EXHIBIT 10.13

 

DATED                     

 

ACTTVCARD CORP

 

- and -

 

ASPACE SOLUTIONS LIMITED

 

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DEBENTURE

 

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Table of Contents

 

          Page

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1.

   DEFINITIONS AND INTERPRETATION    2

2.

   COVENANT TO PAY    11

3.

   INTEREST    11

4.

   SECURITY    11

5.

   CONVERSION OF FLOATING CHARGE    12

6.

   FURTHER ASSURANCE    13

7.

   DEPOSIT OF DOCUMENTS AND TITLE DEEDS    13

8.

   NEGATIVE PLEDGE    14

9.

   THE BOOK DEBTS ACCOUNT    14

10.

   DIVIDENDS, VOTING RIGHTS AND NOMINEES    15

11.

   REPRESENTATIONS AND WARRANTIES    16

12.

   UNDERTAKINGS    19

13.

   COSTS AND LENDER'S PERFORMANCE OF COVENANTS    22

14.

   DEFAULT    23

15.

   STATUTORY POWER OF SALE    25

16.

   RECEIVER    25

17.

   PROTECTION OF THIRD PARTIES    29

18.

   NO LIABILITY AS MORTGAGEE IN POSSESSION    30

19.

   REASSIGNMENT    30

20.

   POWER OF ATTORNEY    30

21.

   CUMULATIVE AND CONTINUING SECURITY    31

22.

   AVOIDANCE OF PAYMENTS    31

23.

   PRIOR CHARGES    32

24.

   OPENING A NEW ACCOUNT    Error!
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defined!

25.

   SUSPENSE ACCOUNT    32

26.

   PAYMENTS AND WITHHOLDING TAXES    32

27.

   CURRENCY    32

28.

   SET-OFF    33

29.

   ASSIGNMENT    33

30.

   WAIVERS    33

31.

   SEVERABILITY    34

32.

   NOTICES    34

33.

   LAW AND JURISDICTION    34

34.

   COUNTERPARTS AND DELIVERY    35

 

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DEBENTURE

 

DATE

 

PARTIES

 

(1) ASPACE SOLUTIONS LIMITED (registered in England under company number
3970100) the registered office of which is at Eagle House, 110 Jermyn Street,
London SW1Y 6RH (the “Borrower”); and

 

(2) ACTIVCARD CORP (registered in Delaware, USA) the registered office of which
is at 6623 Dumbarton Circle, Fremont, California 94555, USA (the “Lender”).

 

RECITALS

 

The Borrower has agreed to enter into this Debenture for the purpose of
providing security to the Lender for the Secured Liabilities.

 

IT IS AGREED AS FOLLOWS:

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 Definitions

 

In this Debenture the following expressions have the following meanings, unless
the context otherwise requires:

 

“Accounts”

 

means, in the case of the Borrower, the latest annual audited profit and loss
account and audited balance sheet of the Borrower available from time to time;

 

“Asset Insurance”

 

means the insurances referred to in Clause 12.10.1 (Property and Asset
Insurance) in respect of assets other than the Property;

 

“Authorities”

 

means all national and local governments, government departments, supranational
bodies, local or public authorities, statutory undertakings, states or agencies;

 

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“Book Debts”

 

means:

 

  (a) all book and other debts in existence from time to time (including,
without limitation, any sums whatsoever owed by banks or similar institutions),
both present and future, due, owing to or which may become due, owing to or
purchased or otherwise acquired by the Borrower; and

 

  (b) the benefit of all rights whatsoever relating to the debts referred to
above including, without limitation, any related agreements, documents, rights
and remedies (including, without limitation, negotiable or non-negotiable
instruments, guarantees, indemnities, legal and equitable charges, reservation
of proprietary rights, rights of tracing, unpaid vendor’s liens and all similar
connected or related rights and assets);

 

“Book Debts Account”

 

means such separate and denominated account or accounts with the Lender or such
bank as may be specified in writing by the Lender for the purpose of receiving
payments of the proceeds of realisation and collection of Book Debts;

 

“Business Day”

 

means any day other than a Saturday, a Sunday, or public holiday in any part of
the United Kingdom or the United. States of America;

 

“Business Operator”

 

means a person carrying out any business, process or other. undertaking (whether
currently operated by or under the control or with the consent of the Borrower,
or otherwise) whether at the Property or elsewhere;

 

“Charged Property”

 

means the whole or any part of the property, assets, income and undertaking of
the Borrower from time to time mortgaged, charged or assigned to the Lender
pursuant to this Debenture;

 

“Company”

 

means any person of whose share capital the Shares form all or any part;

 

“Contracts”

 

means all the Borrower’s rights, title, interest and benefit in and to any
contract in respect of the whole or any part of the Charged Property to which
the Borrower is a party;

 

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“Convertible Loan Agreement”

 

means the secured convertible loan agreement of even date between the Borrower
and the Lender

 

“Costs”

 

means all reasonable costs, charges or expenses of whatsoever nature (including,
without limitation, legal fees) including, without limitation, disbursements and
any Value Added Tax to be charged on such costs, charges, expenses and
disbursements;

 

“Default Rate”

 

means, on any day, the rate of 5 per cent per annum above Barclays Bank Plc’s
base rate;

 

“Derivative Assets”

 

means all stocks, shares, warrants or other securities, rights, dividends,
interest or other property (whether of a capital or income nature) accruing,
offered, issued, or deriving at any time by way of dividend, bonus, redemption,
exchange, purchase, substitution, conversion, consolidation, subdivision,
preference, option or otherwise attributable to any of the Shares or any
Derivative Assets previously described;

 

“Environment”

 

means all of the air, water and land including air within buildings and other
natural or man-made structures above or below ground;

 

“Environmental Authorisations”

 

means all permits, licences, consents or other authorisations or approvals
required at any time under any Environmental Legislation for the operation of
any Business Operator and the occupation or use of the Property by any person;

 

“Environmental Claim”

 

means any claim, notice of violation, prosecution, demand, action, official
warning, abatement or other order (conditional or otherwise) relating to
Environmental Matters and any notification or order requiring compliance with
the terms of any Environmental Authorisation or Environmental Legislation;

 

“Environmental Legislation”

 

means all applicable statutes, statutory instruments, common law, treaties,
regulations, directives, codes of conduct, circulars, guidance notes, orders,
notices, demands and other measures imposed by any Authority to which the
Borrower or any Business Operator or the Property is or has been or may be or
may have been subject which relate to the pollution or protection of the

 

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Environment or the protection of the health of any living organism or the
protection of public health or welfare;

 

“Environmental Matters”

 

means:

 

  (a) the generation, deposit, disposal, keeping, treatment, transportation,
transmission, handling, importation, exportation, processing, collection,
sorting, presence or manufacture of any waste (as defined in the Environmental
Protection Act 1990) or of any Relevant Substance;

 

  (b) public or private nuisance, noise, defective premises or health and safety
at work;

 

  (c) the carrying out of any development (as defined in section 55(l) Town and
Country Planning Act 1990); and

 

  (d) any act, default or phenomenon which is capable of causing harm to human
health or welfare or harm to any other living organism or of damaging the
Environment;

 

“Event of Default”

 

means any of those events or circumstances set out in Clause 14.1 (Events of
Default);

 

“Exchange Rate”

 

means the prevailing spot rate of exchange of the Lender (as conclusively
determined by the Lender) at or around 11 a.m. on the date on which any
conversion of currency is to be effected pursuant to this Debenture;

 

“Existing Property”

 

means all estates and other interests in any freehold, leasehold or other
immovable property (including, without limitation, all Fixtures on such
property) which are the property of the Borrower at the date of this Debenture,
all proceeds of sale derived from such property and the benefit of all covenants
to which the Borrower is entitled in respect of such property;

 

“Fixtures”

 

means all assets of whatsoever nature, apart from land and buildings, forming
part of any freehold or leasehold property owned by the Borrower and deemed by
law to be immovable property other than tenant’s fixtures;

 

“Future Plant and Machinery”

 

means all plant and machinery, equipment, fittings, installations, apparatus,
tools, motor vehicles and all other such assets (other than Fixtures)
whatsoever, wherever situate, which become the property of the Borrower after
the date of this Debenture;

 

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“Future Property”

 

means all estates and other interests in any freehold, leasehold or other
immovable property (including, without limitation, all Fixtures on such
property) which become the property of the Borrower after the date of this
Debenture, all proceeds of sale derived from such property and the benefit of
all covenants to which the Borrower is entitled in respect of such property;

 

“Future Shares”

 

means all shares and other securities issued to the Borrower as a result of its
ownership of the Shares;

 

“Indebtedness”

 

means any obligation of any person from time to time (present or future, actual
or contingent, as principal or surety or otherwise) for the payment or repayment
of money including, but not limited to:

