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                                                                  EXHIBIT 10.40

                       DATED                         2002
                       ----------------------------------

                       THE COMPANIES LISTED IN SCHEDULE 1

                         AS ORIGINAL CHARGING COMPANIES

                                       AND

                      BANK OF AMERICA, NATIONAL ASSOCIATION

                               AS SECURITY TRUSTEE

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

                       SYNDICATED COMPOSITE GUARANTEE AND
                                   DEBENTURE

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

                              BARLOW LYDE & GILBERT

          BEAUFORT HOUSE 15 ST BOTOLPH STREET LONDON EC3A 7NJ TELEPHONE
                  +44 [0] 20 7247 2277 FAX +44 [0] 20 7643 8504
                     WEBSITE WWW.BLG.CO.UK DX 155 LONDON CDE

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                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                            PAGE
<S>                                                                                               <C>
1   INTERPRETATION...............................................................................   1
2   CHARGING PROVISIONS..........................................................................   5
3   PAYMENT OF THE SECURED OBLIGATIONS...........................................................   8
4   GUARANTEE....................................................................................   8
5   ADDITIONAL CHARGING COMPANIES................................................................  11
6   REPRESENTATIONS AND WARRANTIES...............................................................  13
7   COVENANTS....................................................................................  14
8   COLLECTION OF RECEIVABLES AND RELATED MATTERS................................................  19
9   INSURANCE....................................................................................  20
10  THE INVESTMENTS..............................................................................  22
11  NEGATIVE PLEDGE..............................................................................  25
12  FURTHER ASSURANCE AND PERFECTION OF SECURITY.................................................  25
13  RECEIVER.....................................................................................  27
14  VARIATION AND EXTENSION OF STATUTORY POWERS..................................................  31
15  CONTINUING SECURITY..........................................................................  32
16  POWER OF ATTORNEY............................................................................  33
17  INDEMNITIES..................................................................................  34
18  NO WAIVER....................................................................................  34
19  PAYMENTS AND DISCHARGE.......................................................................  35
20  CURRENCY.....................................................................................  36
21  LAND REGISTRY................................................................................  37
22  NOTICES......................................................................................  37
23  SET-OFF......................................................................................  38
24  TRUSTEE PROVISIONS...........................................................................  39
25  COUNTERPARTS.................................................................................  44
26  CONSENTS.....................................................................................  44
27  LAW AND JURISDICTION.........................................................................  45
SCHEDULE
1   THE ORIGINAL CHARGING COMPANIES..............................................................  46
2   RECEIVABLES ACCOUNT(S).......................................................................  47
3   DETAILS OF POLICIES AND CONTRACTS............................................................  49
4   FORMS........................................................................................  50
</TABLE>

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<TABLE>
<S>                                                                                               <C>
    A1 FORM OF NOTICE OF ASSIGNMENT..............................................................  50
    A2 FORM OF ACKNOWLEDGEMENT AND AGREEMENT.....................................................  52
    B1 FORM OF NOTICE OF ASSIGNMENT OF INSURANCES................................................  54
    B2 FORM OF ACKNOWLEDGEMENT...................................................................  55
    B3 FORM OF ENDORSEMENT.......................................................................  56
5   THE SECURITIES...............................................................................  57
6   FORM OF ACCOUNT NOTICE AND FORM OF ACKNOWLEDGEMENT AND AGREEMENT.............................  58
7   THE EQUIPMENT................................................................................  61
8   THE PROPERTY.................................................................................  62
9   FORM OF SUPPLEMENTAL DEED....................................................................  63
10  DOCUMENTS TO ACCOMPANY SUPPLEMENTAL DEED.....................................................  65
</TABLE>

<PAGE>

THIS DEBENTURE dated                  2002

BETWEEN:

(1)      THE COMPANIES referred to in Schedule 1 (the "ORIGINAL CHARGING
         COMPANIES" and each an "ORIGINAL CHARGING COMPANY"); and

(2)      BANK OF AMERICA, NATIONAL ASSOCIATION acting through its London branch
         at Bank of America House, 1 Alie Street, London E1 8DE in its capacity
         as trustee for the Beneficiaries ("THE SECURITY TRUSTEE").

WITNESSES as follows:

1        INTERPRETATION

1.1      DEFINITIONS

         Throughout this Debenture, including the Schedules, the following words
         and phrases shall have the following meanings:

         ACCOUNT NOTICE: unless otherwise agreed by the Security Trustee, a
         notice substantially in the form set out in Schedule 6;

         ACT: the Law of Property Act 1925;

         AGREEMENT: the syndicated credit agreement of even date made between
         (1) the Original Borrowers, (2) BM Europe Partners C.V., (3) Bell
         Microproducts Europe B.V. (4) Bank of America, NA as Arranger, Agent,
         Issuer, Swingline Lender and Security Trustee and (5) certain banks and
         financial institutions as Lenders, on the terms and conditions of which
         the Lenders have agreed that there should be made available to the
         Borrowers, a revolving credit facility of up to L75,000,000;

         BELL ITALIAN RECEIVABLES: the Receivables denominated in euro and paid
         or payable to BMEE (by its Italian customers) and which are paid or
         payable to the account of BMEE with Banco Populare di Milano, account
         no. 13867, ref: Bell Microproducts Europe Export Limited;

         CHARGING COMPANIES: each Original Charging Company and each Group
         Company which accedes to this Debenture as a Charging Company in
         accordance with clause 5 and "CHARGING COMPANY" means any one of them;

         COLLATERAL: in relation to each Charging Company, all of its Property,
         Equipment, Inventory and/or other assets and, where the context so
         admits, each of them and any part thereof and the proceeds of the
         disposal of the same and all rights, title and interest in and to the
         same, in each such case as may now or in the future be the subject of
         the security constituted or intended to be constituted by this
         Debenture;

         DERIVATIVE ASSETS: all assets deriving from any of the Securities owned
         by any Charging Company including all allotments, accretions, offers,
         rights, dividends, interest, income, benefits and advantages whatsoever
         at any time

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         accruing, offered or arising in respect of or incidental to any of the
         Securities and all stocks, shares, rights, money or property accruing
         or offered at any time by way of conversion, redemption, bonus,
         preference, exchange, purchase, substitution, option, interest or
         otherwise in respect thereof;

         EQUIPMENT: in relation to each Charging Company, all of its now owned
         and hereafter acquired machinery, equipment, furniture, furnishings,
         fixtures and other tangible personal property (except Inventory),
         including, without limitation, data processing hardware and software,
         motor vehicles, aircraft, dies, tools, jigs and office equipment, as
         well as all of such types of property leased by such Charging Company
         and all of such Charging Company's rights and interest with respect
         thereto under such leases (including, without limitation, options to
         purchase) together with all present and future additions and accessions
         thereto, replacements therefor, component and auxiliary parts and
         supplies used or to be used in connection therewith and all substitutes
         for any of the foregoing, and all manuals, drawings, instructions,
         warranties and rights with respect thereto, wherever any of the
         foregoing is located;

         EXPENSES: all banking, legal and other costs, charges, expenses and/or
         liabilities (including any VAT thereon) paid or, if earlier, incurred
         by or on behalf of any Beneficiary or any Receiver in each case on a
         full indemnity basis in relation to any of the Collateral or in
         protecting, preserving, improving, considering the enforcement or
         exercise of or enforcing or exercising or attempting to enforce or
         exercise, any rights arising under or pursuant to any of the Finance
         Documents and/or in procuring the payment, performance or discharge of
         any of the Secured Obligations;

         INTELLECTUAL PROPERTY: in relation to each Charging Company, all
         patents, patent applications, trade marks, trade names, service marks,
         service mark applications, registered designs, copyrights, other
         protectable rights and assets, know-how, trade secrets and other
         confidential information and all related licences and connected rights
         now or in the future belonging to or held by such Charging Company or
         any nominee of such Charging Company;

         INVENTORY: in relation to each Charging Company, all of its now owned
         and hereafter acquired inventory, goods and merchandise, wherever
         located, to be furnished under any contract of service or held for sale
         or lease, all raw materials, work-in-progress, finished goods, returned
         goods and materials and supplies of any kind, nature or description
         which are or might be used or consumed in its businesses or used in
         connection with the manufacture, packing, shipping, advertising,
         selling or finishing of such goods, merchandise and such other
         specified property, and all documents of title or other document
         representing them;

         INVESTMENTS: in relation to each Charging Company, its Securities and
         the Derivative Assets relating to such Securities;

         LICENCES: in relation to each Charging Company, all licences, consents
         and authorisations (statutory or otherwise) now or in the future held
         or acquired by such Charging Company, or held by a nominee of such
         Charging Company, in

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         connection with any business carried on by such Charging Company or the
         use of any of the Collateral of such Charging Company;

         NOTICE OF ASSIGNMENT: unless otherwise agreed by the Security Trustee
         and, as the context requires, a notice of assignment substantially in
         the form set out in Part A1 or Part B1 of Schedule 4;

         POLICIES: in relation to each Charging Company, the policies of
         insurance in which such Charging Company is interested, details of
         which are set out in Schedule 3 and set opposite the name of such
         Charging Company and any other policies of insurance in which such
         Charging Company may now or hereafter have an interest;

         PROPERTY: in relation to each Charging Company, all freehold and
         leasehold properties and other real property both present and future of
         such Charging Company as may now or in the future be the subject of the
         security constituted or intended to be constituted by this Debenture,
         including all buildings and other structures from time to time erected
         thereon and all fixtures (trade or otherwise) from time to time thereon
         or therein;

         RECEIVABLES: in relation to each Charging Company, (i) all book debts,
         both present and future, due or owing to such Charging Company and all
         other monetary debts and claims, choses in action and other rights and
         benefits both present and future (including, in each such case, the
         proceeds thereof and all damages and dividends in relation thereto) due
         or owing to such Charging Company and the benefit of all related rights
         and remedies (including under negotiable or non-negotiable instruments,
         guarantees, indemnities, legal and equitable charges, reservation of
         proprietary rights, rights of tracing and liens); (ii) all sums, both
         present and future, due or owing to such Charging Company by way of
         grant, subsidy or refund by any statutory, legal or governmental body,
         authority or institution or by any body, authority or institution of
         the European Union; and (iii) all payments representing or made in
         respect of (i) and (ii) aforesaid;

         RECEIVABLES ACCOUNT: any separate and denominated account established
         and maintained by a Charging Company with the Security Trustee or any
         such account (governed by a mandate in form and substance satisfactory
         to the Security Trustee and conferring control over such account on the
         Security Trustee) established and maintained by a Charging Company with
         such other bank (other than any Beneficiary) as the Security Trustee
         may from time to time agree in writing including, without limitation,
         each account details of which are set out in Schedule 2, to which
         Receivables of that Charging Company are to be paid or credited;

         RECEIVER: a receiver and/or manager (including, as the context admits,
         an administrative receiver) appointed under this Debenture;

         SECURED OBLIGATIONS: all monies, obligations and liabilities (whether
         present or future, actual or contingent) on the part of each Obligor to
         any Beneficiary to be paid, performed or discharged, whether directly
         or indirectly, under or pursuant to the terms of any of the Finance
         Documents and/or in connection

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         with the credit facility or other financial accommodation from time to
         time granted or otherwise made available pursuant thereto, together
         with all Expenses and including, without limitation, any interest
         charged under the terms of the Agreement, this Debenture or any other
         Finance Document;

         SECURITIES: in relation to each Charging Company, all shares, stocks,
         debentures, debenture stock, bonds and securities of any kind
         whatsoever owned by such Charging Company (including rights to
         subscribe for, convert into or otherwise acquire the same) whether
         marketable or otherwise, and all other interests (including loan
         capital) of such Charging Company both present and future in any
         company, firm, consortium or entity wherever situate including those
         details of which appear in Schedule 5 and set opposite the name of such
         Charging Company;

         SUPPLEMENTAL DEED: a deed supplemental to this Debenture executed by a
         Group Company substantially in the form set out in Schedule 9, by
         virtue of which that Group Company becomes bound by this Debenture in
         the capacity of a Charging Company; and

         VAT: value added tax or any similar tax substituted therefor.

