Exhibit 10.8
 
Dated                                                                                    2014
 
(1) MUST HAVE LIMITED
 
- and -
 
(2) (AS SECURITY TRUSTEE)
 
 
DEBENTURE
 

 
 

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TABLE OF CONTENTS
 
No.
 
Heading
 
Page
         
1
 
Definitions and interpretation
 
3
2
 
Covenant to pay
 
10
3
 
Grant of security
 
10
4
 
controlled account and Collection account
 
13
5
 
Notices
 
14
6
 
Restrictions on dealing
 
14
7
 
positive covenants
 
14
8
 
Representations and warranties
 
17
9
 
Power to remedy
 
19
10
 
Enforcement
 
19
11
 
Administrator and Receiver
 
21
12
 
Scope and Powers of Administrator and Receiver
 
22
13
 
Amounts received
 
23
14
 
Power of attorney
 
24
15
 
Protection of security and further assurance
 
24
16
 
GROSS-UP AND PAYMENTS
 
26
17
 
Costs and indemnity
 
27
18
 
Miscellaneous
 
27
19
 
CURRENCY
 
28
20
 
Demands and notices
 
28
21
 
Assignment and transfer
 
29
22
 
Release of Security
 
29
23
 
Governing law and enforcement
 
30
24
 
Counterparts
 
30
Schedule 1 the beneficiary
  31
Schedule 2 Properties
  32
Schedule 3 Securities
  33

 
 
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Exhibit 10.8

 
DEBENTURE
 
DATE
 
PARTIES
 
(1)  
MUST HAVE LIMITED incorporated in England and Wales with company number 05101019
whose registered office is at Unit 14, Dale Street Industrial Estate, Radcliffe,
Manchester M26 1AD  (the "Chargor");

 
(2)  
[                                    ] ("Senior Security Trustee").

 
IT IS AGREED as follows:
 
1.  
DEFINITIONS AND INTERPRETATION

 
1.1  
Definitions

 
In this Deed, unless the context otherwise requires:
 
6% Senior Secured Convertible Notes: means the secured convertible notes of
Victory with a face value of US$[               ] issued to the Beneficiary on
or about the date of this Deed pursuant to which Victory has borrowed
US$[        ] from the Beneficiary;
 
Account Bank: means Natwest Bank plc;
 
Administrator: means a person appointed in accordance with schedule B1 to the
Insolvency Act 1986 to manage the Chargor's affairs, business and property;
 
Assigned Assets: means all of the assets assigned or purported to be assigned
under clause 3.2.
 
Beneficiary: means the person named in Schedule 1;
 
Business Day means a day (other than a Saturday or a Sunday) on which commercial
banks are open for general business in London and New York.
 
Charged Assets: means all the assets property and undertaking for the time being
subject to the Security Interests created by this Deed (and references to the
Charged Assets include references to any part of it);
 
Collection Account: means that segregated blocked account to be established and
maintained at the Account Bank for the purposes set out in clause 4.4 and all
monies from time to time standing to the credit (including any interest thereon)
of such account and all rights in relation thereto (including the right to
interest);
 
Controlled Account: means that segregated blocked account to be established and
maintained at the Account Bank for the purposes set out in clause 4.3 and all
monies from time to time standing to the credit (including any interest thereon)
of such account and all rights in relation thereto (including the right to
interest);
 
 
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Convertible Note Documents: means the 6% Senior Secured Convertible Notes, the
Convertible Note Instrument, the Securities Purchase Agreement and the
Registration Rights Agreement;
 
Convertible Note Instrument: means the instrument dated on or about the date of
this deed pursuant to which the 6% Senior Secured Convertible Notes are, or are
to be, constituted;
 
Costs: means all present and future costs, charges, expenses and liabilities of
any kind including, without limitation, costs and damages in connection with
litigation, professional fees, disbursements and any value added tax charged on
such costs;
 
Debts: means all book and other debts and monetary claims of any kind whatsoever
now or at any time due, owing or payable to the Chargor or in which the Chargor
has an interest and the proceeds of the same, including the benefit of any
judgement or order to pay a sum of money, and the benefit of all rights,
securities and guarantees of any nature enjoyed or held by it in relation to the
same and all Related Rights;
 
EBITDA: means the net income of the Chargor on ordinary and extraordinary
activities during a given calendar month as shown in the Management Accounts of
the Chargor in respect of that calendar month delivered to the Senior Security
Trustee pursuant to paragraph 7.5.2 of this deed, excluding:
 
(a)          interest expense;
 
(b)          the amount charged as tax on income on ordinary and extraordinary
activities;
 
(c)          total depreciation and amortisation;
 
(d)          any extraordinary, unusual or non-recurring items increasing net
income; and
 
(e)          any non-cash items increasing net income,
 
during that calendar month each as shown in such Management Accounts;
 
Equipment: means all present and future equipment, plant, machinery, tools,
vehicles, furniture, furnishings, fittings, installations, apparatus and other
chattels and tangible moveable property now or at any time hereafter (and from
time to time) owned by the Chargor, and any part thereof, together with all
spare parts, replacements, modifications and additions and the benefit of all
contracts and warranties relating to the same and all Related Rights;
 
Event of Cross Default: means subject to paragraph (v) of this definition:
 
 
(i)
any Indebtedness of Victory or the Chargor is not paid when due nor within any
originally applicable grace period;

 
 
(ii)
any Indebtedness of Victory or the Chargor is declared to be or otherwise
becomes due and payable prior to its specified maturity as a result of an event
of default (however described);

 
 
(iii)
any commitment for any Indebtedness of Victory or the Chargor is cancelled or
suspended by a creditor as a result of an event of default (however described);
or

 
 
(iv)
any creditor of Victory or the Chargor becomes entitled to declare any
Indebtedness due and payable prior to its specified maturity as a result of an
event of default (however described).

 
 
(v)
No Event of Cross Default will be deemed to occur if the aggregate amount of
Indebtedness or commitment for Indebtedness falling within paragraphs (i) to
(iv) above is less than $1,000,000  with respect to Victory, and in the case of
the Chargor £250,000 (or its equivalent in any other currency or currencies).

 
 
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Event of Default: means:
 
(i)  
if any of the Secured Obligations are not paid or discharged by the Chargor or
Victory (as the case may be) when the same ought to be paid or discharged
(whether at scheduled maturity or by acceleration or otherwise as the case may
be);

 
(ii)  
the Chargor or Victory (as the case may be) is in breach of any of its
obligations under the Finance Documents and that breach (if capable of remedy)
has not been remedied to the satisfaction of the Senior Security Trustee within
14 days of notice by the Senior Security Trustee to the Chargor or Victory (as
the case may be) to remedy the breach.

 
(iii)  
any representation, warranty or statement made by the Chargor or Victory (as the
case may be) in, or in connection with, any of the Finance Documents is or
proves to have been incorrect or misleading when made;

 
(iv)  
any Event of Cross Default occurs;

 
(v)  
either or both of the Chargor or Victory:

 
a.  
becoming unable to pay their debts as they fall due or the value of their assets
being less than amount of their liabilities, taking into account their
contingent and prospective liabilities;

 
b.  
commencing negotiations with any or more of their creditors with a view to the
general readjustment or rescheduling of their indebtedness; and/or

 
c.  
making a general assignment for the benefit of, or a composition with, their
creditors; or

 
(vi)  
a distress, execution, attachment or other legal process being levied or
enforced upon or sued against all or any part of the assets of the Chargor or
Victory and remaining undischarged for seven days;

 
(vii)  
if any step is taken (including, without limitation, the making of an
application or the giving of any notice) by the Chargor or Victory or by any
other person to appoint an administrator in respect of the Chargor or Victory;

 
(viii)  
if any step is taken (including, without limitation, the making of an
application or the giving of any notice) by the Chargor or Victory or any other
person to wind up or dissolve the Chargor or Victory or to appoint a liquidator,
trustee, receiver, administrative receiver or similar officer to the Chargor or
Victory or any part of its undertaking or assets;

 
(ix)  
the making of a request by the Chargor or Victory for the appointment of a
receiver or administrator; or

 
(x)  
the occurrence of any event which, under any jurisdiction, has a similar or
analogous effect to any of the events mentioned in paragraphs (iv), (v), (vi),
(vii) or (viii) of this definition.

 
Excluded Property: means each leasehold property held by the Chargor under a
lease which either precludes absolutely, or requires consent of a third party
to, the creation of a Security Interest over the Chargor's leasehold interest in
that property;
 
Excess Monies: means at any time the aggregate of all cash in hand held by the
Chargor and its Subsidiary Undertakings and all monies standing to the credit of
every Non-Controlled Account held by the Chargor and every bank account held by
the Chargor’s Subsidiary Undertakings less £1,000,000 to the extent that the
result of such calculation is a positive number;
 
Finance Documents: means the Senior Security Documents, the Convertible Note
Documents, the Intercreditor Agreement, this Deed and any other document
designated as such by the Chargor and the Senior Security Trustee;
 
Financial Collateral: shall have the meaning given to that expression in the
Financial Collateral Regulations;
 
Financial Collateral Regulations: means the Financial Collateral Arrangements
(No. 2) Regulations 2003;
 
 
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Floating Charge Assets: means all the assets property and undertaking for the
time being subject to the floating charge created by this Deed (and references
to the Floating Charge Assets include references to any part of it);
 
Goodwill: means all goodwill now or at any time hereafter (and from time to
time) of or in the Chargor;
 
Guarantee: means the Guarantee between the Chargor and the Senior Security
Trustee dated on or about the date of this Deed;
 
Insurance Policies: means all contracts and policies of insurance or assurance
effected or maintained by the Chargor from time to time or in which the Chargor
has an interest (including without limitation, insurances relating to the
Properties or the Equipment) and all moneys payable under or pursuant to such
policies and all rights and interests in such contracts and policies including
the right to the refund of any premium;
 
Indebtedness: means, with respect to Victory and the Chargor, any amount payable
by either or both of them pursuant to the Junior Documents or any other
agreement or instrument involving, relating to or evidencing money borrowed or
received, the advance of credit, a conditional sale or a transfer with recourse
or with an obligation to repurchase, or pursuant to a lease with substantially
the same economic effect as any such agreement or instrument, to which either or
both of Victory and the Chargor is a party as debtor, borrower or guarantor, all
obligations under the Junior Documents or otherwise of either or both of Victory
and the Chargor to purchase securities (or other property) which arise out of or
in connection with the sale of the same or substantially similar securities or
property, all non contingent obligations under the Junior Documents or otherwise
of either or both of Victory and the Chargor to reimburse any bank or other
person in respect of amounts paid under a letter of credit or similar
instrument, all obligations under the Junior Documents or otherwise to advance
funds including keep wells, comfort letters and similar arrangements and all
liabilities under interest rate cap agreements, interest rate swap agreements,
foreign currency exchange agreements and other hedging agreements or
arrangements.
 
Indemnified Person: has the meaning given to it in clause 17.3;
 
Intellectual Property: means the Chargor's present and future patents, rights to
inventions, copyright and related rights, trade marks, service marks, business
names and domain names, rights in get-up, goodwill and the right to sue for
passing off, rights in designs, database rights, rights to use, and protect the
confidentiality of, confidential information (including know-how), and all other
intellectual property rights, in each case whether registered or unregistered
and including all applications and rights to apply for and be granted, renewals
or extensions of, and rights to claim priority from, such rights and all similar
or equivalent rights or forms of protection which subsist or will subsist now or
in the future in any part of the world, together with all fees, royalties and
other rights derived from, or incidental to, these rights.
 