 

(a) under acceptances, bills, bonds, debentures, notes or similar instruments;

 

(b) under guarantees, indemnities or other assurances against financial loss;

 

(c) in respect of the purchase, hire or lease of any asset or services; and

indebtedness of other persons secured by or benefitting from any Security
Interest on the property of that person;

 

“Insolvency Act”

 

means the Insolvency Act 1986;

 

“Intellectual Property”,

 

means all subsisting patents and subsisting rights of a similar nature held in
any part of the world, applications for patents and such rights, divisions and
continuations of such applications for patents, registered and unregistered
trade marks, registered and unregistered service marks, registered designs,
utility models (in each case for their full period and all extensions renewals
of them), applications for any of them and the right to apply for any of them in
any part of the world, inventions, confidential information, Know-how, business
names, trade names, brand names, copyright (including relating to the source
code and object code of software programs) and rights in the nature of
copyright, design rights and get-up and any similar rights existing in any
country; and the benefit (subject to the burden) of any and all agreements,
arrangements and licences in connection with any of the foregoing;

 

“Know-how”

 

means all the body of knowledge, technical experience, expertise and skills,
technical processes, secret processes, formulae and technical information held
by the Borrower and relating to its business, which is not in the public domain;

 

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“LPA”

 

means the Law of Property Act 1925;

 

“Material Adverse Effect”

 

means, in relation to any person, a material adverse effect on any one or more
of that person’s:

 

(a) financial condition;

 

(b) business; and

 

(c) ability to comply with any obligations under this Debenture;

 

“Material Environmental Effect”

 

means any effect on the Environment which is, or is reasonably likely in the
opinion of the Lender, in its sole discretion, to have a material adverse effect
on:

 

(a) the financial condition of the Borrower; or

 

(b) the ability of the Borrower to perform its obligations under or otherwise
comply with the terms of this Debenture; or

 

(c) the value or marketability of the Property;

 

“Nominees”

 

means the Lender, its agents, nominees and any other person holding the Shares
and the Derivative Assets on behalf of the Lender from time to time;

 

“Occupational Leases”

 

means all leasehold interests and other occupational rights whatsoever
(including, without limitation, all licences and agreements for leases) in
existence from time to time relating to the whole or any part of the Property,
the immediate-reversion to which is vested in the Borrower;

 

“Original Accounts”

 

means the statutory accounts for the Borrower’s financial period ended 31 March
2003;

 

“Permitted Security Interest”

 

means:

 

(a) the security constituted by this Debenture; and

 

(b) liens arising by operation of law in the ordinary course of business;

 

“Planning Acts”

 

means the Town and Country Planning Act 1990, the Planning (Listed Buildings and
Conservation Areas) Act 1990, the Planning (Hazardous Substances) Act 1990, the
Planning and Compensation Act 1991, the Local

 

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Government Planning and Land Act 1980 and the Ancient Monuments and
Archaeological Areas Act 1979;

 

“Plant and Machinery”

 

means all plant and machinery, equipment, fittings, installations and apparatus,
tools, motor vehicles and all other such assets (other than Fixtures)
whatsoever, wherever situate, which are the property of the Borrower at the date
of this Debenture;

 

“Property”

 

means the Existing Property and the Future Property;

 

“Property Insurance”

 

means the insurance referred to in Clause 12.10.1 (Property and Asset Insurance)
in respect of the Property;

 

“Receiver”

 

means any receiver appointed pursuant to this Debenture;

 

“Relevant Jurisdiction”

 

in respect of any person means the jurisdiction in which such person is
incorporated or, if different, has its principal place of business;

 

“Relevant Substance”

 

means all substances which are defined or regulated as toxic, hazardous,
flammable, highly reactive and explosive, or any of these, pursuant to any
Environmental Legislation (whether in a solid or liquid form or in the form of a
gas or vapour and whether alone or in combination with any other substance) and
all radioactive, electrical or electromagnetic emissions which are capable of
causing harm to human health or welfare or harm to any other living organism or
of damaging the Environment;

 

“Rights”

 

means all the Borrower’s rights, title and interest from time to time in any
lease, licence or occupational right whatsoever together with the entire benefit
of all the Borrower’s rights, title and interest from time to time in any
renewal of, replacement of or variation to any such lease, licence or
occupational right (including, without limitation, all its rights, title and
interest in any Occupational Lease, agreement for any Occupational Lease and any
associated agreements which may be granted by the Borrower or any person
deriving title from the Borrower from time to time over or in respect of the
whole or any part of the Property and any other properties (freehold or
leasehold) in which the Borrower has an interest);

 

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“Secured Liabilities”

 

means all moneys, debts and liabilities (including pursuant to the Convertible
Loan Agreement) from time to time due, owing or incurred by the Borrower to the
Lender on any current or other account whatsoever or otherwise in any manner
whatsoever, in each case:

 

  (a) whether present or future;

 

  (b) whether alone or jointly with any other person;

 

  (c) whether actual or contingent;

 

  (d) whether as principal or as surety;

 

  (e) in whatsoever name, firm or style;

 

  (f) in whatsoever currency denominated; or

 

  (g) otherwise;

 

including, without limitation, all liabilities in connection with foreign
exchange transactions, accepting, endorsing or discounting notes or bills, under
bonds, guarantees, indemnities, documentary or other credits or any instruments
from time to time entered into by the Lender for or at the request of the
Borrower together with interest to the date of payment at such rates and upon
such terms as may from time to time be agreed and all commission, fees, costs
and other charges (including, without limitation, legal fees) on a full
indemnity basis;

 

“Security Interest”

 

means any mortgage, charge, assignment, pledge, lien, right of set-off,
hypothecation, encumbrance, priority or other security interest (whether fixed
or floating) including, without limitation, any “hold-back” or “flawed asset”
arrangement together with any preferential right, retention of title, deferred
purchase, leasing, sale or purchase, sale and leaseback arrangement, trust
agreement, declaration of trust, trust arising by operation of law, any option
or agreement for any of the same or any arrangement which has substantially the
same commercial or substantive effect as the creation of security;

 

“Shares”

 

means all stocks, shares and other securities:

 

  (a) for which the stock or share certificates or other documents of title have
been deposited by the Borrower with the Lender or its Nominees or which are held
to the order of the Lender; or

 

  (b) represented by any stock or share certificates or other documents of title
from time to time in the future deposited by the Borrower with the Lender or its
Nominees or held to the order of the Lender or belonging to the Borrower and
received by the Lender or its Nominees after the execution of this Debenture;

 

in each case whether held in the United Kingdom or elsewhere and irrespective of
whether in any such case the deposit was made or the

 

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certificates or other documents were received by the Lender or its Nominees for
the purposes of creating security, safe custody, collection or otherwise;

 

“Subsidiary”

 

bears the same meaning as that contained in Section 736 of the Companies Act
1985 (Definition of “subsidiary”); and

 

“Taxes”

 

means all present and future taxes, levies, duties, charges, assessments,
deductions or withholdings whatsoever, including any interest thereon, and any
penalties and fines with respect thereto, wherever imposed, levied, collected or
withheld pursuant to any regulation having the force of law and “Taxation” shall
be construed accordingly.

 

1.2 Interpretation

 

1.2.1  In this Debenture:

 

  (a) the Contents page and clause headings are included for convenience only
and do not affect the construction of this Debenture;

 

  (b) words denoting the singular include the plural and vice versa;

 

  (c) words denoting one gender include each gender and all genders.

 

1.2.2  In this Debenture, unless the context otherwise requires, references to:

 

  (a) persons include references to natural persons, firms, partnerships,
companies, corporations, associations, organisations and trusts (in each case
whether or not having a separate legal personality);

 

  (b) documents, instruments and agreements (including, without limitation, this
Debenture and any document referred to in this Debenture) are references to such
documents, instruments and agreements as modified, amended, varied, supplemented
or novated from time to time;

 

  (c) receivers are references to receivers of whatsoever nature including,
without limitation, receivers and managers and administrative receivers;

 

  (d) the terms the “Lender” and the “Receiver” include, where the context so
admits, references to any delegate of any such person;

 

  (e) a party to this Debenture include references to its successors,
transferees and assigns;

 

  (f) Recitals, Clauses and Schedules are references to recitals to this
Debenture, clauses of this Debenture and schedules to this Debenture;

 

  (g) unless otherwise expressly provided, references to paragraphs are
references to paragraphs of the Schedule in which the references appear;

 

  (h)

statutory provisions (where the context so admits and unless otherwise expressly
provided) are construed as references to those provisions as respectively
amended, consolidated, extended or re-enacted from time to time,

 

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and to any orders regulations instruments or other subordinate legislation made
under the relevant statute; and

 

  (i) a time of day is a reference to London time.