1.2      CONSTRUCTION

1.2.1    Words and phrases which are not defined or construed in this Debenture
         but which are defined or construed in the Agreement, the Act or the
         Insolvency Act 1986 shall be construed as having the meanings ascribed
         to them therein. To the extent that there is any inconsistency between
         the terms of this Debenture and the Agreement, the terms of the
         Agreement shall prevail.

1.2.2    In construing this Debenture, general words introduced by the word
         "OTHER"" shall not be given a restrictive meaning by reason of the fact
         that they are preceded by words indicating a particular class of acts,
         matters or things and general words shall not be given a restrictive
         meaning by reason of the fact that they are followed by particular
         examples intended to be embraced by the general words. In addition, the
         words "ANY OF" shall be construed as a reference to any one or more
         (including all) of the rights, assets, liabilities or other things
         referred to.

1.2.3    The security constituted by, and the rights of the Beneficiaries under,
         this Debenture shall be enforceable notwithstanding any change in the
         constitution of any Beneficiary or its absorption in or amalgamation
         with any other person or the acquisition of all or part of its
         undertaking by any other person.

1.2.4    The headings in this Debenture are inserted for convenience only and
         shall not affect its construction or interpretation and references to a
         Clause or Schedule are (unless otherwise stated) to a Clause in, or a
         Schedule to, this Debenture.

1.2.5    Any reference in this Debenture to "THIS DEBENTURE" or to any other
         agreement or document shall, unless the context otherwise requires, be
         construed as a reference to this Debenture or to such other agreement
         or document as the same may from time to time be amended, varied,

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         supplemented, novated or replaced and shall include any document which
         is supplemental to, is expressed to be collateral with, or is entered
         into pursuant to or in connection with, the terms of this Debenture or
         of such other agreement or document.

1.2.6    The illegality, invalidity or unenforceability of any provision of this
         Debenture under the law of any jurisdiction shall not affect its
         validity or enforceability under the law of any other jurisdiction or
         the legality, validity or enforceability of any other provision of this
         Debenture.

1.2.7    Save where the context otherwise requires, the plural of any term
         includes the singular and vice versa.

1.2.8    Any reference in this Debenture to any statute or statutory provision
         shall, unless the context otherwise requires, be construed as a
         reference to such statute or statutory provision as in force at the
         date of this Debenture and as subsequently re-enacted or consolidated
         and shall also include all instruments, orders and regulations for the
         time being made thereunder or deriving validity therefrom.

1.2.9    In this Debenture the expressions a "CHARGING COMPANY", the "SECURITY
         TRUSTEE", the "AGENT", the "ARRANGER", the "SWINGLINE LENDER" the
         "ISSUER", a "LENDER" or a "BENEFICIARY" shall, unless the context
         otherwise requires, include their respective permitted assignees and
         Transferees or successors in title, whether immediate or derivative in
         relation to their respective interests.

1.2.10   The obligations of the Charging Companies under this Debenture are
         joint and several.

1.2.11   Except as expressly provided in this Debenture, the terms of this
         Debenture may only be enforced by a party to it and the operation of
         the Contracts (Rights of Third Parties) Act 1999 is excluded.

2        CHARGING PROVISIONS

2.1      SPECIFIC CHARGES

         Each Charging Company with full title guarantee and as a continuing
         security for the payment and discharge of the Secured Obligations
         hereby charges to the Security Trustee (in each case as trustee for and
         on behalf of the Beneficiaries):

         2.1.1    by way of legal mortgage all its Property which is described
                  in Schedule 8 which is set opposite its name and by way of
                  first fixed charge its Property now owned or hereafter
                  acquired, other than the property or properties specified in
                  Schedule 8, and/or the proceeds of sale thereof;

         2.1.2    by way of specific charge and agrees to mortgage to the
                  Security Trustee its Investments;

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         2.1.3    by way of specific charge, its Receivables (other than, in the
                  case of BMEE, the Bell Italian Receivables), its Intellectual
                  Property, its Licences and all deeds and documents from time
                  to time relating to the Collateral;

         2.1.4    by way of specific charge the goodwill (including, without
                  limitation, all brand names) and the uncalled capital both
                  present and future of such Charging Company;

         2.1.5    by way of specific charge all the rights, title and interest
                  of such Charging Company in and to the Policies and to the
                  compensation monies referred to in clause 7.1.12;

         2.1.6    by way of specific charge all the rights, title and interest
                  of such Charging Company in and to all chattels from time to
                  time hired, leased or rented by such Charging Company 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
                  obligation of any person under or in respect of such contract;

         2.1.7    by way of specific charge the benefit of any covenants for
                  title given or entered into by any predecessor in title of
                  such Charging Company to its Property, all proceeds of a
                  capital nature in relation to the disposal of its Property,
                  the benefit of any contract for the sale, letting or other
                  disposal of its Property and all present and future options to
                  renew all leases or purchase all reversions (whether or not
                  freehold) from time to time in relation to its Property;

         2.1.8    by way of specific charge the benefit of all rights and claims
                  of such Charging Company against all lessees from time to time
                  of the whole or any parts of its Property and all guarantors
                  and sureties for the obligations of such lessees and against
                  all persons who are under any obligation to such Charging
                  Company in respect of any works of design, construction,
                  repair or replacement to, on or about its Property;

         2.1.9    by way of specific charge the Equipment of each Charging
                  Company from time to time in or on the Property (and not
                  comprised in the Property) and including, without limitation,
                  all the Equipment of the Charging Companies, details of which
                  are set out in Schedule 7 (which Schedule may be amended and
                  substituted from time to time with the consent of the Borrower
                  and the Security Trustee) and the benefit of all such Charging
                  Company's rights and claims against any person in respect of
                  the design, construction, repair or replacement of the same;
                  and

         2.1.10   so far as permitted under the relevant document, by way of
                  specific charge, each Charging Company's rights, title and
                  interest in and to all contracts, agreements or warranties
                  affecting or in any way

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                  relating to the Collateral and the benefit of all related
                  rights and remedies.

2.2      FLOATING CHARGE

         Each Charging Company with full title guarantee and as a continuing
         security for the payment, performance and discharge of the Secured
         Obligations hereby charges to the Security Trustee by way of floating
         charge the undertaking and all property, assets and rights of such
         Charging Company (including its Inventory and the Equipment),
         whatsoever and wheresoever, both present and future (save insofar as
         any of the same shall for the time being be effectively mortgaged or
         charged by way of specific charge under the provisions of clauses 2.1.1
         to 2.1.10 inclusive or assigned by way of security under the provisions
         of clause 2.3).

2.3      ASSIGNMENTS BY WAY OF SECURITY

         Each Charging Company with full title guarantee and as a continuing
         security for the payment, performance and discharge of the Secured
         Obligations hereby assigns and agrees to assign by way of security to
         the Security Trustee all its rights, title and interest in and to:

         2.3.1    the Policies and all amounts payable thereunder and all other
                  rights, benefits or remedies enjoyed or exercisable
                  thereunder;

         2.3.2    the Receivables;

         2.3.3    each Receivables Account maintained by it (including any such
                  account the details of which appear in Schedule 2 and set
                  opposite its name) and any monies from time to time standing
                  to the credit of any such account or any other account
                  maintained with the Security Trustee or any other person into
                  which the proceeds of Receivables are paid; and

         2.3.4    (so far as permitted under the relevant document) all
                  contracts, documents, agreements or warranties affecting or in
                  any way relating to the Collateral and the benefit of all
                  related rights and remedies thereunder and any other agreement
                  or contract from time to time designated as a Material
                  Contract (including, without limitation, the contracts,
                  details of which appear in Part 2 of Schedule 3).

2.4      TACKING/FURTHER ADVANCES

         2.4.1    The security constituted by this Debenture secures present and
                  further advances.

         2.4.2    Each Lender, by the Security Trustee's execution of this
                  Debenture, hereby covenants to make further advances subject
                  to and in accordance with the terms of the Agreement.

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3        PAYMENT OF THE SECURED OBLIGATIONS

3.1      COVENANT

         Each Charging Company hereby jointly and severally covenants to pay,
         perform and discharge to the Security Trustee the Secured Obligations
         in the manner provided for in the Finance Documents.

3.2      INTEREST

         Save to the extent that the Agent or any of the Lenders is otherwise
         entitled to do so under the Agreement, interest may be added by the
         Security Trustee to any of the Secured Obligations which shall remain
         unpaid on the due date for payment, from such date until payment
         (whether before, on or at any time after demand or judgment or the
         liquidation of any Charging Company) at the rate of 2% per annum above
         the Reference Rate for the time being of the Agent on the sterling
         equivalent of the amount of such Secured Obligations which interest may
         be compounded (whether before, on or at any time after demand or
         judgment or the liquidation of any Charging Company), by the Security
         Trustee with monthly rests to the extent that it shall remain unpaid.