Intercreditor Deed: means the intercreditor deed between, amongst others, (1)
the Chargor; and (2) the Senior Security Trustee dated on or about the date of
this Deed;
 
Junior Beneficiaries: means [                                    ] whose
addresses are listed in part 2 of schedule 1 of the Intercreditor Deed;
 
Junior Documents: means the Junior Secured Loan Notes 2014, the Junior Loan Note
Instrument, the Share Purchase Agreement, the Junior Registration Rights
Agreement and the Junior Security;
 
Junior Debenture: means the debenture between the Chargor and
[                                    ] as Security Trustee dated on or about the
date of this Deed;
 
Junior Guarantee: means the guarantee between the Chargor and the Junior
Beneficiaries dated on or about the date of this Deed;
 
Junior Loan Note Instrument: means the instrument dated on or about the date of
this Deed pursuant to which the Junior Secured Loan Notes 2014 are, or are to
be, constituted;
 
Junior Secured Loan Notes 2014: means the US$11,000,000 secured loan notes 2014
of Victory issued to the Junior Beneficiaries;
 
Junior Security: means the Junior Debenture and the Junior Guarantee;
 
Junior Registration Rights Agreement: means the Registration Rights Agreement
dated on or about the date of this Deed entered into between Victory and each of
the Junior Beneficiaries on the date of the Share Purchase Agreement;
 
Losses: means all losses (including loss of profit), claims, demands, actions,
proceedings, damages and other payments, costs, charges, expenses and other
liabilities of any kind;
 
 
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LPA: means the Law of Property Act 1925;
 
Management Accounts: means the unaudited management accounts of the Chargor,
comprising a balance sheet as at the relevant date of the accounts and a profit
and loss account for the relevant period, prepared in accordance with the terms
of this deed;
 
Must Have Redemption Amount: has the meaning given to that term in the
Convertible Note Instrument;
 
Non-Controlled Accounts: means all accounts and all monies from time to time
standing to the credit (including any interest thereon) of such accounts and all
rights in relation thereto (including the right to interest), with any bank,
financial institution or other person in any jurisdiction now or at any time
hereafter (and from time to time) owned, operated or held by the Chargor or in
which the Chargor has an interest other than the Controlled Account and the
Collection Account;
 
Parent Company means any person which directly or indirectly: (i) owns any of
the outstanding capital stock (as such term is understood under the law of the
jurisdiction in which Victory is incorporated) of Victory or holds any equity or
similar interest of Victory or (ii) controls or operates all or any part of the
business, operations or administration of Victory;
 
Permitted Security means:
 
(a)  
the Junior Security;

 
(b)  
any lien arising by operation of law and in the ordinary course of trading and
not as a result of any default or omission by any member of the Chargor; and

 
(c)  
any Security Interest arising under any retention of title, hire purchase or
conditional sale arrangement or arrangements having similar effect in respect of
goods supplied to the Chargor in the ordinary course of trading and on the
supplier's standard or usual terms and not arising as a result of any default or
omission by the Chargor;

 
Potential Event of Default: means any event or circumstance which would (with
the expiry of a grace period, the giving of notice, the making of any
determination under the Finance Documents, the fulfilment of any other condition
or any combination of any of the foregoing) be an Event of Default;
 
Properties: means all freehold and leasehold properties (whether registered or
unregistered) and all commonhold or other immoveable properties now or at any
time hereafter (and from time to time) owned by the Chargor or in which the
Chargor has an interest wherever situated and all buildings, structures and
fixtures and the proceeds of sale of all or any part thereof including (without
limitation) the properties which are briefly described in Schedule 2
(Properties);
 
Property Interests: means all interests in or over the Properties and all
rights, licences, guarantees, rents, deposits, contracts, covenants and
warranties relating to the Properties, in each case, now or at any time
hereafter (and from time to time) owned or held by the Chargor;
 
Receiver: means a person appointed by the Senior Security Trustee to be a
receiver or receiver and manager or (if permitted by law) an administrative
receiver of all or any part of the Charged Assets of the Chargor;
 
Registration Rights Agreement: means the Registration Rights Agreement entered
into between Victory and the Beneficiary on the date of the Securities Purchase
Agreement;
 
Related Rights: means in relation to any Charged Asset:
 
(a)          the proceeds of sale of any part of that Charged Asset;
 
 
(b)
all rights under any licence, contract of insurance, agreement for sale or
agreement for lease in respect of that Charged Asset;

 
 
(c)
all rights, powers, benefits, claims, contracts, warranties, remedies, security,
guarantees, indemnities or covenants for title in respect of that Charged Asset;

 
 
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(c)          any monies and proceeds paid or payable in respect of that Charged
Asset; and
 
 
(d)
in relation to any Securities, any right against any clearance system and any
rights against any institution or under any agreement.

 
Rental Income: means the aggregate of all amounts payable to or for the account
of the Chargor in connection with the letting of all or part of a Property;
 
Secured Obligations: means all present and future moneys, obligations and
liabilities owed by the Chargor or Victory to the Senior Security Trustee or
Beneficiary under the Finance Documents (whether actual or contingent and
whether owed jointly or severally, as principal or surety and/or in any other
capacity whatsoever);
 
Securities: means all stocks, shares, loan capital, securities, bonds and
investments of any kind whatsoever now or at any time hereafter (and from time
to time) owned by the Chargor, or in which the Chargor has an interest, together
with all allotments offered or arising in respect thereof or incidental thereto
and all stocks, shares, loan capital, securities, bonds, investments, rights,
income, money or property accruing, deriving, offered or paid from time to time
by way of dividend, distribution, interest, exchange, capital reorganisation,
conversion, redemption, bonus, rights, preference, option or otherwise in
respect thereof (including the securities which are briefly described in
Schedule 3 (Securities));
 
Securities Purchase Agreement: means the agreement dated on or about the date of
this Deed between Victory and the Beneficiary relating to (inter alia) the
purchase by the Beneficiary of the 6% Senior Secured Convertible Notes;
 
Security Financial Collateral Arrangement: shall have the meaning given to that
expression in the Financial Collateral Regulations;
 
Security Interest:  means any mortgage, charge (whether fixed or floating, legal
or equitable), pledge, lien, assignment by way of security or other security
interest securing any obligation of any person or any other agreement or
arrangement having a similar effect;
 
Security Period: means the period starting on the date of this Deed and ending
on the date on which the Secured Obligations have been unconditionally and
irrevocably paid and discharged in full and no further Secured Obligations are
capable of being outstanding;
 
Senior Security Documents: means the Guarantee and the Share Charge;
 
Share Charge: means the share charge dated on or about the date of this Deed
between Victory and the Senior Security Trustee;
 
Share Purchase Agreement: means the share purchase agreement dated on or about
the date of this Deed between Victory and the Junior Beneficiaries pursuant to
which inter alia Victory shall acquire the entire issued share capital of the
Chargor from the Junior Beneficiaries;
 
Subsidiary: means any person, other than the Chargor, in which Victory directly
or indirectly: (i) owns any of the outstanding capital stock (as such term is
understood under the law of the jurisdiction in which Victory is incorporated)
or holds any equity or similar interest of such person or (ii) controls or
operates all or any part of the business, operations or administration of such
person;
 
Subsidiary Undertaking: has the meaning given in section 1162 Companies Act
2006;
 
Tax: means any tax, levy, impost, duty or other charge or withholding of a
similar nature (including any penalty or interest payable in connection with any
failure to pay or any delay in paying any of the same);
 
Uncalled Capital: means all the uncalled capital now or at any time hereafter
(and from time to time) of the Chargor; and
 
Victory: means Victory Electronic Cigarettes Corporation registered in the State
of Nevada, USA under number C13461-2004.
 
 
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1.2  
Construction

 
1.2.1  
In this Deed (unless the context requires otherwise) any reference to:

 
(a)  
the Chargor, the Senior Security Trustee, any Beneficiary, or Junior Beneficiary
any Administrator or Receiver or any other person shall be construed so as to
include their successors in title, permitted assigns, permitted transferees and
(in the case of any Administrator or Receiver) lawful substitutes and/or
replacements;

 
(b)  
an "amendment" includes a supplement, restatement, variation, novation or
re-enactment (and "amended" is to be construed accordingly);

 
(c)  
a Finance Document or any other agreement or instrument (or any specified
provision of it) is a reference to that Finance Document or other agreement or
instrument or provision as amended (however fundamentally, including any
amendment providing for any increase in the amount of any facility or other
liability) from time to time in accordance with the terms of the  relevant
agreement or instrument;

 
(d)  
any reference to the Security Interests constituted by this Deed becoming
"enforceable" shall mean that the Security Interests created under this Deed
have become enforceable under Clause 10.1 (Enforcement events);

 
(e)  
a reference to a person shall include a reference to an individual, firm,
corporation, unincorporated body of persons, or any state or any agency of a
person;

 
(f)  
"including" means "including without limitation";

 
(g)  
"owned" includes having legal or equitable title to or a right to have legal or
equitable title transferred;

 
(h)  
a "law" includes a reference to the common law, any statute, bye-law, regulation
or instrument and any kind of subordinate legislation, and any order,
requirement, code of practice, circular, guidance note, licence, consent or
permission made or given pursuant to any of the foregoing;

 
(i)  
a provision of law is a reference to that provision as amended or re-enacted
from time to time;

 
(j)  
a time of day is a reference to New York time;

 
(k)  
any gender includes a reference to the other genders;

 
(l)  
the singular includes a reference to the plural and vice versa; and

 
(m)  
a reference to a Clause or Schedule is to a Clause or Schedule (as the case may
be) of or to this Deed.

 
1.2.2  
Clause and Schedule headings are for ease of reference only.

 
1.2.3  
The Schedules form part of this Deed and shall have effect as if set out in full
in the body of this Deed.  Any reference to this Deed includes the Schedules.

 
1.3  
Nature of security over real property

 
A reference in this Deed to any freehold, leasehold or commonhold property
includes:
 
1.3.1  
all buildings and fixtures (including trade and tenant's fixtures) which are at
any time situated on that property;

 
1.3.2  
the proceeds of sale of any part of that property; and

 
 
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1.3.3  
the benefit of any covenants for title given or entered into by any predecessor
in title of the Chargor in respect of that property or any monies paid or
payable in respect of those covenants.

 
1.4  
Rights of the Beneficiary

 
1.4.1  
All of the representations, covenants and undertakings given by the Chargor
pursuant to this Deed are given to the Senior Security Trustee for the benefit
of the Beneficiary.

 
1.4.2  
All of the security created by the Chargor pursuant to the terms of this Deed is
created in favour of the Senior Security Trustee as security trustee for the
Beneficiary and the Senior Security Trustee holds the benefit of this Deed on
trust for the Beneficiary.

 
1.5  
Intercreditor Deed

 
The provisions of this Deed are in all respects subject to the provisions of the
Intercreditor Deed and where a provision of this Deed conflicts with a provision
of the Intercreditor Deed then the relevant provision of the Intercreditor Deed
shall prevail.
 
1.6           Incorporation of terms
 
For the purposes of section 2(1) of the Law of Property (Miscellaneous
Provisions) Act 1989, the terms of any other of the Finance Documents and of any
side letters between any parties in relation to such Finance Documents are
incorporated in this Deed.
 