 

1.3 Incorporation of Schedule

 

The Schedule to this Debenture forms part of this Debenture.

 

1.4 Conditions

 

The provisions of this Agreement (other than Clauses 29 to 34 which shall take
immediate effect) shall be conditional upon the Acquisition Agreement of even
date between the Lender, Orla Macallister and Una Gilmore as the administrators
of the Estate of Paul Gilmore, Alan Bates, Rick Peel, EFG Reads Trustees
Limited, John Merchant, Corbett Keeling Limited and Gary Rimmer relating to a
purchase of shares in the Company by the Lender being completed in all respects
by no later than 1 August 2003.

 

2. COVENANT TO PAY

 

The Borrower shall on demand pay to the Lender or discharge, as the case may be,
all the Secured Liabilities when the Secured Liabilities become due.

 

3. INTEREST

 

The Borrower shall pay to the Lender interest on the Secured Liabilities (after
as well as before any demand made or judgment obtained or the liquidation or
administration of the Borrower) at the rate of 6 per cent. per annum upon such
days as the Lender may from time to time determine and such interest shall be
compounded in the event of it not being punctually paid with quarterly rests.

 

4. SECURITY

 

By way of continuing security in favour of the Lender for the payment and
discharge of the Secured Liabilities, the Borrower with fall title guarantee
hereby charges to the Lender or assigns to the Lender (as the case may be) the
property set out below in the manner set out below (The assignment set out below
is an absolute assignment for the purposes of Section 136 of the LPA (Legal
assignments of things in action) and is not made by way of charge only):

 

4.1 Existing Property and the Future Property

 

By way of first fixed charge:

 

4.1.1  the Existing Property the Future Property; and

 

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4.1.2  all Rights relating to the Existing Property and the Future Property.

 

4.2 Contracts

 

By way of absolute legal assignment, the Contracts.

 

4.3 Book Debts

 

By way of first fixed charge, the Book Debts.

 

4.4 Intellectual Property

 

By way of first fixed charge, all the Intellectual Property owned, possessed or
controlled by the Borrower.

 

4.5 Plant and Machinery

 

By way of first fixed charge, the Plant and Machinery.

 

4.6 Future Plant and Machinery

 

By way of first fixed charge, the Future Plant and Machinery.

 

4.7 Shares and Derivative Assets

 

Byway of first fixed charge, the Shares and Derivative Assets.

 

4.8 Goodwill

 

By way of first fixed charge, all the goodwill and uncalled capital for the time
being of the Borrower.

 

4.9 Floating charge

 

By way of first floating charge, all the undertaking and assets of the Borrower
whatsoever, wherever situate, whether movable, immovable, present or future
(including, without Limitation, its uncalled capital for the time being and all
the undertaking and assets of the Borrower referred to above which are, for any
reason, not validly charged or assigned, pursuant to Clauses 4.1 (Existing
Property and the Future Property) to 4.8 (Goodwill) (inclusive) of this
Debenture).

 

5. CONVERSION OF FLOATING CHARGE

 

5.1 Conversion by notice

 

The Lender may by notice to the Borrower convert the floating charge contained
in this Debenture into a fixed charge as regards such Charged Property as the
Lender may specify (whether generally or specifically) in that notice (i) if it
considers that it would be desirable to do so in order to protect, preserve or
supplement the charges over the Charged Property or the priority of those
charges; or (ii) on, or at any time following,

 

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the occurrence of an Event of Default (whether or not the Event of Default is
continuing at the relevant time), or both.

 

5.2 Automatic conversion

 

If, without the prior written consent of the Lender, the Borrower creates any
Security Interest over any of the Charged Property not expressed to be subject
to a fixed charge under this Debenture, or attempts to do so, or if any person
levies or attempts to levy any distress, attachment, execution or other legal
process against any of such Charged Property, the floating charge created by
this Debenture over the Charged Property the subject of such Security Interest
or process will automatically, without notice, be converted into a fixed charge
as soon as such event occurs.

 

6. FURTHER ASSURANCE

 

The Borrower shall:

 

6.1 forthwith, at any time if so required by the Lender, at its own expense
execute and deliver to the Lender such further legal or other mortgages,
charges, assignments, securities, authorities and documents as the Lender may in
its reasonable discretion require of the whole or such part of the Charged
Property as the Lender may specify, in such form, as the Lender may in its
discretion require, to secure the payment or discharge of the Secured
Liabilities, including, without limitation, in order to vest the whole or such
part of the Charged Property in the Lender, the nominee of the Lender or in any
purchaser from the Lender or the Receiver;

 

6.2 pending the execution and delivery of any such assignments, hold such
Charged Property upon trust for the Lender subject to the provisions of this
Debenture; and

 

6.3 pending the execution and delivery of any such mortgages, charges, or other
security, hold such Charged Property subject to the provisions of this
Debenture.

 

7. DEPOSIT OF DOCUMENTS AND TITLE DEEDS

 

7.1 The Borrower shall deposit with the Lender (and the Lender during the
continuance of this security may hold and retain):

 

7.1.1  all deeds and documents of title relating to the Existing Property and
the Future Property including, without limitation, all Occupational Leases;

 

7.1.2  all stock or share certificates or other documents of title to or
representing the Shares and the Derivative Assets together with such duly
executed transfers or assignments with the name of the transferee, date and
consideration left blank as the Lender may require;

 

7.1.3  all such deeds and documents of title (if any) relating to the Book Debts
as the Lender may from time to time specify; and

 

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7.1.4  copies of all the Contracts certified to be true copies by one director
of or solicitor acting for the Borrower.

 

7.2 The Borrower shall:

 

7.2.1  after the occurrence of an Event of Default procure the registration in
the books of the Company of the transfer of the Shares and the Derivative Assets
to the Lender (or the Nominees as the Lender may require), the entry of Lender
(or the Nominees as the Lender may require) in the register of members of the
Company as the holder or holders of the Shares and the Derivative Assets, and
the issue of new share certificates in respect of the Shares and the Derivative
Assets to the Lender (or the Nominees as the Lender may require); and

 

7.2.2  upon the accrual, offer, issue or receipt of any Derivative Assets
deliver or pay to the Lender or procure the delivery or payment to the Lender of
all such Derivative Assets or the stock or share certificates or other documents
of title to or representing them together with such duly executed transfers or
assignments with the name of the transferee, date and consideration left blank
as the Lender may require.

 

8. NEGATIVE PLEDGE

 

The Borrower shall not:

 

8.1 create, purport to create or allow to subsist, any Security Interest over
the whole or any part of the Charged Property except for any Permitted Security
Interest;

 

8.2 convey, assign, transfer, or agree to convey, assign or transfer the whole
or any part of the Charged Property;

 

8.3 permit or agree to any variation of the rights attaching to the whole or any
part of the Charged Property;

 

8.4 do, cause or permit to be done anything which may in the opinion of the
Lender, in any way depreciate, jeopardise or otherwise prejudice the value to
the Lender (whether monetary or otherwise) of the whole or any part of the
Charged Property; or

 

8.5 release, exchange, compound, set off, grant time or indulgence in respect
of, or in any other manner deal with, all or any of the Book Debts save as
expressly provided in this Debenture.

 

9. THE BOOK DEBTS ACCOUNT

 

Until all the security constituted by this Debenture is discharged the Borrower
shall:

 

9.1

collect and realise all Book Debts in the ordinary course of its business. For
the avoidance of doubt, it is hereby declared that for the purposes of this
Debenture, the ordinary course of business of the Borrower does not include or
extend to the selling, assigning or in any other way factoring or discounting
any Book Debts. The Borrower

 

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shall hold the proceeds of such collection and realisation of the Book Debts
upon trust for the Lender pending payment of such proceeds into the Book Debts
Account;

 

9.2 if the Lender so requires, pay the proceeds of such collection and
realisation into the Book Debts Account;

 

9.3 not except with the prior written consent of the Lender, withdraw from the
Book Debts Account all or any monies standing to the credit of the Book Debts
Account; and

 

9.4 if called upon so to do by the Lender execute a legal assignment of the Book
Debts to the Lender in such terms as the Lender may in its discretion require,
give such notice of that legal assignment to the debtors from whom the Book
Debts are due, owing or incurred and take any such other step as the Lender may
in its discretion require to perfect such legal assignment.