4        GUARANTEE

4.1      GUARANTEE

         Each Charging Company unconditionally and irrevocably guarantees to the
         Security Trustee the due and punctual payment, performance and
         discharge by each other Obligor of the Secured Obligations. If and
         whenever any Obligor shall default in the payment, performance or
         discharge of any of the Secured Obligations, each Charging Company
         shall, upon written demand by the Security Trustee, promptly pay,
         perform or discharge the Secured Obligations in respect of which such
         default has been made.

4.2      INDEMNITY

         Each Charging Company agrees to indemnify and hold harmless the
         Security Trustee for and on behalf of the Beneficiaries from time to
         time on demand from and against any loss incurred by any Beneficiary as
         a result of any of the Secured Obligations being or becoming void,
         voidable or unenforceable for any reason whatsoever, whether known to
         the Security Trustee or not.

4.3      CONTINUING SECURITY

         The obligations of each Charging Company under this Debenture are
         continuing obligations and shall remain in force until all of the
         Secured Obligations have been satisfied in full. The obligations of
         each Charging Company under this Debenture shall not be (or be
         construed so as to be) satisfied by any intermediate discharge or
         payment of or on account of any of the Secured Obligations or any
         settlement of account between the Security Trustee and any other
         Beneficiary, any Charging Company or any other Obligor or any other
         person, or any other matter (other than the discharge in full of the
         Secured Obligations).

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4.4      PROTECTIVE PROVISIONS

         Neither the obligations of any Charging Company nor the rights and
         remedies of the Beneficiaries under any of the Finance Documents or
         otherwise conferred by law shall be discharged, prejudiced or impaired
         by reason of:

         4.4.1    any variation of any of the Secured Obligations or of the
                  terms or conditions of any of the Finance Documents or of any
                  encumbrance, guarantee or other assurance held or to be held
                  as security for the payment, performance or discharge of any
                  of the Secured Obligations (any such encumbrance, guarantee or
                  other assurance together referred to in this clause 4 as
                  "RELATED SECURITY");

         4.4.2    any failure on the part of the Security Trustee (whether
                  intentional or not) to take, perfect or realise (whether in
                  full or in part) the security constituted or intended to be
                  constituted by this Debenture or any related security now or
                  in the future agreed to be taken in respect of any of the
                  Secured Obligations;

         4.4.3    any incapacity or change in the constitution of any party to
                  any of the Finance Documents or to any related security;

         4.4.4    any of the Secured Obligations or any obligation of any person
                  under any of the Finance Documents or under any related
                  security being or becoming invalid, illegal, void or
                  unenforceable for any reason;

         4.4.5    any time or other indulgence given or agreed to be given to,
                  or any composition or other arrangement made with or accepted
                  from, any Charging Company or any other Obligor in respect of
                  any of the Secured Obligations or any other person in respect
                  of any of its obligations under any related security;

         4.4.6    any waiver or release of any of the Secured Obligations or of
                  any obligation of any person under any related security or any
                  failure to realise, in full or in part, the value of, or any
                  discharge or exchange of the security constituted or intended
                  to be constituted by this Debenture or any related security;

         4.4.7    any Charging Company, any other Obligor or any other person
                  party to any of the Finance Documents or any related security
                  being wound up, going into administration or liquidation or
                  making any composition or arrangement with its creditors
                  (whether or not sanctioned by the court and whether or not the
                  Beneficiaries have agreed to such compromise or arrangement)
                  and so that where, by virtue of any compromise or arrangement,
                  any of the Secured Obligations are transferred to any other
                  person, the guarantee and indemnity of each Charging Company
                  contained in this Debenture shall take effect as if the term
                  "CHARGING COMPANY" included such other person; or

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         4.4.8    any other act, event or omission which, but for this
                  provision, would or might operate to offer any legal or
                  equitable defence for or impair or discharge any of the
                  Secured Obligations or any obligation of any person under any
                  related security or prejudicially affect the rights or
                  remedies of the Security Trustee under this Debenture or
                  otherwise conferred by law.

4.5      INDEPENDENT OBLIGATIONS

         The obligations of each Charging Company under this Debenture are
         additional to, and not in substitution for, any related security and
         the obligations assumed by such Charging Company under this Debenture
         may be enforced without first having recourse to any related security
         and without making or filing any claim or proof in a winding-up or
         dissolution of any other Charging Company or any other person party to
         any of the Finance Documents or any related security or first taking
         any steps or proceedings against any other Charging Company, any other
         Obligor or any such person.

4.6      NON-COMPETITION

         Until all of the Secured Obligations have been satisfied in full and
         none of the Beneficiaries are under any further obligation, actual or
         contingent, to any Obligor, no Charging Company shall:

         4.6.1    exercise any right of subrogation, indemnity, set-off or
                  counterclaim against any other Charging Company, any other
                  Obligor or any person party to any related security;

         4.6.2    claim payment of any other monies for the time being due to it
                  by any other Charging Company, any other Obligor or any person
                  party to any related security by reason of the performance by
                  it of its obligations under any of the Finance Documents or
                  under any related security or on any account whatsoever or
                  exercise any other right or remedy or enforce any encumbrance,
                  guarantee or other assurance which it has in respect thereof;

         4.6.3    claim any contribution from any other Charging Company, any
                  other Obligor or any other person party to any of the Finance
                  Documents or any related security;

         4.6.4    negotiate, assign, charge or otherwise dispose of any monies,
                  obligations or liabilities now or at any future time due or
                  owing to it by any other Charging Company, any other Obligor
                  or any person party to any related security or any
                  encumbrance, guarantee or other assurance in respect thereof;
                  or

         4.6.5    claim or prove in a winding-up or dissolution of any other
                  Charging Company, any other Obligor or any other person party
                  to any of the Finance Documents or any related security in
                  competition with the Security Trustee or any Beneficiary; and

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<PAGE>

         if any Charging Company receives any sums in contravention of this
         clause 4.6, it shall hold them on trust to be applied promptly in or
         towards the satisfaction of the Secured Obligations.

4.7      NO SECURITY

         Each Charging Company warrants that it has not taken, and agrees that
         it will not take, from any other Charging Company, any other Obligor or
         any person party to any related security, any encumbrance, guarantee or
         other assurance in respect of or in connection with its obligations
         under this Debenture. If any Charging Company takes any such
         encumbrance, guarantee or other assurance in contravention of this
         clause, it shall hold it on trust for the Security Trustee until such
         time as all of the Secured Obligations have been satisfied in full (and
         no Beneficiary is under any further obligation, actual or contingent,
         to any Obligor) and shall on request promptly deposit the same with
         and/or charge the same to the Security Trustee in such manner as the
         Security Trustee may require as security for the due and punctual
         payment, performance and discharge by such Charging Company of the
         Secured Obligations.

4.8      SUSPENSE ACCOUNT

         If any Charging Company is wound up, goes into liquidation or makes any
         composition or arrangement with its creditors, neither the existence of
         this Debenture nor any monies received or recovered by the Security
         Trustee under or pursuant to this Debenture shall impair the right of
         any Beneficiary to prove in such winding-up, liquidation, composition
         or arrangement for the total amount due from such Charging Company or
         any other Obligor. The Security Trustee may at any time and from time
         to time place and, for so long as it thinks fit, keep any monies
         received or recovered under this Debenture in a separate or suspense
         account, in such name as it thinks fit, without any intermediate
         obligation on its part to apply the same in or towards discharge of the
         Secured Obligations provided that if such monies are at any time
         sufficient to discharge the Secured Obligations in full they shall
         promptly be so applied.

5        ADDITIONAL CHARGING COMPANIES

5.1      REQUIREMENT

         The parties to this Debenture acknowledge that the Agent may require
         that any Group Company (which is not then a Charging Company) shall
         become a Charging Company, by giving to Ideal not less than 10 business
         days' notice, provided that any Group Company which accedes to the
         Agreement as an Additional Borrower shall, unless the Agent otherwise
         agrees, automatically be required to become a Charging Company without
         the need for the Agent to serve any such notice upon Ideal.

5.2      ACCESSION

         Any Group Company in respect of whom a notice has been served to Ideal
         (or, in the case of an acceding Additional Borrower, in respect of whom
         a notice is

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<PAGE>

         deemed to have been served) as contemplated by clause 5.1, shall be
         required to and shall become, a Charging Company:

         5.2.1    (other than in the case of a Group Company which accedes to
                  the Agreement as an Additional Borrower (in which case,
                  accession as a Charging Company shall, unless the Agent
                  otherwise agrees, be mandatory)), if the Lenders require the
                  addition of that Group Company as a Charging Company;

         5.2.2    upon Ideal delivering to the Security Trustee (through the
                  Agent) a duly completed and executed Supplemental Deed, which
                  Ideal shall be required to do not later than 30 days after
                  receipt (or deemed receipt) of a notice from the Agent
                  pursuant to clause 5.1;

         5.2.3    if no Default has occurred or is likely to occur as a result
                  of that Group Company becoming a Charging Company; and

         5.2.4    if the Agent has received all of the documents and other
                  evidence in relation to that Group Company specified in
                  Schedule 10 (which shall be required to be delivered to the
                  Agent within 60 days of receipt (or deemed receipt) by Ideal
                  of a notice under clause 5.1) and each is in form and
                  substance satisfactory to the Agent.

5.3      TIMING

         The Security Trustee (through the Agent) shall notify Ideal and each of
         the Beneficiaries promptly upon being satisfied that it has received
         all of the documents and other evidence specified in Schedule 10 and
         that such is in form and substance satisfactory to it, whereupon
         subject always to clauses 5.2.1 to 5.2.3 (inclusive), the relevant
         Group Company shall become a Charging Company.

5.4      IDEAL AS AGENT

         Each Charging Company shall be deemed to appoint Ideal as its agent for
         the purposes of the Finance Documents (including this Debenture) by its
         execution of a Supplemental Deed. The Security Trustee may rely on a
         document signed by Ideal as if it had been signed by each other
         Charging Company. Ideal may give a good receipt for any sum payable by
         any Finance Party to each other Charging Company. Any communication
         delivered to Ideal shall be deemed to have been delivered to each of
         the Charging Companies. Any communication made by Ideal to the Agent or
         the Security Trustee (through the Agent) shall, to the extent
         permissible by law, be deemed to have been made with the consent of
         each other Charging Company.

5.5      REPETITION OF REPRESENTATIONS

         Delivery of a Supplemental Deed constitutes confirmation by the
         relevant Charging Company that the representations and warranties set
         out in clause 14.1 of the Agreement which are required to be repeated
         pursuant to clause 14.3 of that Agreement are true and correct in all
         material respects in

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<PAGE>

         relation to that Charging Company as at the date of delivery of such
         Supplemental Deed as if made by reference to the facts and
         circumstances then existing.

