SALES LEDGER FINANCING Terms and Conditions

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SALES LEDGER FINANCING

Terms and Conditions

                                                          Sales Ledger Financing

BARCLAYS BANK PLC

SALES LEDGER FINANCING TERMS AND CONDITIONS (VERSION A/2005)

INCORPORATED INTO OUR SALES LEDGER FINANCING AGREEMENT

These Conditions are signed by the authorised signatories on behalf of each

party to indicate their incorporation into the Sales Ledger Financing Agreement

between:

(Party 1) Barclays Bank PLC and

(Party 2) Allied Healthcare Group Limited

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

With the Commencement Date of the: ___________________ day of _________ 20 _____

Full Names of Authorised Signatory      Signature

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(Party 1) Barclays Bank PLC

David Moffatt                           David Moffatt

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(Party 2)

Paul Weston                             Paul Weston

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(Party 2)

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Barclays Bank PLC

Sales Ledger Financing Terms and Conditions

Order of Clauses

1    Introduction

2    Notification To Us of Debts and Credit Notes

3    Purchase Price of Debts

4    Credit Lines

5    Debtors Control Account and Payment Account

6    Discount, Service Charges and Other Fees

7    Notices to Debtors

8    Debtor's Accounts and Collection of Debts

9    Your Agency

10   Trusts

11   Foreign Debts

12   Information and Documentation

13   Your Warranties to us

14   Your Undertakings to us

15   External Credit Insurance

16   Computerised Facilities

17   Recourse and Reassignment

18   Communications with Debtors and Third Parties

19   Partnerships and Sole Traders

20   Termination of the Agreement

21   Assignment, Delegation, Force Majeure and EMU

22   Waiver, Severance, Variation and Further Acts

23   Service of Notices and Process

24   Power To Act In Your Name

25   Definitions

26   Standard Confidential Invoice Discounting Terms & Conditions

27   Standard Factoring Terms & Conditions

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                                                          Sales Ledger Financing

Barclays Bank PLC

Standard Terms and Conditions

1.   INTRODUCTION

1.1. Certain words have the meanings given after each of them in Condition 25.1

1.2. The Sales Ledger Financing Agreement shows which of our facilities we shall

     be providing to you. Our Non Recourse Facility shall only be available in

     conjunction with at least one other of our services or facilities.

1.3. If we are not to provide you with our Collection Service, then you will be

     our agent for the collection of Debts. If we are not to provide you with

     our Ledger Management Facility you will be our agent for maintaining Debtor

     Ledgers. Each agency will be regulated by these Conditions.

1.4. Even if the Sales Ledger Financing Agreement specifies that notice of

     assignment will not normally be given to some or all of your Debtors, such

     notice may be given in the special circumstances which are described later.

1.5. If we are to provide a Sales Ledger Financing Facility we will require your

     sales ledger to be fully reconciled, clearly identifying all outstanding

     invoices and credit notes in an open item format with all cash and other

     credit items allocated to the appropriate invoices. We may require a

     satisfactory survey and a copy of your latest management accounts.

1.6. The Debts to which this Agreement applies are shown in the Sales Ledger

     Financing Agreement, together with such other Debts as we may subsequently

     agree with you in writing. We agree to purchase from you and you agree to

     sell to us all Debts to which this Agreement applies:

     (i)  which are in existence on the Commencement Date shown in the Sales

          Ledger Financing Agreement: and

     (ii) all such Debts created in future.

1.7. The whole Agreement between you and us shall comprise only

     (i)  this document

     (ii) our document entitled Sales Ledger Financing Agreement.

          All of which have been supplied or are available to you upon request.

          References to "the Agreement" shall include all or any of the above

          together with any variation, amendment or extension of it. The terms

          of this document and the conditions shall prevail over any

          inconsistency shown in any other document. All earlier sales ledger

          financing agreements between you and us and all discussions,

          quotations, warranties and representations by us however made shall be

          of no effect.

1.8. The contractual relationship between you and us set out in the Agreement

     shall begin on the Commencement Date and then continue for the Minimum

     Period, both of which are set out in the Sales Ledger Financing Agreement.

1.9. Our relationship with you is to be governed and interpreted by English law.

     You will submit to the jurisdiction of the English courts. However we may,

     in our discretion, use the courts of any other jurisdiction.

