EXHIBIT 10.31



                  Date:                December 27, 1999






                  GUILDSOFT LIMITED
                  (as Chargor)

                  SILICON VALLEY BANK
                  (as Bank)



                  Mortgage Debenture


             FIELD FISHER WATERHOUSE 35 Vine Street London EC3N 2AA
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Contents


NO       HEADING                                                         PAGE

         CLAUSES

1.       Definitions and interpretation                                     1

2.       Covenant to pay                                                    5

3.       Mortgages and Charges                                              5

4.       Restrictions on other Securities and Disposals                    10

5.       Perfection of the Bank's Security                                 11

6.       Collection of Debts                                               13

7.       Conversion of Floating Charge                                     13

8.       Insurance                                                         15

9.       Undertakings by the Chargor                                       18

10.      Extension and Variation of the Law of Property Act 1925           26

11.      Appointment of Receiver                                           28

12.      No Liability as Mortgagee in Possession                           37

13.      Expenses                                                          38

14.      Power of Attorney                                                 39

15.      Protection of Purchasers                                          41

16.      Subsequent Charges                                                41

17.      Redemption of Prior Mortgages                                     42

18.      Set-Off                                                           42

19.      Payments                                                          43


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20.      Currency                                                          45

21.      Suspense Account                                                  46

22.      The Bank's Remedies                                               47

23.      Provisions Severable                                              49

24.      The Bank's Discretion                                             49

25.      Certificates                                                      49

26.      Assignment; Successors                                            49

27.      Discharge                                                         50

28.      Law and Jurisdiction                                              50

29.      Constitutional Documents                                          51

30.      Counterparts                                                      51

31.      Notices                                                           51

Schedule 1  Details of the Property                                        54

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THIS MORTGAGE DEBENTURE is made on December 27, 1999

BETWEEN

(1)      GUILDSOFT LIMITED (Company No. 02567531) whose registered office is at
         Unit A, The Software Centre, East Way, Lee Mill Industrial Estate,
         Ivybridge, Devon PL21 9PE (the "CHARGOR"); and

(2)      SILICON VALLEY BANK a California chartered bank having its principal
         place of business at 3003 Tasman Drive, Santa Clara, California 95054,
         United States of America (the "BANK").

WITNESSES as follows:


1.       DEFINITIONS AND INTERPRETATION

1.1      DEFINED TERMS

         In this Mortgage Debenture:-

         "BANK'S RIGHTS" means any of the rights, powers and remedies provided
         by this Mortgage Debenture or by law;

         "BANK" means Silicon Valley Bank (and includes its successors in title
         and assigns);

         "CHARGED DEBTS" means the book and other debts and liabilities hereby
         charged as more particularly referred to in Clause 3.1(B)(ii);

         "COLLATERAL" means the property, assets and income of the Chargor for
         the time being mortgaged, assigned or charged (whether by way of fixed
         or floating charge) to the Bank by or pursuant to this Mortgage
         Debenture and each and every part thereof;

         "DEFAULT RATE" means the rate of interest described under the heading
         "Default Rate" in Section 1 of the Loan Agreement;

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         "ENVIRONMENTAL LAWS" means all laws (statutory, common or otherwise)
         including, without limitation, circulars, guidance notes and codes of
         practice from time to time relating to the protection of the
         environment (including, without limitation, any laws requiring the
         remediation of contaminated land or water), or regulating the carrying
         on of any process or activity on premises and any emissions from, and
         all waste produced by, such process or activity and any such chemicals
         or substances relating to the same whether relating to health and
         safety, the workplace, the environment or the provision of energy
         (including without limitation the Health and Safety at Work etc Act
         1974, the Control of Pollution Act 1974, the Environmental Protection
         Act 1990, the Environment Act 1995, the Water Industry Act 1991, the
         Water Resources Act 1991, the Statutory Water Companies Act 1991, the
         Water Consolidation (Consequential Provisions) Act 1991, the Clean Air
         Acts, the Alkali & c. Works Regulation Act 1906, the Planning Hazardous
         Substances Act 1990, the Public Health Acts and the Radioactive
         Substances Act 1960 and any European Community legislation regarding
         the same) from time to time in force and any other instrument, plan,
         regulation, permission, authorisation and direction made or issued
         thereunder or deriving validity therefrom;

         "ENVIRONMENTAL LICENCE" means any permit, licence, authorisation,
         consent or other approval required by or given pursuant to any
         Environmental Laws;

         "GUARANTEE" means the Guarantee dated of even date herewith and made
         between the Chargor as guarantor and the Bank in respect of Datawatch
         Corporation;

         "PERMITTED ENCUMBRANCES" means any lien arising in the ordinary course
         of business of the Chargor

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         which is discharged in the ordinary course of such business;

         "PROPERTY" means all the freehold and/or leasehold properties (if any)
         more particularly described in the Schedule which is the subject of
         this security and refers to each and every part of the Property
         including all buildings, fixtures and fittings and fixed plant and
         machinery from time to time thereon owned by the Chargor and the
         proceeds of sale of all or any part thereof, and the benefit of any
         covenants for title given or entered into by any predecessor in title
         of the Chargor and any moneys paid or payable in respect thereof;

         "RECEIVER" means a receiver receivers or receiver and manager or
         administrative receiver or receivers appointed by the Bank under this
         Mortgage Debenture;

         "SECURED OBLIGATIONS" means all monies which now are or at any time
         hereafter may be or become due or owing by the Chargor to the Bank
         under or in connection with the Guarantee and all other liabilities
         (including, without limitation, liability to pay liquidated or
         unliquidated damages), whether actual or contingent, now existing or
         hereafter incurred by the Chargor to the Bank anywhere and in any
         manner whatever (and in either case whether due, owing or incurred by
         the Chargor alone or jointly with any other person(s) and in whatever
         name, form or style and whether as principal or surety) and all other
         monies and liabilities payable or to be discharged by the Bank under or
         pursuant to this Mortgage Debenture;

         "SECURITY INTEREST" means any mortgage, charge, pledge, lien,
         hypothecation, encumbrance, assignment, trust arrangement, title
         retention, or other security interest (other than a lien arising in the
         ordinary course of business by operation of law);

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         "SECURITY PERIOD" means the period commencing on the date of this
         Mortgage Debenture and ending on the date upon which all the Secured
         Obligations have been unconditionally and irrevocably paid and
         discharged in full; and

         "VAT" means Value Added Tax payable pursuant to the provisions of the
         Value Added Tax Act 1994 or any other tax amending, replacing or
         substituting the same.

1.2      TERMS DEFINED IN GUARANTEE

         Terms defined in the Guarantee shall unless otherwise defined in this
         Mortgage Debenture or unless the context otherwise requires, have the
         same meaning when used herein.

1.3      CONSTRUCTION OF CERTAIN TERMS

         In this Mortgage Debenture:

         (a)      Clause headings are inserted for convenience only and shall
                  not affect the construction of this Mortgage Debenture and
                  unless otherwise specified, all references to Clauses and to
                  Schedules (if any) are to clauses of, and the schedules to,
                  this Mortgage Debenture and references to Sub-clauses are to
                  sub-clauses of the Clause in which the reference appears;

         (b)      Section 61 of the Law of Property Act 1925 shall govern the
                  construction hereof, and where the context so admits, any
                  reference herein to any statute or any provision of any
                  statute shall be deemed to include reference to any statutory
                  modification or re-enactment thereof and to any regulations or
                  orders made thereunder and from time to time in force;

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         (c)      the masculine gender shall include the feminine and neuter
                  genders and the singular shall include the plural and vice
                  versa;

         (d)      references to persons shall include references to bodies
                  corporate and unincorporate;

         (e)      references to any document are to be construed as references
                  to such document as amended or supplemented from time to time;
                  and

         (f)      references to the Bank include references to any person or
                  persons to whom the Bank may dispose of this Mortgage
                  Debenture or any interest or right created by or existing
                  under it and the successors in title to any such person in
                  respect of any such interest or right.

1.4      EFFECT AS A DEED

         It is intended that this Mortgage Debenture take effect as a deed
         notwithstanding the fact that the Bank may only execute this document
         under hand.

2.       COVENANT TO PAY

         The Chargor covenants with the Bank that it will pay and discharge to
         the Bank the Secured Obligations on the due date therefor in the
         currency specified and otherwise in all respects in the manner provided
         in the Guarantee.

3.       MORTGAGES AND CHARGES

3.1      MORTGAGES AND FIXED AND FLOATING CHARGES

         The Chargor, with full title guarantee, hereby (and to the intent that
         the security so constituted shall be a continuing security in

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         favour of the Bank) charges with the payment and discharge of the
         Secured Obligations:

         (A) by way of first legal mortgage the Property.