6        REPRESENTATIONS AND WARRANTIES

         Each Charging Company represents and warrants to the Security Trustee
         that except as disclosed to and accepted by the Security Trustee in
         writing:

         6.1      BENEFICIAL OWNER: it is the sole, absolute and beneficial
                  owner of the Securities specified in Schedule 5 opposite its
                  name and of all other Investments owned by it as at the date
                  of this Debenture and it is the sole legal and beneficial
                  owner of its other Collateral free and clear from any
                  encumbrance other than (i) under or pursuant to the Agreement
                  or this Debenture; or (ii) a Permitted Encumbrance;

         6.2      NO DISPOSALS: except in accordance with the terms of the
                  Agreement, it has not disposed of any interest in, or granted
                  any rights (whether of pre-emption or otherwise) over, any of
                  its Collateral nor agreed to do any of the same or
                  subordinated or agreed to subordinate to the rights of any
                  other person in relation to debts owed to such person, or
                  released or agreed to release, any of its rights in or to any
                  of its Receivables;

         6.3      NO CLAIMS: none of the Collateral is the subject of any claim,
                  assertion, infringement, attack, right, action or other
                  restriction or arrangement of whatever nature which does or
                  may impinge upon the validity, enforceability or ownership of
                  the Collateral by such Charging Company or its utilisation by
                  such Charging Company and its Investments are and will be
                  fully paid up;

         6.4      STATUS: it is a limited liability company duly incorporated
                  and validly existing under the laws of its jurisdiction of
                  incorporation and has the power and authority to own its
                  assets and to conduct the business and operations which it
                  conducts or proposes to conduct;

         6.5      POWERS AND AUTHORITY: it has full power and authority to enter
                  into and perform this Debenture and has taken all necessary
                  corporate or other action to authorise the execution, delivery
                  and performance of this Debenture;

         6.6      AUTHORISATIONS: all action, conditions and things required by
                  all applicable laws and regulations to be taken, fulfilled and
                  done in order to (i) enable it lawfully to enter into,
                  exercise its rights under and perform and comply with its
                  obligations under this Debenture, (ii) ensure that those
                  obligations are valid, legally binding and enforceable and
                  (iii) make this Debenture admissible in evidence in England
                  and Wales and (if different) its jurisdiction of incorporation
                  and any other jurisdiction in which any of its assets may be
                  situated have been taken, fulfilled and done (or, in the case

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<PAGE>

                  of registrations, will be effected within any applicable
                  required period);

         6.7      NON-VIOLATION: the execution by it of this Debenture and the
                  exercise by it of its rights and performance of or compliance
                  with its obligations under this Debenture do not and will not
                  violate (i) any law or regulation to which it or any of its
                  assets is subject or (ii) to an extent or in a manner which
                  has or might reasonably be expected to have a material adverse
                  effect, any agreement to which it is a party or which is
                  binding on it or any of its assets; and

         6.8      OBLIGATIONS BINDING: subject to the Reservations its
                  obligations under this Debenture are valid, legally binding
                  and enforceable in accordance with their respective terms.

7        COVENANTS

7.1      COVENANTS RELATING TO THE COLLATERAL

         Each Charging Company covenants with the Security Trustee that it will
         comply with the terms of any prior mortgage or charge, lease, agreement
         for lease, tenancy or other binding contract comprised in and/or
         affecting any of the Collateral or under which such Charging Company
         derives its title or interest to any relevant item of Collateral
         (whilst any of the same remain in force) and, subject to the foregoing
         and so far as not inconsistent with the said terms and provided the
         Security Trustee agrees that the following provisions of this clause
         7.1 shall not impose obligations upon such Charging Company which are
         more extensive or more onerous than those comprised in any such
         document, such Charging Company shall:

         7.1.1    STATE OF REPAIR AND CONDITION: keep the Collateral in a good
                  and substantial state of repair and in good working order and
                  condition;

         7.1.2    ALTERATIONS: (save with the prior written consent of the
                  Security Trustee) procure that no material alteration or
                  addition is made to its Property, no Equipment or services are
                  removed from the same (except in the ordinary course of use,
                  repair, maintenance and/or improvement), no new buildings are
                  erected thereon and that nothing is done on its Property which
                  constitutes "DEVELOPMENT" as defined in the Town and Country
                  Planning Act 1990;

         7.1.3    THIRD PARTY INTERESTS: (save with the prior written consent of
                  the Security Trustee and where any priority arrangements exist
                  between the Security Trustee and any other person, also that
                  person) procure that no person is registered as proprietor of
                  any right or interest in respect of its Property and that no
                  overriding interest arises under the Land Registration Acts
                  1925-1988;

         7.1.4    FORFEITURE NOTICES: give immediate notice to the Security
                  Trustee if it receives any notice under section 146 of the Act
                  or any notice

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<PAGE>

                  of proceedings commenced against it for the forfeiture of any
                  lease comprised in its Property;

         7.1.5    DISPOSALS AND CONSENTS: (save as permitted under the terms of
                  the Agreement or with the prior written consent of the
                  Security Trustee acting on instructions received from the
                  Majority Lenders) not convey, transfer, assign, surrender or
                  otherwise dispose of any interest (or agree to do any of the
                  same) in its Property nor, save where such Charging Company is
                  not entitled at law or under the terms of any lease or leases
                  relating to its Property to refuse such consent or licence,
                  grant any consent or licence to assign, underlet or part with
                  possession or occupation of its Property or any part thereof
                  nor agree any rent review, accept any surrender or waive or
                  vary any of the terms of any lease or tenancy relating to its
                  Property from time to time (whether such lease is a lease
                  under which such Charging Company holds its Property or any
                  lease superior thereto or derivative therefrom) or any of the
                  terms of any guarantee, indemnity or other security in
                  relation thereto (whether proprietary or by way of personal
                  covenant only) nor, save as aforesaid, grant any licences for
                  alterations to or for any change of user of its Property or
                  any part thereof nor institute any proceedings for forfeiture
                  in relation to any such lease or tenancy or release any
                  lessee, tenant, guarantor, surety or provider of security from
                  any of its obligations thereunder or in relation thereto;

         7.1.6    CREATION OF OTHER INTERESTS: (save as permitted under the
                  terms of the Agreement or with the prior written consent of
                  the Security Trustee acting on instructions received from the
                  Majority Lenders) not create or permit to arise or subsist any
                  licence, interest or right to occupy in favour of, or share
                  possession of any of its Property with, any third party and
                  not exercise the powers of leasing and accepting surrenders of
                  leases contained in sections 99 and 100 of the Act (whether in
                  respect of any lease under which it holds its Property or any
                  lease superior thereto or derivative therefrom);

         7.1.7    PROPERTY ACQUISITIONS: notify the Security Trustee in writing
                  forthwith upon the acquisition by such Charging Company from
                  time to time of any freehold or leasehold property and,
                  without prejudice to the provisions of clause 12.1.1, on
                  demand made to it by the Security Trustee and at the cost of
                  such Charging Company, execute and deliver to the Security
                  Trustee a legal mortgage in favour of the Security Trustee of
                  any freehold and leasehold properties which become vested in
                  it after the date hereof and all fixtures thereon to secure
                  the payment and discharge of the Secured Obligations in such
                  form as the Security Trustee may reasonably require and, in
                  the case of any leasehold property where the consent of any
                  landlord needs to be obtained in order for such Charging
                  Company to execute any such legal mortgage, exercise all
                  reasonable endeavours to obtain such consent and comply with

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<PAGE>

                  its obligations under this clause 7.1.7 forthwith upon such
                  consent being obtained;

         7.1.8    HM LAND REGISTRY: in respect of any freehold or leasehold
                  property which is hereafter acquired by such Charging Company
                  the title to which is registered at HM Land Registry or the
                  title to which is required to be so registered, give HM Land
                  Registry written notice of this Debenture (including the terms
                  of clause 2.4.2) and procure that notice of this Debenture is
                  duly noted in the register to each such title;

         7.1.9    REGULATIONS: comply without delay with all orders,
                  regulations, notices and directives issued or made by any
                  competent authority, body or person (whether or not having the
                  force of law) which relate in any way to its Property or its
                  use and enjoyment;

         7.1.10   STATUTORY CHARGES: comply without delay with and pay all
                  charges imposed by all statutes, statutory instruments,
                  by-laws and other enactments relating to its Property and not
                  do or suffer to be done any act or thing nor make any omission
                  whereby its Property may become subject to any statutory
                  charge which is or may be or become binding upon the Security
                  Trustee or any person deriving title under or through the
                  Security Trustee and, in particular, will not enter into any
                  onerous or restrictive obligations affecting its Property
                  including, without limitation, planning agreements under the
                  Town and Country Planning Act 1990 or planning obligations
                  under the Planning and Compensation Act 1991;

         7.1.11   OUTGOINGS: punctually pay and indemnify the Security Trustee
                  and (as a separate covenant for the benefit of the relevant
                  Receiver) any Receiver, against all rents, rates, taxes,
                  duties, assessments and other outgoings (including any which
                  shall be wholly novel) from time to time payable in respect of
                  any of its Property by its owner or occupier, as the case may
                  be;

         7.1.12   COMPENSATION MONIES: hold on trust (and such Charging Company
                  hereby declares itself as trustee accordingly) the amount of
                  any statutory or other compensation (including the proceeds of
                  any defective title, restrictive covenant or other indemnity
                  policy or covenant relating to its Property, but excluding
                  insurance monies referred to in clause 9) arising for the
                  benefit of such Charging Company for interference with the use
                  and/or enjoyment of its Property or the curtailment of any
                  easement, right or benefit relating thereto and all other
                  compensation monies from time to time received by it in
                  respect of its Property without prejudice to any rights,
                  claims and/or obligations having priority to the obligations
                  imposed by this Debenture, to pay the same to the Security
                  Trustee in or towards payment and discharge of the Secured
                  Obligations in such order or manner as the Security Trustee
                  may in its absolute and unfettered discretion from time to
                  time conclusively determine;

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<PAGE>

         7.1.13   ORDERS: within seven days after the receipt by such Charging
                  Company of any order, notice, direction, designation,
                  resolution or proposal served or given by any public, local or
                  other authority with respect to its Property or the area in
                  which it is situated, give written notice thereof to the
                  Security Trustee and (within two business days after demand)
                  produce the same or a copy thereof to the Security Trustee
                  and, where appropriate, inform it of the steps taken or
                  proposed to be taken to comply with any of the same and, at
                  the request of the Security Trustee (but at the cost of such
                  Charging Company) make or join with the Security Trustee in
                  making such representations or objections against or in
                  respect of any matter contained therein as the Security
                  Trustee shall deem expedient;

         7.1.14   INSPECTION: permit the Security Trustee and its duly
                  authorised representatives at all reasonable times (but in
                  accordance with the provisions in that regard contained in any
                  lease of such Charging Company's Property) during business
                  hours and on not less than twenty-four hours' notice to such
                  Charging Company except in the case of emergency to enter into
                  and upon its Property to view the state and condition thereof;

         7.1.15   EQUIPMENT NOT TO BECOME A FIXTURE: not permit any Equipment to
                  become a fixture to real property or an accession to other
                  personal property, unless the Security Trustee has a valid,
                  perfected and first priority security interest in such real or
                  personal property;

         7.1.16   IDENTIFYING MARKS: it will not, without the Security Trustee's
                  prior written consent, alter or remove any identifying symbol
                  or number on the Equipment;

         7.1.17   INVESTIGATION OF TITLE: grant the Security Trustee or its
                  lawyers on request all such facilities within the power of
                  such Charging Company to enable the Security Trustee or such
                  lawyers to carry out investigations of title to such Charging
                  Company's Property and enquiries into matters in connection
                  therewith as may be carried out by a prudent mortgagee, such
                  investigations and enquiries to be at the expense of such
                  Charging Company.