 

10. DIVIDENDS, VOTING RIGHTS AND NOMINEES

 

10.1 Dividends and voting rights

 

For so long as no Event of Default has occurred, the Borrower may:

 

10.1.1  subject to Clause 7.2.2 (Deposit of Documents and Title Deeds), receive
and retain all dividends, interest and other income deriving from and received
by it in respect of the Shares and the Derivative Assets; and

 

10.1.2  exercise all voting and other rights and powers attached to the Shares
and the Derivative Assets PROVIDED THAT such exercise does not adversely affect
the Shares and the Derivative Assets and is not otherwise inconsistent with the
Debenture and PROVIDED FURTHER THAT the Borrower shall:

 

  (a) give the Lender at least five Business Day’s written notice of the manner
in which it intends to exercise, or its reasons for abstaining from exercising,
such right; and

 

  (b) not exercise any right or power if, in the Lender’s absolute discretion,
such action would adversely affect the value of the Shares and the Derivative
Assets or if such action would be inconsistent with this Debenture.

 

10.2 Trustee powers

 

The Lender may at its discretion (in the name of the Borrower or otherwise,
subject to Clause 10.1 (Dividends and voting rights), after the occurrence of an
Event of Default and without any consent or authority on the part of the
Borrower) exercise all the powers given to trustees by Section 10(3) and (4) of
the Trustee Act 1925 (as amended by Section 9 of the Trustee Investments Act
1961) in respect of those Shares and the Derivative Assets subject to a trust.

 

10.3 Lender’s powers of enforcement over Shares and the Derivative Assets

 

10.3.1 

Following the occurrence, of an Event of Default, all dividends, interest and
other income forming part of the Shares and the Derivative Assets shall, unless
otherwise

 

15

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agreed between the Lender and the Borrower, be paid without any set-off or
deduction whatsoever to an interest bearing suspense account in the name of the
Lender and shall be retained by the Lender until applied as hereinafter provided
as part of the Shares and the Derivative Assets and any such monies which may be
received by the Borrower shall, pending such payment, be held in trust for the
Lender.

 

10.3.2  The Lender shall not have any duty as to any Shares and Derivative
Assets and shall incur no liability for:

 

  (a) ascertaining or taking action in respect of any calls instalments,
conversions, exchanges, maturities, tenders or other matters in relation to any
Shares and Derivative Assets or the nature or sufficiency of any payment whether
or not the Lender has or is deemed to have knowledge of such matters; or

 

  (b) taking any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Shares and Derivative Assets; or

 

  (c) for any failure to present any interest, coupon or any bond or stock drawn
for repayment or for any failure to pay any call or instalment or to accept any
offer or to notify the Borrower of any such matter or for any failure to ensure
that the correct amounts (if any) are paid or received in respect of the Shares
and the Derivative Assets.

 

10.4 Custody

 

The Lender shall be entitled to provide for the safe custody by third parties of
all stock and share certificates and documents of title deposited with the
Lender or Nominees at the expense of the Borrower and shall not be responsible
for any loss of or damage to any such certificates or documents.

 

11. WARRANTIES

 

11.1 The Borrower warrants to the Lender that:

 

11.1.1  Status

 

it is duly incorporated an validly existing under the laws of its Relevant
Jurisdiction and is fully qualified and empowered to own its assets and carry
out its business;

 

11.1.2  Powers

 

it has power to enter this Debenture is to exercise its rights and perform its
obligations hereunder, and has taken all necessary corporate and other action to
authorise the execution, delivery and performance and any other documents
referred to herein;

 

11.1.3  Authorisations:

 

all acts, conditions, authorisations and other things required to be done,
fulfilled and Performed by it in order:

 

16

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  (a) to enable it lawfully to enter into, exercise its rights under and perform
and comply with the obligations expressed to be assumed by it in this Debenture;

 

  (b) to ensure that the obligations expressed to be assumed by it in this
Debenture are legal, valid and binding; and

 

  (c) to make this Debenture admissible in evidence in the Relevant Jurisdiction
have been done, fulfilled and performed and are in full force and effect;

 

11.1.4  No filing

 

under the laws of the Relevant Jurisdiction in force at the date hereof, it is
not necessary that this Debenture be filed, recorded or enrolled with any court
or other authority in the Relevant Jurisdiction or that any stamp, registration
or similar tax be paid on of in relation to this Debenture (or where it is so
required, this Debenture has been so filed, recorded or enrolled or such stamp,
registration or other tax has been paid);

 

11.1.5  Legal validity

 

the obligations expressed to be assumed by it in this Debenture are legal and
valid obligations binding on it in accordance with the terms of this Debenture;

 

11.1.6  Insolvency

 

neither it nor any other member of the Group has taken any corporate action nor
have any other steps been taken or legal proceedings been started or threatened
against it or any other member of the Group for its winding-up, dissolution or
re-organisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of it or of any or all of
its revenues or assets;

 

11.1.7  No default

 

no Event of Default is outstanding or might result from the execution and
performance of this Debenture, nor is any other event outstanding which
constitutes (or, with the giving of notice, lapse of time, determination of
materiality or the fulfillment of any other applicable condition or any
combination of the foregoing, might constitute) a default under any document
which is binding on it or any other member of the Group, or on any of its
revenues or assets or of any other member of the Group, to an extent or in a
manner which might have a Material Adverse Effect in relation to it or any other
member of the Group;

 

11.1.8  Non-conflict

 

it does not require the consent, approval or authority of any other person to
enter into or perform its obligations under this Debenture and its entry into
and performance of, and the transactions contemplated by, this Debenture will
not:

 

  (a) constitute any breach of, or default under, any contractual, governmental
or public obligation binding upon it;

 

  (b) conflict with its constitutional documents; nor

 

17

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  (c) result in the creation or imposition of (or enforceability of) any
Security Interest over the whole or any part of its undertaking or assets of the
Borrower pursuant to the provisions of any agreement or document other than this
Debenture;

 

11.1.9  No deduction

 

Save as may be required by law, it will not be required to make any deduction or
withholding from any payment it may make under this Debenture;

 

11.1.10  Litigation

 

no action, arbitration or administrative proceeding of or before any court,
tribunal or agency is current, pending or threatened which might, if adversely
determined have a Material Adverse Effect in relation to it;

 

11.1.11  Original Accounts

 

the Original Accounts were prepared in accordance with accounting principles and
practices generally accepted in England and Wales and consistently applied and
present fairly and accurately (in conjunction with the notes thereto) the
financial condition of it and (if consolidated accounts) each other member of
the Group at the date to which they were drawn up and the results of its
operations the financial year then ended;

 

11.1.12  No change from date of Original Accounts

 

save as disclosed in the Disclosure Letter and the Disclosure Bundle (as those
terms arc defined in the Investment Agreement of even date between the Borrower,
Steve Keohane, Paul Ryder, Julian Lovelock and the Lender), since publication of
the Original Accounts, there has been no material adverse change in the business
or financial condition of it or any other member of the Group;

 

11.1.13  No undisclosed liabilities

 

save as disclosed in the Disclosure Letter and the Disclosure Bundle (as those
terms are defined in the Investment Agreement of even date between the Borrower,
Steve Keohane, Paul Ryder, Julian Lovelock and the Lender), as at the date as of
which the Original Accounts were prepared neither it nor any other member of the
Group had any liabilities (contingent or otherwise) which were not disclosed
thereby (or by the notes thereto, or reserved against therein) nor any
unrealised or anticipated losses arising from commitments entered into by it or
by any other member of the Group which were not so disclosed or reserved
against;

 

11.1.4  No undisclosed Security Interest

 

save as disclosed to the Lender in the Disclosure Letter and the Disclosure
Bundle (as those terms are defined in the Investment Agreement of even date
between the Borrower, Steve Keohane, Paul Ryder, Julian Lovelock and the
Lender), no Security Interest exists over all or any of the present or future
revenues or assets of it or of any other member of the Group;

 

18

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11.1.15  Future Security Interest

 

except as contemplated by this Debenture, the execution of this Debenture by it
and its exercise of the rights and performance of its obligations hereunder will
not result in the existence of or oblige any other member of the Group to create
any Security Interest over all or any of its present or future revenues or
assets;

 

11.1.16  Other information

 

save for the Original Accounts (as to which a representation is made in Clause
11.1.11 (Original Accounts)), all of the written information supplied by or on
behalf of the Borrower to the Lender is true and accurate in all material
respects;

 

11.1.17  Other circumstances

 

it is not aware of any facts or circumstances that have not been disclosed to
the Lender which might have a Material Adverse Effect in relation to it;

 

11.1.18  Ownership of the Charged Property

 

it is absolutely, solely and beneficially entitled to all the Charged Property
as from the date it or any part of it falls to be charged under this Debenture
and the rights of the Borrower in respect of the Charged Property are free from
any Security Interest of any kind other than a Permitted Security Interest; and

 

11.1.19  No disposal

 

it has not sold or agreed to sell or otherwise disposed of, or agreed to dispose
of, the benefit of all or any of the Borrower’s right, title and interest in and
to the Charged Property.

 

11.2 The warranties set forth in this Clause are given and made on and as of the
date of this Debenture, shall survive the execution of this Debenture and other
than the warranty in Clause 11.1.16 (Warranties - Other information) are
continuing warranties which are deemed to be repeated during the continuance of
the security constituted by this Debenture.