         (B)      by way of first fixed charge (which so far as it relates to
                  land in England and Wales and Northern Ireland vested in the
                  Chargor at the date hereof shall be a charge by way of legal
                  mortgage) the following namely:-

                  (i)      all estates and other interests in freehold,
                           leasehold and other immovable property wheresoever
                           situate now or hereafter belonging to the Chargor
                           (including, without limitation, all its right, title
                           and interest in the Property (other than so far as
                           the same is charged by way of first legal mortgage
                           under sub-clause (A)) and all buildings, trade and
                           other fixtures, fixed plant and machinery belonging
                           to the Chargor from time to time on any such
                           freehold, leasehold and other immovable property;

                  (ii)     all book and other debts and monetary claims now or
                           at any time hereafter due or owing or incurred to the
                           Chargor including all accounts with banks (including
                           but not limited to the account referred to in Clause
                           6.1) and the moneys deposited therein and interest
                           accruing the arrears and claims arising in respect of
                           accounts, together with the full benefit of all
                           guarantees and securities therefor and indemnities in
                           respect thereof and all liens, reservations of title,
                           rights of tracing and other rights enabling the
                           Chargor to enforce any such debts or claims;

                  (iii)    the benefit of all insurance policies and contracts
                           of insurance

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                           relating to the Property and all moneys payable under
                           any such policies and contracts and all VAT payable
                           on the same;

                  (iv)     the benefit of all rentals, rents, service charges
                           and licence fees (if any) payable under or in respect
                           of any lease, underlease, tenancy or agreement for
                           lease affecting the Property and all VAT payable on
                           the same, and of all personal covenants given by any
                           tenant or occupier of the Property or guarantor of
                           such tenant or occupier to the Chargor;

                  (v)      the Chargor's rights now or hereafter to recover any
                           VAT on any supplies made to it relating to the
                           Property and any sums so recovered;

                  (vi)     the benefit of all contracts, deeds, undertakings,
                           agreements, rights, warranties, securities,
                           covenants, guarantees, bonds and indemnities of any
                           nature now or at any time enjoyed or held by the
                           Chargor and relating to the Property (including but
                           without limitation any deposit or other sum paid by
                           way of security or paid under any contract for the
                           sale of the Property or any part thereof or under any
                           option contract relating to the Property (whether or
                           not such deposit is forfeited), and all compensation
                           paid in relation to the Property) and all VAT payable
                           on the same;

                  (vii)    all stocks, shares, debentures, loan capital, rights
                           to subscribe for, convert other securities into or
                           otherwise acquire any stocks, shares, debentures and
                           loan capital of any other body corporate now or at
                           any time

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                           hereafter belonging to the Chargor, together with all
                           dividends, interest and other income and all other
                           rights of whatsoever kind deriving from or incidental
                           to any of the foregoing;

                  (viii)   the goodwill of the Chargor and its uncalled capital
                           now or at any time hereafter in existence and future
                           calls (whether made by the directors of the Chargor
                           or by a Receiver appointed hereunder or a
                           liquidator);

                  (ix)     all and any sums payable, by purchasers or others,
                           upon the disposal (whether by transfer, assignment or
                           otherwise) of, or the grant or creation of, any
                           interest in the Property or any part thereof, and
                           including any other sums of a capital nature derived
                           from the Property or any part thereof, and including,
                           compensation or damages received for any use or
                           disturbance, blight or compulsory purchase in respect
                           of the Property or any part thereof, after deduction
                           in each case of all reasonable costs and expenses
                           directly and properly incurred in connection with
                           such disposal, grant or creation;

                  (x)      all chattels now or at any time hereafter hired,
                           leased or rented by the Chargor to any other person
                           together in each case with the benefit of the related
                           hiring, leasing or rental contract and any guarantee,
                           indemnity or other security for the performance of
                           the obligations of any person under or in respect of
                           such contract insofar as the same are capable of
                           being charged; and

                  (xi)     all present and future copyrights, patents and all
                           registered patents owned

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                           by the Chargor from time to time and all applications
                           for registration of any patent owned by the Chargor
                           from time to time, design rights and all registered
                           designs owned by or licenced by or to the Chargor
                           from time to time, trademarks and all applications
                           for trademarks (and all goodwill associated
                           therewith), service marks and all applications for
                           service marks, brand names and/or business names,
                           inventions, design rights, all trade secrets and
                           know-how and all other intellectual property rights
                           whatsoever without limitation, whether registered or
                           unregistered in all or any part of the world in which
                           the Chargor is legally, beneficially or otherwise
                           interested and the benefit of any pending
                           applications for the same and all benefits deriving
                           therefrom and thereunder including but not limited to
                           royalties, fees, profit sharing agreements and income
                           arising therefrom and all licences in respect of or
                           relating to any intellectual property rights, whether
                           such licences are granted to the Chargor or granted
                           by the Chargor.

         (C)      By way of first floating charge the whole of the Chargor's
                  undertaking and all its property, rights and assets whatsoever
                  and wheresoever, present and future, other than any property
                  or assets from time to time or for the time being effectively
                  charged to the Bank by way of the legal mortgage or fixed
                  charge or assigned to the Bank by sub-clauses (A) or (B) of
                  Clause 3.1 respectively or otherwise pursuant to this Mortgage
                  Debenture.

3.2      CONTINUING SECURITY

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         The security from time to time constituted by or pursuant to this
         Mortgage Debenture shall:-

         (a)      be in addition to and shall be independent of every bill,
                  note, guarantee, mortgage or other security which the Bank may
                  at any time hold for any of the Secured Obligations and it is
                  hereby declared that no prior or other security or other
                  interest held by the Bank over the Collateral or any part
                  thereof shall merge in the security created hereby or pursuant
                  thereto; and

         (b)      remain in full force and effect as a continuing security until
                  the discharge and satisfaction of all the Secured Obligations
                  and the Chargor is under no further obligation actual or
                  contingent under this Mortgage Debenture.

4.       RESTRICTIONS ON OTHER SECURITIES AND DISPOSALS

4.1      NEGATIVE PLEDGE

         The Chargor shall not at any time without the prior written consent or
         agreement of the Bank (and to the intent that any purported dealing in
         contravention of this Clause shall be void and of no effect):-

         (a)      create, or purport to create, extend or permit to subsist any
                  mortgage or other fixed security, floating charge, pledge,
                  hypothecation or lien (other than a lien arising by operation
                  of law) or other security interest of any kind, whether in any
                  such case ranking in priority to or PARI PASSU with or after
                  the fixed and floating charges created by the Chargor under
                  Clause 3.1 above or any other security of the Bank created
                  pursuant to this Mortgage Debenture other than the Permitted
                  Encumbrances; or

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         (b)      sell, transfer, lease, lend or otherwise dispose of, whether
                  by means of one or a number of transactions related or not and
                  whether at one time or over a period of time, the whole or any
                  material part of the Chargor's undertaking or of its assets,
                  or enter into an agreement for sale, transfer, lease, loan or
                  other disposal of the whole or any such part.

4.2      RESTRICTION AT HM LAND REGISTRY

         In the case of any part of the Property consisting of land which is for
         the time being registered at HM Land Registry, the Chargor and the Bank
         jointly apply to the Chief Land Registrar to enter a restriction in the
         Proprietorship Register of the relevant title or titles in the
         following terms:

         "EXCEPT UNDER AN ORDER OF THE REGISTRAR NO DEALING BY THE PROPRIETOR OF
         THE PROPERTY COMPRISED IN THIS TITLE OR MADE IN EXERCISE OF A POWER OF
         SALE UNDER ANY CHARGE SUBSEQUENT TO CHARGE NUMBER [ o ] IN THE CHARGES
         REGISTER IS TO BE REGISTERED WITHOUT THE CONSENT OF THE PROPRIETOR FOR
         THE TIME BEING OF THE CHARGE NUMBER [ o ] IN THE CHARGES REGISTER".

         The "charge number [ o ]" referred to above will be the entry number in
         the Charges Register of the relevant title which relates this Mortgage
         Debenture."

5.       PERFECTION OF THE BANK'S SECURITY

5.1      FURTHER ASSURANCE

         The Chargor shall from time to time, whensoever requested by the Bank
         and at the Chargor's cost, execute in favour of the Bank, or as it may
         direct, such further or other legal assignments, transfers, mortgages,
         legal or other charges or

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         securities as in each such case the Bank shall reasonably stipulate
         over the Chargor's estate or interest in any property or assets of
         whatsoever nature or tenure and wheresoever situate and forming part of
         the Collateral for perfecting the security intended to be created by
         this Mortgage Debenture and for facilitating the realisation of the
         Collateral. Without prejudice to the generality of the foregoing, such
         assignments, transfers, mortgages, legal or other charges, or
         securities shall be in such form as shall be prepared on behalf of the
         Bank and may contain provisions such as are herein contained or
         provisions to the like effect and/or such other provisions of
         whatsoever kind as the Bank shall reasonably consider requisite for the
         improvement or perfection of the security constituted by or pursuant to
         this Mortgage Debenture (but not otherwise). The obligations of the
         Chargor under this Clause 5.1 shall be in addition to and not in
         substitution for the covenants for further assurance deemed to be
         included herein by virtue of the Law of Property (Miscellaneous
         Provisions) Act 1994.

5.2      DEPOSIT OF TITLE DEEDS

         The Chargor shall immediately upon the execution of this Mortgage
         Debenture (or upon becoming possessed thereof at any time hereafter)
         deposit with the Bank all deeds, certificates and other documents
         constituting or evidencing title to the Collateral or any part thereof.

5. 3     AFFIXING OF NOTICES

         The Chargor shall, whenever requested by the Bank and at the Chargor's
         cost, affix to such items of the Collateral or register, endorse or
         cause to be registered or endorsed on such documents as are referred to
         in Clause 5.2 as the Bank shall in each case stipulate, labels, signs
         or memoranda in such form as the Bank shall reasonably require
         referring or drawing attention

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         to the security constituted by or pursuant to this Mortgage Debenture.