2.   NOTIFICATION TO US OF DEBTS AND CREDIT NOTES

2.1. On the Commencement Date you will deliver to us an Offer with the

     Notification Documents. Such Offer will include all Debts outstanding at

     that date (except those referred to in the Sales Ledger Financing Agreement

     as Non Notifiable Debts) and details of any relative credits. Thereafter,

     within seven days of the completion of each Contract of Sale you will issue

     invoices to your Debtors. At the same time, you will include the relative

     Debt in a Notification Schedule and deliver it to us with the appropriate

     Notification Documents, or in the appropriate application by ledgermaster.

     You will ensure that your ledgers record the sale of each Debt to us.

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Sales Ledger Financing

2.2. Credit Notes issued to Debtors will be dealt with as follows:

     (i)   in the case of our Ledger Management Facility - all credit notes will

           be raised immediately when due and forwarded to us with the relevant

           Notification Schedule;

     (ii)  in the case of any facility or service which has not been selected in

           conjunction with our Ledger Management Facility - you will enter

           details of all credit notes on Notification Schedules and send us

           copies of the credit notes or complete the appropriate application

           via Ledgermaster.

3.   PURCHASE PRICE OF DEBTS

3.1. The Purchase Price of each Debt shall be the amount received by us towards

     the discharge of the Debt but less any trade, prompt settlement or

     retrospective discounts that may apply and less the Discount and less the

     Service Charge.

3.2. If you have our Non-Recourse Facility then the Purchase Price in respect of

     a Covered Debt shall be the amount for which we have assumed the Credit

     Risk, if this shall be greater than the amount referred to in Condition

     3.1.

3.3. The Purchase Price of any Debt expressed in a currency other than sterling

     will normally be paid in sterling unless otherwise agreed. Accordingly:

     (i)   we shall provisionally calculate the Purchase Price at the spot

           buying rate of exchange for the currency of the Purchase Price for

           the date we shall credit the Debt to the Debtor Control Account; and

     (ii)  we shall finally calculate the Purchase Price at the spot buying rate

           of exchange for the currency of the Purchase Price for the date that

           any part of the Purchase Price shall be credited to the Payment

           Account; and

     (iii) any exchange rate losses incurred by us shall be Your Responsibility

           and will accordingly be reflected in the Debtor Control Account and

           the Payment Account.

4.   CREDIT LINES

4.1. Where you have our Non-Recourse Facility, then at the end of the Credit

     Period we may exercise Recourse in respect of a Debt within the Credit Line

     for the amount of:

     (i)   the Value Added Tax included in the Debt; and

     (ii)  the First Loss; and

     (iii) any settlement, trade or retrospective discount taken or claimed.

     We may also exercise Recourse for amounts in excess of the Credit Line. We

     will then accept the Credit Risk for the remainder of the Covered Debt.

4.2. We will notify you of the Credit Line for each Outstanding Debtor as soon

     as convenient after the Commencement Date and thereafter as soon as

     convenient after a Credit Line has been requested by you. Prior to

     Notifying each Debtor's Debts to us, you must have a Credit Line or have

     submitted an application to us for one. Your application must be in the

     form and with the information required by us.

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     All information given by you must be accurate. Credit Lines will be issued

     entirely at our discretion for the purpose of determining the terms upon

     which we will purchase Debts. They will apply only to Debtors with the

     names specified by you. Credit Lines shall, under no circumstances, be

     taken as our indication of the creditworthiness or otherwise of a Debtor.

4.3. We will advise you of Credit Lines by whatever means we consider

     appropriate. We may increase or decrease Credit Lines at any time. We will

     advise you of increases or decreases. Any Notified Debt within a Credit

     Line shall not be affected by a decrease, provided that the Contract of

     Sale shall have been completely performed before Notification to us of the

     Debt.

4.4. You will not reveal to anyone, including your Debtors, the terms, the

     amount or absence of any Credit Lines. As between you and us, such

     information shall be considered legally privileged. Where you have a

     Recourse Facility Credit Lines are set only for the purposes of

     establishing the amount of Early Payments that may be made.

4.5. Where a Credit Line has been established then Outstanding Debts shall be

     treated as Covered Debts in the order in which they shall become due for

     payment. Debts above a Credit Line shall be Approved Debts.