7.2      OTHER COVENANTS

         Each Charging Company covenants with the Security Trustee that it will:

         7.2.1    INTELLECTUAL PROPERTY AND LICENCES: take all such steps as may
                  be necessary to protect, maintain and renew its Intellectual
                  Property and its Licences;

         7.2.2    OBLIGATIONS GENERALLY: comply with its obligations in the
                  Finance Documents and comply with every covenant (whether
                  restrictive or otherwise), obligation and provision on its
                  part to be complied with (and use its best endeavours to
                  procure compliance by each other

                                       17
<PAGE>

                  party thereto with every covenant, obligation and provision on
                  the part of each such other party to be complied with)
                  contained in any document affecting or constituting any of the
                  Collateral or its use and enjoyment and not enter into any
                  onerous or restrictive obligations affecting any of the
                  Collateral;

         7.2.3    DEEDS: save where any priority arrangements exist between the
                  Security Trustee and any other person and where the Security
                  Trustee otherwise permits, deposit with the Security Trustee
                  and permit the Security Trustee to hold and retain all deeds
                  and documents relating to or constituting any of the
                  Collateral and hold on trust for the Security Trustee (as
                  trustee for and on behalf of the Beneficiaries) any such deeds
                  and documents not for the time being so deposited (and such
                  Charging Company hereby declares itself as trustee
                  accordingly);

         7.2.4    REGISTRATIONS: make all such filings and registrations and
                  take all such other steps as may be necessary in connection
                  with the creation, perfection or protection of the security
                  constituted or intended to be constituted by this Debenture
                  and pay all application, registration, renewal and other fees
                  necessary for effecting, protecting, maintaining or renewing
                  registrations in respect of any of the Collateral;

         7.2.5    VALUE OF THE SECURITY: not do or cause or permit to be done
                  anything which may in any way depreciate, jeopardise or
                  otherwise prejudice the value of the security constituted or
                  intended to be constituted by this Debenture;

         7.2.6    DEALINGS WITH THE COLLATERAL: save as permitted in the
                  Agreement, not amend, vary, supplement, replace, release,
                  novate, waive, surrender, determine, discharge, rescind or
                  avoid any of the Collateral nor compound, grant any time or
                  other indulgence or otherwise deal with any of the Collateral
                  nor purport to do so (save, in the case of assets of such
                  Charging Company charged by this Debenture by way of floating
                  charge only, in the ordinary course of its operations).

7.3      INFORMATION COVENANTS

7.3.1    GENERAL: The Security Trustee (on behalf of, and for disclosure to the
         Beneficiaries) may at any time seek from any person having a
         professional or trading relationship with any Charging Company such
         information about such Charging Company and its affairs as the Security
         Trustee may think fit. Each Charging Company authorises and requests
         any such person to provide any such information to the Security Trustee
         and agrees to provide such further authority for this purpose as the
         Security Trustee may require from time to time.

7.3.2    INVESTIGATIONS: If the Security Trustee so requests at any time (any
         such request, whilst no Default has occurred and is continuing, to be
         based on the

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<PAGE>

         Security Trustee's reasonable belief that any Charging Company may be
         unable to perform its obligations under the Finance Documents), any
         Charging Company so requested shall (at such Charging Company's
         expense) appoint (failing which the Security Trustee may so appoint)
         accountants nominated by the Security Trustee to investigate the
         financial affairs of each such Charging Company and any Group Company
         of each such Charging Company or company of which each such Charging
         Company is a Group Company.

8        COLLECTION OF RECEIVABLES AND RELATED MATTERS

         Each Charging Company covenants with the Security Trustee that it will:

         8.1      COLLECTION: get in and realise its Receivables in the ordinary
                  course of its business as agent for and on behalf of the
                  Security Trustee and not release, exchange, compound, set off,
                  grant time or indulgence, subordinate its rights in respect of
                  any of its Receivables to the rights of any other person in
                  relation to debts owed to such person or otherwise deal with
                  its Receivables in favour of any person (nor, in each such
                  case, purport to do so) save in the ordinary course of its
                  business and, in any event, not sell, assign, factor, discount
                  or otherwise charge its Receivables in favour of any person,
                  nor purport to do so;

         8.2      PERFECTION OF ASSIGNMENT OF RECEIVABLES: at any time after the
                  occurrence of an Event of Default which is continuing and at
                  any other time when it is requested to do so by the Security
                  Trustee and without prejudice to the generality of clause 12.1
                  take such steps as the Security Trustee may require to perfect
                  the assignment of its Receivables and each Receivables Account
                  assigned pursuant to clause 2.3 including, without prejudice
                  to the generality of the foregoing and without prejudice to
                  the Security Trustee's right to do so, giving notice of any
                  such assignment to any of the persons (as the Security Trustee
                  shall specify) from whom its Receivables are due, owing or
                  incurred by delivery to each such person of a Notice of
                  Assignment duly executed by such Charging Company and use all
                  reasonable endeavours to procure that each such person
                  delivers to the Security Trustee (if the Security Trustee so
                  requires) a written acknowledgement substantially in the form
                  of the acknowledgement and agreement attached to the Notice of
                  Assignment;

         8.3      DESIGNATED ACCOUNTS: unless and until the Security Trustee
                  otherwise agrees in writing, pay or procure the payment of the
                  proceeds of its Receivables into a Receivables Account and so
                  that such Charging Company hereby declares itself trustee of
                  the proceeds of any such Receivables not from time to time so
                  paid to hold the same upon trust for the Security Trustee to
                  pay the same to the Security Trustee in or towards payment and
                  discharge of the Secured Obligations in such order and manner
                  as the Security Trustee may in its absolute and unfettered
                  discretion from time to time conclusively determine and not
                  make any withdrawal or direct

                                       19
<PAGE>

                  or permit any payment to be made from any Receivables Account
                  save as permitted under the Agreement and this Debenture. All
                  proceeds received by a Charging Company or by the Security
                  Trustee directly or paid into a Receivables Account shall be
                  the subject of the security constituted by this Debenture and
                  shall be subject to the sole control of the Security Trustee
                  and withdrawals by a Charging Company from a Receivables
                  Account shall not be permitted without the prior written
                  consent of the Security Trustee. The Security Trustee shall be
                  entitled, in its sole discretion, to permit the withdrawal by
                  each Charging Company of any and all credit balances from time
                  to time standing to the credit of any Receivables Account and
                  the Charging Companies shall use such monies only for their
                  corporate and business purposes in the ordinary course of
                  trading and, if the Security Trustee permits such withdrawals,
                  the Security Trustee agrees to issue to the bank at which such
                  Receivables Account may be held (if not the Security Trustee),
                  any directions or instructions reasonably necessary to permit
                  such withdrawals to be effected. The Security Trustee shall
                  not be obliged to permit any withdrawals or to issue any such
                  directions in accordance with this clause 8.3. The Charging
                  Companies and the Security Trustee acknowledge and agree that
                  unless the Security Trustee otherwise requires or directs,
                  prior to the occurrence of an Event of Default which is
                  continuing the credit balance standing to the credit of the
                  Receivables Accounts at the end of each business day shall
                  automatically be transferred to the Agent for application in
                  or towards the discharge of the then Outstandings, such
                  transfer to occur on the immediately following business day.
                  The relevant Charging Company will give an instruction to that
                  effect to the relevant bank at which such Receivables Account
                  is held.

         8.4      ACCOUNT NOTICE: promptly upon opening a Receivables Account,
                  deliver an Account Notice duly executed by such Charging
                  Company to the entity with which the relevant account is
                  maintained and use reasonable endeavours procure that such
                  entity delivers to the Security Trustee a written
                  acknowledgement substantially in the form of the
                  acknowledgement and agreement attached to the Account Notice;
                  and

         8.5      SALES OF INVENTORY FOR CASH: if sales of Inventory are made or
                  services are rendered for cash, the Charging Company shall
                  immediately pay into a Receivables Account denominated in the
                  currency of such Receivables the identical cheques, cash or
                  other forms of payment which it receives.

9        INSURANCE

9.1      INSURANCE COVENANTS

         Each Charging Company covenants with the Security Trustee that it will
         at its own expense (failing which the Security Trustee may elect, and
         is hereby

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<PAGE>

         authorised, to procure such compliance), comply with (or procure
         compliance with) all obligations as to insurance imposed by the terms
         of any prior mortgage or charge, lease, agreement for lease, tenancy or
         other binding contract comprised in and/or affecting any of the
         Property or under which such Charging Company derives its title or
         interest to any relevant Collateral and, subject to the foregoing and
         so far as not inconsistent with the said terms, such Charging Company
         shall:

         9.1.1    insure and keep insured its Property and all Equipment and
                  Inventory forming part of the Collateral with insurers
                  previously approved by the Security Trustee in writing against
                  loss or damage by fire, explosion, storm, tempest, lightning,
                  earthquake, impact, aircraft and articles dropped therefrom,
                  riot, civil commotion, malicious damage, bursting and/or
                  over-flowing pipes and such other risks and contingencies as
                  the Security Trustee shall from time to time reasonably
                  require;

         9.1.2    maintain such other insurances as are normally maintained by
                  prudent companies carrying on similar business (including
                  public liability insurance, employees' liability insurance and
                  credit insurance);

         9.1.3    effect all insurances pursuant to clause 9.1.1 with the
                  interest of the Security Trustee as loss payee endorsed on the
                  relevant Policy in which it is interested and, if the Security
                  Trustee so requires, with the Security Trustee named as
                  co-insured;

         9.1.4    punctually pay all premiums and other sums payable under or in
                  relation to each Policy in which it is interested and
                  promptly, if the Security Trustee so requests, produce
                  evidence satisfactory to the Security Trustee of such
                  payments;

         9.1.5    not make, do, consent or agree to any act or omission which
                  would or might render any Policy in which it is interested
                  invalid, void, voidable or unenforceable or render any
                  proceeds of any such Policy irrecoverable whether in whole or
                  in part, and not alter the terms of any such Policy (without
                  the prior written consent of the Security Trustee) or allow
                  any such Policy to lapse; and

         9.1.6    without prejudice to the generality of the provisions of
                  clause 7.2.3 and save where any priority arrangements exist
                  between the Security Trustee and any other person and where
                  the Security Trustee otherwise permits, deposit with the
                  Security Trustee and permit the Security Trustee to hold and
                  retain all Policies in which it is interested and to hold on
                  trust for the Security Trustee any such Policies not for the
                  time being so deposited (and such Charging Company hereby
                  declares itself as trustee accordingly).