5.4      NOTICES TO THIRD PARTIES

         The Chargor will from time to time as requested by the Bank deliver any
         notices to any third party having rights or liabilities in or to any of
         the Collateral will procure the issue by such third party of
         acknowledgements reasonably required by the Bank.

6.       COLLECTION OF DEBTS

6.1      COLLECTION AND PAYMENT INTO DESIGNATED ACCOUNT

         The Chargor shall at all times during the continuance of the security
         constituted by or pursuant to this Mortgage Debenture get in and
         realise and pay into a designated account in the name of the Chargor
         with such bank as the Bank may stipulate all monies which the Chargor
         may receive in respect of the Charged Debts, and if its authority to do
         so is terminated by the Bank giving notice following an Event of
         Default under either of the Loan Agreements, shall not draw money from
         such account.

6.2      NOT TO DEAL

         The Chargor shall not at any time following an Event of Default under
         either of the Loan Agreements without the prior written consent of the
         Bank deal with the Charged Debts or other monies otherwise than by
         getting in the same and making payment thereof into such designated
         account referred to in Clause 6.1. Without prejudice to the generality
         of the foregoing, the Chargor shall not at any such time factor or
         discount any of such debts or claims or enter into any agreement for
         such factoring or discounting.

7.       CONVERSION OF FLOATING CHARGE

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7.1      BY NOTICE

         The Bank shall be entitled immediately upon the occurrence of any Event
         of Default under either of the Loan Agreements or at any time
         thereafter or if the Bank reasonably considers such assets to be in
         danger of being seized or sold under any form of distress, attachment,
         execution or other legal process or to be otherwise in jeopardy, by
         notice in writing to the Chargor to convert the floating charge created
         by Clause 3.1(C) into a fixed charge affecting all the property and
         assets which for the time being are the subject of such floating charge
         or, as the case may be, such of the said property and assets as are
         specified by such notice. This provision shall not preclude the
         floating charge from becoming fixed in any of the events in which under
         this Mortgage Debenture or under the general law it would do so.

7.2      AUTOMATIC CONVERSION

         The floating charge hereby created shall (in addition to the
         circumstances in which the same will occur under general law)
         automatically be converted into a fixed charge:

         (a)      on the convening of any meeting of the members of the Chargor
                  to consider a resolution to wind the Chargor up (or not to
                  wind the Chargor up);

         (b)      on the presentation of a petition (other than a frivolous or
                  vexatious petition) to wind the Chargor up; or

         (c)      if the Chargor fails to comply with its obligations under
                  Clause 4.1.

7.3      Service by the Bank of a notice pursuant to Clause 7.1 in relation to
         any class of the

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         Chargor's assets shall not be construed as a waiver or abandonment of
         the Bank's rights to serve similar notices in respect of any other
         class of assets or of any other of the rights of the Bank.

8.       INSURANCE

8.1      REQUIRED COVER

         The Chargor shall at all times during the subsistence of the security
         constituted by or pursuant to this Mortgage Debenture comply with all
         covenants, undertakings and conditions as to insurance of any part of
         the Collateral in any of the Loan Documents and/or required by the
         terms of any lease, agreement for lease or tenancy granted by the
         Chargor or to which any of the Collateral is for the time being subject
         or under which the Chargor derives its estate or interest therein and,
         subject to the foregoing and so far as this Clause is not inconsistent
         with the said terms of such lease, agreement for lease or tenancy, the
         Chargor shall at all such times:-

         (a)      cause all buildings, trade and other fixtures, fixed and other
                  plant and machinery forming part of the Collateral (if any) to
                  be insured and to be kept insured:-

                  (i)      (if the Bank shall so stipulate) in an insurance
                           office or with underwriters approved by the Bank
                           against loss or damage by fire, and all such other
                           risks which it is usual to insure against in the case
                           of the relevant Collateral (including, in the case of
                           the Property, full cover against terrorism to the
                           extent available) and against such other or
                           additional risks as the Bank shall direct, to the
                           full reinstatement value thereof (together in the
                           case of the Property with additional amounts
                           estimated as sufficient to cover

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                           architects', surveyors' and other requisite
                           professional advisers' fees in relation to the
                           reinstatement of the Property and five years' loss of
                           rent and Service Charge in respect of the Property
                           and the costs of demolition, site clearance and
                           shoring-up and VAT on the cost of reinstatement) and
                           with the interest of the Bank noted on the policy of
                           insurance and providing for the Bank to be the loss
                           payee thereunder (or, if the Bank shall so direct, in
                           the joint names of the Chargor and the Bank); or

                  (ii)     (if and to the extent that the Bank does not so
                           stipulate) in such insurance office of repute as
                           shall have been selected by the Chargor or with
                           Lloyd's underwriters on the same basis as insurances
                           are maintained by prudent companies carrying on
                           businesses comparable with that of the Lessee and on
                           a comparable scale as regards the property and assets
                           insured, the insured risks and the classes of risk to
                           be covered; and

                  (iii)    procure that any such policy of insurance contains a
                           Bank protection clause whereby the insurance effected
                           will not be vitiated or avoidable as against a
                           mortgagee in the event of any misrepresentation act
                           or neglect or failure to disclose on the part of the
                           Chargor (subject to the payment of any increased
                           premium required by the insurer) and a Landlord
                           protection clause whereby the insurance will not be
                           vitiated or avoidable as against the Chargor or the
                           mortgagee as a result of anything done or omitted by
                           a tenant of the Property without the knowledge of the
                           Chargor and the mortgagee (subject

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                           to usual terms as to notification and payment of
                           additional premiums),

         (b)      procure that there are maintained such other insurances as are
                  normally maintained by prudent persons carrying on similar
                  businesses to the Lessee or which may be required by the Bank
                  (acting reasonably) including without limitation insurance
                  against liability to third parties arising out of the
                  ownership or occupation of the Property or the state or
                  condition thereof;

         (c)      duly and punctually pay all premiums and other moneys payable
                  under all such insurances as aforesaid and as soon as
                  reasonably practicable following written request by the Bank
                  produce to the Bank the premium receipts or other evidence of
                  the payment thereof; and

         (d)      (if so required by the Bank) deposit all policies and other
                  contracts of insurance relating to the Collateral or any part
                  thereof with the Bank or produce the same to the Bank for
                  inspection.

8.2      BANK'S RIGHT TO INSURE

         If default shall be made by the Chargor in complying with Clause 8.1
         after a reasonable demand regarding such has been made by the Bank to
         the Chargor in writing it shall be lawful for the Bank, but not
         obligatory on the Bank, to insure and keep insured such Collateral
         either in its own name or in its name and that of the Chargor jointly
         or in the name of the Chargor with an endorsement of the Bank's
         interest. The monies expended by the Bank on so effecting or renewing
         any such insurance shall be reimbursed by the Chargor to the Bank on
         demand and until so reimbursed shall carry interest from the date of
         payment to the date of reimbursement at the Default Rate.

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<PAGE>

8.3      TRUST

         All claims and monies received or receivable under any such insurance
         as aforesaid shall (subject to the rights and claims of and obligations
         of the Chargor to any prior mortgagee or chargee or any lessee, lessor
         or landlord of any part of the Collateral) be held by the Chargor in
         trust for the Bank and shall be applied by the Chargor in repaying or
         reducing the Secured Obligations or, if the Bank shall so require, in
         repairing, replacing, restoring or rebuilding the property damaged or
         destroyed.

8.4      NO AVOIDANCE OF INSURANCE

         The Chargor shall not do any act or commit any default by which any
         policy of insurance may become void or voidable.

8.5      PAYMENT OF PROCEEDS

         The Chargor shall not do any act or commit any default by which the
         Bank may be prevented from receiving all monies payable under any
         policy of insurance relating to the Collateral and shall ensure that
         all sums at any time payable under any of such policies of insurance of
         the Collateral shall be paid to the Bank.