4.6. If we have designated a Debt as an Approved Debt, it (and all other Debts

     due by the same Debtor) shall forthwith and without notice to you be

     treated as Unapproved Debts in any of the following circumstances:

     (i)    you shall have been in breach of any warranty or undertaking to us

            relating to the Debt;

     (ii)   the Debt shall in any way have been disputed by the Debtor or

            subject to a claim by the Debtor to set-off or counterclaim;

     (iii)  it shall be a Non-Notifiable Debt;

     (iv)   the payment terms under the Contract of Sale shall be different from

            those shown on your application for a Credit Line (or if none is

            shown - from those appearing in the Sales Ledger Financing Agreement

            or as agreed by us in writing); or

     (v)    the Goods shall not have been delivered to the Debtor's carrier or

            premises or the Contract of Sale shall not have been fully completed

            (except for payment of the Debt) prior to the Notification to us of

            the Debt; or

     (vi)   the Credit Period shall expire after the date of termination of this

            Agreement or following a Termination Event; or

     (vii)  if the Debtor's failure to pay shall, in our reasonable opinion, be

            due to government action, political events, war, revolution,

            insurrection or to any default or failure by you; or

     (viii) the amount of the Debt shall be reduced as a result of any credit

            note, allowance or other credit being issued or made to or claimed

            by any Debtor for any reason (except a prompt payment discount not

            exceeding 5%);

     (ix)   if the Debtor shall deliver payment to you (except where you have

            our Agency to collect Debts).

4.7. Following a Debt becoming an Unapproved Debt under Condition 4.6 you will

     forthwith repay any Early Payment made in respect of it.

4.8. If you have our Non-Recourse Facility then, even though we may have

     credited the Purchase Price of a Covered debt to the Payment Account under

     Condition 5.2, we may debit the Purchase Price to that account if the Debt

     shall later become Unapproved, whilst still Outstanding.

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Sales Ledger Financing

4.9.   Where you have a Non-Recourse Facility, we may treat an Outstanding

       Approved Debt as an Unapproved Debt at any time once less that 30 days

       shall remain unelapsed before the expiry of the Credit Period and such

       Debt has not become a Covered Debt.

4.10.  If you notify us of a Debt for which no Credit Line has been established

       then such Debt shall always be an Unapproved Debt until we notify you to

       the contrary.

5.     DEBTORS CONTROL ACCOUNT AND PAYMENT ACCOUNT

5.1.   We shall credit the Purchase Price of all Notified Debts, at their

       Notified Value, to your account in our ledgers known as the 'Debtor

       Control Account' but subject to such later adjustment to the value as may

       be needed.

5.2.   On the Payment Account Credit Date stated in Clause 26.26 or 27.21, we

       shall debit the Purchase Price to the Debtor Control Account and also

       credit it to the Payment Account. However where the Debtor is Insolvent

       we shall not deal with the Purchase Price in this way until a proof of

       debt has been admitted or the person with the duty to administer the

       Debtor's affairs has confirmed in writing the validity of the Debt.

5.3.   At the Expiry of the Recourse Period shown in the Sales Ledger Financing

       Agreement we shall exercise Recourse in respect of a Recourse Debt.

5.4.   We shall debit to the Debtor Control Account any of the following:

       (i)    the Notified amount of any credit note issued by you;

       (ii)   an amount equal to any cash discount taken or debit note issued or

              relied upon by a Debtor;

       (iii)  any adjustment to the value of the Debt, advised by you to us or

              to which we may reasonably consider the Debtor is entitled.

5.5.   We shall be entitled to debit the amount of Your Responsibility at any

       time to the Payment Account.

5.6.   You may, at any time, draw from the Payment Account any credit balance

       thereon, less deductions equal to:

       (i)    all credit balances on Debtor's accounts; and

       (ii)   any reserves which we are entitled to create; and

       (iii)  any items which we shall be entitled to debit to the Payment

              Account but shall not have done so. No interest shall accrue to

              you in respect of credit balances on the Payment Account.

5.7.   If you have our Early Payment Facility and you shall have complied to our

       satisfaction with our Pre-Conditions and your other obligation to us, you

       may also draw sums from the Payment Account up to the amount of your

       Availability. In calculating your Availability, the following

       requirements must be taken into account:

       (i)    the debit balance on the Payment Account must not exceed the Early

              Payment Ceiling (shown in the Sales Ledger Financing Agreement);

              and

       (ii)   the debit balance on the Payment Account must not exceed the Early

              Payment Percentage (shown in the Sales Ledger Financing Agreement)

              after deduction of the amounts referred to in Condition 5.6.; and

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       (iii)  Early Payments will not be permitted in respect of Debts in excess

              of the Prime Debtor Restriction shown in the Sales Ledger

              Financing Agreement; and

       (iv)   your Availability will be reduced by the amount of any Early

              Payment made in respect of an Approved Debt or Recourse Debt whose

              Recourse Period has expired.