2.  
COVENANT TO PAY

 
The Chargor hereby covenants with the Senior Security Trustee (for the benefit
of the Beneficiary) that it will on demand pay and discharge all Secured
Obligations when the same become due whether by acceleration or otherwise.
 
3.  
GRANT OF SECURITY

 
3.1  
Fixed security

 
As a continuing security for the payment or discharge of the Secured
Obligations, the Chargor with full title guarantee hereby:
 
3.1.1  
grants to the Senior Security Trustee, a charge by way of first legal mortgage
over all its Properties which are listed in Schedule 2 (Properties), if any;

 
3.1.2  
charges to the Senior Security Trustee, by way of first fixed charge, all its:

 
(a)  
Properties acquired by it after the date of this Deed;

 
(b)  
Property Interests;

 
(c)  
Equipment;

 
(d)  
Securities (including but not limited to any Securities which are listed in
Schedule 3 (Securities) opposite its name (if any));

 
(e)  
Intellectual Property;

 
 
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(f)  
Rental Income;

 
(g)  
Goodwill and Uncalled Capital;

 
(h)  
Non-Controlled Accounts;

 
(i)  
to the extent that the Controlled Account is not effectively assigned under
clause 3.2 or it has been effectively assigned but has not been perfected by the
service of the appropriate notice,  the Controlled Account;

 
(j)  
to the extent that the Collection Account is not effectively assigned under
clause 3.2 or it has been effectively assigned but has not been perfected by the
service of the appropriate notice,  the Collection Account;

 
(k)  
to the extent that the Debts are not effectively assigned under clause 3.2 or
they have been effectively assigned but have not been perfected by the service
of the appropriate notice,  the Debts; and

 
(l)  
to the extent that the Insurance Policies are not effectively assigned under
clause 3.2 or they have been effectively assigned but have not been perfected by
the service of the appropriate notice, the Insurance Policies.

 
3.2  
Assignments

 
3.2.1  
As a continuing security for the payment and discharge of the Secured
Obligations, the Chargor with full title guarantee assigns absolutely (subject
to a proviso for reassignment on redemption) to the Senior Security Trustee all
its present and future right, title and interest in and to the benefit of:

 
(a)  
Controlled Account: the Controlled Account together with all Related Rights;

 
(b)  
Collection Account: the Collection Account together with all Related Rights;

 
(c)  
Receivables: the Debts together with all Related Rights; and

 
(d)  
Insurance Policies: the Insurance Policies.

 
3.2.2  
For the avoidance of doubt, the Chargor will remain at all times liable in
respect of all of its obligations under each of the Assigned Assets to the same
extent as if this security had not been created and the Senior Security Trustee
will not be under any obligation or liability to the Chargor or to any other
person under or in respect of any Assigned Assets.

 
3.3  
Non-Assignable Rights

 
3.3.1  
The Chargor declares that to the extent that any right, title, interest or
benefit in or in respect of any asset described in clause 3.2 (Assignments)
cannot be or is not effectively assigned pursuant to clause 3.2 for whatever
reason, the Chargor shall:

 
(a)  
promptly notify the Senior Security Trustee of the same and the reasons why such
asset is not capable of assignment;

 
(b)  
hold the benefit of the same on trust for the Senior Security Trustee as
security for the payment and discharge of the Secured Obligations; and

 
(c)  
take such steps as the Senior Security Trustee may require to remove such
impediment to such assignment.

 
 
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3.4  
Floating Security

 
3.4.1  
Floating Charge

 
As a continuing security for the payment and discharge of the Secured
Obligations, the Chargor with full title guarantee hereby charges to the Senior
Security Trustee, by way of floating charge, all of its undertaking, property,
assets and rights at any time not effectively mortgaged, charged or assigned
pursuant to Clauses 3.1 and 3.2 above.
 
3.4.2  
Qualifying floating charge

 
Paragraph 14 of schedule B1 to the Insolvency Act 1986 (as inserted by section
248 of, and schedule 16 to, the Enterprise Act 2002) applies to the floating
charge created by this Deed.
 
3.4.3  
Automatic conversion of floating charge

 
The floating charge created by this Deed shall automatically and immediately
(without notice) be converted into a fixed charge over the relevant Charged
Assets if:
 
(a)  
the Chargor creates, or attempts to create, on all or any part of the Charged
Assets a Security Interest other than Permitted Security without the prior
written consent of the Senior Security Trustee;

 
(b)  
the Chargor disposes or attempts to dispose of all any part of any Charged
Asset; or

 
(c)  
a receiver is appointed over all or any of the Charged Assets that is subject to
the floating charge; or

 
(d)  
any person levies (or attempts to levy) any distress, attachment, execution or
other process against all or any part of the Charged Assets; or

 
(e)  
the Senior Security Trustee receives notice of the appointment of, or a proposal
or an intention to appoint, an administrator of the Chargor.

 
3.4.4  
Conversion of floating charge by notice

 
Notwithstanding anything express or implied in this Deed, the Senior Security
Trustee may at any time, by notice to the Chargor, convert the floating charge
created by this Deed with immediate effect into a fixed charge over all or any
of the Floating Charge Assets of the Chargor specified (either generally or
specifically) in such notice (but without prejudice to the Senior Security
Trustee's rights to serve a notice in respect of any other Floating Charge
Assets and any other rights of the Senior Security Trustee whatsoever) if:
 
(a)         a Potential Event of Default or an Event of Default has occurred;
 
 
(b)
the Chargor considers (acting on the basis of professional advice) that any
Charged Asset may be in danger of being seized or sold pursuant to any form of
legal process or otherwise is in jeopardy; or

 
 
(c)
the Chargor considers that it is necessary or desirable to protect the priority,
value and enforceability of the security.

 
3.4.5  
Assets acquired after any floating charge conversion

 
Any asset acquired by the Chargor after any conversion of the floating charge
created under this Deed into a fixed charge which but for such conversion would
be subject to a floating charge shall, (unless the Senior Security Trustee
confirms in writing to the contrary) be charged to the Senior Security Trustee
by way of fixed charge.
 
3.4.6  
Reconversion of fixed charge assets into floating charge assets

 
The Senior Security Trustee may at any time after any conversion of the floating
charge created under this Deed over any Charged Assets into a fixed charge
reconvert such fixed charge into a floating charge by notice to the Chargor.
 
 
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3.5  
Leasehold security restrictions

 
3.5.1  
Subject to clauses 3.5.2 and 3.5.3 the security created by clause 3.1 and clause
3.4 shall not apply to an Excluded Property.

 
3.5.2  
In relation to each Excluded Property, the Chargor undertakes to:

 
(a)  
apply for the relevant consent or waiver of prohibition written 5 Business Days
of the date of this Deed and use its reasonable endeavours to obtain that
consent or waiver of prohibition as soon as possible;

 
(b)  
keep the Senior Security Trustee informed of its progress in obtaining such
consent or waiver; and

 
(c)  
immediately on receipt of such consent or waiver, provide the Senior Security
Trustee with a copy of that consent or waiver.

 
3.5.3  
Immediately on receipt by the Chargor of the relevant consent or waiver, that
Excluded Property shall become the subject of a mortgage or charge (as
appropriate) pursuant to clause 3.1 or clause 3.4 (as appropriate).

 
4.  
CONTROLLED ACCOUNT AND COLLECTION ACCOUNT

 
4.1  
On or prior to the date of this Deed, the Chargor shall open the Controlled
Account.

 
4.2  
As soon as practicable following the execution of this Deed and, in any event,
on or prior to the final day of the calendar month in which this Deed is
executed, the Chargor shall open the Collection Account and procure that the
Senior Security Trustee shall have sole signing rights in relation to the
Controlled Account and, as soon as practicable following the opening of the
Collection Account, provide the Senior Security Trustee with evidence, to its
reasonable satisfaction, of the opening of such account and the notices served
pursuant to clause 5 of this Deed.

 
4.3  
On or prior to the date falling one Business Day after the date of this Deed,
the Chargor shall pay at least USD 15,000,000 (fifteen million) into the
Controlled Account and provide the Security Trustee with evidence, to its
reasonable satisfaction, of such monies held in the Controlled Account and
thereafter shall ensure that balance of the Controlled Account is never less
than USD 3,000,000 (three million) except, without prejudice to clause 4.9, to
the extent any amount in the Controlled Account is applied in discharge of all
or part of any Secured Obligations in accordance with the terms of this Deed.

 
4.4  
The Chargor shall pay into the Collection Account no later than the final day of
each calendar month during the Security Period the Excess Monies calculated as
at the last day of the previous calendar month, or, in respect of the first such
payment during the Security Period as calculated as at the date of this Deed.

 
4.5  
The Senior Security Trustee shall have sole signing rights in relation to the
Controlled Account and the Collection Account.

 
4.6  
Subject to clause 4.7, save with the prior written consent of the Senior
Security Trustee, the Chargor may not withdraw all or any monies from time to
time standing to the credit of the Collection Account or the Controlled Account.

 
4.7  
Subject to clause 4.8, the parties hereby agree that:

 
4.7.1  
within 3 Business Days following demand in writing by the Chargor in accordance
with the terms of the Convertible Note Instrument the Senior Security Trustee
shall instruct the Account Bank to withdraw from the Controlled Account an
amount equal to the Must Have Redemption Amount and apply such amount promptly
towards the redemption of the Must Have Redemption Amount, provided such
withdrawal will not cause the balance of the Controlled Account to be less than
USD 3,000,000 (three million);

 
4.7.2  
the Senior Security Trustee shall instruct the Account Bank to withdraw all or
any monies from time to time standing to the credit of the Collection Account
for application towards the payment and/or discharge of the Secured Obligations
on the date that they fall due and, if there are insufficient funds in the
Collection Account to pay the relevant Secured Obligations on such date, the
Senior Security Trustee may, at its sole discretion, apply the monies then
standing to the credit of the Controlled Account towards payment of such Secured
Obligations; and

 
 
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4.7.3  
within 3 Business Days following on demand in writing by the Chargor the Senior
Security Trustee shall instruct the Account Bank to withdraw all or any monies
from time to time standing to the credit of the Collection Account for
application towards the payment and/or discharge of any amounts due to Junior
Beneficiaries under the Junior Loan Note Instrument and/ or the Share Purchase
Agreement provided that any such payment and/or discharge constitutes a
Permitted Payment (as defined in Intercreditor Deed) and may be paid in
accordance with the terms of the Intercreditor Deed.

 
4.8  
The Senior Security Trustee may, at its sole discretion, at any time without
prior notice apply any amounts standing to the credit of the Collection Account
and/or the Controlled Account following the occurrence of an Event of Default,
in such manner as it sees fit.

 
4.9  
In the event that the Senior Security Trustee makes a withdrawal from the
Controlled Account pursuant to clause 4.7.2 and/or 4.8, the Chargor shall
(within 3 Business Days of the Senior Security Trustee giving notice to the
Chargor of such withdrawal or the Chargor becoming aware of the same) procure
that a payment is made into the Controlled Account of an amount which, once paid
into the Controlled Account, will result in the balance of the Controlled
Account being not less than USD 3,000,000 (three million).

 
5.  
NOTICES

 
The Chargor shall immediately on the execution of this Deed (or, if later, the
date of opening of the relevant bank account or acquisition of the relevant
Charged Asset) in respect of clause 5.1 and as soon as practicable in respect of
clause 5.2:
 
5.1  
serve a notice of charge, substantially in the form of Part 1 of Schedule 4, on
the Account Bank in respect of the assignment of the Controlled Account and of
the Collection Account under clause 3.2(a) and clause 3.2(b) and use reasonable
endeavours to ensure that the Account Bank promptly acknowledges the notice
substantially in the form of Part 2 of Schedule 4.