9.       UNDERTAKINGS BY THE CHARGOR

         The Chargor hereby undertakes with the Bank that the Chargor will at
         all times while there shall subsist any security constituted by or
         pursuant to this Mortgage Debenture:-

         (a)      INFORMATION

                  provide the Bank, its employees, professional advisers and
                  agents with all such information respecting the Chargor's

                                       18
<PAGE>

                  business and affairs as the Bank may from time to time
                  require;

         (b)      PAY OUTGOINGS

                  punctually pay or cause to be paid all rents, rates, taxes,
                  duties, assessments and other outgoings payable in respect of
                  the Collateral or any part thereof;

         (c)      REPAIR

                  keep all buildings and erections on or forming part of the
                  Property or any other freehold or leasehold property hereby
                  charged in good and substantial repair and condition and
                  adequately and properly painted and decorated and keep the
                  fixtures and fittings thereon and all plant, machinery,
                  implements and other effects for the time being owned by it in
                  a good state of repair and in good working order and condition
                  (in each case replacing, rebuilding, and renewing the same
                  when necessary);

         (d)      RIGHT OF ENTRY

                  permit the Bank and such persons as the Bank may from time to
                  time for that purpose appoint at reasonable times and upon
                  reasonable notice to enter and inspect and view the state and
                  condition of the Property and if any unauthorised alterations
                  or additions or any defects or disrepair are found upon such
                  inspection the Bank may enter onto the Property and execute
                  such replacements or removals, repairs or works as may be
                  necessary, the cost of which shall be paid by the Chargor to
                  the Bank on demand. The Chargor shall not be in breach of this
                  undertaking where the terms of any lease prohibit such entry
                  and the Chargor, having used all reasonable endeavours to

                                       19
<PAGE>

                  obtain the relevant tenant's consent to such entry, has failed
                  to obtain the requisite permission;

         (e)      LEASES AND USE

                  not without the prior written consent of the Bank:

                  (i)      grant or agree to grant (whether in exercise of any
                           statutory power or otherwise) any lease, underlease,
                           tenancy or agreement for lease affecting the
                           Collateral;

                  (ii)     confer or agree to confer on any other person any
                           other right or licence to occupy any land or
                           buildings forming part of the Collateral or grant any
                           licence to assign or sub-let the Collateral or any
                           part thereof;

                  (iii)    waive, release or vary or agree to waive, release or
                           vary any of the terms of any lease, underlease,
                           tenancy or agreement for lease affecting the
                           Collateral including the determination or review of
                           any rent payable thereunder nor exercise any power to
                           terminate or extend the same;

                  (iv)     forfeit nor commence proceedings for forfeiture nor
                           exercise any right of re-entry nor accept the
                           surrender of any lease, underlease, tenancy or
                           agreement for lease affecting the Collateral; or

                  (v)      change or permit or suffer to be changed the present
                           user of any part of the Collateral,

         (f)      ENVIRONMENTAL

                                       20
<PAGE>

                  not cause, permit or suffer any substance, the presence of
                  which may require work of containment, restoration or clean up
                  to be undertaken under any applicable law whether on or off
                  the Collateral, or which causes or threatens to cause either a
                  nuisance under the provisions of the Environmental Protection
                  Act 1990 or the Environment Act 1995, or the presence of which
                  on adjacent properties could constitute a trespass by the
                  Chargor or which in an uncontained form may cause pollution of
                  the environment or harm to human health or detriment to the
                  amenities of the locality or which is otherwise toxic,
                  explosive, corrosive, radioactive, carcinogenic or mitogenic,
                  to be brought upon, treated, kept, stored, disposed of,
                  discharged, released, processed, produced, manufactured,
                  generated, refined or used upon, above or beneath any freehold
                  or leasehold forming part of the Collateral;

         (g)      PERFORM LEASE COVENANTS

                  observe and perform or (as the case may be) enforce the
                  observance and performance of all regulations, covenants and
                  provisions reserved by or contained in any lease, agreement
                  for lease or tenancy agreement affecting the Collateral and
                  neither take any step nor omit to take any step whatsoever if
                  in consequence of the taking or omission to take such step
                  such lease, agreement for lease or tenancy agreement may be
                  surrendered or forfeited or the rent thereunder may be
                  increased;

         (h)      PERFORM RESTRICTIVE AND OTHER COVENANTS

                  observe and perform all restrictive and other covenants and
                  stipulations for the time being affecting any part of the

                                       21
<PAGE>

                  Collateral or the use or the enjoyment of the same or any part
                  thereof;

         (i)      INDEMNITY AGAINST OUTGOINGS

                  indemnify the Bank (and as a separate covenant any Receiver or
                  Receivers appointed by it) against all existing and future
                  rents, taxes, duties, fees, renewal fees, charges,
                  assessments, impositions and outgoings whatsoever (whether
                  imposed by deed or statute or otherwise and whether in the
                  nature of capital or revenue and even though of a wholly novel
                  character) which now or at any time during the continuance of
                  the security constituted by or pursuant to this Mortgage
                  Debenture are payable in respect of the Collateral or any part
                  thereof or by the owner or occupier thereof and so that if any
                  such sums as are referred to in this sub-paragraph (i) of
                  Clause 9.1 shall be paid by the Bank (or any such Receiver or
                  Receivers) the same shall be repaid by the Chargor on demand
                  with interest from the time or respective times of the same
                  having been paid at the Default Rate;

         (j)      COMPLY WITH STATUTORY PROVISIONS

                  comply or cause compliance in all respects with the provisions
                  of all statutes for the time being in force and requirements
                  of any competent authority relating to the Collateral or
                  anything done thereon by the Chargor and in particular (but
                  without prejudice to the generality of the foregoing) to
                  observe and perform or cause to be observed and performed all
                  the provisions and requirements of the Town and Country
                  Planning Act 1990, the Planning (Listed Buildings and
                  Conservation Areas) Act 1990, the Planning (Hazardous
                  Substances) Act 1990, the Planning

                                       22
<PAGE>

                  (Consequential Provisions) Act 1990, the Planning and
                  Compensation Act 1991 and any Act amending, replacing or
                  modifying such Acts and all regulations and orders thereunder
                  (together, the "PLANNING ACTS") and the Registered Homes Act
                  1984 and all regulations and orders thereunder and before the
                  Chargor serves any discretionary notices the Chargor will
                  obtain the Bank's consent and to obtain or cause to be
                  obtained any development or other consent which may be
                  requisite by reason of the development of or on any of the
                  Collateral;

         (k)      VAT

                  not without the prior written consent of the Bank to exercise
                  any option to waive exemption from VAT in relation to the
                  Collateral or any part thereof and to give to the Bank on
                  demand all such details of the Chargor's registration for VAT
                  purposes as the Bank shall require;

         (l)      SUPPLY DETAILS OF NOTICES RECEIVED

                  give full particulars to the Bank of any notice or order or
                  proposal for a notice or order made, given or issued to the
                  Chargor under or by virtue of any statute including (without
                  prejudice to the generality of the foregoing) the Planning
                  Acts, or any regulation or order issued thereunder, within
                  seven days of receipt of such notice, order or proposal by the
                  Chargor and, if so required by the Bank, to produce such
                  notice, order or proposal to the Bank or its agents and also
                  as soon as practicable take all reasonable and necessary steps
                  to comply with any such notice, order or proposal or (if
                  required to do so by the Bank) to join with the Bank at the
                  cost of the Chargor in making such representation or appeals
                  as the Bank may deem fit in respect of any such

                                       23
<PAGE>

                  notice, order or proposal and (without prejudice to the
                  generality of the foregoing) at all times during the
                  continuance of this security to give to the Bank or its agents
                  such information as they shall reasonably require as to all
                  matters relating to the Collateral;

         (m)      NOT TO WASTE

                  not do or permit or suffer to be done in or upon the
                  Collateral any waste, spoil or destruction nor to make or
                  permit any development, alteration or addition whatsoever,
                  structural, external, internal or otherwise, or any change of
                  user, to the Collateral without the consent in writing of the
                  Bank (which shall not be withheld where the Chargor cannot
                  withhold it under the terms of any Lease) and in the event of
                  the Bank giving any such consent as aforesaid to carry out all
                  such works in accordance with the provisions and conditions of
                  the consent and to the reasonable satisfaction of the Bank;
                  provided that the consent of the Bank shall not be required in
                  the case of minor alterations to shop fronts or fascias nor in
                  the case of internal non-structural alterations;

         (n)      CHARGED DEBTS

                  not without the prior written consent of the Bank release,
                  exchange, compound set-off, grant time or indulgence in
                  respect of or in any other manner, deal with all or any of the
                  Charged Debts otherwise than in the ordinary course of its
                  business or except as expressly provided for herein;

         (o)      NOTIFY MATERIAL MATTERS

                  notify the Bank of any matters materially affecting the value,
                  enforceability or

                                       24
<PAGE>

                  collectability of any part of the Collateral and of all
                  material disputes, counterclaims, returns and rejections by or
                  of customers of the Company;

         (p)      COMPLIANCE WITH ENVIRONMENTAL LICENCES

                  obtain all requisite Environmental Licences applicable to the
                  Collateral and comply with the terms and conditions of the
                  same;

         (q)      COMPLIANCE WITH ENVIRONMENTAL LAWS

                  comply with all Environmental Laws applicable to the
                  Collateral and not permit a contravention of the same;

         (r)      NOTIFY CLAIMS

                  notify the Bank of the receipt of and contents of all claims,
                  notices or other communications in respect of any alleged
                  breach of any Environmental Licences or any Environmental Laws
                  which may, if substantiated, have a material adverse effect on
                  the market value of the Collateral and shall forthwith take
                  such steps as the Bank may reasonably direct to remedy and/or
                  cease the continuation of any such alleged breach;

         (s)      PAY ENVIRONMENTAL LICENCE FEES

                  promptly pay all fees and other charges in respect of any
                  Environmental Licence applicable to the Collateral;

         (t)      NOTIFY NOTICES CONCERNING ENVIRONMENTAL LICENCES

                  forthwith notify the Bank of the receipt of and the contents
                  of any notices or other communications varying or suspending
                  any Environmental Licence relating to the

                                       25
<PAGE>

                  Collateral and forthwith take such steps as the Bank may
                  reasonably direct to reinstate in full force and effect any
                  Environmental Licence so varied or suspended;

         (u)      SUPPLY ENVIRONMENTAL REPORTS

                  forthwith supply the Bank with copies of any environmental
                  reports, audits or studies undertaken in relation to the
                  Collateral; and

         (v)      ENVIRONMENTAL INDEMNITY

                  indemnify the Bank and each Receiver appointed under this
                  Mortgage Debenture and their respective officers, employees,
                  agents and delegates (together the "INDEMNIFIED PARTIES")
                  against any cost or expense suffered or incurred by them
                  which:-

                  (i)      arises by virtue of any actual or alleged breach of
                           any Environmental Laws (whether by the Chargor, an
                           Indemnified Party or any other person);

                  (ii)     would not have arisen if this Mortgage Debenture had
                           not been executed; and

                  (iii)    was not caused by the negligence or wilful default of
                           the relevant Indemnified Party.