5.8.   The Early Payment Ceiling, the Early Payment Percentage and the Prime

       Debtor Restriction shall initially be those specified in the Sales Ledger

       Financing Agreement. Any or all of them may at any time be increased or

       decreased by us. You will be notified of such changes. Where you have

       Payment Accounts in different currencies, and your Availability has to be

       calculated, they shall be considered as if they had all been converted to

       sterling at our spot buying rate on the day on which your Availability is

       calculated. All such conversions and any Purchase Account in sterling

       shall be aggregated for the purpose of calculating your Availability.

5.9.   Any withdrawal by you from the Payment Account shall be in the currency

       of the Payment Account or in such other currency as we may agree. Payment

       may only be made by a remittance made payable to you or direct to your

       bank account. Early Payments shall be treated as being made on account of

       the Purchase Price of Debts in the order in which such Debts appear on

       your Notification Schedules and then in the order in which such

       Notification Schedules are entered on the Debtor Control Account.

5.10.  You will repay us on demand any amount by which the debit balance on the

       Payment Account shall exceed your Availability.

5.11.  You may not draw from your Payment Account whilst you are insolvent or

       Insolvency proceedings shall be pending or threatened against you.

5.12.  Upon the occurrence of a Termination Event or the ending of this

       Agreement we shall have the right to set-off all amounts owing by you to

       us (including Your Responsibility) against sums due by us to you. Such

       amounts together with any debit balance on the Payment Account, shall be

       treated as being consolidated in a single account. Any debit balance

       arising from such treatment shall become immediately payable to us and

       any credit balance shall immediately become payable to you. We may also,

       at any time, set-off the amount of any liability of you to us against any

       monies owing by us to you and/or combine any accounts recording

       transactions between you and us. Any obligation of yours expressed in a

       foreign currency may be converted into sterling, at our rate of exchange

       at the time of such set-off or combination of accounts.

5.13.  We will send you weekly statements of the Debtor Control Account and the

       Payment Account. These shall be treated as correct and binding on you,

       except for those errors which shall be manifest or of which we receive

       your written notice within 10 days of our despatch of such accounts to

       you.

5.14.  Following any demand by us to you for payment of any sum or in any

       proceedings you will be bound by a certificate signed by an Officer of

       ours holding our power of attorney as to the balance on the Payment

       Account or the Debtor Control Account any accrued or contingent charges,

       any credit balance on a Debtor's account or any loss or damage suffered

       by us. Such certificate shall be conclusive as to the correctness of the

       certified amount, in the absence of manifest error or error in law.

5.15.  Your obligations to us shall at all times continue without any right of

       set off or counterclaim against us until all the monies due from you to

       us shall have been paid.

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Sales Ledger Financing

5.16.  All payments to be made by you to us shall be made free and clear of, and

       without deduction for or on account of, tax, unless you are required to

       make such a payment subject to the deduction or withholding of tax. In

       the latter case the sum payable by you, in respect of which such

       deduction or withholding is required to be made, shall be increased to

       the extent necessary to ensure that, after the making of such deduction

       or withholding, we receive and retain (free from any liability in respect

       of any such deduction or withholding) a net sum equal to the sum which we

       would have received and so retained had no such deduction or withholding

       been made or required to be made.

5.17.  On the Commencement Date you will make us an Offer in respect of each

       Debt then Outstanding. If we decide that we wish to accept your Offer

       (which will be entirely at our discretion) then we may do so by crediting

       the Notified Value of each accepted Debt to the Debtor Control Account.

       Upon such credit our ownership of each accepted Debt will be complete.

       You hereby transfer ownership of each Debt coming into existence after

       the Commencement Date. Such ownership will vest in us without further

       formality upon the Debt coming into existence.

6.     DISCOUNT, SERVICE CHARGES AND OTHER FEES

6.1.   The Discount shall accrue from day to day and be calculated at the rate

       specified in the Sales Ledger Financing Agreement in respect of each

       Early Payment from the date of its entry on the Payment Account. For such

       purposes, any debit to the Payment Account shall be treated as an Early

       Payment. The Discount shall be calculated on the daily debit balance on

       the Payment Account subject to the following adjustments. Any remittance

       received (other than a payment through BACS - the Bankers Automated

       Clearing System or CHAPS - the Clearing House Automated Payments System)

       which results in a credit to the Payment Account shall not be treated as

       reducing the debit balance on that account until the third Working Day

       after such credit. Discount shall be debited monthly to the Payment

       Account.