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9.2      RENEWAL OF INSURANCE

         If default shall be made by a Charging Company in complying with clause
         9.1, the Security Trustee may, but shall not be required to, effect or
         renew any such insurance as is mentioned in that clause either in its
         own name or in its name and that of the relevant Charging Company or in
         the name of the relevant Charging Company with an endorsement of the
         Security Trustee's interest. All monies expended by the Security
         Trustee in so effecting or renewing any such insurance shall be
         reimbursed by the relevant Charging Company to the Security Trustee on
         demand and shall carry interest from the date of payment by the
         Security Trustee until so reimbursed at the rate and otherwise as
         mentioned in clause 3.2

9.3      DECLARATION OF TRUST

         Each Charging Company hereby declares itself as trustee of all monies
         not paid directly to the Security Trustee by the insurers in relation
         to any Policy in which it is interested whether or not effected or
         maintained pursuant to the obligations of such Charging Company under
         this clause 9, to hold the same upon trust to be applied in the same
         manner in which the same would have been applied had payment been made
         to the Security Trustee.

9.4      EVENT OF DEFAULT

         On the occurrence of an Event of Default which is continuing, any
         monies paid or payable to the Security Trustee by the insurers in
         relation to any Policy may, on the written instruction of the Majority
         Lenders, be applied in or towards payment and discharge of the Secured
         Obligations.

10       THE INVESTMENTS

10.1     CHARGING COMPANY'S COVENANTS

         Each Charging Company covenants with the Security Trustee that it will:

         10.1.1   DEPOSIT OF DOCUMENTS OF TITLE: without prejudice to the
                  generality of the provisions of clause 7.2.3, forthwith upon
                  execution of this Debenture, and as soon as practicable
                  following its acquisition of any Investment, deposit or
                  procure the deposit with the Security Trustee and permit the
                  Security Trustee to hold and retain all stock and share
                  certificates and documents of title relating to each of its
                  Investments at such time;

         10.1.2   EXECUTION OF TRANSFERS: without prejudice to the generality of
                  the provisions of clause 12.1, forthwith upon execution of
                  this Debenture (in relation to the Securities details of which
                  appear in Schedule 5 opposite its name) and as soon as
                  practicable following its acquisition of any Investment and at
                  any other time upon request by the Security Trustee promptly
                  deliver to the Security Trustee such instruments of transfer
                  (with the name of the transferee, the consideration and the
                  date left blank but otherwise

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<PAGE>

                  duly completed and executed) and other documents as the
                  Security Trustee may from time to time require for perfecting
                  its title to such Investments (duly executed by or signed on
                  behalf of the registered holder) or for vesting or enabling it
                  to vest the same in itself or any of its nominees or in any
                  purchaser provided that such a transfer may only be effected
                  by the Security Trustee following the occurrence of an Event
                  of Default which is continuing and, in the event of any such
                  transfer being effected, neither the Security Trustee nor any
                  of its nominees shall be liable for any loss occasioned by any
                  exercise or non-exercise of rights attached to such
                  Investments or by any failure to report to such Charging
                  Company any notice or other communication received in respect
                  of such Investments;

         10.1.3   NO RESTRICTIONS ON TRANSFER: ensure that its Investments are
                  at all times free from any restriction on transfer (whether
                  under any relevant constitutive documents or otherwise) by the
                  Security Trustee or its nominees to perfect or enforce the
                  security constituted or intended to be constituted by this
                  Debenture and procure that the board of directors of any
                  company in which any of its Investments are held approves any
                  transfer of any of its Investments desired to be made by the
                  Security Trustee in the exercise of the rights, powers and
                  remedies conferred upon it by this Debenture or by law;

         10.1.4   DERIVATIVE ASSETS: upon the accrual, offer or issue of any
                  Derivative Assets deriving from its Investments (apart from
                  dividends, interest payments or other payments of money, as
                  the case may be, forming part of its Investments) deliver to
                  the Security Trustee (or procure the delivery to the Security
                  Trustee of) all such Derivative Assets and the certificates
                  and documents of title to or representing the same together
                  with each of the documents required to be duly executed,
                  completed and delivered under and in accordance with the terms
                  of clause 10.1.2;

         10.1.5   CALLS: duly and promptly pay or procure the payment of all
                  calls, instalments and other payments in respect of any of its
                  Investments provided that if it defaults in making any such
                  payment, the Security Trustee may (but shall not be obliged
                  to) pay such amounts on behalf of such Charging Company and
                  shall be reimbursed by such Charging Company forthwith on
                  demand;

         10.1.6   COMMUNICATIONS: notify the Security Trustee of the contents of
                  any communication or document received by it in relation to
                  any of its Investments;

         10.1.7   EXERCISE OF VOTING RIGHTS AND DIVIDEND ENTITLEMENT BY EACH
                  CHARGING COMPANY: at all times prior to the occurrence of an
                  Event of Default which is continuing:

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<PAGE>

                  (a)      it shall be entitled to exercise any voting rights
                           attaching to its Investments as it sees fit but in a
                           manner which does not prejudice and is not
                           inconsistent with the security constituted by this
                           Debenture; and

                  (b)      it shall be entitled to receive any and all dividend
                           and interest payments and other distributions
                           accruing on or deriving from such Investments;

         10.1.8   VARIATION OF RIGHTS: not, without the prior written consent of
                  the Security Trustee, by the exercise of any voting rights or
                  otherwise, permit or agree to any proposed compromise, capital
                  reorganisation, conversion, exchange, repayment or takeover
                  offer affecting or in respect of any of its Investments or to
                  any variation of the rights attaching to or conferred by any
                  of its Investments or to any conversion of any of its
                  Investments into an uncertificated security.

10.2     EXERCISE OF VOTING RIGHTS BY SECURITY TRUSTEE AND DIVIDEND ENTITLEMENT

         If any of the Investments of any Charging Company are transferred into
         the name of the Security Trustee or any nominee of the Security
         Trustee, then:

         10.2.1   the Security Trustee shall use all reasonable endeavours to
                  procure that all voting rights attached to such Investments
                  are exercised as such Charging Company shall direct provided
                  that the Security Trustee shall not be obliged to comply with
                  such Charging Company's directions if, as a result, such
                  voting rights would be exercised in any manner which (a) is
                  inconsistent with the security constituted or intended to be
                  constituted by this Debenture or (b) is in breach of any
                  provision of any of the Finance Documents or (c) would or
                  might result in permission or agreement being given to any
                  compromise, capital reorganisation, conversion, exchange,
                  repayment or takeover offer affecting or in respect of any of
                  such Investments or to any variation of the rights attaching
                  to or conferred by any of such Investments; and

         10.2.2   any and all dividend and interest payments and other
                  distributions accruing on or deriving from such Investments
                  shall be paid to such Charging Company.

10.3     DIVIDENDS AND VOTING RIGHTS FOLLOWING ENFORCEMENT

         On or at any time after the Security Trustee becomes entitled to
         appoint any person or persons to be a Receiver of any of the
         Collateral, the Security Trustee (or any of its nominee(s)) or any
         Receiver shall, on notice in writing to any of the Charging Companies,
         have the right (a) to exercise (or direct the exercise of) any and all
         voting rights attaching to any of the Investments of such Charging
         Company in such manner as any such person so acting shall in its sole
         discretion think fit and (b) to receive, retain and give a good
         discharge for any and all payments falling due in respect of dividends
         or other

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<PAGE>

         distributions of profits or capital on or arising from any of such
         Investments notwithstanding that they may have accrued in respect of a
         period prior to the time at which the security constituted by this
         Debenture shall have become enforceable.

11       NEGATIVE PLEDGE

         Each Charging Company agrees that it will not, save as permitted under
         the Agreement or this Debenture:

         11.1     ENCUMBRANCES: save in respect of which any priority
                  arrangements exist between the Security Trustee and any other
                  person, create or permit to subsist any encumbrance on or over
                  the Collateral or any interest therein ranking in priority to,
                  pari passu with or subsequent to the security constituted or
                  intended to be constituted by this Debenture; or

         11.2     DISPOSALS: sell, transfer, assign, lease out, lend or
                  otherwise dispose of (whether outright, by a sale and
                  repurchase or sale and leaseback arrangement or otherwise), or
                  grant any rights (whether of pre-emption or otherwise) over,
                  the Collateral or any interest therein nor enter into any
                  agreement to do any of the same (save in the ordinary course
                  of its operations in the case of assets of such Charging
                  Company charged by this Debenture by way of floating charge
                  only).

12       FURTHER ASSURANCE AND PERFECTION OF SECURITY

12.1     FURTHER ASSURANCE

12.1.1   Each Charging Company shall forthwith deliver to the Security Trustee
         or procure the delivery to the Security Trustee of Notices of
         Assignment duly executed by such Charging Company in respect of the
         Policies listed in Schedule 3 and set opposite its name and such
         further Policies as the Security Trustee may direct and shall use
         reasonable endeavours procure that each of the insurers liable on such
         Policies delivers to the Security Trustee a written acknowledgement
         substantially in the form of the acknowledgement and agreement attached
         to each such Notice of Assignment.

12.1.2   Each Charging Company shall execute in favour of the Security Trustee,
         or as the Security Trustee may otherwise direct, such further
         assignments, transfers, mortgages, charges or other encumbrances as in
         each such case the Security Trustee shall stipulate over the Collateral
         for the purpose of more effectively providing security for the payment,
         performance and discharge of the Secured Obligations or of enabling the
         Security Trustee to vest any of the Collateral in the Security Trustee
         or its nominee(s).