 
5.2  
give notice to each insurer, substantially in the form of Part 1 of Schedule 5,
that it has charged or assigned its rights and interest in and under each
Insurance Policy under clause 3(d) and use reasonable endeavours to ensure that
each addressee of any such notice promptly acknowledges, substantially in form
of Part 2 of Schedule 5, the notice of the Senior Secured Creditor's interest.

 
6.  
RESTRICTIONS ON DEALING

 
6.1  
Negative pledge and restriction on disposal

 
The Chargor hereby covenants with the Senior Security Trustee that it will not
at any time except with the prior written consent of the Senior Security
Trustee:
 
6.1.1  
create or purport to create or permit to subsist any Security Interest on or in
relation to the Charged Assets other than the Security Interests created by this
Deed and the Permitted Security; or

 
6.1.2  
enter into a single transaction or a series of transactions (whether related or
not) and whether voluntary or involuntary to sell, lease, license transfer,
convey, assign,  factor, surrender or otherwise dispose of or cease to exercise
control of any interest in any Charged Assets which are charged by way of legal
mortgage or fixed charge under this Deed.

 
7.  
POSITIVE COVENANTS

 
7.1  
General

 
Unless the Senior Security Trustee otherwise consents in writing, the Chargor
hereby covenants with the Senior Security Trustee that it will:
 
7.1.1  
keep the Charged Assets in good and substantial repair and condition (fair wear
and tear accepted) and not do, or permit to be done, any act or thing that would
or might jeopardise or otherwise prejudice the Security held by the Senior
Security Trustee or the effectiveness of the security created by this Deed;

 
7.1.2  
maintain insurances on and in relation to the Charged Assets against those risks
and to the extent as is usual for companies carrying on the same or
substantially similar business as the Chargor with reputable independent
insurance companies or underwriters;

 
 
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7.1.3  
promptly pay all Taxes, fees, licence duties, registration charges, insurance
premiums and other outgoings in respect of the Charged Assets;

 
7.1.4  
at the request of the Senior Security Trustee, produce to or deposit with the
Senior Security Trustee copies of all Insurance Policies and copies of the
receipts for all premiums and other payments necessary for effecting and keeping
up the Insurance Policies.

 
7.1.5  
at all times comply with the terms of this debenture;

 
7.1.6  
comply in all material respects with the terms of all applicable laws and
regulations including (without limitation) all environmental laws, legislation
relating to public health, town & country planning, control and handling of
hazardous substances or waste, fire precautions and health and safety at work;

 
7.1.7  
promptly notify the Senior Security Trustee of the acquisition by the Chargor of
any estate or interest in any freehold or leasehold property and (i)
immediately, if so requested by the Senior Security Trustee and at the cost of
the Chargor, execute and deliver to the Senior Security Trustee a legal mortgage
in favour of the Senior Security Trustee of the freehold or leasehold property
in any form (consistent with this Deed) which the Senior Security Trustee may
require; (ii) if the title to the freehold or leasehold property is registered
at the Land Registry or is required to be so registered, give the Land Registry
notice of the relevant Security Interest of the Senior Security Trustee over the
freehold or leasehold property; and (iii) ensure that such Security Interest is
correctly noted in the relevant register of title against that title at the Land
Registry;

 
7.1.8  
deposit with the Senior Security Trustee all deeds, certificates and documents
of title relating to the Charged Assets or any part thereof charged by this
debenture;

 
7.1.9  
promptly pay or cause to be paid and indemnify the Senior Security Trustee and
any Receiver against all present and future rent, rates, Taxes, duties, charges,
assessments, impositions and outgoings whatsoever now or at any time in the
future payable in respect of any of its properties (or any part thereof) or by
the owner or occupier thereof;

 
7.1.10  
not make any structural or material alteration to or to the user of any of its
properties or do or permit to be done any act, matter or thing where to do so
would have a material and adverse effect on the value of any of its properties
or on the marketability of any of such properties;

 
7.1.11  
not grant any lease of, part with possession or share occupation of, the whole
or any part of any of its properties or confer any licence, right or interest to
occupy or grant any licence or permission to assign, under-let or part with
possession of the same in any way which is likely to have a material and adverse
effect upon the value of any of such properties;

 
7.1.12  
not vary, surrender, cancel or dispose of, or permit to be forfeit, any
leasehold interest in any of its properties;

 
7.1.13  
notify the Senior Security Trustee immediately in the event of any creditor
executing diligence against the Chargor or any distress or execution is levied
or enforced against the Chargor or any third party debt order or freezing order
is made and served on the  Chargor;

 
7.1.14  
notify the Senior Security Trustee immediately if any steps (including, without
limitation, the making of any application or the giving of any notice) are taken
by any person (including, without limitation, the Chargor) in relation to the
administration, receivership, winding-up or dissolution of the Chargor;

 
7.1.15  
not to allow any person other than itself to be registered under the Land
Registration Act 1925 or Land Registration Act 2002 (as appropriate) as
proprietor of any of its properties (or any part thereof) or create or permit to
arise any overriding interest (as specified in Section 70(1) of the Land
Registration Act 1925 or as specified in Schedule 1 or Schedule 3 to the Land
Registration Act 2002) affecting any such property;

 
7.1.16  
enforce any rights and institute, continue or defend any proceedings relating to
any of the Charged Assets which the Senior Security Trustee may from time to
time require, in each case, at the Chargor’s cost;

 
7.1.17  
perform all things necessary to preserve and keep in full force and effect its
existence and maintain the continuous operation of its business.  The Chargor
shall not engage in any lines of business other than those it engages in as at
the date of this Deed.   The Chargor shall not amend its certificate of
formation or limited company agreement, or change its jurisdiction of formation
and shall comply with all of the provisions of its constitution and Companies
Act 2006;

 
 
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7.1.18  
promptly notify the Senior Security Trustee in writing of (i) any material
litigation or dispute affecting the Chargor whether pending or threatened of
which the Chargor has actual knowledge, and deliver to the Senior Security
Trustee copies of all pleadings, unprivileged relevant correspondence and
similar documentation relating thereto, (ii) any Security Interest, attachment
or other legal process asserted against any of the Charged Assets other than
Permitted Security and (iii) the occurrence of any other event or the discovery
of any other information known to the Chargor which could reasonably be expected
to have an adverse material effect on the value of any of the Charged Assets or
otherwise on the ability of the Chargor to fulfil its obligations under this
Deed;

 
7.1.19  
except with respect to any claim by the Chargor against the Senior Security
Trustee or by the Senior Security Trustee against Chargor, the Chargor shall
cooperate fully with the Senior Security Trustee with respect to any proceedings
before any court or tribunal which may in any way materially and adversely
affect the rights of the Senior Security Trustee hereunder or under any of the
Finance Documents and, in connection therewith, the Senior Security Trustee may,
at its election, participate or designate a representative to participate in any
such proceedings;

 
7.1.20  
not (i) wind up, liquidate, or dissolve its affairs, enter into any transaction
of merger or consolidation, convey or transfer its properties and assets
substantially as an entirety; or (ii) create any partnership, joint venture or
subsidiary;

 
7.1.21  
not enter into any agreement containing any provision which would cause an Event
of Default hereunder or which would be violated or breached by the performance
of Chargor’s obligations under any Finance Document;

 
7.1.22  
maintain all authorisations required under any law in any applicable
jurisdiction to (i) enable it to perform its obligations under the Finance
Documents to which it is a party; (ii) ensure the legality, validity,
enforceability or admissibility in evidence of any Finance Document; and (iii)
to carry on conduct of its business and the ownership of its Properties, or
otherwise obtain a waiver, exemption or variance thereof, except where the
failure to so maintain would not reasonably be expected to have an adverse
material effect on the value of any of the Charged Assets or otherwise on the
ability of the Chargor to fulfil its obligations under this Deed;

 
7.1.23  
not, other than in accordance with the terms of the Finance Documents, directly
or indirectly use any of its cash (whether held in hand or on deposit), assets
or other resources to discharge any obligation or liability of Victory or any
Subsidiary of Victory;

 
7.1.24  
promptly notify the Senior Security Trustee of the occurrence of an Event of
Default or a Potential Event of Default; and

 
7.1.25  
not do or cause or permit to be done anything which may in any way depreciate,
jeopardise or otherwise prejudice the value or marketability of any of its
Assets.

 
7.2  
Properties

 
The Chargor hereby covenants with the Senior Security Trustee that it will
 
7.2.1  
observe and perform all covenants, stipulations and conditions to which each
Property is now or may hereafter be subjected; and

 
7.2.2  
perform and observe all covenants and conditions on its part contained in any
lease, agreement for lease, licence or other agreement under which any Property
or part of any Property is held,

 
where a failure to do so has or is reasonably likely to have a material adverse
effect on the validity or enforceability of, or the effectiveness or ranking of
any Security Interests granted or purporting to be granted pursuant to this
Deed.
 
7.3  
Book Debts

 
7.3.1  
The Chargor shall collect in and realise all Debts in the ordinary course of its
business in a proper and efficient manner.

 
7.3.2  
Subject to clause 4.4, the Chargor shall promptly pay, or procure the prompt
payment of, all monies received by it or on its behalf in respect of any of its
Debts into any of the Non-Controlled Accounts or such other account as required
by the Senior Security Trustee.

 
7.3.3  
The Chargor shall not create a Security Interest (other than Permitted
Security), dispose, release, exchange, compound, set-off, grant time or
indulgence or otherwise deal over, of or with its Debts otherwise than by
getting in and realising them in the ordinary and proper course of business (and
for this purpose the realisation of Debts by means of block discounting,
factoring or the like shall not be regarded as dealing in the ordinary and
proper course of its business).

 
 
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7.3.4  
The Chargor shall, to the extent it is not already required to do so under the
terms of this Deed, at any time after any Security Interest constituted or
purported to be constituted by this Deed becomes enforceable at the request of
the Senior Security Trustee, execute a legal assignment of the Debts to the
Senior Security Trustee in such terms as the Senior Security Trustee may require
and give notice of that assignment to the debtors from whom the Debts are due,
owing or incurred.

 
7.4  
Intellectual Property

 
The Chargor shall:
 
7.4.1  
observe and perform all material covenants and stipulations from time to time
affecting the Intellectual Property or the way it is used or enjoyed;

 
7.4.2  
make all such payments, carry out and seek all registrations, grants or renewals
of the Intellectual Property, or of any licences or other interests affecting
such Intellectual Property; and

 
7.4.3  
generally take all such steps necessary to preserve, maintain and renew when
necessary all of the Intellectual Property, present or future,

 
where a failure to do so has or is reasonably likely to have a material adverse
effect on the validity or enforceability of, or the effectiveness or ranking of
any Security Interests granted or purporting to be granted pursuant to this
Deed.
 
7.5  
Financial covenants

 
The Chargor shall:
 
7.5.1  
prepare Management Accounts in respect of each calendar month during the
Security Period;

 
7.5.2  
supply each set of such Management Accounts to the Senior Security Trustee,
within one Business Day of the same becoming available; and

 
7.5.3  
ensure that the EBITDA in respect of each calendar month is not less than
$700,000.