6.2.   Upon a Debt being Notified to us we shall debit the Payment Account with

       a Service Charge, for each Notified Debt, at the rates shown in the Sales

       Ledger Financing Agreement. For a Debt expressed in a currency other than

       sterling, the Debt shall nationally be converted to sterling at our spot

       buying rate for the day that we receive the Notification Schedule and the

       Service Charge applied to the converted amount. No refund of Service

       charges shall be made upon termination of the Agreement.

6.3.   If the total of all Service Charges in the period specified in the Sales

       Ledger Financing Agreement falls short of the sum stated for such period

       as the Minimum Service Charge then you will immediately pay us a sum

       equal to such shortfall. Should we consider such shortfall likely we may

       forthwith debit the anticipated shortfall to the Payment Account.

6.4.   Payments by us to you will be made either by cheque or BACS (Bank

       Automated Clearing System) or by Telegraphic Transfer. Payments by cheque

       or BACS will not be subject to an administration charge. Payments by

       Telegraphic Transfers will be subject to an administration charge by us.

6.5.   You will pay us all bank commissions and charges for:

       (i)    keeping any bank account held in trust for us;

       (ii)   collecting remittances for Foreign Debts and collecting and

              converting the proceeds of any Debt expressed in a currency other

              than sterling;

       (iii)  dealing with dishonoured remittances.

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6.6.   After the Commencement Date you will pay us an arrangement fee for any

       variation of the Sales Ledger Financing Agreement requested by you or any

       additional service provided outside its scope. Should the balance on the

       Payment Account exceed your Availability, then we may also make an

       additional facility charge or increase our Service Charge and/or

       Discount.

6.7.   If we have a concern as to the operation of any facility which gives rise

       to our making exceptional visits to your premises or those of any other

       person then we shall raise a charge against you for our reasonable costs

       and expenses incurred.

6.8.   You will fully indemnify us against all costs and expenses payable by us

       in or arising out of any of the following:

       (i)    enforcing this Agreement;

       (ii)   the release of Debts from charges, trusts or other encumbrances;

       (iii)  dealing with disputes by Debtors;

       (iv)   issuing proceedings to collect any Debts, except those for which

              we shall continue to accept the Credit Risk;

       (v)    Assignments or re-assignments of Debts or Related Rights;

       (vi)   all costs and disbursements payable to any opponent or third party

              arising out of claims or proceedings; and you will upon request

              provide us, or we may debit the Payment Account with, such

              security for legal costs and disbursements as we may reasonably

              require.

6.9.   Where you have our Non-Recourse Facility, the following provisions shall

       apply to any Covered Debt to which the Revised VAT Bad Debt Scheme would

       apply but for its assignment to us:

       (i)    we may give notice to you of our intention to reassign all our

              interest in such Covered Debt. At the expiry of the period

              specified in such notice, or if none is so stated then at the time

              of our giving of such notice, all our interest in such Debt shall,

              without further formality, become revested in you. The

              consideration for such revesting shall be sums payable to us under

              subcondition (iv) of this Condition;

       (ii)   you will then use your best endeavours to recover sums available

              for the reduction of the amount of such Covered Debt, including

              any dividend or benefit from the estate of the Debtor;

       (iii)  we shall be at liberty to complete and lodge in your name a proof

              or statement of debt in the Insolvency of the Debtor;

       (iv)   you will pay to us any future sums (after deduction of the

              relevant Value Added Tax proportion thereof) that may be

              recovered by you in respect of such Covered Debt, whether from the

              estate of the Debtor or otherwise and meanwhile you will hold such

              sums in trust for us.

6.10.  All fees and charges are and shall be quoted exclusive of Value Added

       Tax, which shall be added where applicable.

7.     NOTICES TO DEBTORS

7.1.   Except where the Sales Ledger Financing Agreement or these Conditions

       provide to the contrary, you will give notice to each Debtor of the

       assignment to us of the Debts payable by that Debtor, including notices

       on invoices, statements and by general notices. The form of such notice

       will be decided by us. We may also give such notice, at any time, whether

       in your name or ours.