10.      EXTENSION AND VARIATION OF THE LAW OF PROPERTY ACT 1925

10.1     POWER OF SALE

         Section 103 of the Law of Property Act 1925 shall not restrict the
         exercise by the Bank of the statutory power of sale conferred on it by
         section 101 of such Act, which power shall arise and may be exercised
         by the Bank immediately upon and at any time after the the Bank has
         made demand under the Guarantee and the provisions of

                                       26
<PAGE>

         the said Act relating to and regulating the exercise of the said power
         of sale shall, so far as they relate to the security constituted by or
         pursuant to this Mortgage Debenture, be varied and extended
         accordingly.

10.2     STATUTORY POWERS OF LEASING

         The statutory powers of leasing, letting, entering into agreements for
         leases or lettings and accepting and agreeing to accept surrenders of
         leases conferred by Sections 99 and 100 of the said Act shall not be
         exercisable by the Chargor in relation to any part of the Collateral
         without the prior written consent of the Bank, but the foregoing shall
         not be construed as a limitation of the powers of any Receiver
         appointed hereunder and being an agent of the Chargor. Such statutory
         powers shall be exercisable by the Bank upon or at any time after the
         occurrence of an Event of Default and, whether or not the Bank shall
         then be in possession of the premises proposed to be leased, so as to
         authorise the Bank to make a lease or agreement for lease at a premium
         and for any length of term and generally without any restriction on the
         kinds of leases and agreements for lease that the Bank may make and
         generally without the necessity for the Bank to comply with any
         restrictions imposed by or the other provisions of the said Sections 99
         and 100. The Bank may delegate such powers to any person and no such
         delegation shall preclude the subsequent exercise of such powers by the
         Bank itself or preclude the Bank from making a subsequent delegation
         thereof to some other person; and any such delegation may be revoked.

10.3     CONSOLIDATION OF MORTGAGES

         The restriction on the right of consolidating mortgage securities
         contained in Section 93 of the Law of Property Act 1925 shall not apply
         to this Mortgage Debenture.

                                       27
<PAGE>

11.      APPOINTMENT OF RECEIVER

11.1     TIMING OF APPOINTMENT AND JOINT RECEIVERS

         At any time after having been requested so to do by the Chargor or at
         any time after making demand under the Guarantee following an Event of
         Default, the Bank may appoint one or more persons to be a Receiver or
         Receivers of the whole or any part of the Collateral. The Bank may:-

         (i)      remove any Receiver previously appointed hereunder; and

         (ii)     appoint another person or other persons as Receiver or
                  Receivers, either in the place of a Receiver so removed or who
                  has otherwise ceased to act or to act jointly with a Receiver
                  or Receivers previously appointed hereunder.

         If at any time and by virtue of any such appointment(s) any two or more
         persons shall hold office as Receivers of the same assets or income,
         each one of such Receivers shall be entitled (unless the contrary shall
         be stated in any of the deed(s) or other instrument(s) appointing them)
         to exercise all powers and discretions hereby or by law conferred on
         Receivers individually and to the exclusion of the other or others of
         them.

11.2     FORM OF APPOINTMENT AND REMOVAL

         Every such appointment or removal, and every delegation, appointment or
         removal by the Bank in the exercise of any right to delegate its power
         or to remove delegates herein contained, may be made either by deed or
         by instrument in writing under the hand of any officer of the Bank or
         any person authorised in writing in that behalf by any such officer.

                                       28
<PAGE>

11.3     POWERS OF RECEIVER - STATUTORY

         Every Receiver for the time being holding office by virtue of an
         appointment made by the Bank hereunder shall (subject to any
         limitations or restrictions expressed in the deed or other instrument
         appointing him but notwithstanding any winding-up or dissolution of the
         Chargor) have, in relation to the Collateral, or as the case may be,
         that part of the Collateral in respect of which he was appointed:-

         (a)      all the powers (as varied and extended by the provisions
                  hereof) conferred by the Law of Property Act 1925 on
                  mortgagors and on mortgagees in possession and receivers
                  appointed under the Act; and

         (b)      power in the name or on behalf and at the cost of the Chargor
                  to exercise all powers and rights of an absolute owner and do
                  or omit to do anything which the Chargor itself could do.

11.4     POWERS OF RECEIVER - SPECIFIC

         In addition and without prejudice to the generality of the foregoing or
         any other provision of this Mortgage Debenture, every Receiver for the
         time being holding office by virtue of an appointment made by the Bank
         hereunder shall (notwithstanding any winding-up or dissolution of the
         Chargor) have the following powers, namely:-

         (i)      TAKE POSSESSION

                  power to take possession of, collect and get in all or any
                  part of the Collateral and for that purpose to make, or to
                  require the directors of the Chargor to make, calls upon the
                  holders of the Chargor's share capital in respect of any such
                  capital of the Chargor which remains uncalled and to

                                       29
<PAGE>

                  enforce payment of calls so made and any previous unpaid calls
                  by taking proceedings in the name of the Chargor or by his own
                  name;

         (ii)     CARRY ON BUSINESS

                  power to carry on, manage, develop, amalgamate, reconstruct or
                  diversify the whole or any part of the Chargor's business,
                  including the power where the Chargor has one or more
                  subsidiaries of supervising, controlling and financing such
                  subsidiary or subsidiaries (inclusive of any bodies corporate
                  as are referred to in sub-paragraph (iv) below) and its or
                  their business or businesses and the conduct thereof;

         (iii)    SELL ASSETS

                  power to sell or assign all or any of the Charged Debts or
                  Collateral in such manner and generally upon such terms and
                  conditions as he thinks fit and to convey the same in the name
                  of the Chargor;

         (iv)     FORM SUBSIDIARIES

                  power to promote, or subscribe for or otherwise acquire the
                  share capital of any body corporate with a view to such body
                  corporate becoming a subsidiary of the Chargor and purchasing,
                  leasing or otherwise acquiring an interest in the whole or any
                  part of the Collateral or carrying on any business in
                  succession to the Chargor or any subsidiary of the Chargor;

                                       30
<PAGE>

         (v)      SEVER

                  power to sever and sell separately from the Collateral all or
                  any fixed plant and machinery and other fixtures and fittings
                  relevant thereto;

         (vi)     IMPROVE, DEVELOP OR REPAIR

                  power to alter, improve, develop, complete, construct, modify,
                  refurbish or repair any building or land and to complete or
                  undertake or concur in the completion or undertaking (with or
                  without modification), of any project in which the Chargor was
                  concerned or interested prior to his appointment being a
                  project for the alteration, improvement, development,
                  completion, construction, modification, refurbishment or
                  repair of any building or land;

         (vii)    NO STATUTORY RESTRICTION ON SALE ETC

                  power to sell, lease or otherwise dispose of or concur in
                  selling, leasing, accepting surrenders or otherwise disposing
                  of the whole or any part of the Collateral without the
                  restriction imposed by Section 103 of the Law of Property Act
                  1925 or the need to observe any of the restrictions or other
                  provisions of Section 99 or 100 of the said Act and upon such
                  terms as he shall think fit;

         (viii)   METHOD OF SALE OR DISPOSAL

                  power to carry any sale, lease or other disposal of any land
                  or buildings and other property and assets into effect by
                  conveying, transferring, assigning or leasing in the name of
                  the Chargor and for that purpose to enter into covenants and

                                       31
<PAGE>

                  other contractual obligations in the name of and so as to bind
                  the Chargor;

         (ix)     CONSENTS AND LICENCES

                  power to apply for and obtain any appropriate consents,
                  licences or approval in relation to the Collateral, its use or
                  development;

         (x)      ADDITIONAL LAND AND EASEMENTS

                  power to acquire additional land or any interest therein and/
                  or easements for the benefit of any of the Collateral and
                  power to grant easements or rights over the Collateral;

         (xi)     CHARGOR'S NAME

                  power to use the Chargor's name for registration and to effect
                  any necessary election for tax or other purposes;

         (xii)    COMPROMISE

                  power to make any arrangement or compromise or settlement of
                  claims or enter into any contracts or arrangements as he shall
                  think fit;

         (xiii)   INSURANCES

                  power to effect and renew insurances;

         (xiv)    PROCEEDINGS

                  power to take or defend proceedings in the name of the Chargor
                  including proceedings for the compulsory winding-up of the
                  Chargor and proceedings for directions under Section 35(1) of
                  the Insolvency Act 1986 and power to settle and compromise any
                  proceedings;

                                       32
<PAGE>

         (xv)     EMPLOYEES

                  power to employ, engage and appoint such managers, agents,
                  servants and other employees and professional advisers on such
                  terms as he shall think fit including without limitation power
                  to engage his own firm in the conduct of the receivership;