 
7.6  
Provisions relating to the Securities

 
The Senior Security Trustee may at any time after the occurrence of an Event of
Default cause any or all of the Securities to be registered in the name of the
Senior Security Trustee or its nominee.  The Chargor agrees promptly to execute
and deliver all such transfers and other documents and do all such things as may
be necessary or desirable to achieve such registration.
 
8.  
REPRESENTATIONS AND WARRANTIES

 
8.1  
Representations and warranties

 
The Chargor makes the representations and warranties set out in this clause 8 to
the Senior Security Trustee
 
8.2  
Organisation and standing

 
The Chargor is a limited liability company, duly incorporated and validly
existing under the laws of England and Wales, with all requisite power and
authority to own and operate its assets, to conduct the business in which it is
engaged and to consummate the transactions contemplated by this Deed and has not
adopted any resolutions or taken any action leading to liquidation.
 
8.3  
Authorisations obtained

 
The Chargor has taken all necessary actions and has all requisite power and
authority to enter into and perform its obligations under this Deed and the
other Finance Documents to which it is party in accordance with their respective
terms
 
 
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8.4  
Compliance with other instruments

 
The Chargor is not in violation of, or default under, any applicable law, any
agreement or instrument to which it is a party or by which it is bound or to
which any of its properties or assets are subject.  The execution, delivery and
the performance by the Chargor of and in accordance with this Deed and the other
Finance Documents to which it is a party, and any related document and agreement
required to be delivered hereunder or thereunder, the consummation of the
transactions contemplated herein or therein and the compliance with the terms
and provisions hereof or thereof, will not violate the organisational and
governing documents of the Chargor or contravene any applicable law to which the
Chargor is subject.
 
8.5  
No Event of Default or Potential Event of Default

 
No Event of Default or Potential Event of Default has occurred, is continuing.
 
8.6  
Ownership of Charged Assets

 
The Chargor is the legal and beneficial owner of the Charged Assets.
 
8.7  
No Security

 
The Charged Assets are free from any Security Interest other than Permitted
Security and the Security created by this Deed.
 
8.8  
No adverse claims

 
The Chargor has not received, or acknowledged notice of, any adverse claim by
any person in respect of the Charged Assets or any interest in them.
 
8.9  
No adverse covenants

 
There are no covenants, agreements, reservations, conditions, interests, rights
or other matters whatsoever that materially and adversely affect the Charged
Assets.
 
8.10  
No breach of laws

 
There is no breach of any law or regulation that materially and adversely
affects the Charged Assets.
 
8.11  
No interference in enjoyment

 
No facility necessary for the enjoyment and use of the Charged Assets is subject
to terms entitling any person to terminate or curtail its use.
 
8.12  
No overriding interests

 
Nothing has arisen, has been created or is subsisting, that would be an
overriding interest in any Property.
 
8.13  
Avoidance of security

 
No Security Interest expressed to be created under this Deed is liable to be
avoided, or otherwise set aside, on the liquidation or administration of the
Chargor or otherwise.
 
8.14  
No prohibitions or breaches

 
The entry into this Deed by the Chargor does not, and will not, constitute a
breach of any Insurance Policy, any other agreement or instrument binding on the
Chargor or its assets.
 
 
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8.15  
Enforceable security

 
This Deed and the other Finance Documents to which it is a party constitute and
will constitute the legal, valid, binding obligations of the Chargor enforceable
in accordance with their respective terms, and is and will continue to be
effective security over all and every part of the Charged Assets in accordance
with its terms.
 
8.16  
Times for making representations and warranties

 
The representations and warranties set out in clause 8.2 to clause 8.15 are made
by the Chargor on the date of this Deed and each such representation and
warranty is deemed to be repeated on each day of the Security Period with
reference to the facts and circumstances existing at the time of repetition.
 
9.  
POWER TO REMEDY

 
If the Chargor is at any time in breach of any of its obligations contained in
this Deed, the Senior Security Trustee shall be entitled (but shall not be
bound) to remedy such breach and the Chargor hereby irrevocably authorises the
Senior Security Trustee and its agents to do all such things necessary or
desirable in connection therewith.  The Chargor shall be liable to the Senior
Security Trustee for the expenses of the Senior Security Trustee in so
doing.  The rights of the Senior Security Trustee contained in this Clause 9 are
without prejudice to any other rights of the Senior Security Trustee
hereunder.  The exercise by the Senior Security Trustee of its rights under this
Clause shall not make the Senior Security Trustee liable to account as a
mortgagee in possession.
 
10.  
ENFORCEMENT

 
10.1  
Enforcement events

 
The security constituted by this Deed shall be immediately enforceable on the
occurrence of an Event of Default, and thereupon and at any time thereafter,
without prejudice to any other rights of the Senior Security Trustee, the powers
of sale and all other powers conferred on mortgagees under the LPA (as varied or
extended by this Deed) and all other powers of the Senior Security Trustee shall
immediately be exercisable and the Senior Security Trustee may in its absolute
discretion enforce all or any part of the security created by this Deed as it
sees fit.
 
10.2  
Statutory power of sale

 
The statutory power of sale shall arise on the execution of this Deed (and the
Secured Obligations shall be deemed to have become due and payable for that
purpose) but shall not be exercised by the Senior Security Trustee until the
security constituted by this Deed has become enforceable.
 
10.3  
Extension of statutory powers

 
10.3.1  
Any restriction imposed by law on the power of sale (including under section 103
of the LPA) or the right of a mortgagee to consolidate mortgages (including
under section 93 of the LPA) does not apply to the security constituted by this
Deed and the Senior Security Trustee or any Receiver shall have the right to
consolidate all or any of the security constituted by this Deed with any other
Security Interests in existence at any time and to make any applications to the
Land Registry in support of the same.

 
10.3.2  
Any powers of leasing conferred on the Senior Security Trustee or any Receiver
by law are extended so as to authorise the Senior Security Trustee or any
Receiver to lease, make agreements for leases, accept surrenders of leases and
grant options as the Senior Security Trustee or Receiver may think fit and
without the need to comply with any restrictions conferred by law (including
under section 99 or 100 of the LPA).

 
10.4  
No obligation to enquire

 
10.4.1  
No person dealing with the Senior Security Trustee, any Administrator or any
Receiver appointed hereunder, or its agents or brokers, shall be concerned to
enquire:

 
(a)  
whether the security constituted by this Deed has become enforceable;

 
 
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(b)  
whether any power exercised or purported to be exercised has become exercisable;

 
(c)  
whether any money remains due under the Finance Documents;

 
(d)  
as to the necessity or expediency of the stipulations and conditions subject to
which any sale of any Charged Assets shall be made, or otherwise as to the
propriety or regularity of any sale of any of the Charged Assets; or

 
(e)  
how any money paid to the Senior Security Trustee, Administrator or Receiver, or
its agents or brokers is to be applied.

 
10.4.2  
All of the protection to purchasers contained in ss104 and 107 LPA shall apply
to any person purchasing from or dealing with a Receiver or the Senior Security
Trustee as if the Secured Obligations had become due and the statutory powers of
sale and the appointment of a Receiver in relation to the Charged Assets had
arisen on the date of this Deed.

 
10.5  
Privileges

 
10.5.1  
Each Receiver and the Senior Security Trustee is entitled to all the rights,
powers, privileges and immunities conferred by the LPA on mortgagees and
receivers.

 
10.6  
Delegation

 
10.6.1  
The Senior Security Trustee and a Receiver may delegate to any person or persons
all or any of the rights which are exercisable by it under this Deed.  A
delegation under this clause may be made in any manner (including by power of
attorney) and on any terms (including power to sub-delegate) which the Senior
Security Trustee or Receiver may think fit.

 
10.6.2  
A delegation under clause 10.6.1 shall not preclude the subsequent exercise of
those rights by the Senior Security Trustee or Receiver itself nor preclude the
Senior Security Trustee or Receiver from making a subsequent delegation of them
to another person or from revoking that delegation.

 
10.6.3  
Neither the Senior Security Trustee nor any Receiver shall be liable or
responsible to the Chargor for any loss or damage arising from any act, default,
omission or misconduct on the part of any delegate or sub-delegate.

 
10.7  
Redemption of Prior Security Interests

 
At any time after the security constituted by this Deed shall have become
enforceable the Senior Security Trustee may:
 
10.7.1  
redeem any prior Security Interests;

 
10.7.2  
procure the transfer thereof to itself; and/or

 
10.7.3  
may settle and pass the accounts of the prior encumbrancer and any account so
settled and passed shall be conclusive and binding on the Chargor and all monies
paid by the Senior Security Trustee to the prior encumbrancer in accordance with
such accounts shall as from such payment be due from the Chargor to the Senior
Security Trustee on current account and shall bear interest and be secured as
part of the Secured Obligations.

 
10.8  
No liability as mortgagee in possession

 
None of the Senior Security Trustee, any Administrator or any Receiver or any
delegate shall be liable to account as mortgagee in possession or otherwise to
account in respect of all or any of the Charged Assets for any loss on
realisation or for any other action, default or omission for which it or he
might be liable.
 
 
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10.9  
Right of appropriation

 
10.9.1  
To the extent that:

 
(a)  
the Charged Assets constitute Financial Collateral; and

 
(b)  
this Deed and the obligations or the Chargor hereunder constitute a Security
Financial Collateral Arrangement,

 
the Senior Security Trustee shall have the right, at any time after the security
constituted by this Deed has become enforceable, to appropriate all or any of
those Charged Assets in or towards payment or discharge of the Secured
Obligations in such order as the Senior Security Trustee may, in its absolute
discretion, determine.
 
10.9.2  
The value of any Charged Assets appropriated in accordance with this clause
shall be the price of such Charged Assets at the time the right of appropriation
is exercised as listed on any recognised market index, or determined by such
other method as the Senior Security Trustee may select (including independent
valuation).

 
10.9.3  
The Chargor agrees that the methods of valuation provided for in this clause are
commercially reasonable for the purposes of the Financial Collateral
Regulations.

 
11.  
ADMINISTRATOR AND RECEIVER

 
11.1  
Appointment of Administrator or Receiver

 
At any time after:
 
11.1.1  
the security constituted by this Deed becomes enforceable;

 
11.1.2  
any corporate action or any other steps are taken or legal proceedings started
by or in respect of the Chargor with a view to the appointment of an
Administrator; or

 
11.1.3  
at the request of the Chargor,

 
the Senior Security Trustee may without further notice, under seal or by writing
under hand of a duly authorised officer of the Senior Security Trustee:
 
(a)  
appoint any person or persons to be an Administrator of the Chargor; or

 
(b)  
appoint any person or persons to be a Receiver of all or any part of the Charged
Assets of the Chargor; and

 
(c)  
(subject to Section 45 of the Insolvency Act 1986) from time to time remove any
person appointed to be Receiver and appoint another in his place.

 
11.2  
More than one appointment

 
Where more than one person is appointed Administrator or Receiver, they will
have power to act separately (unless the appointment by the Senior Security
Trustee specifies to the contrary).
 
11.3  
Additional powers

 
11.3.1  
The powers of appointing an Administrator or a Receiver conferred by this Deed
shall be in addition to all statutory and other powers of the Senior Security
Trustee under the Insolvency Act 1986 and the LPA or otherwise and shall be
exercisable without the restrictions contained in Section 109 of the LPA or
otherwise.

 
 
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11.3.2  
The power to appoint an Administrator or a Receiver (whether conferred by this
Deed or by statute) shall be and remain exercisable by the Senior Security
Trustee notwithstanding any prior appointment in respect of all or any part of
the Charged Assets.