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8.     DEBTOR'S ACCOUNTS AND COLLECTION OF DEBTS

8.1.   Where we provide our Ledger Management Facility or where your agency to

       collect Debts or manage Debtor's accounts has been ended, we will manage

       your Debtor's accounts and provide you with information from them.

8.2.   We may, at all times, take any payment made by a Debtor or any credit or

       allowance given by you to reduce any Covered Debt in priority to any

       Approved or Unapproved Debt, despite any contrary appropriation by you or

       your Debtor. We may deal with any credit balance on a Debtor's Account in

       such manner as we consider appropriate, including paying such balance to

       the Debtor.

8.3.   We may accept payment from a Debtor which is less than the Notified value

       of the Debt in full discharge of it, if the amount of such shortfall

       shall be immaterial and the Purchase Price shall be accordingly reduced.

8.4.   Whether you act as our agent to collect Debts or you have the benefit of

       our Collection Service, subject to Condition 9.2, we shall, as the

       Purchaser of the Debts, at all times have the sole right of collecting

       and enforcing payment of all Debts, in whatever manner we shall consider

       necessary and prudent. Without affecting such right, we will try to

       collect Debts in the manner discussed between us.

8.5.   You will, if required by us, lend your name to any proceedings that we

       may institute. But we shall not be obliged to institute any proceedings.

       Without affecting the last sentence, where your Debtor is also a client

       of ours, we may use an Alternative Dispute Resolution Procedure. We may

       settle any claim in respect of a Debt (or any claim against us or you by

       way of reduction of a Debt) upon such terms as we shall think fit. You

       will accept any resulting reduction in the Purchase Price.

8.6.   You will make available to us on request and free of charge all evidence

       required by us in any proceedings or Alternative Dispute Resolution

       Procedure. You will ensure the attendance at any hearing of those

       witnesses that we or our legal advisers shall require.

9.     YOUR AGENCY

9.1.   If you do not have our Collection Service, we appoint you as our agent to

       collect Debts vested in us. If you do not have our Ledger Management

       Facility we appoint you as our agent to maintain the Debtor ledger. You

       will act promptly and efficiently in carrying out your duties as our

       agent. You will not hold yourself out as our agent for any other

       purposes.

9.2.   If we have appointed you as our agent to collect Debts vested in us and

       to maintain Debtor's ledgers then we will only exercise our rights under

       Condition 8.4. after prior notice to you.

9.3.   We may open a bank account in your name, where our officers are to be

       irrevocably appointed as the only authorised signatories; you will pay

       all receipts in respect of Debts into such bank account without otherwise

       banking or dealing with them.

9.4.   Where you have our agency to maintain the Debtor ledger then upon a Debt

       coming into existence you will promptly enter it into your accounting

       system and ledgers. Your ledgers must prominently indicate that the Debts

       have been Assigned to us. Where you have our agency to collect Debts, you

       will not appoint any third party to collect payment of Debts without our

       prior written consent.

9.5.   During your agency you will provide us with the following reports and

       information as at each month end by the 10th day of the immediately

       following month:

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       (i)    an aged Debtor analysis, with copies of all Debtor statements; or

       (ii)   an open item aged Debtor listing with the names and addresses of

              all Debtors; and

       (iii)  a complete sales ledger reconciliation in the format required by

              us;

       (iv)   an aged creditor analysis;

       (v)    any other information requested by us.

9.6.   We may at any time withdraw your agency to collect debts. You will then

       immediately give notice to every Debtor, in such form as we shall

       require, of the withdrawal of your agency together with the Assignment of

       Debts to us. If you do not give the notice of Assignment within seven

       days of our withdrawal of your agency then all Covered Debts will become

       Unapproved Debts.

9.7.   Following such withdrawal of your agency:

       (i)    you will not hold yourself out as our agent for any purpose; and

       (ii)   you will ensure that Debtors pay all Debts direct to us; and

       (iii)  you will immediately deliver to us such of your ledgers, books of

              account, computer data, electronic records and all documents

              recording or evidencing Debts as we may require; and

       (iv)   we shall provide you with our Ledger Management and/or Collection

              Service, for which you will pay a Service Charge of two per cent

              of the Notified Value of those Outstanding Debts at the start date

              of such additional facilities and/or services and those Debts

              which are afterwards Notified to us.