 

12. UNDERTAKINGS

 

The Borrower gives each of the undertakings contained in this Clause to the
Lender.

 

12.1 Duration

 

The undertakings in this Clause shall remain in force during the continuance of
the security constituted by this Debenture.

 

12.2 To comply with statutes

 

The Borrower shall comply with all requirements of any Authority, all
obligations under any statute and all bylaws and regulations relating to the
whole or any part of the Charged Property.

 

19

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12.3 Business

 

The Borrower shall carry on its business in a proper and efficient manner and,
except with the prior written consent of the Lender, shall not make any
alteration in the nature or mode of conduct of such business (whether by
acquisition or otherwise).

 

12.4 Books of account

 

The Borrower shall:

 

12.4.1  keep, or cause to be kept, proper books of account relating to the
business of the Borrower; and

 

12.4.2  keep such books of account, and all other documents relating to the
affairs of the Borrower, at the Borrower’s registered office.

 

12.5 To provide information

 

The Borrower shall furnish to the Lender forthwith on demand by the Lender such
information and supply such documents or papers relating to the Charged Property
from time to time as the Lender may in its reasonable discretion require.

 

12.6 Access and information

 

The Borrower shall:

 

12.6.1  upon reasonable prior written notice, permit the Lender, its
representatives and agents free access at all reasonable times to examine and
take copies and extracts from the records, books of account and statutory books
of the Borrower;

 

12.6.2  furnish the Lender with all additional information which the Lender may
in its reasonable discretion require in connection with such examination; and

 

12.6.3  co-operate and comply with all reasonable requests relating to such
examination.

 

12.7 Shares of Subsidiary

 

The Borrower shall not permit any Subsidiary of the Borrower to issue any shares
except to the Borrower itself or to one of its other wholly owned Subsidiaries.

 

12.8 Notification of Events of Default,

 

The Borrower shall forthwith notify the Lender in writing of the happening of
any Event of Default.

 

12.9 Property and Asset Insurance

 

The Borrower shall:

 

12.9.1 

insure and keep insured the Property and all of its undertaking and assets other
than the Property with reputable and responsible insurers previously approved by
the Lender in such manner and to such extent as is reasonable and customary for
an enterprise engaged in the same or a similar business and in the same or
similar

 

20

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localities such risks and contingencies as the Lender shall from time to time
request; and

12.9.2  effect the Property Insurance and the Asset Insurance and the Borrower
shall procure that the interest of the Lender is noted on all policies of
Property Insurance and Asset Insurance in such manner as the Lender may in its
absolute discretion require;

 

12.9.3  duly and punctually pay all premiums and any other moneys necessary for
maintaining the Property Insurance and the Asset Insurance in fall force and
effect;

 

12.9.4  ensure that every policy of insurance relating to the Property Insurance
and the Asset Insurance contains a first loss payee clause and a standard
mortgagee clause, whereby such insurance will not be invalidated, vitiated or
avoided as against a mortgagee in the event of any misrepresentation, act,
neglect or failure to disclose on the part of the insured;

 

12.9.5  produce to the Lender on request copies of all policies and all receipts
for the current premiums with respect to the Property Insurance and the Asset
Insurance; and

 

12.9.6  immediately give notice to the Lender of any occurrence which gives
rise, or might give rise, to a claim under any policy of insurance relating to
the Property Insurance, the Asset Insurance or both and, except with the prior
written consent of the Lender, the Borrower shall not agree to settlement of any
such claim.

 

If the borrower at any time fails to perform any of its obligations contained in
this Clause, the Lender may effect or renew such insurance as the Lender thinks
fit and the Borrower shall reimburse the Lender for the Costs thereby incurred
on demand. Such Costs will bear interest in accordance with Clause 3 (Interest)
from the date of payment by the Lender until the date of reimbursement.

 

12.10  Insurance monies

 

12.10.1  Any monies received by virtue of any insurance relating to the whole or
any part of the Charged Property (whether effected pursuant to this Debenture or
otherwise) will be deemed to be part of the Charged Property. The Borrower shall
apply all such monies in making good, or in recouping expenditure incurred in
making good, any loss or damage or, if the Lender in its discretion so requires,
towards discharge of the Secured Liabilities.

 

12.10.2  The Borrower shall ensure that all such monies as are referred to in
Clause 12. 11.1 which are not paid directly by the insurers to the Lender shall
be held by the recipient upon trust for the Lender and be applied by the
Borrower in accordance with Clause 12.11.1.

 

12.10.3  This Clause applies whether or not this Debenture has become
enforceable.

 

12.11  To repair

 

The Borrower shall:

 

 

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12.11.1  at all times keep in good and substantial repair and condition all the
Charged Property including, without limitation, all buildings, erections and
structures on and in the Property;

 

12.11.2  keep all Plant and Machinery and Future Plant and Machinery in good
repair, working order and condition and fit for its purpose; and

 

12.11.3  where it is uneconomic to repair any part of the Charged Property,
replace such part by another similar asset of equal or greater quality and
value.

 

12.12  Environment

 

The Borrower shall:

 

12.12.1  and shall procure that any Business Operator shall, obtain and maintain
in full force and effect all Environmental Authorisations and ensure that the
Property, itself and any Business Operator complies with all Environmental
Legislation; and

 

12.12.2  promptly on becoming aware of it inform the Lender of any Environmental
Claim which has been made or threatened against the Borrower or any Business
Operator or any of the officers of the Borrower or any Business Operator or any
occupier of the Property or any requirement of any Authority, Environmental
Authorisation or applicable Environmental Legislation to make any investment or
expenditure or take or desist from taking any action which might, if
substantial, have a Material Environmental Effect.

 

13. COSTS AND LENDER’S PERFORMANCE OF COVENANTS

 

13.1 Costs undertaking

 

The Borrower shall on demand pay to the. Lender or the Receiver, as the case may
be, and discharge all Costs payable by it pursuant to this Debenture on a full
and unlimited indemnity basis, together with interest at the Default Rate
calculated in accordance with Clause 3 (Interest) from the date the relevant
Cost was expended, incurred or suffered (whichever is the earlier) by the Lender
or the Receiver, as the case may be, until full discharge of such Cost.

 

13.2 Lender’s performance of covenants

 

If the Borrower fails to perform either of the undertaking contained in Clause
12.12 (To repair) or Clause 12.13 (Environment) the Lender may perform any such
covenant at the Borrower’s expense and the Borrower shall reimburse the Lender
for the Costs of such performance on demand. Nothing in this Debenture shall
oblige the Lender to perform any covenant of the Borrower.

 

22

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14. DEFAULT

 

14.1 Events of Default

 

Each of the following events is an Event of Default:

 

14.1.1  Non-payment

 

the Borrower fails to pay in full on the due date any sum due from it under this
Debenture in the currency and in the manner specified herein;

 

14.1.2  Breach of other obligations

 

the Borrower fails duly to perform or comply with any other obligation expressed
to be assumed by it in this Debenture;

 

14.1.3  Misrepresentation

 

any warranty or statement made by the Borrower in this Debenture (or in any
notice or other document, certificate or statement delivered by it pursuant
hereto or in connection herewith) is, or proves to have been, materially
incorrect or misleading when made;

 

14.1.4  Cross-default

 

any Indebtedness of the Borrower or any other member of the Group is not paid
when due, any indebtedness of the Borrower or any other member of the Group is
declared to be or otherwise becomes due and payable before its specified
maturity, or any creditor or creditors of the Borrower or of any other member of
the Group become entitled to declare any Indebtedness of the Borrower or any
other member of the Group due and payable before its specified maturity;

 

14.1.5  Insolvency

 

the Borrower or any other member of the Group is deemed unable to pay its debts
as they fall due, admits its inability to pay its debts as they fall due,
commences negotiations with any one or more of its creditors with a view to the
general readjustment or rescheduling of its indebtedness, or makes a general
assignment for the benefit of, or a composition with, its creditors;

 

14.1.6  Insolvency proceedings

 

the Borrower or any other member of the Group takes any corporate action or
other steps are taken or legal proceedings are started for its winding-up,
dissolution or re-organisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar officer of it or of
any or all of its revenues and assets or distress is executed against, or an
encumbrancer takes possession of, any part of its revenues or assets;

 

14.1.7  Repudiation

 

the Borrower repudiates this Debenture or does or causes to be done any act or
thing evidencing an intention to repudiate this Debenture;

 

23

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14.1.8  Validity of agreement

 

at any time any act, condition or thing required to be done, fulfilled or
performed in order:

 

  (a) to enable the Borrower lawfully to enter into, exercise its rights under
or perform the obligations expressed to be assumed by it in this Debenture;

 

  (b) to ensure that the obligations expressed to be assumed by the Borrower in
this Debenture are legal, valid and binding; or

 

  (c) to make this Debenture admissible in evidence in its Relevant Jurisdiction

 

is not done, fulfilled or performed within any time available to ensure
compliance with the same;

 

14.1.9  Unlawfulness

 

at any time it is or becomes unlawful for the Borrower to perform or comply with
any or all of its obligations under this Debenture or any of the obligations of
the Borrower under this Debenture are not, or cease to be, legal, valid and
binding;

 

14.1.10  Analogous proceedings

 

there occurs, in relation to the Borrower, any event anywhere which, in the
reasonable opinion of the Lender, appears to correspond with any of those
mentioned in Clauses 14.1.5 (Insolvency) and 14.1.6 (Insolvency proceedings);

 

14.1.11  Litigation

 

any litigation, arbitration, or administrative proceedings are commenced which,
in the reasonable opinion of the Lender, if adversely determined might have a
Material Adverse Effect in relation to the Borrower; or

 

14.1.12  Material adverse change

 

any circumstances arise which give grounds in the reasonable opinion of the
Lender for belief that the Borrower may not (or may be unable to) perform, or
comply with, its obligations under this Debenture.