 
11.4  
Agent of the Chargor

 
11.4.1  
Any Administrator or Receiver shall be the agent of the Chargor and the Chargor
shall be solely responsible for his acts and remuneration as well as for any
defaults committed by him.

 
11.4.2  
The Senior Security Trustee will not incur any liability (either to the Chargor
or to any other person) by reason of the appointment of an Administrator or
Receiver.

 
11.5  
Relationship with Senior Security Trustee

 
To the fullest extent allowed by law, any right, power or discretion conferred
by this Deed (either expressly or implicitly) or by law on a Receiver may, after
this security becomes enforceable, be exercised by the Senior Security Trustee
in relation to the Charged Assets without first appointing a Receiver or
notwithstanding the appointment of a Receiver.
 
12.  
SCOPE AND POWERS OF ADMINISTRATOR AND RECEIVER

 
12.1  
Powers of Administrators and Receiver

 
Any Administrator or Receiver shall in addition to the powers conferred on him
by the LPA and (if applicable) the Insolvency Act 1986 have power to do all such
acts and things as an absolute owner could do in the management of such of the
Charged Assets over which he is appointed and in particular:
 
12.1.1  
to undertake or complete any works of repair, building or development on the
Property and to apply for and maintain any planning permission, development
consent, building regulation approval or any other permission, consent or
licence to carry out any of the same;

 
12.1.2  
to grant or to accept surrenders of any leases or tenancies affecting the
Property and to grant any other interest or right over any Property upon such
terms and subject to such conditions as he thinks fit;

 
12.1.3  
to provide services and employ or engage such managers, contractors and other
personnel and professional advisors on such terms as he deems expedient and to
discharge any such person or any such person appointed by the Chargor;

 
12.1.4  
to make such elections for value added tax purposes as he thinks fit;

 
12.1.5  
to charge and receive such sum by way of remuneration (in addition to all costs,
charges and expenses incurred by him) as the Senior Security Trustee may
prescribe or agree with him;

 
12.1.6  
to collect and get in such Charged Assets or any part thereof and for that
purpose to make such demands and take any proceedings as may seem expedient and
to take possession of such Charged Assets with like rights;

 
12.1.7  
to carry on, manage, develop, reconstruct, amalgamate or diversify or concur in
carrying on, managing, developing, reconstructing, amalgamating or diversifying
the business of the Chargor;

 
12.1.8  
to grant options and licences over all or any part of such Charged Assets, sell
or concur in selling, assign or concur in assigning, lease or concur in leasing
and accept or concur in accepting surrenders of leases of, all or any of such
Charged Assets in such manner and generally on such terms and conditions as he
thinks fit (fixtures and plant and machinery may be severed and sold separately
from the premises in which they are contained without the consent of the
Chargor) and to carry any such sale, assignment, leasing or surrender into
effect.  Any such sale may be for such consideration as he shall think fit and
he may promote or concur in promoting a company to purchase the property to be
sold;

 
12.1.9  
to sever and sell separately any fixtures or fittings from any Property without
the consent of the Chargor;

 
12.1.10  
to give valid receipt for all monies and execute all assurances and things that
may be proper or desirable for realising any of the Charged Assets;

 
 
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12.1.11  
to sell and assign all or any of the Debts in respect of which he is appointed
in such manner and generally on such terms and conditions as he thinks fit;

 
12.1.12  
to make any arrangement, settlement or compromise between the Chargor and any
other person which he may think expedient;

 
12.1.13  
to bring, prosecute, enforce, defend and abandon all actions, suits and
proceedings in relation to any of the Charged Assets as he thinks fit;

 
12.1.14  
to make and effect such substitutions of or improvements to the Equipment as he
may think expedient;

 
12.1.15  
to make calls conditionally or unconditionally on the members of the Chargor in
respect of the uncalled capital with such and the same powers for that purpose
and for the purpose of enforcing payments of any calls so made as are conferred
by the articles of association of the Chargor on its directors in respect of
calls authorised to be made by them;

 
12.1.16  
to appoint managers, officers, servants, workmen and agents for the aforesaid
purposes at such salaries and for such periods and on such terms as he may
determine;

 
12.1.17  
if he thinks fit, but without prejudice to the indemnity contained in Clause 17
(Costs and Indemnity), to effect with any insurer any policy or policies of
insurance either in lieu or satisfaction of or in addition to such indemnity or
to the insurance required to be maintained by the Chargor under this Deed;

 
12.1.18  
to exercise all powers provided for in the LPA in the same way as if he had been
duly appointed thereunder and to exercise all powers provided for an
administrative receiver in Schedule 1 to the Insolvency Act 1986;

 
12.1.19  
for any of the purposes authorised by this Clause to raise money by borrowing
from the Senior Security Trustee or from any other person either unsecured or on
the security of all or any of the Charged Assets in respect of which he is
appointed upon such terms (including, if the Senior Security Trustee shall
consent, terms under which such security ranks in priority to this Deed) as he
shall think fit;

 
12.1.20  
to redeem any prior Security Interest and to settle and pass the accounts to
which the Security Interest relates and any accounts so settled and passed will
be conclusive and binding on the Chargor and the moneys so paid will be deemed
to be an expense properly incurred by him;

 
12.1.21  
in relation to any of the Charged Assets, to exercise all powers, authorisations
and rights he would be capable of exercising, and do all those acts and things,
as an absolute beneficial owner could exercise or do in the ownership and
management of the Charged Assets or any part of the Charged Assets.

 
12.1.22  
to acquire additional assets as necessary to enhance the value of the Charged
Assets; and

 
12.1.23  
to do all such other acts and things: (i) that he may consider desirable or
necessary for realising any of the Charged Assets; (ii) that he may consider to
be incidental or conducive to any of the matters or powers aforesaid; or (iii)
which he lawfully may or can do as agent for the Chargor

 
12.2  
Scope of powers

 
The Administrator or Receiver may exercise any of the above powers on behalf of
the Chargor or on his own behalf or in the case of the power contained in Clause
12.1.15 on behalf of the directors of the Chargor
 
13.  
AMOUNTS RECEIVED

 
13.1  
Application of proceeds

 
The Receiver or any delegate shall apply all monies received by him:
 
13.1.1  
first in paying all rents, Taxes, rates and outgoings affecting any Charged
Assets;

 
 
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13.1.2  
secondly in paying all costs, charges and expenses of and incidental to his
appointment and the exercise of his powers and all outgoings paid by him;

 
13.1.3  
thirdly in paying his remuneration (as agreed between him and the Senior
Security Trustee);

 
13.1.4  
fourthly in or towards discharge of the Secured Obligations; and

 
13.1.5  
finally in paying any surplus to the Chargor or any other person entitled to it.

 
13.2  
Section 109(8) Law of Property Act 1925

 
Neither the Senior Security Trustee nor any Receiver or Administrator shall be
bound (whether by virtue of Section 109(8) of the LPA, which is hereby varied
accordingly, or otherwise) to pay or appropriate any receipt or payment first
towards interest rather than principal or otherwise in any particular order as
between any of the Secured Obligations.
 
14.  
POWER OF ATTORNEY

 
14.1  
Power of attorney

 
The Chargor hereby by way of security irrevocably appoints the Senior Security
Trustee and (jointly and severally) each and every Administrator or Receiver or
delegate to be the attorney of the Chargor and in its name and on its behalf and
as its act and deed or otherwise to sign, execute, seal, deliver, complete any
blanks in and otherwise perfect any deed, transfer, assurance, agreement,
instrument or act which such Administrator or Receiver or delegate or the Senior
Security Trustee may consider expedient in the exercise of any of his or its
powers or in respect of the Chargor's obligations under this Deed.  The power of
attorney hereby granted is to secure the performance of obligations owed to the
donees within the meaning of the Powers of Attorney Act 1971.
 
14.2  
Ratification

 
The Chargor ratifies and confirms, and agrees to ratify and confirm, anything
that any of its attorneys may do in the proper and lawful exercise, or purported
exercise, of all or any of the rights, powers, authorities and discretions
referred to in Clause 14.1 (Power of Attorney).
 
15.  
PROTECTION OF SECURITY AND FURTHER ASSURANCE

 
15.1  
Independent security

 
This Deed shall be in addition to and independent of every other security or
guarantee which the Senior Security Trustee may at any time hold for any of the
Secured Obligations and it is hereby declared that no prior security held by the
Senior Security Trustee over the whole or any part of the Charged Assets shall
merge in the security created by this Deed.
 
15.2  
Continuing security

 
This Deed shall remain in full force and effect as a continuing security for the
Secured Obligations, notwithstanding any settlement of account or intermediate
payment or discharge in whole or in part.
 
15.3  
Discretion in enforcement

 
Until the expiry of the Security Period, the Senior Security Trustee or any
Receiver may:
 
15.3.1  
refrain from applying or enforcing any other monies, Security Interests or other
rights held or received by it in respect of the Secured Obligations or apply and
enforce them in such manner and order as it sees fit (whether against the
Secured Obligations or otherwise) and the Chargor shall not be entitled to the
benefit of the same; and

 
 
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15.3.2  
hold in an interest-bearing suspense account any monies received from the
Chargor or Victory on account of the Secured Obligations.

 
15.4  
New accounts

 
15.4.1  
If the Senior Security Trustee receives, or is deemed to have received, notice
of any Security Interest (other than the Junior Security) or other interest
affecting all or part of the Charged Assets, the Senior Security Trustee may
open a new account or accounts for the Chargor in the Senior Security Trustee's
books and (without prejudice to the Senior Security Trustee's right to combine
accounts) no money paid to the credit of the Chargor in any such new account
will be appropriated towards or have the effect of discharging any part of the
Secured Obligations.

 
15.4.2  
If the Senior Security Trustee does not open a new account or accounts
immediately on receipt of notice, or deemed notice, referred to in clause
15.4.1, then, unless the Senior Security Trustee gives express written notice to
the contrary to the Chargor, all payments made by the Chargor to the Senior
Security Trustee shall be treated as having been credited to a new account of
the Chargor and not as having been applied in reduction of the Secured
Obligations, as from the time of receipt or deemed receipt of the relevant
notice by the Senior Security Trustee.

 
15.5  
Senior Security Trustee's set-off rights

 
If the Senior Security Trustee has more than one account for the Chargor in its
books, the Senior Security Trustee may at any time after:
 
15.5.1  
the security constituted by this Deed has become enforceable; or

 
15.5.2  
the Senior Security Trustee has received notice of any Security Interest (other
than the Junior Security) or other interest affecting all or any part of the
Charged Assets,

 
transfer, without prior notice, all or any part of the balance standing to the
credit of any account to any other account which may be in debit, but the Senior
Security Trustee shall notify the Chargor of the transfer once made.
 