12.1.3   The assignments, transfers, mortgages, charges or other encumbrances
         referred to in clause 12.1.2 shall be in such form and contain such
         provisions as the Security Trustee requires. The obligations of each
         Charging Company under clause 12.1.2 and this clause 12.1.3 shall be in
         addition to and not in

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<PAGE>

         substitution for the covenants for further assurance deemed to be
         included in this Debenture by virtue of section 1(2) of the Law of
         Property (Miscellaneous Provisions) Act 1994.

12.1.4   Each Charging Company shall, whenever requested by the Security Trustee
         and at such Charging Company's cost, affix to such of the Collateral or
         endorse or cause to be endorsed on such documents as the Security
         Trustee shall in each case stipulate, labels, signs or memoranda in
         such form as the Security Trustee shall require (but not so as to
         impede or restrict the normal use or operation thereof) referring or
         drawing attention to the security constituted or intended to be
         constituted by this Debenture.

12.2     CONVERSION OF FLOATING CHARGE

12.2.1   Without prejudice to the security constituted or intended to be
         constituted by this Debenture, the Security Trustee may at any time by
         notice in writing to any Charging Company convert the floating charge
         created by such Charging Company pursuant to clause 2.2 with immediate
         effect into a specific charge as regards any of the Collateral of such
         Charging Company specified in the notice:

         (a)      at any time after the Security Trustee becomes entitled to
                  appoint a Receiver notwithstanding it may elect not to do so;
                  or

         (b)      if the Security Trustee considers such Collateral to be in
                  danger of seizure, distress, attachment, execution, diligence
                  or other legal process or to be otherwise in jeopardy.

12.2.2   The floating charge created by each Charging Company pursuant to clause
         2.2 shall (in addition to the circumstances in which the same will
         occur under general law) automatically be converted into a fixed charge
         in respect of the Collateral subject to such floating charge:

         (a)      upon the presentation of a petition for an administration
                  order to be made in relation to any Charging Company;

         (b)      if any Charging Company fails to comply with its obligations
                  under clause 11;

         (c)      upon any person taking any step with a view to levying
                  distress against any of the Collateral of any Charging Company
                  or any judgement creditor taking any step with a view to
                  enforcing against any of the Collateral of any Charging
                  Company a judgement obtained against such Charging Company
                  whether by a warrant of execution, writ of fieri facias,
                  garnishee order, charging order or otherwise; or

         (d)      if any other floating charge created by any Charging Company
                  crystallises for any reason.

12.2.3   Service by the Security Trustee of a notice pursuant to clause 12.2.1
         in relation to any class of the Collateral of any Charging Company
         shall not be construed

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<PAGE>

         as a waiver or abandonment of the Security Trustee's right to serve
         similar notices in respect of any other class of the Collateral of that
         or any other Charging Company or its other rights under this Debenture.

12.3     SECURITY IN JEOPARDY

         If at any time it shall appear to the Security Trustee (acting in good
         faith) that any of the Collateral of any Charging Company shall be in
         imminent danger of seizure, distress, attachment, execution, diligence
         or other legal process, or that the security constituted or intended to
         be constituted by this Debenture over such Collateral shall for any
         other reason be in jeopardy, the Security Trustee shall be entitled
         without notice to such Charging Company to take possession of and hold
         the same or to appoint a Receiver of such Collateral. The provisions of
         clause 13 shall govern the appointment, removal and powers of a
         Receiver appointed under this clause 12.3 as if he were a Receiver
         appointed under clause 12.

13       RECEIVER

13.1     APPOINTMENT OF RECEIVER

         If:

         13.1.1   any Charging Company requests that a Receiver be appointed; or

         13.1.2   the Security Trustee becomes aware of the intention of any
                  party to petition for an administration order to be made in
                  relation to any Charging Company or any such petition is
                  presented; or

         13.1.3   any Charging Company fails duly and punctually to perform or
                  discharge any of the Secured Obligations or any Event of
                  Default occurs and is continuing under the Agreement,

         then at any time or times thereafter the Security Trustee may by
         writing appoint any person or persons to be a Receiver of any of the
         Collateral of any of the Charging Companies and of the rights of the
         Security Trustee contained in this Debenture in relation thereto.

13.2     JOINT RECEIVERS

         Where two or more persons are appointed to be a Receiver, the Security
         Trustee may in the appointment declare whether any act required or
         authorised to be done by a Receiver is to be done by any one or more of
         them for the time being holding office and, subject thereto, any such
         persons may act jointly and/or severally.

13.3     GENERAL POWERS OF RECEIVER

         Any Receiver of any of the Collateral of any Charging Company shall
         (subject to any limitations or restrictions which the Security Trustee
         may in its absolute and unfettered discretion incorporate in the deed
         or other instrument appointing him but notwithstanding the liquidation,
         winding-up, or dissolution

                                       27
<PAGE>

         at any time of such Charging Company and whether or not any such
         Receiver shall be an administrative receiver) have:

         13.3.1   all the powers conferred from time to time on receivers
                  (whether administrative receivers or otherwise) by law and/or
                  statute (including the Act and the Insolvency Act 1986);

         13.3.2   power on behalf and at the cost of such Charging Company and
                  whether in the name of such Charging Company or otherwise to
                  exercise all the powers and rights of an absolute owner and do
                  or omit to do anything which such Charging Company could do or
                  omit to do or could have done or omitted to do but for any
                  incapacity or the appointment of a liquidator, administrator
                  or like officer in relation to such Charging Company or its
                  Collateral; and

         13.3.3   power to use the name of such Charging Company in connection
                  with the exercise of any of such powers and, without prejudice
                  to the generality of the provisions of clauses 13.3.1 and
                  13.3.2, on behalf and at the cost of, and in the name of such
                  Charging Company or otherwise, the powers referred to in
                  clause 13.4.

13.4     SPECIFIC POWERS OF RECEIVER

         Any Receiver shall, in relation to any Charging Company and the
         Collateral of such Charging Company in respect of which it is
         appointed, have the power to:

         13.4.1   carry on, manage, develop, reconstruct, amalgamate or
                  diversify (or concur in managing, developing, reconstructing,
                  amalgamating or diversifying) the business of such Charging
                  Company or any part thereof or concur in so doing;

         13.4.2   purchase, acquire, accept a lease or licence of and/or any
                  other interest in and/or develop or improve properties or
                  other assets without being responsible for loss or damage;

         13.4.3   raise or borrow any money (including, without limitation,
                  money for the completion, with or without modification, of any
                  building on the Property of such Charging Company in the
                  course of construction and any development or project in which
                  such Charging Company was engaged) from, or incur any other
                  liability to, the Security Trustee and/or others on such terms
                  as he may think fit and secure the payment of any such money
                  and liabilities, whether or not in priority to the Secured
                  Obligations, in such manner as he shall think fit and with or
                  without any encumbrance on or affecting any of such Collateral
                  and enter into any form of hedging arrangement, whether in
                  relation to any such borrowing or any Secured Obligation or
                  otherwise, on such terms as he shall think fit;

                                       28
<PAGE>

         13.4.4   without the restrictions imposed by section 103 of the Act, or
                  the need to observe any of the provisions of sections 99 and
                  100 of the Act, sell by public auction or private contract,
                  convey, transfer, assign, let, surrender or accept surrenders,
                  grant licences or otherwise dispose of or deal with such
                  Collateral or concur in so doing in such manner, for such
                  consideration and generally on such terms and conditions as he
                  may think fit;

         13.4.5   sever plant, machinery and other fixtures and sell them
                  separately from that part of any Property of such Charging
                  Company containing them and pending any such sale use the same
                  without cost to the Receiver and without any liability to such
                  Charging Company in connection with the use thereof;

         13.4.6   promote the formation of companies with a view to the same
                  purchasing, leasing, licensing or otherwise acquiring
                  interests in such Collateral, or otherwise arrange for such
                  companies to trade or cease to trade and to purchase, lease,
                  license or otherwise acquire any of such Collateral on such
                  terms and conditions whether or not including payment by
                  instalments secured or unsecured as he may think fit;

         13.4.7   make and effect such repairs, renewals and improvements to
                  such Collateral as he may think fit and maintain, renew, take
                  out or increase insurances;

         13.4.8   appoint managers, agents, officers and employees for any of
                  the purposes set out in clauses 13.3 and 13.4 or to guard or
                  protect such Collateral at such salaries and commissions and
                  for such periods and on such terms as he may determine and may
                  dismiss the same;

         13.4.9   make calls, conditionally or unconditionally, on the members
                  of such Charging Company in respect of uncalled capital;

         13.4.10  exercise for and on behalf of such Charging Company all the
                  powers and provisions conferred on a landlord or a tenant by
                  the Landlord and Tenant Acts 1927-1988 (inclusive) or any
                  other legislation from time to time in force relating to rents
                  in respect of any part of the Property of such Charging
                  Company but without any obligation to exercise any of such
                  powers and without any liability in respect of powers so
                  exercised or omitted to be exercised; and

         13.4.11  sign any document, execute any deed and do all such other acts
                  and things, whether in the name of such Charging Company or
                  otherwise, in relation to, or as may be considered by him to
                  be incidental or conducive to, any of the matters or powers
                  aforesaid or to the protection and/or realisation of the
                  security constituted or intended to be constituted by this
                  Debenture.

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<PAGE>

13.5     RECEIVER AS AGENT

         Any Receiver of any of the Collateral of any Charging Company shall, so
         far as the law allows, be deemed to be the agent of such Charging
         Company for all purposes and such Charging Company shall be solely
         responsible for his acts, defaults, contracts, engagements, omissions,
         losses, liabilities, misconduct and remuneration (save where caused by
         gross negligence or wilful misconduct) and neither the Security Trustee
         nor any Beneficiary shall be under any liability whatsoever in such
         regard.

13.6     REMUNERATION

         The remuneration of the Receiver shall be such sum or rate payable in
         such manner as may be agreed between him and the Security Trustee at or
         at any time after his appointment without being limited to the maximum
         rate specified in section 109(6) of the Act.

13.7     REMOVAL

         The Security Trustee may from time to time remove any Receiver
         appointed by it and, in the case of an administrative receiver, may at
         any time and from time to time apply to the court for removal of any
         administrative receiver appointed by it and may, whenever it may deem
         it expedient, appoint or as the case may be apply to the court for the
         appointment of another qualified person as a new Receiver in place of
         any Receiver whose appointment may for any reason have terminated.