 

14.2 Enforcement

 

This Debenture will become enforceable on the occurrence of any Event of Default
or if the Borrower requests the Lender to appoint a receiver over the whole or
any part of its undertaking or assets.

 

14.3 Consequences of default

 

On and at any time after the occurrence of an Event of Default, the Lender in
its absolute discretion may by written notice to the Borrower;

 

14.3.1 

declare the Secured Liabilities to be immediately due and payable, together with
all accrued interest thereon and any other sums then owed by the Borrower under
this Debenture and, upon that declaration, such sums shall become immediately
due and

 

24

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payable without demand or notice of any kind, all of which are hereby expressly
waived by the Borrower; or

 

14.3.2  declare the Secured Liabilities to be due and payable on demand of the
Lender; and/or

 

14.3.3  declare the security constituted by this Debenture to be enforceable.

 

15. STATUTORY POWER OF SALE

 

15.1 For the purposes of all powers implied by statute, and in particular the
power of sale under Section 101 of the LPA (Powers incident to estate or
interest in a mortgage), the Secured Liabilities will be deemed to have become
due when the security created by this Debenture becomes enforceable and Section
103 of the LPA (Regulation of exercise of power of sale) and Section 93 of the
LPA (Restriction on consolidation of mortgages) will not apply.

 

15.2 The statutory powers of leasing conferred on the Lender are extended so as
to authorize the Lender to lease, make arrangements for leases, accept surrender
of leases and grant options on such terms and conditions as the Lender may in
its discretion think fit. The Lender is not obliged to comply with any of the
provisions of Section 99 (Leasing powers of mortgagor and mortgagee in
possession) and Section 100 (Powers of mortgagor and mortgagee in possession to
accept surrenders of leases) of the LPA.

 

15.3 Each of the Lender and the Receiver may exercise such person’s statutory
power of sale in respect of the whole or any part of the Property.

 

16. RECEIVER

 

16.1 Appointment of Receiver

 

16.1.1  At any time after the security constituted by this Debenture has become
enforceable, whether or not the Lender has entered into or taken possession of
the whole or any part of the Charged Property pursuant to this Debenture:

 

  (a) the Lender may, by writing under the hand of any authorised officer of the
Lender, appoint any person to be a receiver of the Charged Property and such
person shall, with effect from the date of such appointment, be a “Receiver”;

 

  (b) the Lender may, from time to time, in similar manner, remove the Receiver
and appoint another in his place;,

 

  (c) the Lender may, either at the time of appointment or at any time
thereafter, fix the remuneration of the Receiver;

 

  (d)

the Lender and any Nominee wheresoever situate may, without further notice and
without the restrictions contained in Section 103 of the Law of Property Act
1925 (Regulation of exercise of power of sale), exercise in respect of all or
any part of the Shares and the Derivative Assets all the powers and rights
exercisable by the registered holder of the Shares and the Derivative Assets

 

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and all other powers conferred on mortgagees by the Law of Property Act 1925 as
varied or extended by this Debenture; and

 

  (e) the Lender and any Nominee wheresoever situate may apply any dividends,
interest or other payments received or receivable by the Lender or by such
Nominee in respect of the Shares and the Derivative Assets as if they were
proceeds of sale.

 

None of the restrictions imposed by the LPA in relation to the appointment of
receivers, the giving of notice or otherwise shall apply.

 

16.1.2  The Receiver may from time to time delegate, by power of attorney or
otherwise, to any person any of his powers and discretions, whether arising by
statute, the provisions of this Debenture or otherwise, upon such terms and for
such periods of time as he may in his discretion think fit and may from time to
time terminate any such delegation. The Leader shall not be liable to the
Borrower for any loss or damage arising from any such delegate’s act, default,
neglect or misconduct of any nature whatsoever.

 

16.2 Powers of Receiver

 

The Receiver has all the powers to do or abstain from doing anything which the
Borrower could do or abstain from doing in relation to the Charged Property
including, without limitation the powers conferred by Section 109 of the LPA
(Appointment, powers, remuneration and duties of receivers) and, in the case of
a Receiver who is an administrative receiver, the powers conferred by Section 29
of the Insolvency Act (Definitions) and Schedule 1 to the Insolvency Act (Powers
of administrator or administrative receiver), and in particular the Receiver
may:

 

16.2.1  Carry on business

 

carry on, manage or concur in carrying on managing the whole or any part of the
business of the Borrower as he may in his discretion think fit;

 

16.2.2  Protection of assets

 

  (a) manage, insure, repair, decorate, maintain, alter, improve, renew or add
to the Charged Property or concur in so doing;

 

  (b) commence or complete any building operations on the Property;

 

  (c) apply for and maintain any planning permissions, building regulations,
approvals and any other permissions, consents or licences,

 

in each case as he may in his discretion think fit;

 

16.2.3  Realisation of assets

 

sell, exchange, convert into money and realise the Charged Property or concur in
so doing by public auction or private contract and generally in such manner and
on such terms as he may in his discretion think fit. Without prejudice to the
generality of the foregoing, he may do any of these things for any valuable
consideration, including, without limitation, cash, shares, stock, debentures or
other obligations.

 

26

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Any such consideration may be payable in a lump sum or by instalments spread
over such period as he may in his discretion think fit;

 

16.2.4  Let, hire or lease

 

  (a) let, hire or lease (with or without premium) and accept surrenders of
leases or tenancies or concur in so doing;

 

  (b) grant rights, options or easements over and otherwise deal with or dispose
of, and exercise all rights, powers and discretions incidental to, the ownership
of the Charged Property;

 

  (c) exchange or concur in exchanging the Charged Property,

 

in each such case in such manner and generally on such terms as he may in his
discretion think fit, with all the powers of an absolute beneficial owner. The
Receiver may exercise any such power by effecting such transaction in the name
or on behalf of the Borrower or otherwise;

 

16.2.5  Borrowing

 

for the purpose of exercising any of the powers, authorities or discretions
conferred on him by or pursuant to this Debenture or of defraying any Costs
(including, without limitation, his remuneration) which are incurred by him in
the exercise of such powers, authorities or discretions or for any other
purpose, to raise and borrow money or incur any other liability either unsecured
or secured on the Charged Property, either in priority to the security
constituted by this Debenture or otherwise, and generally on such terms as he
may in his discretion think fit. No person lending such money is to be concerned
to enquire as to the propriety or purpose of the exercise of such power or as to
the application of any money so raised or borrowed;

 

16.2.6  Make calls

 

make, or require the directors of the borrower to make, such calls upon the
shareholders of the Borrower in respect of any uncalled capital of the Borrower
as the Receiver may in his discretion require and enforce payment of any call so
made by action (in the name of the Borrower or the Receiver as the Receiver may
in his discretion think fit) or otherwise;

 

16.2.7  Compromise

 

  (a) settle or compromise any claim by, adjust any account with, refer to
arbitration any dispute with, and deal with any question or demand from, any
person who is, or claims to be, a creditor of the Borrower, as he may in his
discretion think fit; and

 

  (b) settle or compromise any claim, adjust any account, refer to arbitration
any dispute and deal with any question or demand relating in any way to the
Charged Property, as he may in his discretion think fit;

 

16.2.8  Proceedings

 

bring, prosecute, enforce, defend and abandon all such actions, suits and
proceedings in relation to the Charged Property as he may in his discretion
think fit;

 

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16.2.9  Subsidiaries

 

  (a) promote the formation of any Subsidiary of the Borrower with a view to
such Subsidiary purchasing, leasing, licensing or otherwise acquiring an
interest in the Charged Property;