9.8.   Your agency may be withdrawn by us at any time following a Termination

       Event and also automatically upon termination of this Agreement. We shall

       then collect all Debts or oversee their collection by a third party

       (whether acting in our or your name). In addition to any other fees and

       charges payable under this Agreement you will be responsible for our

       collect out fee of five per cent of the Notified Value of all Debts

       existing at such cancellation of your agency or Notified to us after such

       cancellation. This fee is to cover our additional work involved,

       including where appropriate the collection of Debts or overseeing their

       collection by a third party. Where we oversee the collection of Debts we

       may discharge the fees and expenses of the third party. The collect-out

       fee and third party fees and expenses so discharged are to be treated as

       a deduction in calculating the Purchase Price.

10.    TRUSTS

10.1.  From the moment that you shall receive any payment in or towards

       settlement of a Debt (or in settlement of claim under the Policy) you

       will hold it absolutely in trust for us. This will include all payments

       received as our agent and all sums paid into the bank account referred to

       in Condition 9.3 and any dividend from the estate of an Insolvent Debtor.

       We acknowledge having received intimation of such trust. We may at any

       time give notice to anyone of the existence of such trust.

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10.2.  Upon receipt of any payment in or towards settlement of a Debt, you will

       immediately hand to us the identical cash, cheque, bill of exchange or

       other remittance or pay it into such bank account as we may specify. You

       will endorse over to us any such cheque, bill of exchange or other

       remittance if your endorsement is necessary to enable us to receive

       payment. You will give us such instructions and indemnities as we may

       require for the collection of non-transferable instruments for our

       benefit.

10.3.  Where any Debt or its Related Rights shall fail to vest in us you will

       hold them in trust for us.

10.4.  You will promptly notify us of all Returned Goods. At our request, you

       will set these aside marked with our name as owner and then deliver them

       to us, or deliver or deal with them as directed by us. We shall have the

       right, without notice, to enter into any premises where Returned Goods or

       any items comprised in the Related Rights are kept. We may then take

       possession of and sell any Returned Goods upon such terms and at such

       prices as we may decide. We shall credit the net proceeds in or towards

       the discharge of the Debts to which they relate. Upon request you will

       deliver the other Related Rights to us. We may deal with them as we see

       fit.

11.    FOREIGN DEBTS

11.1.  Where the invoice for a Foreign Debt is addressed to a Debtor in a

       country where we have a relationship either with a company offering

       factoring or invoice discounting services in respect of Debts owing by

       Debtors in that country or any other party approved of by us, our rights

       and obligations shall remain unchanged, except that:

       (i)    no Credit Line will be issued by us until:

              (a) the Credit Risk has been assessed and reported to us by either

              the Foreign Factor or such other party;

              (b) we have received an acknowledgment from the relative Debtor of

              receipt of notice of assignment and confirmation that we shall be

              paid direct, should the Sales Ledger Financing Agreement state

              that notice of assignment shall be given to Foreign Debtors.

       (ii)   we may assign the Foreign Debt to the Foreign Factor or such other

              party;

       (iii)  collection of the Foreign Debt may be carried out through the

              Foreign Factor or such other party; and

       (iv)   payment by a Debtor to the Foreign Factor or such other party

              shall not be treated as a receipt by us until the proceeds of such

              payment shall actually have been received by us;

       (v)    all Debts due by a Debtor shall be in the same currency, unless

              otherwise agreed with us;

       (vi)   all Debts on a Notification Schedule shall be in the same currency

              and addressed to Debtors in the same country;

       (vii)  you will use your best endeavours to carry out such administrative

              procedures as are required by Factors Chain International, the

              Foreign Factor or such other party as we may notify to you;

       (viii) you, your employees, agents and representatives (whether in U.K.

              or overseas) shall give all reasonable assistance to us, the

              Foreign Factor or such other party in connection with obtaining

              payment of Foreign Debts.

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                                                          Sales Ledger Financing

12.    INFORMATION AND DOCUMENTATION

12.1.  If you are a limited company, or a limited liability partnership you will

       supply us with a copy of your audited balance sheet, accounts and

       directors' report for each of your accounting reference periods (as

       defined in the Companies Act 1985) or such other financial reports as we

       may require.

12.2.  If you are a partnership or sole trader you will supply us with a copy of

       your balance sheet and accounts for each yearly accounting period. These

       are to be prepared and certified as true and correct by a firm of

       chartered or certified accountants.