15.6  
Liability not discharged

 
The Chargor's liability under this deed in respect of any of the Secured
Obligations shall not be discharged, prejudiced or affected by:
 
15.6.1  
any intermediate payment, settlement of account or discharge in whole or in part
of the Secured Obligations;

 
15.6.2  
any variation, extension, discharge, compromise, dealing with, exchange or
renewal of any right or remedy which the Senior Security Trustee may now or
after the date of this Deed have from or against Victory, the Chargor or any
other person in connection with the Secured Obligations;

 
15.6.3  
any act or omission by the Senior Security Trustee or any other person in taking
up, perfecting or enforcing any Security Interest, indemnity, or guarantee from
or against Victory, the Chargor or any other person;

 
15.6.4  
any termination, amendment, variation, novation or supplement of or to any of
the Secured Obligations;

 
15.6.5  
any grant of time, indulgence, waiver or concession to Victory, the Chargor or
any other person;

 
15.6.6  
any insolvency, bankruptcy, liquidation, administration, winding up, incapacity,
limitation, disability, the discharge by operation of law, or any change in the
constitution, name or style of Victory, the Chargor or any other person;

 
15.6.7  
any invalidity, illegality, unenforceability, irregularity or frustration of any
actual or purported obligation of, or Security Interest held from, Victory, the
Chargor or any other person in connection with the Secured Liabilities;

 
15.6.8  
any claim or enforcement of payment from the Victory, the Chargor or any other
person; or

 
15.6.9  
any other act or omission which would not have discharged or affected the
liability of the Chargor had it been a principal debtor or by anything done or
omitted by any person which, but for this provision, might operate to exonerate
or discharge the Chargor or otherwise reduce or extinguish its liability under
this Deed.

 
 
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15.7  
Immediate Recourse

 
Chargor waives any right it may have of first requiring the Senior Security
Trustee .
 
15.7.1  
to take any action or obtain judgment in any court against Victory or any other
person;

 
15.7.2  
to make or file any claim in a bankruptcy, liquidation, administration or
insolvency of Victory of any other person; or

 
15.7.3  
to make demand, enforce or seek to enforce any claim, right or remedy against
Victory or any other person

 
before enforcing this Deed against the Chargor. This waiver applies irrespective
of any applicable law and regulation or any provision of any Finance Document to
the contrary.
 
15.8  
Rights Cumulative

 
No failure to exercise, nor delay in exercising, on the part of the Senior
Security Trustee, any right or remedy under this Deed shall operate as a waiver,
nor shall any single or partial exercise of any right or remedy prevent any
further or other exercise, or the exercise of any right or remedy. The rights
and remedies of the Senior Security Trustee provided in this Deed are cumulative
and not exclusive of any rights or remedies provided by law.
 
15.9  
Further assurance

 
The Chargor shall take all such action (including making all filings and
registrations) as may be necessary or desirable for the purpose of the creation,
perfection, protection or maintenance of any Security Interest conferred or
intended to be conferred on the Senior Security Trustee under the Finance
Documents.  In addition, the Chargor shall, promptly upon request by the Senior
Security Trustee or any Receiver or Administrator, at its own expense, take
whatever action the Senior Security Trustee or a Receiver or Administrator may
reasonably require for:
 
15.9.1  
creating, perfecting or protecting any security intended to be created by or
pursuant to this Deed;

 
15.9.2  
facilitating the realisation of any Charged Asset at any time after the security
constituted by this Deed has become enforceable; or

 
15.9.3  
exercising any right, power or discretion conferred on the Senior Security
Trustee, or any Receiver or any Administrator or any of their respective
delegates or sub-delegates in respect of any Charged Asset.

 
16.  
GROSS-UP AND PAYMENTS

 
16.1  
Grossing Up

 
Each payment made by the Chargor to the Senior Security Trustee under this Deed
shall be made free and clear of and without deduction for or on account of Tax
unless the Chargor is required to make such payment subject to the deduction or
withholding of Tax, in which case the sum payable by the Chargor 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 the required deduction
or withholding, the Senior Security Trustee receives and retains (free from any
liability in respect of any such deduction or withholding) a net sum equal to
the sum which it would have received and so retained had no such deduction or
withholding been made or required to be made.
 
16.2  
Payments without Set-Off

 
Any payment made by the Chargor under this Deed shall be made free and clear of
and without any deduction for or on account of any set-off or counterclaim.
 
16.3  
Manner of Payment

 
Each payment made by the Chargor under this Deed shall be paid in the manner
required by the Senior Security Trustee.
 
 
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17.  
COSTS AND INDEMNITY

 
17.1  
Costs

 
The Chargor shall pay to, or reimburse, the Senior Security Trustee and any
Receiver on demand, on a full indemnity basis, all Costs incurred by the Senior
Security Trustee or any Receiver in connection with:
 
17.1.1  
protecting, perfecting, preserving, enforcing or discharging (or attempting to
do so) any of the Senior Security Trustee's or Receiver's rights under this
Deed;

 
17.1.2  
suing for, or recovering, any of the Secured Obligations,

 
(including, without limitation, the Costs of any proceedings in connection with
this debenture or the Secured Obligations) and the Costs shall form part of the
Secured Obligations.
 
17.2  
Taxes

 
The Chargor shall pay all stamp, registration and other Taxes to which this
Deed, this security or any judgment or order given in connection with this Deed
may at any time be subject and shall on demand indemnify the Senior Security
Trustee against any Losses resulting from any failure to pay or delay in paying
the same.
 
17.3  
Indemnity

 
The Chargor shall on demand indemnify and keep indemnified the Senior Security
Trustee and every Receiver, Administrator, delegate, attorney, manager, agent or
other person appointed by the Senior Security Trustee under this Deed and their
respective employees (each one "Indemnified Person") in respect of all Losses
incurred or suffered by any of them directly or indirectly as a result of the
exercise or purported exercise of any of the rights vested in them under this
Deed and against all Losses suffered or incurred by any of them in respect of
any matter or thing done or omitted relating to the Charged Assets or occasioned
by any breach of any of the Chargor’s covenants or other obligations under this
Deed or otherwise relating to all or any part of the Charged Assets.
 
18.  
MISCELLANEOUS

 
18.1  
Severability

 
If any of the provisions of this Deed is or becomes invalid or unenforceable,
the validity and enforceability of the remaining provisions shall not be
affected or impaired thereby.
 
18.2  
Third party rights

 
Other than a Beneficiary, Receiver, Administrator, any delegate and any
Indemnified Person, save where the contrary appears, a third party  has no right
under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy
the benefit of any term of this Deed.  The consent of any third party is not
required to rescind or vary this Deed at any time.
 
18.3  
Calculation and certificates

 
Any certificate or determination of the Senior Security Trustee as to any matter
provided for in this Deed is, in the absence of manifest error, conclusive
evidence of the matters to which it relates.
 
18.4  
Amendment and waivers

 
Any term of this Deed may be amended or waived only with the written consent of
the Senior Security Trustee and the Chargor and any such amendment or waiver
will be binding on all parties.
 
 
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18.5  
Perpetuity period

 
The perpetuity period applicable to all trusts declared by this Deed shall be
125 years.
 
18.6  
Trustee Act 2000

 
The Chargor and the Senior Security Trustee agree that the Senior Security
Trustee shall not be subject to the duty of care imposed on the trustees by the
Trustee Act 2000.
 
19.  
CURRENCY

 
19.1  
Curreny conversion

 
19.2  
In order to apply any sum held or received by the Senior Security Trustee or a
Receiver or Administrator or a delegate in or towards payment of the Secured
Obligations, the Senior Security Trustee or such Receiver or Administrator or
delegate may purchase an amount in another currency and the rate of exchange to
be used shall be that at which, at such time as it considers appropriate, the
Senior Security Trustee or such Receiver or Administrator or delegate is able to
effect such purchase.

 
19.3  
Currency Indemnity

 
If any sum due from the Chargor under this Deed or any order or judgment given
or made in relation to this Deed has to be converted from the currency (the
"first currency") in which the same is payable under this Deed or under such
order or judgment into another currency (the "second currency") for the purpose
of (a) making or filing a claim or proof against the Chargor, (b) obtaining an
order or judgment in any court or other tribunal or (c) enforcing any order or
judgment given or made in relation to this Deed, the Chargor shall indemnify and
hold harmless the Senior Security Trustee from and against any Losses it suffers
or incurs as a result of any discrepancy between (i) the rate of exchange used
for such purpose to convert the sum in question from the first currency into the
second currency; and (ii) the rate or rates of exchange at which the Senior
Security Trustee may, in the ordinary course of business, purchase the first
currency with the second currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
 
20.  
DEMANDS AND NOTICES

 
20.1  
Form of notice

 
Any notice or other communication given or made in connection with this
Debenture must be in writing and in English.
 
20.2  
Addresses

 
Any demand for payment and any other demand, notice, consent or communication
hereunder must be served by delivering it personally or sending it by pre-paid
recorded or special delivery (or pre-paid international recorded airmail if
being sent to or from a place outside the United Kingdom) to the address of the
Chargor or the Senior Security Trustee (as appropriate) set out on page 1 (or
any other address as may be notified by at least five Business Days' notice in
writing from time to time by the relevant party to the other parties in
accordance with this Clause 20).
 
20.3  
Delivery

 
Provided that it has been correctly addressed as set out in clause 20.2, the
notice or communication will (in the absence of earlier receipt) be deemed to
have been received:
 
20.3.1  
if delivered personally, at the time of delivery; and

 
20.3.2  
in the case of pre-paid first class post, two Business Days after the date of
posting or in the case of airmail five Business Days after the date of posting,

 
 
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provided that if receipt would under this clause be deemed to occur outside 9.30
a.m. to 5.30 p.m. (New York time) on a Business Day (Working Hours) the notice
or communication will instead be deemed to have been received at the start of
the next period of Working Hours.
 
21.  
ASSIGNMENT AND TRANSFER

 
21.1  
Assignment by Senior Security Trustee

 
The Senior Security Trustee may assign any of its rights or transfer any of its
obligations under this Deed or enter into any transaction which would result in
any of these rights or obligations passing to another person to the extent that
the transferee is a permitted transferee for the 6% Senior Secured Convertible
Notes.
 
21.2  
Assignment by the Chargor

 
The Chargor may not assign any of its rights or transfer any of its obligations
under this Deed or enter into any transaction which would result in any of these
rights or obligations passing to another person.
 
21.3  
Disclosure of information

 
The Senior Security Trustee may disclose any information about the Chargor which
it shall consider appropriate to any affiliate, any of its professional
advisers, any person to whom it is proposing to assign or transfer, or has
assigned or transferred, any of its rights and obligations under this Deed or to
any person to whom information may be required to be disclosed by any applicable
law and regulation.
 
22.  
RELEASE OF SECURITY

 
22.1  
Release

 
Subject to Clause 22.3 (Discharge conditional), upon the expiry of the Security
Period the Senior Security Trustee shall at the request and cost of the Chargor,
take whatever action is necessary to release the Charged Assets from the
security constituted by this Deed.
 
22.2  
Avoidance of payments and reinstatement

 
If any payment by the Chargor or any discharge given by the Senior Security
Trustee (whether in respect of the obligations of the Chargor or any security
for those obligations or otherwise) is (a) capable of being avoided or reduced
or (b) avoided or reduced in each case as a result of insolvency or any similar
event:
 
22.2.1  
the liability of the Chargor will continue as if the payment, discharge,
avoidance or reduction had not occurred;

 
22.2.2  
the Senior Security Trustee will be entitled to recover the value or amount of
that security or payment from the Chargor, as if the payment, discharge,
avoidance or reduction had not occurred; and

 
22.2.3  
the Senior Security Trustee shall be entitled to enforce this Deed subsequently
as if such payment, discharge, avoidance or reduction had not occurred.