         (xvi)    BORROW MONEY

                  power to raise or borrow money from the Bank or any other
                  person to rank for payment in priority to the security
                  constituted by or pursuant to this Mortgage Debenture and with
                  or without a mortgage or mortgage debenture on the Collateral
                  or any part of it;

          (xvii)  GENERAL POWERS

                  power to do all such other things as may seem to the Receiver
                  to be incidental or conducive to any other power vested in him
                  or to be conducive to the realisation of the security
                  constituted by or pursuant to this Mortgage Debenture as if he
                  were the absolute beneficial owner of the Collateral;

         (xviii)  PROTECTION OF ASSETS

                  to make and effect all repairs and insurances and do all other
                  acts which the Company might do in the ordinary conduct of its
                  business as well for the protection as for the improvement of
                  the Collateral and to commence and/or complete any building
                  operations on the Collateral and to apply for and maintain any
                  planning permissions, building regulation approvals and any
                  other permissions, consents or licences, in each case as he
                  may in his absolute discretion think fit;

                                       33
<PAGE>

         (xix)    LEASES

                  to let all or any part of the Collateral for such term and at
                  such rent (with or without a premium) as he may think proper
                  and to accept a surrender of any lease or tenancy thereof on
                  such terms as he may think fit (including the payment of money
                  to a lessee or tenant on a surrender); and

         (xx)     RECEIPTS

                  to give valid receipts for all moneys and execute all
                  assurances and things which may be proper or desirable for
                  realising the Collateral.

                                       34
<PAGE>

11.5     CONSIDERATION ON DISPOSAL

         In making any sale or other disposal of any of the Collateral in the
         exercise of their respective powers (including a disposal by the
         Receiver to any such subsidiary as is referred to in Clause 11.4 (iv))
         the Receiver or the Bank may accept, by way of consideration for such
         sale or other disposal, cash, shares, loan capital or other
         obligations, including without limitation consideration fluctuating
         according to or dependent upon profit or turnover and consideration the
         amount whereof is to be determined by a third party. Any such
         consideration may be receivable in a lump sum or by instalments and
         upon receipt by the Receiver shall IPSO FACTO be and become charged
         with the payment of the Secured Obligations. Any contract for any such
         sale or other disposal by the Receiver or the Bank may contain
         conditions excluding or restricting the personal liability of the
         Receiver or the Bank. Plant, machinery and other fixtures may be
         severed and sold in the exercise of their respective powers by the
         Receiver or the Bank separately from the premises to which they are
         attached without any consent being obtained from the Chargor.

11.6     APPLICATION OF PROCEEDS

         All monies received by the Bank or any Receiver appointed under this
         Mortgage Debenture shall (subject to the rights and claims of any
         person having a security ranking in priority to the security
         constituted by or pursuant to this Mortgage Debenture) be applied in
         the following order:

         (i)      in the payment of or provision for all costs, charges and
                  expenses incurred and payments made by the Bank and in the
                  payment of all costs, charges and expenses of and

                                       35
<PAGE>

                  incidental to the Receiver's appointment and the payment of
                  his remuneration;

         (ii)     in the payment and discharge of any liabilities incurred by
                  the Receiver on the Chargor's behalf in the exercise of any of
                  the powers of the Receiver;

         (iii)    in providing for the matters (other than the remuneration of
                  the Receiver) specified in the first three paragraphs of
                  Section 109(8) of the Law of Property Act 1925;

         (iv)     in or towards payment of any debts or claims which are by
                  statute payable in preference to the Secured Obligations but
                  only to the extent to which such debts or claims have such
                  preference;

         (v)      in or towards the satisfaction of the Secured Obligations,

         and any surplus shall be paid to the Chargor or other person entitled
         thereto.

         The provisions of this Clause 11.6 and of Clause 11.8 shall take effect
         as and by way of variation and extension to the provisions of the said
         section 109, which provisions as so varied and extended shall be deemed
         incorporated herein.

11.7     RECEIVER AS AGENT

         Every Receiver so appointed shall be deemed at all times and for all
         purposes to be the agent of the Chargor which shall be solely
         responsible for his acts and defaults and liable on any contracts or
         engagements made or entered into by him and for the payment of his
         remuneration. The Bank shall not be responsible for his misconduct,
         negligence or default.

                                       36
<PAGE>

11.8     RECEIVER'S REMUNERATION

         Every Receiver so appointed shall be entitled to remuneration for his
         services at a rate to be fixed by agreement between him and the Bank
         (or, failing such agreement, to be fixed by the Bank) appropriate to
         the work and responsibilities involved upon the basis of charging from
         time to time adopted in accordance with his current practice or the
         current practice of his firm and without being limited to the maximum
         rate specified in Section 109(6) of the Law of Property Act 1925. The
         amount of such remuneration may be debited by the Bank to the Chargor,
         but shall in any event form part of the Secured Obligations.

11.9     MONIES ACTUALLY RECEIVED

         Only monies actually paid by the Receiver to the Bank in satisfaction
         or discharge of the Secured Obligations and unconditionally and
         irrevocably retained by the Bank shall be capable of being applied by
         the Bank in satisfaction thereof.

11.10    RECEIVER'S INDEMNITY

         The Chargor agrees to indemnify and hold harmless the Receiver from and
         against all actions, claims, expenses, demands and liabilities (save
         where the same is due to gross negligence or wilful misconduct of the
         Receiver) whether arising out of contract or tort or in any other way
         incurred or which may at any time be incurred by him or by any manager,
         agent, servant or other employee for whose debt, default or miscarriage
         he may be answerable for anything done or omitted to be done in the
         exercise or purported exercise of his powers under the provisions of
         this deed or pursuant hereto.

12.      NO LIABILITY AS MORTGAGEE IN POSSESSION

                                       37
<PAGE>

         The Bank shall not nor shall any Receiver appointed as aforesaid by
         reason of it or such Receiver entering into possession of the
         Collateral or any part thereof be liable to account as mortgagee in
         possession or be liable for any loss on realisation or for any default
         or omission which mortgagee in possession might be liable except for
         its gross negligence or wilful misconduct.

13.      EXPENSES

13.1     UNDERTAKING TO PAY

         All costs, charges and expenses incurred and all payments made by the
         Bank or any Receiver appointed hereunder in the lawful exercise of the
         powers hereby conferred whether or not occasioned by any act, neglect
         or default of the Chargor shall carry interest (as well after as before
         judgment) at the Default Rate from the date of the same being incurred
         or becoming payable until the date the same are unconditionally and
         irrevocably paid and discharged in full.

         The amount of such costs, charges, expenses and payments and all such
         interest thereon and all remuneration payable hereunder shall be
         payable by the Chargor on demand. All such costs, charges, expenses and
         payments shall be paid and charged as between the Bank and the Chargor
         on the basis of a full indemnity and not on the basis of party and
         party or any other kind of taxation.

13.2     INDEMNITY

         The Bank and every Receiver, attorney, manager, agent or other person
         appointed by the Bank hereunder shall be entitled to be indemnified out
         of the Collateral in respect of all liabilities and expenses properly
         incurred by them in the execution or purported execution of any of the
         powers, authorities or discretions vested in them

                                       38
<PAGE>

         pursuant hereto and against all actions, proceedings, costs, claims and
         demands in respect of any matter or thing done or omitted in any way
         relating to the Collateral and the Bank and any such Receiver may
         retain and pay all sums in respect of the same out of any monies
         received under the powers hereby conferred.

13.3     STAMP DUTIES

         The Chargor shall pay and, forthwith on demand, indemnify the Bank
         against any liability it incurs in respect of any stamp, registration
         and similar tax which is or becomes payable in connection with the
         entry into, performance or enforcement of this Mortgage Debenture.

14.      POWER OF ATTORNEY

14.1     APPOINTMENT AND POWERS

         The Chargor hereby irrevocably appoints the following, namely:-

         (i)      the Bank,

         (ii)     each and every person whom the Bank shall from time to time
                  nominate in writing under the hand of any officer of the Bank,
                  and

         (iii)    each and any Receiver appointed hereunder and for the time
                  being holding office as such,

         jointly and also severally its attorney and attorneys for it and in the
         name of the Chargor and otherwise on its behalf and as its act and deed
         to sign, seal, execute, deliver, perfect and do all deeds, instruments,
         acts and things which may be required (or which the Bank or any
         Receiver appointed hereunder shall consider requisite) for carrying out
         any obligation imposed on the Chargor by or pursuant to this Mortgage
         Debenture (including but not limited to

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<PAGE>

         the obligations of the Chargor under Clause 5.1 and the statutory
         covenant referred to in such Clause), for carrying any sale, lease or
         other dealing by the Bank or such Receiver into effect, for conveying
         or transferring any legal estate or other interest in land or other
         property or otherwise howsoever, for getting in the Collateral, and
         generally for enabling the Bank and the Receiver to exercise the
         respective powers conferred on them by or pursuant to this Mortgage
         Debenture by law. The Bank shall have full power to delegate the power
         conferred on it by this Clause, but no such delegation shall preclude
         the subsequent exercise of such power by the Bank itself or preclude
         the Bank from making a subsequent delegation thereof to some other
         person; and any such delegation may be revoked by the Bank at any time.
         All money properly expended by any attorney shall be deemed to be
         expenses incurred by the Bank under this Mortgage Debenture.

