in the Group to the Executive or the Executive’s family which are not expressly referred to in this agreement shall be regarded as at the absolute discretion of the Company and shall not constitute a contractual entitlement of the Executive under this agreement or otherwise.

4.3

In the absolute discretion of the Company the Executive may be paid an annual bonus. The amount of any such bonus payment and the timing of any such payment shall be in the absolute discretion of the Company. For the avoidance of doubt, the Executive shall not be entitled to a bonus under this clause if, for whatever reason, he is not in the employment of the Company or he is under notice of termination (whether given or received) on the date when the bonus is payable. It is also agreed that the payment of a discretionary bonus in respect of any one year, or over a period of years, does not confer any legal or moral entitlement to a bonus, or to compensation for the loss of any bonus, in any subsequent year.

5.

EXPENSES

5.1

The Company shall repay to the Executive all expenses reasonably and properly incurred by the Executive in the performance of the Executive’s duties under this agreement upon appropriate evidence of such expenditure being provided to the Company.

5.2

The Executive undertakes to observe the Company’s policy on expenses from time to time.

6.

HOLIDAYS

6.1

The Executive shall be entitled to paid holidays of 35 working days per calendar year accruing pro rata over the holiday year in addition to all usual bank and other public holidays.

6.2

The Executive shall obtain the consent of the person to whom the Executive reports prior to taking any holiday and may not carry forward any unused part of the holiday entitlement to a subsequent holiday year without the prior written approval of the person to whom the Executive reports.

6.3

Upon termination of the Executive’s employment for any reason other than gross misconduct or other breach of this agreement the Executive shall be

entitled to pay in lieu of any accrued holiday entitlement at the rate of 1/260 ^th of the basic salary in respect of each day of holiday entitlement, fractions of a day being rounded down to the nearest whole number of days. Upon termination of the Executive’s employment for any reason, the Executive shall be required to make a payment to the Company in respect of holiday taken in excess of the accrued holiday entitlement at the rate described above in this clause. Any such sum due to the Company may be deducted from any remuneration or other sums otherwise payable by the Company to the Executive.

7.

ILLNESS OR ACCIDENT

7.1

The Executive shall be entitled to receive the basic salary and other contractual benefits to which the Executive is entitled under this agreement if prevented from performing his duties through illness, accident or other such incapacity at the rate of full pay for the first fifty-two weeks of such absence and at the rate of half pay for the next fifty two weeks thereafter. The Executive’s entitlement to basic salary and other benefits under this agreement shall cease upon the expiry of the period referred to in this clause and any continuing payments of salary after this period of one hundred and four weeks shall be at the Company’s sole discretion. The Company may on such terms and conditions as the Company shall determine appoint a replacement to undertake some or all of the Executive’s duties in the event that the relevant period of illness, accident or other incapacity exceeds 20 consecutive working days.

7.2

The basic salary payable by the Company to the Executive in circumstances where clause 7.1 applies shall abate by the amount of sickness or disability benefit which the Executive receives under any scheme maintained by the Group or under any relevant legislation.

7.3

The Executive shall notify the Company immediately of any illness, accident or other incapacity in such form and thereafter at such intervals as the Company may require.

7.4

If the Executive shall be prevented from performing his duties as a result of illness, accident or incapacity for any period in excess of one hundred and four weeks in the preceding forty eight months, the Company may, notwithstanding

any other provision of this agreement, terminate the Executive’s employment by giving the statutory minimum period of notice, in which case the Executive shall not be entitled to any additional compensation.

7.5

In circumstances where the Executive shall have been prevented from performing his duties for the periods referred to in clause 7.4, the Company may in its absolute discretion, if the Executive is a director of the Company or any company in the Group, require the Executive to resign any such directorship (the imposition by the Company and the compliance by the Executive with which requirement shall not constitute a breach of contract on the part of the Company) and, if the appropriate resignation shall not be signed and delivered by the Executive to the Board within seven days of such request, the Executive agrees that the Board may appoint any other director of the Company to sign such notice of resignation for and on behalf of the Executive and in the Executive’s name for such purpose.

7.6

The Executive may be required at the request of the Company during the course of his employment to attend a doctor or clinic nominated by the Company for the purpose of a comprehensive medical examination to determine his fitness for continued employment and shall use his reasonable endeavours to ensure the prompt delivery of the relative report to the Company. Notwithstanding the provisions of the Access to Medi