 

  (b) arrange for the purchase, lease, licence or acquisition of an interest in
the Charged Property by any such Subsidiary for any valuable consideration,
including, without limitation, cash, shares, debentures, loan stock, convertible
loan stock or other securities, profits or a sum calculated by reference to
profits, turnover, royalties, licence fees or otherwise, whether or not secured
on the undertaking or assets of such Subsidiary and whether or not such
consideration is payable or receivable in a lump sum or at any time or any
number of times by instalments spread over such period, as the Receiver may in
his discretion think fit; and

 

  (c) arrange for such Subsidiary to trade or cease to trade as the Receiver may
in his discretion think fit;

 

16.2.10  Employees

 

appoint and discharge any manager, officer, agent, professional adviser,
employee and any other person, upon such terms as he may in his discretion think
fit;

 

16.2.11  Receipts

 

give valid receipts for all monies and execute all assurances and things which
he may in his discretion think proper or desirable for realizing the Charged
Property;

 

16.2.12  Environment

 

conduct and complete all investigations, studies, sampling and testing and all
remedial, removal and other actions, whether required under Environmental
Legislation or by the Lender or otherwise and comply with all lawful orders and
directives of all Authorities regarding Environmental Legislation; and

 

16.2.13  General powers

 

do all such other, acts and things as the Receiver may in his discretion
consider to be incidental or conducive to any of the matters or powers set out
in this Debenture or otherwise incidental or conducive to the preservation,
improvement or realisation of the Charged Property.

 

16.3 Receiver as agent of the Borrower

 

The Receiver is at all times and for all purposes the agent of the Borrower.
Subject to the provisions of the Insolvency Act, the Borrower is solely
responsible for all the Receiver’s acts, defaults, neglect and misconduct of any
nature whatsoever and for his remuneration and Costs, to the exclusion of
liability on the part of the Lender.

 

16.4 No obligation

 

The Receiver is not obliged to exercise any of the powers set out in this
Clause.

 

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16.5 Several power

 

Where more than one Receiver is appointed, each Receiver has the power to act
severally unless the Lender specifies otherwise in the appointment of such
Receiver.

 

16.6 Powers exercisable by the Lender

 

16.6.1  The Lender may exercise all powers granted to the Receiver by this
Debenture, whether as attorney of the Borrower or otherwise.

 

16.6.2  The powers of the Receiver set out above are in addition to, and without
prejudice to, all statutory and other powers of the Lender as provided in Clause
15 (Statutory power of sale) or otherwise and so that, inter alia, such powers
are and remain exercisable by the Lender in respect of that part of the Charged
Property in respect of which no appointment of a Receiver by the Lender is from
time to time subsisting.

 

16.7 Application of proceeds

 

The provisions of Sections 99 to 109 inclusive of the LPA are varied and
extended to the extent that all monies received by the Receiver be applied in
the following order.

 

16.7.1  in full payment of his remuneration and the Costs of realisation
including, without limitation, all Costs of, or incidental to, any exercise of
any power referred to in this Debenture, including, without limitation, all
outgoings paid by the Receiver;

 

16.7.2  providing for the matters specified in paragraphs (i) to (iii) inclusive
of Section 109 (8) of the LPA (Appointment, powers, remuneration and duties of
receiver);

 

16.7.3  in or towards satisfaction of any debts or other imposts which are by
statute made payable in preference to the Secured Liabilities to the extent to
which such debts or imposts are made so payable;

 

16.7.4  if so required by the Lender in its discretion, in or towards
satisfaction of the Secured Liabilities; and

 

16.7.5  to the person entitled to any surplus.

 

17. PROTECTION OF THIRD PARTIES

 

17.1 Any person (including, without limitation, any purchaser, mortgagor or
mortgagee) (in this Clause a “purchaser”) dealing with the Lender may assume
without inquiry that:

 

17.1.1  some part of the Secured Liabilities has become due;

 

I7.1.2  a demand for such Secured Liabilities has been duly made; and

 

17.1.3  such Secured Liabilities have become due within the meaning of Section
101 of the LPA (Powers incident to estate or interest in a mortgage).

 

17.2

No purchaser dealing with the Receiver or the Lender is to be concerned to
enquire whether any power exercised or purported to be exercised by the Receiver
or the Lender has become exercisable, or as to the propriety or regularity of
any sale by,

 

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or other dealing with, the Receiver or the Lender. Any such sale or dealing is
deemed to be within the powers conferred by this Debenture and to be valid and
effective accordingly. All the protection to purchasers contained in Section 104
(Conveyance on sale) and Section 107 (Mortgagee’s receipt, discharges etc.) of
the LPA and Section 42(3) of the Insolvency Act (Prohibition upon enquiry into
administrative receiver’s powers) apply to any purchaser.

 

18. NO LIABILITY AS MORTGAGEE IN POSSESSION

 

18.1 Mortgagee’s liability

 

Neither the Lender nor the Receiver is:

 

18.1.1  liable to account as mortgagee in possession in respect of the Charged
Property; nor

 

18.1.2  liable for any loss upon realisation or exercise of any power, authority
or right of the Lender or the Receiver arising under this Debenture, nor for any
act, default, neglect, or misconduct of any nature whatsoever.

 

18.2 Possession

 

If the Lender or the Receiver enters into possession of the Charged Property,
such person may at any time go out of possession at the discretion of such
person.

 

19. REASSIGNMENT

 

Subject to Clause 22.2 (Avoidance of payments), upon irrevocable discharge in
full of the Secured Liabilities the Lender shall reassign to the Borrower all
the Borrower’s rights, title, interest and benefit in and to the Contracts.

 

20. POWER OF ATTORNEY

 

20.1 The Borrower irrevocably appoints, by way of security the Lender, each
person deriving title from the Lender and the Receiver, jointly and severally to
be its attorney (with full power to appoint substitutes and to sub-delegate) for
it, in its name, on its behalf and as its act and deed or otherwise to sign or
execute any deed or document or do any act or thing which the Borrower is, or
may become, obliged to sign, execute or do pursuant to this Debenture or which
the Lender, the Receiver or any person deriving title from the Lender or the
Receiver may in the discretion of such person think fit in connection with the
exercise of any of the powers of such person or the realisation of any security
constituted by this Debenture.

 

20.2 Without prejudice to the generality of the foregoing, the Borrower
unconditionally undertakes to the Lender, and separately to the Receiver and to
each person deriving title from the Lender or the Receiver, that it shall ratify
and confirm anything done or purported to be done by any attorney appointed
pursuant to this Clause.

 

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21. CUMULATIVE AND CONTINUING SECURITY

 

21.1 This Debenture is a continuing security to the Lender regardless of any
intermediate payment or discharge of the whole or any part of the Secured
Liabilities and will not be prejudiced or affected by any act, omission or
circumstance which, but for this Clause, might affect or diminish its
effectiveness.

 

21.2 The security constituted by this Debenture is in addition to, is not in
substitution for, is without prejudice to, and does not merge with, any rights
whatsoever which the Lender may have, whether in respect of the Secured
Liabilities or otherwise, including, without limitation, any rights arising
under any other Security Interest, any bill, note, guarantee, contract or
applicable rule of law.

 

21.3 Any receipt, release or discharge of the security constituted by, or of any
liability arising under, this Debenture shall not release or discharge the
Borrower from any liability which may exist independently of this Debenture to
the Lender.

 

21.4 Where the security constituted by this Debenture initially takes effect as
a collateral or further security to any other Security Interest held by the
Lender then, notwithstanding any receipt, release or discharge given in respect
of such other Security Interest, this Debenture shall take effect as an
independent security for any monies, liabilities or other sums secured by such
other Security Interest.

 

22. AVOIDANCE OF PAYMENTS

 

22.1 No assurance, security or payment which may be avoided under the law or
subject to an order of the court made under any law relating to bankruptcy,
insolvency, administration or winding-up, including, without limitation, the
Insolvency Act, and no release, settlement or discharge given or made by the
Lender on the faith of any such assurance, security or payment, prejudices or
affects the right of the Lender:

 

22.1.1  to recover any monies from the Borrower (including, without limitation,
any monies which it is compelled to refund under Chapter X (Malpractice before
and during liquidation; penalisation of companies and company officers;
investigations and prosecutions) of the Insolvency Act and any Costs payable by
it incurred in connection with such process); or

 

22.1.2  to enforce the security constituted by this Debenture to the full extent
of the Secured Liabilities.

 

22.2 The Leader may at its discretion retain the security so created as security
for the Secured Liabilities for a period of one month plus any statutory period
within which any such assurance, security or payment can be avoided or
invalidated notwithstanding any release, settlement, discharge or arrangement
given or made by the Lender.