 
22.3  
Discharge conditional

 
Any release, discharge or settlement between the Chargor and the Senior Security
Trustee shall be deemed conditional upon no payment or security received by the
Senior Security Trustee in respect of the Secured Obligations being avoided or
reduced or ordered to be refunded pursuant to any provision of any enactment
relating to insolvency, bankruptcy, winding-up, administration or receivership
and, notwithstanding any such release, discharge or settlement:
 
22.3.1  
the Senior Security Trustee or its nominee shall be at liberty to retain this
Deed and the security created by or pursuant to this Deed, including all
certificates and documents relating to the Charged Assets or any part thereof,
for such period as the Senior Security Trustee shall deem necessary to provide
the Senior Security Trustee with security against any such avoidance or
reduction or order for refund; and

 
 
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22.3.2  
the Senior Security Trustee shall be entitled to recover the value or amount of
such security or payment from the Chargor subsequently as if such settlement,
discharge or release had not occurred and the Chargor agrees with the Senior
Security Trustee accordingly and charges the Charged Assets and the proceeds of
sale thereof with any liability under this Clause, whether actual or contingent.

 
23.  
GOVERNING LAW AND ENFORCEMENT

 
23.1  
Governing law

 
This Deed and any non-contractual obligations arising out of or in connection
with it shall be governed by and construed in accordance with English law.
 
23.2  
Enforcement

 
23.2.1  
The courts of England have exclusive jurisdiction to settle any dispute arising
out of or in connection with this Deed (including a dispute regarding the
existence, validity or termination of this Deed) (a Dispute).

 
23.2.2  
The parties agree that the courts of England are the most appropriate and
convenient courts to settle Disputes and accordingly no party will argue to the
contrary.

 
23.2.3  
This clause 23 is for the benefit of the Senior Security Trustee only.  As a
result, the Senior Security Trustee shall not be prevented from taking
proceedings relating to a Dispute in any other courts with jurisdiction.  To the
extent allowed by law, the Senior Security Trustee may take concurrent
proceedings in any number of jurisdictions.

 
24.  
COUNTERPARTS

 
This Deed may be executed and delivered in any number of counterparts, each of
which is an original and which, together, have the same effect as if each party
had signed the same document.
 
In Witness whereof this Deed has been executed by the parties and is intended to
be and is hereby delivered as a deed the day and year first above written.
 
.
 
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SCHEDULE 1
 
THE BENEFICIARY
 
 
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SCHEDULE 2
 
PROPERTIES
 
(1)  
Lease of Unit 14 Dale Industrial Estate, Phoenix Way, Radcliffe, Manchester
between (1) Max Industrial LP and Max Industrial Nominee Limited as Landlord and
(2) Must Have Limited as Tenant for a term of 5 years from 16 November 2010.

 
(2)  
Sub-Sub-Underlease of Unit F5 MetroCentre, Swalwell, Gateshead, Tyne and Wear,
between (1) MetroCentre (Nominee No. 1) Limited and MetroCentre Nominee No. 2)
Limited as Landlord and (2) Must Have Limited as Tenant for a term of 5 years
from 28 August 2013.

 
 
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SCHEDULE 3
 
SECURITIES
 
None as at the date of this Deed.
 
 
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SCHEDULE 4
 
PART 1
 
Form of notice to the Account Bank
 
[On the letterhead of the Chargor]
 
[ACCOUNT BANK]
 
[ADDRESS LINE 1]
 
[ADDRESS LINE 2]
 
[POSTCODE]
 
[DATE]
 
Dear Sirs,
 
Charge over bank accounts (“Charge”) dated [DATE] between Must Have Limited
(“Chargor”) and [                                    ] (“Senior Security
Trustee”).
 
This letter constitutes notice to you that under the Charge (a copy of which is
attached) we have charged, by way of first fixed charge, in favour of the Senior
Security Trustee all monies from time to time standing to the credit of the
accounts held with you and detailed below (the “Accounts”), together with all
other rights and benefits accruing to or arising in connection with the Accounts
(including, but not limited to, entitlements to interest):
 
Account 1
 
Name of Account: [NAME OF ACCOUNT]
 
Sort code: [SORT CODE]
 
Account number: [ACCOUNT NUMBER]
 
Account 2
 
Name of Account: [NAME OF ACCOUNT]
 
Sort code: [SORT CODE]
 
 
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Account number: [ACCOUNT NUMBER]
 
We irrevocably instruct and authorise you to:
 
Disclose to the Senior Security Trustee any information relating to the Accounts
requested from you by the Senior Security Trustee;
 
Comply with the terms of any written notice or instructions relating to the
Accounts received by you from the Senior Security Trustee;
 
Hold all sums from time to time standing to the credit of the Accounts to the
order of the Senior Security Trustee; and
 
Pay or release all or any part of the monies standing to the credit of the
Accounts in accordance with the written instructions of the Senior Security
Trustee.
 
We acknowledge that you may comply with the instructions in this letter without
any further permission from us.
 
We are not permitted to withdraw any amount from the Accounts without the prior
written consent of the Senior Security Trustee.
 
The instructions in this letter may not be revoked or amended without the prior
written consent of the Senior Security Trustee.
 
This letter is governed by English law.
 
Please confirm your agreement to the above by sending the attached
acknowledgement to the Senior Security Trustee at 544 Riverside Avenue,
Westport, CT 066880, with a copy to ourselves.
 
Yours faithfully,
 
Signed.............................................
 
For and on behalf of the Chargor
 

 
 
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PART 2
 
Form of acknowledgement of the Account Bank
 
[On the letterhead of the Account Bank]
 
[                                    ]

 
[DATE]
 
Dear Sirs,
 
Charge over bank accounts (“Charge”) dated [DATE] between Must Have Limited
(“Chargor”) and [                                    ] (“Senior Security
Trustee”).
 
We confirm receipt from the Chargor of a notice (the “Notice”) dated [DATE] of a
charge on the terms of the Charge over all monies from time to time standing to
the credit of the accounts detailed below (the “Accounts”), together with all
other rights and benefits accruing to or arising in connection with the Accounts
(including, but not limited to, entitlements to interest).
 
We confirm that we:
 
·  
Accept the instructions contained in the Notice and agree to comply with the
Notice;

 
·  
Have not received notice of the interest of any third party in the Accounts;

 
·  
Have neither claimed nor exercised, nor will claim or exercise any security
interest, set-off, counter-claim or other right in respect of the Accounts; and

 
·  
Will not permit any amount to be withdrawn from the Accounts without your prior
written consent.

 
The Accounts are:
 
Account 1
 
Name of Account: [NAME OF ACCOUNT]
 
Sort code: [SORT CODE]
 
Account number: [ACCOUNT NUMBER]
 
 
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Account 2
 
Name of Account: [NAME OF ACCOUNT]
 
Sort code: [SORT CODE]
 
Account number: [ACCOUNT NUMBER]
 
This letter is governed by English law.
 
Yours faithfully,
 
Signed............................................
 
For and on behalf of the [Account Bank]]
 

 
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SCHEDULE 5
 
PART 1
 
Form of notice to counterparty of Insurance Polices
 
[ON HEADED NOTEPAPER OF CHARGOR]
 

 
[NAME OF INSURANCE COMPANY]
 
[ADDRESS LINE 1]
 
[ADDRESS LINE 2]
 
[POSTCODE]
 
 
[DATE]
 
 
Dear Sirs,
 
Debenture (Debenture) dated [DATE] between Must Have Limited and
[                                    ]
 
We refer to the [DESCRIBE INSURANCE POLICY AND SPECIFY ITS POLICY NUMBER]
(Policy).
 
This letter constitutes notice to you that under the Debenture (a copy of which
is attached) we have assigned to [                                    ] (Senior
Security Trustee), by way of security, all our rights, title and interest and
benefit in and to the Policy.
 
We irrevocably instruct and authorise you to:
 
●
Note the Senior Security Trustee's interest on the Policy as “FIRST MORTGAGEE
AND AND FIRST LOSS PAYEE”.

 
●
Comply with the terms of any written instructions received by you from the
Senior Security Trustee relating to the Policy, without notice or reference to,
or further authority from, us and without enquiring as to the justification or
the validity of those instructions.

 
●
Hold all sums from time to time due and payable by you to us under the Policy to
the order of the Senior Security Trustee.

 
●
Pay, or release, all monies to which we are entitled under the Policy to the
Senior Security Trustee, or to such persons as the Senior Security Trustee may
direct.

 
●
Disclose information in relation to the Policy to the Senior Security Trustee on
request by the Senior Security Trustee.

 
 
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Neither the Debenture nor this notice releases, discharges or otherwise affects
your liability and obligations in respect of the Policy.
 
Subject to the foregoing, you may continue to deal with us in relation to the
Policy until you receive written notice to the contrary from the Senior Security
Trustee. Thereafter, we will cease to have any right to deal with you in
relation to the Policy and you must deal only with the Senior Security Trustee.
 
The instructions in this notice may only be revoked or amended with the prior
written consent of the Senior Security Trustee.
 
Please confirm that you agree to the terms of this notice and to act in
accordance with its provisions by sending the attached acknowledgement to the
Senior Security Trustee at Corporation Trust Center, 1209 Orange St.,
Wilmington, Delaware 19801 USA, with a copy to us.
 
This notice, and any dispute or claim arising out of or in connection with it or
its subject matter or formation (including non-contractual disputes or claims),
shall be governed by and construed in accordance with the law of England and
Wales.
 

 
Yours faithfully,
 

 
 ................................................................
 
Must Have Limited
 
 
 
 
 
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SCHEDULE 5
 
PART 2
 
Form of acknowledgement from counterparty of Insurance Polices
 
[On the letterhead of the insurance company]
 
[                                    ]
 
 [DATE]
 
Dear Sirs,
 
Debenture (Debenture) dated [DATE] between Must Have Limited and
[                                    ]
 
We confirm receipt from Must Have Limited (Chargor) of a notice (Notice) dated
[DATE] of an assignment, by way of security, of all the Chargor's rights under
[DESCRIBE INSURANCE POLICY AND ITS NUMBER] (Policy).
 
Terms defined in the Notice shall have the same meaning when used in this
acknowledgement.
 
We confirm that:
 
We accept the instructions and authorisations contained in the Notice and agree
to comply with the Notice.
 
We have noted the Senior Security Trustee's interest on the Policy as "FIRST
MORTGAGEE AND FIRST LOSS PAYEE".
 
There has been no amendment, waiver or release of any rights or interests in the
Policy since the date the Policy was issued.
 
We will not cancel, avoid, release or otherwise allow the Policy to lapse
without giving the Senior Security Trustee at least 30 days' prior written
notice.
 
We have not, as at the date of this acknowledgement, received notice that the
Chargor has assigned its rights under the Policy to a third party, or created
any other interest (whether by way of security or otherwise) in the Policy in
favour of a third party.
 
The Policy shall not be rendered void, voidable or unenforceable by reason of
any non-disclosure by the Senior Security Trustee.
 
This letter, and any dispute or claim arising out of or in connection with it or
its subject matter or formation (including non-contractual disputes or claims),
shall be governed by and construed in accordance with the law of England and
Wales.
 
Yours faithfully,
 
.......................................
 
[INSURANCE COMPANY]
 
 
 
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SIGNATORIES TO DEED
 
THE CHARGOR
 
EXECUTED as a deed and DELIVERED when dated by MUST HAVE LIMITED acting by a
director in the presence of:
 
Signature
 
 
                                                      
  Director
Witness signature
 
Name (in BLOCK CAPITALS)
 
Address
     

 
THE SENIOR SECURITY TRUSTEE
 
EXECUTED as a deed and DELIVERED when dated by
[                                    ]acting by a director in the presence of:
 
 
Signature
 
 
  Director
Witness signature
 
Name (in BLOCK CAPITALS)
 
Address
     

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