14.2     RATIFICATION

         The Chargor shall ratify and confirm all transactions entered into by
         the Bank or such Receiver or delegate of the Bank in the exercise or
         purported exercises of the Bank's or such Receiver's respective powers
         and all transactions entered into, documents executed and things done
         by the Bank or such Receiver or delegate by virtue of the power of
         attorney given by Clause 14.1.

14.3     IRREVOCABLE

         The power of attorney hereby granted is as regards the Bank, its
         delegates and (so far as permitted by law) any such Receiver (and as
         the Chargor hereby acknowledges) granted irrevocably and for value as
         part of the security constituted by this Mortgage Debenture to secure
         proprietary interests of and the performance of obligations

                                       40
<PAGE>

         owed to, the respective donees within the meaning of the Powers of
         Attorney Act 1971.

15.      PROTECTION OF PURCHASERS

         No purchaser or other person dealing with the Bank or its delegate or
         any Receiver appointed hereunder shall be bound to see or inquire
         whether the right of the Bank or such Receiver to exercise any of its
         or his powers has arisen or become exercisable or be concerned with
         notice to the contrary, or be concerned to see whether any such
         delegation by the Bank shall have lapsed for any reason or been
         revoked.

16.      SUBSEQUENT CHARGES

         If the Bank shall at any time receive notice of any subsequent
         mortgage, charge, assignment, hypothecation, pledge or other like
         interest, matter, event or transaction affecting the Collateral or any
         part of it (otherwise than with the prior written consent of the Bank
         as permitted by this Mortgage Debenture) or that a receiver has been
         appointed to all or any part of the Chargor's assets or that a petition
         for an administration order or for compulsory liquidation has been
         presented or a resolution for voluntary liquidation has been passed in
         relation to the Chargor, the Bank may open a new account or accounts
         for the Chargor in its books. If the Bank does not in fact open any
         such new account then, unless it gives express written notice to the
         Chargor to the contrary, the Bank shall be treated as if it had in fact
         opened such account or accounts at the time when it received such
         notice. As from that time and unless such express written notice shall
         be given to the Chargor, all payments by or on behalf of the Chargor to
         the Bank shall (in the absence of any express contrary appropriation by
         the Chargor) be credited, or treated as having been credited, to the
         new account(s) of the Chargor opened or deemed to have been opened and
         not as having been

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<PAGE>

         applied in reduction of the Chargor's indebtedness and other
         liabilities to the Bank at the time when the Bank received such notice.

17.      REDEMPTION OF PRIOR MORTGAGES

         The Bank may, at any time after the security hereby constituted has
         become enforceable, redeem any prior security interest against the
         Collateral or any part thereof or procure the transfer thereof to
         itself and may settle and pass the accounts of the prior mortgagee,
         chargee or encumbrancer. Any accounts so settled and passed shall be
         conclusive and binding on the Chargor. All principal moneys, interest,
         costs, charges and expenses of, and incidental to, such redemption and
         transfer shall be paid by the Chargor to the Bank on demand.

18.      SET-OFF

18.1     CONSOLIDATION OF ACCOUNTS

         In addition to any general lien or similar right to which it may be
         entitled by operation of law, the Bank shall have the right upon or at
         any time after the occurrence of an Event of Default and with notice to
         the Chargor to combine or consolidate all or any of the Chargor's then
         existing accounts opened pursuant to this Mortgage Debenture with any
         liabilities of the Chargor to the Bank and to set-off or transfer any
         sum or sums standing to the credit of any one or more of such accounts
         in or towards satisfaction of any of the liabilities of the Chargor to
         the Bank on any other such account or in any other respect. The
         liabilities referred to in this Clause may be actual, contingent,
         primary, collateral, several or joint liabilities, and the accounts,
         sums and liabilities referred to in this Clause may be denominated in
         any currency.

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<PAGE>

18.2     SET-OFF

         The Bank may set-off any Secured Obligations owed by the Chargor
         against any obligation (whether or not matured) owed by the Bank to the
         Chargor regardless of the place of payment or currency of either
         obligation. If the obligations are in different currencies, the Bank
         may convert either obligation in the manner provided in Clause 20.

19.      PAYMENTS

19.1     MANNER OF PAYMENT

         All payments to be made by the Chargor hereunder shall be made in the
         same currency in which the Secured Obligations are expressed to be
         payable under the Loan Agreement.

19.2     TAXES

         All payments by the Chargor under or in connection with this Mortgage
         Debenture shall be made without set-off or counterclaim, free and clear
         of and without deduction for or on account of all taxes. All taxes in
         respect of this Mortgage Debenture and payments hereunder shall be for
         the account of and shall be paid by the Chargor for its own account
         prior to the date on which penalties attach thereto. If the Chargor is
         compelled by law to make payment subject to any tax and the Bank does
         not actually receive for its own benefit on the due date a net amount
         equal to the full amount provided for hereunder, the Chargor will pay
         all necessary additional amounts to ensure receipt by the Bank of the
         full amounts so provided for, provided that the Chargor shall have no
         liability to the Bank under this Clause 19.2 if and to the extent that
         such liability would not have been incurred or arisen if the Bank had
         retained its rights under the Loan Agreement and/or had not changed its
         lending office. The Chargor will indemnify the Bank in respect of all
         such taxes upon the Bank providing

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<PAGE>

         to the Chargor evidence that the Bank has suffered or incurred any
         liability to pay such taxes.

19.3     TAX CREDITS

         If the Bank receives the benefit of a tax credit or an allowance
         resulting from a payment which includes an additional amount paid by
         the Chargor under Clause 19.2, it shall (to the extent that it can do
         so without prejudice to the retention of such credit or allowance and
         to the extent that it is not unlawful or contrary to any official
         directive for it to do so) pay to the Chargor such part of that benefit
         as is, in the reasonable opinion of the Bank, attributable to the
         withholding or deduction giving rise to payment of that additional
         amount, provided that the Bank shall:

         (i)      be the sole judge of the amount of any such benefit to be so
                  paid to the Chargor and of the date on which it is received by
                  the Bank;

         (ii)     have an absolute discretion as to the order and manner in
                  which it employs or claims tax credits and allowances
                  available to it;

         (iii)    not be obliged to disclose to the Chargor or any other person
                  any confidential information regarding its tax affairs or tax
                  computations.

19.4     APPROPRIATION OF PAYMENTS

         The Bank shall have an absolute and unfettered right to appropriate any
         payments received from the Chargor, or otherwise recovered under the
         Loan Documents to such indebtedness of the Chargor hereunder or
         thereunder as the Bank may determine, to the exclusion of any right on
         the

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<PAGE>

         part of the Chargor to make an appropriation in respect of such
         payments.

20.      CURRENCY

20.1     CURRENCY CONVERSION

(a)      The Chargor's liability hereunder shall be to pay to the Bank the full
         amount of the Principal's Obligations in such currency in which they
         are for the time being denominated provided that if and to the extent
         the Chargor shall not pay such amount in such currency the Bank may
         accept payment of all or part of such amount in any other currency
         and/or require the Chargor , in substitution for its liability to pay
         such amount in such currency, to pay an amount in pounds Sterling which
         is equivalent to the amount of such currency remaining unpaid (and in
         either case the provisions of Clause 20.1(b) below shall apply);

(b)      The equivalent on any day in one currency of any amount denominated in
         another currency shall be an amount in the first currency equal to the
         amount which the Bank would have received if the Bank had on such day
         (or, if such day shall not be a business day, on the next succeeding
         business day) made a purchase of the first currency with such amount of
         such other currency at the then prevailing spot rate of exchange of the
         Bank less all costs, charges and expenses normally incurred by the Bank
         in connection with such a purchase.

20.2     CURRENCY INDEMNITY

         If the Bank receives an amount in respect of the Chargor's liability
         under this Mortgage Debenture or if that liability is converted into a
         claim, proof, judgment or order in a currency other than the currency
         (the "CONTRACTUAL CURRENCY") in which the amount is expressed to be
         payable under this Mortgage Debenture (as the case may be):-

                                       45
<PAGE>

         (a)      the Chargor shall indemnify the Bank as an independent
                  obligation against any loss or liability arising out of or as
                  a result of the conversion;

         (b)      if the amount received by the Bank, when converted into the
                  contractual currency at a market rate in the usual course of
                  its business is less than the amount owed in the contractual
                  currency, the Chargor shall forthwith on demand pay to the
                  Bank an amount in the contractual currency equal to the
                  deficit and to the extent that such conversion results in the
                  Chargor receiving more than the amount owed in the contractual
                  currency the amount of such excess (as conclusively determined
                  by the Bank) shall be paid to the Chargor; and

         (c)      the Chargor shall pay to the Bank forthwith on demand any
                  exchange costs and taxes payable in connection with any such
                  conversion.

20.3     WAIVER

         The Chargor waives any right it may have in any jurisdiction to pay any
         amount under this Mortgage Debenture in a currency other than that in
         which it is expressed to be payable.

21.      SUSPENSE ACCOUNT

         All monies received, recovered or realised by the Bank under this
         Mortgage Debenture (including the proceeds of any conversion of
         currency) may in the discretion of the Bank be credited to any suspense
         or impersonal account and may be held in such account for so long as
         the Bank may think fit. The Bank shall not charge interest on so much
         of the Chargor's indebtedness to the Bank as otherwise accrued under
         the Principal's Obligations as is equal to the credit balance

                                       46
<PAGE>

         from time to time on such separate suspense account.