 

22.3

If at any time within the period referred to in Clause 22.2 any person takes any
step whatsoever relating to (i) the winding-up or administration of the
Borrower; or (ii) any arrangement with the creditors of the Borrower, the Lender
may retain the whole or any part of the security constituted by this Debenture
for such further period as the

 

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Lender may in its discretion think fit. Such security will be deemed to have
been held and remained held by the Lender as security for the payment to the
Lender of the Secured Liabilities.

 

23. PRIOR CHARGES

 

23.1 If there subsists any prior Security Interest against the Charged Property
and either, any step is taken to exercise any power or remedy conferred by such
Security Interest or the Lender or the Receiver exercises any power of sale
pursuant to this Debenture, the Lender may redeem such prior Security Interest
or procure the transfer of such Security Interest to itself and may settle and
pass the accounts of the person entitled to such Security Interest. Any accounts
so settled and passed are conclusive and binding on the Borrower.

 

23.2 The Borrower shall reimburse the Lender for any Costs incurred by the
Leader in exercise of its rights under this Clause.

 

24. SUSPENSE ACCOUNT

 

The Lender may, in its discretion credit to any suspense or impersonal account
and hold in such account, on such terms as the Lender may in its discretion
think fit all monies received, recovered or realised by the Lender pursuant to
this Debenture (including, without limitation, the proceeds of any conversion of
currency) pending the application from time to time (as the Lender may effect in
its discretion) of such monies and accrued interest, if any, in or towards,
satisfaction, of the Secured Liabilities.

 

25. PAYMENTS AND WITHHOLDING TAXES

 

The Borrower shall pay and discharge the Secured Liabilities without any
set-off, counterclaim, restriction or condition, without regard to any equities
between the Borrower and the Lender and free and clear of, and without deduction
or withholding for, or on account of, any Taxes, except to the extent that the
Borrower is required by law to deduct or withhold any Taxes on any amounts
payable under this Debenture.

 

26. CURRENCY

 

26.1 All monies received or held by the Lender or any Receiver in respect of the
Secured Liabilities may, from time to time after demand has been made, be
converted into such other currency as the Lender in its absolute discretion
considers necessary or desirable to cover the obligations and liabilities actual
or contingent of the Borrower in that other currency at the Exchange Rate for
purchasing that other currency with the existing currency.

 

26.2

If and to the extent that the Borrower fails to pay the amount due on demand the
Lender may in its absolute discretion without notice to the Borrower purchase,
at any

 

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time thereafter so much of any currency as the Lender considers necessary or
desirable to cover the obligations and liabilities of the Borrower in such
currency hereby secured at the Exchange Rate for purchasing such currency with
sterling and the Borrower hereby agrees to indemnify the Lender against the full
sterling cost incurred by the Lender for such purchase.

 

26.3 Neither the Lender nor any Receiver shall be liable to the Borrower for any
loss resulting from any fluctuation in exchange rates before or after the
exercise of the foregoing powers.

 

26.4 No payment to the Lender (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the Borrower in
respect of which it was made unless and until the Lender shall have received
payment in full in the currency in which such obligation or liability was
incurred and to the extent that the amount of any such payment shall, on actual
conversion into such currency, fall short of such obligation or liability actual
or contingent expressed in that currency the Lender shall have a further
separate cause of action against the Borrower, shall be entitled to enforce the
security constituted by this Debenture to recover the amount of the shortfall
and such amount will bear interest in accordance with Clause 3 (Interest) from
the date of payment by the Lender until the date of reimbursement.

 

27. SET-OFF

 

The Borrower agrees the Lender may at, any time without notice or further demand
notwithstanding any settlement of account or other matter whatsoever, combine or
consolidate all or any of its then existing accounts wherever situate including
any accounts in the name of the Lender or of the Borrower jointly with others
(whether current, deposit, loan or of any other nature whatsoever whether
subject to notice or not and whether in sterling or in any other currency) and
set-off or transfer any sum standing to the credit of any one or more such
accounts in or towards satisfaction of the Secured Liabilities. Where such
combination, set-off or transfer requires the conversion of one currency into
another, such conversion shall be calculated at the Exchange Rate for purchasing
the currency for which the Borrower is liable, with the existing currency.

 

28. ASSIGNMENT

 

Neither party may assign or transfer any of its rights under this Debenture in
whole or in part without the consent of the other save that the Lender may
assign to another member of its Group without restriction.

 

29. WAIVERS

 

No failure or delay or other relaxation or indulgence on the part of the Lender
to exercise any power, right or remedy shall operate as a waiver thereof nor
shall any single or partial

 

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exercise or waiver of any power, right or remedy preclude its further exercise
or the exercise of any other power, right or remedy.

 

30. SEVERABILITY

 

Each of the provisions of this Debenture is distinct and severable from the
others and if at any time one or more of such provisions is or becomes illegal,
invalid or unenforceable the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.

 

31. NOTICES

 

31.1 Each party may give any notice, demand or other communication under or in
connection with this Debenture by letter, telex, facsimile or comparable means
of communication addressed to the other party at the address identified with its
below. Any such communication will be deemed to be given as follows:

 

31.1.1  if personally delivered, at the time of delivery;

 

31.1.2  if by letter, at noon on the Business Day following the day such letter
was posted (or in the case of airmail, seven days after the envelope containing
the same was delivered into the custody of the postal authorities); and

 

31.1.3  if by telex, facsimile transmission or comparable means of communication
during the business hours of the addressee then on the day of transmission,
otherwise on the next following Business Day.

 

31.2 In proving such service it shall be sufficient to prove that personal
delivery was made or that such letter was properly stamped first class,
addressed and delivered to the postal authorities or that the telex was
transmitted with a correct answerback or in the case of facsimile transmission
or other comparable means of communication, that a confirming hard copy was
provided promptly after transmission.

 

32. LAW AND JURISDICTION

 

32.1 This Debenture shall be governed by and construed in accordance with
English law.

 

32.2 The parties hereby agree that any legal action or proceedings arising out
of or in connection with this Debenture is shall be brought in the High Court of
Justice in England, irrevocably and unconditionally submits to the jurisdiction
of such Court and the Borrower irrevocably designates, appoints and empowers
Maclay Murray & Spens at present of 10 Foster Lane, London EC2V 6HR and the
Lender irrevocably designates, appoints and empowers Credo Corporate Finance
Limited at present of 33 Margaret Street, London WlG OJD to receive for it and
on its behalf, service of process issued out of such Court in any such legal
action or proceedings.

 

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33. COUNTERPARTS AND DELIVERY

 

33.1 This Debenture may be executed in any number of counterparts, each of which
is an original, and which together constitute one and the same document.

 

33.2 If this Debenture is executed in more than one counterpart, this Debenture
is deemed to be delivered and has effect when:

 

33.2.1  each party other than the Lender has executed a counterpart of this
Debenture;

 

33.2.2  each party other than the Lender has handed over such counterpart to one
of the other parties to this Debenture; and

 

33.2.3  each of the counterparts has been dated.

 

33.3 If this Debenture is not executed in more than one counterpart, this
Debenture is deemed to be delivered and has effect when each party other than
the Lender has executed this Debenture and this Debenture has been dated.

 

33.4 The execution (whether under hand or as a deed) or sealing of this
Debenture by or on behalf of a party constitutes an authority to the solicitors
or legal counsel acting for that party in connection with this Debenture, or any
agent or employee of such solicitors or legal counsel, to deliver it as a deed
on behalf of that party.

 

33.5 Each party to this Debenture agrees to be bound by this Debenture despite
the fact that any other person which was intended to execute or to be bound does
not do so or is not effectually bound and despite the fact that any Security
Interest contained in this Debenture is terminated or becomes invalid or
unenforceable against any other person whether or not such termination,
invalidity, or unenforceability is known to the Lender.

 

IN WITNESS WHEREOF this Debenture has been executed and delivered as a deed on
the date written at the beginning of this Debenture.

 

35

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The Schedule - The Scheduled Property

 

36

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EXECUTED and DELIVERED as a DEED

  )    

for and on behalf of

  )    

ASPACE SOLUTIONS LIMITED by:

  )         Director         Director/Secretary    

Notice details

       

Address:

 

Three Tuns House

109 Borough High Street

London

SE1 1NL

Fax No:

  020 7744 6249

Telephone No:

  020 7744 6248

Attention:

  Paul Ryder

EXECUTED and DELIVERED as a DEED

  ) /s/    Steven Humphrey    

for and on behalf of

  )    

ACTIVCARD CORP by:

  )         Director         Director/Secretary    

 

Notice details

 

Address: 6623 Dumbarton Circle, Fremont, California 94555, USA

 

Fax No: + 1 (0)510 574 0128

 

Telephone No: +1 (0)510 574 0100

 

Attention: Blair Geddes

 

37