12.3.  The items listed in Conditions 12.1 and 12.2 are to be sent to us as soon

       as they are available to you and in any event no later than four months

       from the end of such accounting period.

12.4.  You will provide us with your internal management accounts showing the

       financial results of your operation, with such verification and in such

       form and at such intervals as we may specify.

13.    YOUR WARRANTIES TO US

13.1.  It is of the essence of this Agreement that:

       (i)    all balance sheets, profit and loss accounts, management accounts,

              information and documents which either have been or may in future

              be supplied by you to us fairly represent your financial position,

              the value of the Debts and are otherwise accurate and correct in

              all material aspects, subject only to any qualification appearing

              on them;

       (ii)   you have provided us with all information that you knew or ought

              reasonably to have known would influence us in deciding whether or

              not to enter into this Agreement or the terms upon which we should

              enter into it; and

       (iii)  you have made, and will continue to make, all necessary

              notifications or registrations under the terms of the Data

              Protection Act 1998 (or its predecessor 1994 Act).

13.2.  The inclusion of a Debt in an Offer or a Notification Schedule delivered

       to us shall be treated as including all of the following warranties from

       you, namely that:

       (a)    you are the owner of the Debt and freely able to sell it to us and

              no other person (including a party providing stock finance) has

              any interest in it;

       (b)    the sale or Assignment of the Debt to us will not violate any law

              or agreement binding on you and following such sale or Assignment

              the Debt will not be available to your creditors should you become

              Insolvent;

       (c)    except in our favour, no mortgage, charge, lien, trust, option,

              hypothecation, encumbrance or any tracing or equitable rights

              affects the Debt or the Goods;

       (d)    the Goods have been Delivered or the services have been completely

              performed and the Goods are owned only by either you or the Debtor

              free from encumbrances or any third party tracing right;

       (e)    the Debt represents an existing, enforceable and undisputed

              obligation of the Debtor;

       (f)    the Notified value of the Debt represents its Contracted Value;

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       (g)    the Debt arises out of a Contract of Sale in the ordinary course

              of your business;

       (h)    you are not and will not be in breach of any of your obligations

              to the Debtor;

       (i)    you have no financial obligations towards the Debtor;

       (j)    the Debtor has an established place of business and has bought the

              Goods for the purpose of its business and is not an Associate of

              yours;

       (k)    no right or claim of rescission, contra accounting, defence,

              set-off, counterclaim, adjustment or other right or claim (whether

              valid or alleged) exists to reduce or extinguish the Notified

              Value of the Debt or affect our ability, in our name, to collect

              the Debt;

       (l)    except as otherwise approved by us in writing (including the

              giving of a Credit Line in response to an application referring to

              your credit terms), the debt is payable in accordance with your

              payment terms set out in the Sales Ledger Financing Agreement,

              which are endorsed on every invoice, and which do not allow the

              Debtor to claim a prompt settlement or trade discount exceeding

              5.0% (five per cent) and is not subject to retrospective discount;

       (m)    the Debt arises under a Contract of Sale governed by English law

              (or such other law approved by us) obliging the Debtor to pay in

              sterling or a Permitted Currency referred to in the Sales Ledger

              Financing Agreement (or such other currency approved by us);

       (n)    the correct name and address of the Debtor appears on every

              invoice, credit note, application for a Credit Line and all other

              documentation sent to us;

       (o)    the person having the duty to administer the affairs of a Debtor

              upon its Insolvency will accept proof for the Notified amount of

              each Covered Debt;

       (p)    the original invoice has been delivered to the Debtor and, if the

              Sales Ledger Financing Agreement so states, with the required

              notice of Assignment of the Debt to us endorsed thereon;

       (q)    the Debt arises under a Contract of Sale with credit terms as to

              payment;

       (r)    the Debt is not subject to any withholding tax;

       (s)    that you have provided us with all additional information that

              might affect our designation of a Debt as Covered, Approved or

              Unapproved;

       (t)    except as notified to you, no reservation of title by any third

              party will apply to the Goods nor will there be any right for a

              third party to trace into such Goods or any Notified Debts.

14.    YOUR UNDERTAKINGS TO US

14.1.  You undertake throughout the duration of this Agreement and afterwards

       until all sums due to us have been discharged:

       (a)    to ensure that the warranties given to us upon Notifying us of a

              Debt shall remain unaltered but if there should be any breach of

              such warranties to Notify us immediately you become aware of such

              breach and without prejudicing our rights arising out of such

              breach;