LIABILITY AND ASSET GUARANTEE
Between the undersigned
A Business Corporation under French Law, with a capital of 500 000 Euros
Whose registered office is at 24 Rue des Teinturiers, 84000 Avignon (France)
On the Avignon Trade and Companies Register under No 385 386 834
Represented by Mr Jean Patrice DAIRE
Hereinafter called the Assignor or the Guarantor, the first party
Q.E.P. Co. INC
A Delaware company
Whose registered office is at 1081 Holland Drive, Boca Raton, Florida 33487
Represented by its Chairman, Mr Lewis GOULD
Hereinafter called the Assignee, the second party
The following was set out and agreed:
In terms of the agreement dated of the (“the Agreement”) the two parties signing below agreed to assign all 8,200 shares in PRCI for a mutually agreed price based on the Company’s Balance Sheet as of 31 December 2003 (“the Balance Sheet”).
The price was confirmed in the light of the Company’s financial situation as shown in the Balance Sheet as of 30 June 2004, provided this shows shareholders’ equity of the same or a greater amount than that shown on the Balance Sheet of 31 December 2003.
The transfer taking place in accordance with the agreement shall be covered by a guarantee of the Company’s assets and liabilities, as at the date of this Guarantee and as at the date of transfer of the shares in PRCI.
The Guarantor declares and acknowledges that the accounting documents handed to the Assignee were drawn up in accordance with the generally accepted accounting standards and practices allowed in France, and that the tax forms used are those required by the tax authorities.
GIVEN THE ABOVE PREAMBLE THE PARTIES AGREED AS FOLLOWS:
The Assignor hereby declares and certifies, warrants and represents as at the date of this agreement and as at the date of transfer of the shares in PRCI (the “Completion”):
The premises occupied by the Company for the exercise of its function are not the Company’s property, but are rented under a commercial lease in accordance with French legislation. The afore-mentioned lease is annexed to this Guarantee (Schedule 1). However in order for the Assignee to have a complete understanding, it should be noted that commercial leases have specific conditions, namely regarding the duration of contracts and compulsory notices which are in excess of the three months above-mentioned. In particular the current commercial lease, which PRCI is bound to, has a duration of three years and can only be terminated, except with the lessor’s agreement, at the end of this period and only with six months’ prior notice. The Company does not own or lease any other real estate.
No employee has any special contract and the Company’s arrangements with its employees are in compliance with current legislation and regulations. Only Mr Rene Condomines has an individual agreement which he has explained to the Buyer who acknowledges.
As of this day, the Company has 10 in situ, 11 sales representatives, 5 of which have a statute of REP Multicard, and 6 of which are non-salaried sales agents. A list of employees showing their length of service, the gross salaries in 2003 and 2004 other benefits (e.g. pension) and the bonus paid in 2003, the commission rates and commissions paid in 2003, is annexed together with details of bonus and commission arrangements for 2004 (Schedule 2).
The Company has not distributed dividends. The transfers to the Assignee are realized inclusive of dividends, i.e. all the Company’s earning remain acquired to the Ass