22.      THE BANK'S REMEDIES

22.1     EFFECT OF RELEASE

         Any receipt, release or discharge of the security provided by, or of
         any liability arising under, this Mortgage Debenture shall not release
         or discharge the Chargor from any liability to the Bank for the same or
         any other liability which may exist independently of this Mortgage
         Debenture.

22.2     ARRANGEMENTS WITH THIRD PARTIES

         The Bank may in its discretion grant time or other indulgence, or make
         any other arrangement, variation or release with, any person or persons
         not party hereto (whether or not such person or persons are jointly
         liable with the Chargor) in respect of any of the Secured Obligations
         or of any other security therefor or guarantee in respect thereof
         without prejudice either to the security constituted by or pursuant to
         this Mortgage Debenture or to the liability of the Chargor for the
         Secured Obligations or the exercise by the Bank of any rights, remedies
         and privileges conferred upon it by this Mortgage Debenture.

22.3     RIGHTS CUMULATIVE

         The rights, powers and remedies provided in this Mortgage Debenture are
         cumulative and are not, nor are they to be construed as, exclusive of
         any rights, powers or remedies provided by law, or under any of the
         other Loan Documents.

22.4     WAIVER

         No failure on the part of the Bank to exercise, or delay on its part in
         exercising, any of the

                                       47
<PAGE>

         powers and remedies provided by this deed or by law, shall operate as a
         waiver thereof, nor shall any single or partial waiver of such rights,
         powers and remedies preclude any further or other exercise of that one
         of such rights, powers and remedies concerned or the exercise of any
         other of such rights, powers and remedies.

22.5     COSTS

         All the costs, charges and expenses of the Bank in relation to this
         Mortgage Debenture or for the Secured Obligations (including, without
         limitation, the costs, charges and expenses incurred in the carrying
         out of this Mortgage Debenture into effect or in the exercise of any of
         the rights, remedies and powers conferred on the Bank hereby or in the
         perfection or enforcement of the security constituted hereby or
         pursuant hereto or in the perfection or enforcement of any other
         security for or guarantee in respect of the Secured Obligations) shall
         be reimbursed by the Chargor to the Bank on demand on a full indemnity
         basis provided always that any costs, charges and expenses incurred by
         the Bank prior to an Event of Default shall be reasonable.

22.6     INSOLVENCY RELATION BACK

         Any settlement or discharge between the Bank and the Chargor shall be
         conditional upon no security of, or payment to, the Bank (whether by
         the Chargor or otherwise) being avoided or reduced or required to be
         paid away by virtue of any requirement (whether or not having the force
         of law) or enactment, whether relating to bankruptcy, insolvency,
         liquidation, administration or otherwise, at any time in force or by
         virtue of any obligation to give effect to any preference or priority
         and the Bank shall be entitled to recover the value or amount of any
         such security or payment from the Chargor as if such settlement or
         discharge had not occurred.

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<PAGE>

23.      PROVISIONS SEVERABLE

         Every provision contained in this Mortgage Debenture shall be severable
         and distinct from every other provision and if at any time any one or
         more of such provisions is or becomes invalid, illegal or
         unenforceable, the validity, legality and enforceability of the
         remaining such provisions shall not in any way be affected thereby.

24.      THE BANK'S DISCRETION

         Any power which may be exercised or any determination which may be made
         hereunder by the Bank may be exercised or made in the absolute and
         unfettered discretion of the Bank.

25.      CERTIFICATES

         A certificate of the Bank setting out the amount of any Secured
         Obligation due from the Chargor shall be prima facie evidence of such
         amount against the Chargor in the absence of manifest error.

26.      ASSIGNMENT; SUCCESSORS

26.1     SUCCESSORS

         The expression the "BANK" wherever used herein shall be deemed to
         include the assignees and other successors, whether immediate or
         derivative, of the Bank, who shall be entitled to enforce and proceed
         upon this Mortgage Debenture in the same manner as if named herein.

26.2     ASSIGNMENT

         The Bank shall be entitled at any time to assign all or any of its
         rights and benefits hereunder to any person to whom the rights and
         benefits of the Bank under the Loan Agreements are assigned

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<PAGE>

         in accordance with the terms thereof and this Mortgage Debenture shall
         remain in full force and effect after, and shall continue to secure the
         Secured Obligations after and resulting from, any such assignment.

27.      DISCHARGE

         If the Chargor shall have unconditionally and irrevocably paid and
         discharged the Secured Obligations in full (which event shall not occur
         until all contingent liabilities have either crystallised or expired)
         and the Bank will at the request and cost of the Chargor duly discharge
         this Mortgage Debenture and re-assign to the Chargor or as it shall
         direct such of the Collateral as is hereby assigned to the Bank.

28.      LAW AND JURISDICTION

28.1     LAW

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

28.2     SUBMISSION TO JURISDICTION

         For the exclusive benefit of the Bank, the Chargor irrevocably agrees
         that the courts of England are to have jurisdiction to settle any
         disputes which may arise out of or in connection with this Mortgage
         Debenture and the other Loan Documents and irrevocably submits to the
         jurisdiction of such courts and agrees that accordingly any suit,
         action or proceeding arising out of or in connection with this Mortgage
         Debenture (together in this Clause referred to as "PROCEEDINGS") may be
         brought in such courts.

28.3     OTHER JURISDICTIONS

         Nothing contained in this Clause shall limit the right of the Bank to
         take Proceedings against the

                                       50
<PAGE>

         Chargor in any other court of competent jurisdiction, nor shall the
         taking of Proceedings in one or more jurisdictions preclude the taking
         of Proceedings in any other competent jurisdiction, whether
         concurrently or not.

28.4     WAIVER OF OBJECTION

         The Chargor irrevocably waives any objection which it may have now or
         hereafter to the laying of the venue of any Proceedings in any such
         court as is referred to in Clause 28.2 and any claim that any such
         Proceedings have been brought in any inconvenient forum and further
         irrevocably agrees that a final judgment in any Proceedings brought in
         the English courts shall be conclusive and binding and may be enforced
         in the courts of any other competent jurisdiction.

29.      CONSTITUTIONAL DOCUMENTS

         The Chargor hereby certifies that its creation by this Mortgage
         Debenture of charges in favour of the Bank does not contravene any of
         the provisions of its constitutional documents.

30.      COUNTERPARTS

         This Mortgage Debenture may be executed in any number of counterparts
         and by the different parties on separate counterparts and this will
         have the same effect as if the signatures on the counterparts were on a
         single copy of this Mortgage Debenture and each such counterpart shall
         be treated as an original.

31.      NOTICES

         Any notice or other communication required or permitted to be given by
         this Mortgage Debenture or by applicable law shall be in writing and
         shall be deemed received (a) on the date delivered, if sent by hand
         delivery (to the person or department if one is specified below),

                                       51
<PAGE>

         (b) three (3) days following the date deposited in U.S. mail, certified
         or registered, with return receipt requested, or (c) one (1) day
         following the date deposited with Federal Express or other national
         overnight carrier, and in each case addressed as follows:

         IF TO THE CHARGOR:

                  The Company Secretary
                  Guildsoft Limited
                  Unit A
                  The Software Centre
                  East Way
                  Lee Mill Industrial  Estate
                  Ivybridge
                  Plymouth
                  PL21 9PE

         IF TO THE BANK:

                  Mr Andrew H Tsao, Senior Vice President
                  Silicon Valley Bank
                  40 William Street
                  Suit 350
                  Wellesley
                  Massachusetts 02481
                  USA

         WITH COPY TO:

                  Mr James Krumsiek
                  Rieimer & Braunstein LLP
                  Counselors at Law
                  Three Centre Plaza
                  Boston
                  Massachusetts 02108
                  USA

                  Fax:     001 (617) 723 6831

         Failure to provide any courtesy copy shall not invalidate any notice
         otherwise properly given to the designated party set out above. Any
         party

                                       52
<PAGE>

         may change its address to another single address by notice given as
         herein provided, except any change of address notice must be actually
         received in order to be effective.


IN WITNESS whereof this Mortgage Debenture has been executed as a deed and
delivered by the parties hereto on the day and the year first before written.


                                       53
<PAGE>

                                   SCHEDULE 1

                             DETAILS OF THE PROPERTY


PROPERTY                         INTEREST           TITLE NUMBER/DESCRIPTION

Unit A                           Leasehold          a lease over the Property
The Software Centre                                 between Hopkins Developments
East Way                                            Limited and the Chargor
Lee Mill Industrial  Estate                         commencing 18 September 1998
Ivybridge                                           for the period to 31
Plymouth                                            December 2017
PL21 9PE



                                       54
<PAGE>

EXECUTED and DELIVERED ..........  )
AS A DEED BY GUILDSOFT LIMITED...  )


Acting by:
            Bruce R. Gardner  Director                /s/ Bruce R. Gardner

            John F. Cave  Director/Secretary          /s/ John F. Cave



EXECUTED and DELIVERED ..........  )
AS A DEED by SILICON VALLEY .....  )
BANK.............................  )



By:         Heidi Fetty Assistant Vice President      /s/ Heidi Fetty

A person authorised under the laws of California to execute and deliver as a
deed.







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