13.8     APPLICATION OF PROCEEDS

         Any Receiver shall (so far as the law allows) apply all monies received
         by him in the following order:

         13.8.1   in the payment of any costs, charges and expenses of or
                  incidental to the Receiver's appointment, the payment of his
                  remuneration and the payment and discharge of any other
                  Expenses incurred by or on behalf of the Receiver;

         13.8.2   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; and

         13.8.3   in or towards payment and discharge of the balance of the
                  Secured Obligations in such order and manner as the Security
                  Trustee may in its absolute and unfettered discretion from
                  time to time conclusively determine; and

         13.8.4   in payment of the surplus (if any) to the Charging Company or
                  other person entitled to it.

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<PAGE>

14       VARIATION AND EXTENSION OF STATUTORY POWERS

14.1     STATUTORY POWERS GENERALLY

         The powers conferred on mortgagees or receivers (including
         administrative receivers) by the Act and the Insolvency Act 1986 shall
         apply to this Debenture except insofar as they are expressly or
         impliedly excluded and where there is any ambiguity or conflict between
         the powers contained in the Act and/or the Insolvency Act 1986 and
         those contained in this Debenture the terms of this Debenture shall (so
         far as the law allows) prevail.

14.2     SECURITY TRUSTEE'S POWERS

         The restrictions contained in sections 93 and 103 of the Act shall not
         apply to the security constituted or intended to be constituted by this
         Debenture and the powers contained in section 101 of the Act shall be
         immediately exercisable at any time after the Security Trustee becomes
         entitled to appoint a Receiver pursuant to clause 13.1 and shall be
         varied and extended so that the Security Trustee shall at any such time
         be entitled (without prejudice to any other rights or powers of a
         mortgagee) to exercise any of the powers conferred upon a Receiver by
         clause 13 and shall have the benefit of all the provisions of clause
         13.

14.3     MORTGAGEE IN POSSESSION

         It is agreed and declared that no exercise (whether by the Security
         Trustee or any Receiver) of any of the powers contained in this
         Debenture shall render the Security Trustee or any Receiver liable as
         mortgagee in possession in respect of any of the Collateral of any
         Charging Company or liable for any loss or damage (including, without
         limitation, loss upon realisation of any of the Collateral) save where
         caused by gross negligence or wilful default on the part of the
         Security Trustee or any Receiver.

14.4     PROTECTION FOR THIRD PARTIES

         No third party dealing with the Security Trustee or any Receiver or its
         or his agents shall, whether before, on or after any contract,
         disposition or assurance in relation to any Collateral in such third
         party's favour be concerned to enquire whether the Secured Obligations
         have become payable or whether any power which the Security Trustee or
         any Receiver purports to exercise has become exercisable or whether any
         of the Secured Obligations remain undischarged or to see to the
         application of any money paid to the Security Trustee or any Receiver,
         nor shall any such third party lending any money to a Receiver be
         concerned to enquire as to the propriety or purpose of the exercise of
         such power or as to the application of any money so borrowed.

14.5     DELEGATION

         The Security Trustee or any Receiver may at any time delegate by power
         of attorney or in any other manner to any person or persons any of the
         powers (including the power of attorney contained in clause 16.1),
         authorities and

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<PAGE>

         discretions which are for the time being exercisable by the Security
         Trustee or any Receiver under this Debenture in relation to the
         Collateral of any Charging Company. Any such delegation may be made
         upon such terms (including power to sub-delegate) and subject to such
         regulations as the Security Trustee or Receiver may think fit. Neither
         the Security Trustee nor any Receiver shall, save for their wilful
         default or gross negligence, be in any way liable or responsible to any
         Charging Company for any loss or damage arising from any act, default,
         omission or misconduct on the part of any such delegate or
         sub-delegate.

14.6     SUSPENSE ACCOUNTS

         The Security Trustee and any Receiver may place and keep (for such time
         as it or he shall consider prudent) any money received, recovered or
         realised from any Charging Company or in relation to any Collateral of
         such Charging Company pursuant to this Debenture in a separate suspense
         account (to the credit of either such Charging Company or the Security
         Trustee as the Security Trustee shall think fit) without any obligation
         to apply the same or any part thereof in or towards the discharge of
         the Secured Obligations provided that if such monies are at any time
         sufficient to discharge the Secured Obligations in full, they shall be
         promptly so applied.

14.7     SECURITY TRUSTEE'S POWER TO REMEDY BREACHES

         If at any time any Charging Company fails to perform any of the
         covenants contained in this Debenture it shall be lawful for the
         Security Trustee, but the Security Trustee shall have no obligation, to
         take such action on behalf of such Charging Company (including, without
         limitation, the payment of money) as may in the Security Trustee's
         reasonable opinion be required to ensure that such covenants are
         performed. Any losses, costs, charges and expenses incurred by the
         Security Trustee in taking such action shall be reimbursed by such
         Charging Company on demand.

15       CONTINUING SECURITY

15.1     SUBSEQUENT CHARGES

15.1.1   If the Security Trustee receives notice (whether actual or
         constructive) of any subsequent encumbrance or other interest affecting
         any of the Collateral of any Charging Company, or of any other matter
         which may cause the security constituted or intended to be constituted
         by this Debenture to cease to be a continuing security the Security
         Trustee, the Agent and the Lenders may open a new account or accounts
         for such Charging Company.

15.1.2   If any of the Security Trustee, the Agent and the Lenders does not open
         a new account for a Charging Company pursuant to clause 15.1.1 then, it
         shall nevertheless be treated as if it had done so at the time when it
         received such notice and as from that time all payments made by or on
         behalf of such Charging Company shall be credited or deemed to have
         been credited to the new account and shall not operate to reduce the
         amount due from such Charging Company at the time when it received such
         notice.

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<PAGE>

15.2     GENERAL

         The security constituted by this Debenture secures present and further
         advances as may be made by the Lenders subject to and in accordance
         with the terms of the Agreement and shall be a continuing security
         notwithstanding any settlement of account or other matter whatsoever
         (other than the discharge in full of the Secured Obligations) and is in
         addition to and shall not merge with or otherwise prejudice or affect
         (or be prejudiced or affected by) the security constituted by any
         encumbrance, guarantee or other assurance now or hereafter held by the
         Security Trustee or any right or remedy of the Security Trustee in
         respect of the same and shall not be in any way prejudiced or affected
         by the invalidity thereof, or by the Security Trustee now or hereafter
         dealing with, exchanging, releasing, modifying or abstaining from
         perfecting or enforcing any of the same, or any rights which it may now
         or hereafter have, or giving time for payment or indulgence or
         compounding with any other person liable.

16       POWER OF ATTORNEY

16.1     APPOINTMENT

         Each Charging Company, by way of security for the performance of such
         Charging Company's obligations under this Debenture, irrevocably
         appoints the Security Trustee and the persons deriving title under it
         and separately any Receiver jointly or severally to be its attorney or
         attorneys for it and in the name and on behalf and as the act and deed
         or otherwise of such Charging Company to sign, seal, execute, deliver,
         perfect and do all deeds, instruments, acts and things which may be
         required:

         16.1.1   for carrying out any obligations imposed on such Charging
                  Company by or pursuant to this Debenture;

         16.1.2   for carrying any sale, lease or other dealing whatsoever by
                  the Security Trustee or Receiver into effect;

         16.1.3   for conveying or transferring any legal estate or other
                  interest in land or any other property whatsoever;

         16.1.4   for getting in all or any part of the Collateral; and

         16.1.5   generally for enabling the Security Trustee and any Receiver
                  to exercise the respective powers, authorities and discretions
                  conferred on them by or pursuant to this Debenture or by law.

         The provisions of this clause 16.1 shall take effect as and by way of
         variation to the provisions of Section 109(8) of the Law of Property
         Act 1925 which provisions as so varied and extended shall be deemed
         incorporated herein as if they related to a receiver of the Collateral
         and not merely a receiver of the income thereof.

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16.2     RATIFICATION

         Each Charging Company covenants with the Security Trustee and
         separately with any Receiver that, on request, it will ratify and
         confirm all security agreements, documents, acts and all transactions
         entered into by the Security Trustee or any Receiver (or by such
         Charging Company at the instance of the Security Trustee or any
         Receiver) in the exercise or purported exercise of its or his powers
         and such Charging Company irrevocably acknowledges and agrees that the
         power of attorney contained in clause 16.1 is given to secure the
         proprietary interest of, and the performance of obligations owed to,
         the respective donees within the meaning of the Powers of Attorney Act
         1971.

17       INDEMNITIES

17.1     GENERAL

         Each Charging Company agrees to indemnify the Security Trustee (and its
         nominees) and any Receiver on demand against all losses, actions,
         claims, expenses, demands or liabilities whether in contract, tort or
         otherwise now or hereafter incurred by any of them or by any manager,
         agent, officer or employee for whose liability, act or omission any of
         them may be answerable for anything done or omitted in the exercise or
         purported exercise of the powers contained in this Debenture or
         occasioned by any breach by such Charging Company of any of its
         covenants or other obligations under this Debenture or otherwise
         arising out of or in connection with the Collateral of such Charging
         Company or the security constituted or intended to be constituted by
         this Debenture (save where the same is caused by the gross negligence
         or wilful misconduct of the Security Trustee or any Receiver Manager,
         agent, officer or employee).

17.2     TAXES

         Each Charging Company agrees to indemnify each Beneficiary, the
         Security Trustee and any Receiver on demand against all present or
         future stamp or other taxes or duties and any penalties or interest
         with respect thereto which may be imposed by any competent authority in
         connection with the execution or enforcement of this Debenture or in
         consequence of any payment made pursuant hereto being impeached or
         declared void for any reason whatsoever.

18       NO WAIVER

         No failure or delay by the Security Trustee or any Beneficiary in
         exercising any right or remedy shall operate as a waiver thereof, nor
         shall any single or any partial exercise or waiver of any right or
         remedy preclude its further exercise or the exercise of any other right
         or remedy as though no waiver had been made and no relaxation or
         indulgence granted.

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19       PAYMENTS AND DISCHARGE

19.1     PAYMENT WITHOUT DEDUCTION

         All payments to be made to any person under this Debenture shall be
         made free and clear of and (save as required by law) without any
         deduction for or on account of any tax, withholding, charges, set-off
         or counterclaim. All payments shall be made into such account or
         accounts as the Security Trustee may from time to time specify for that
         purpose.

19.2     GROSS-UP AND TAX RECEIPTS

         If any Charging Company is required by law to make a deduction or
         withholding from any payment made under this Debenture then the sum
         payable by such Charging Company in respect of which such deduction or
         withholding is required to be made shall be increased to the extent
         necessary to ensure that, after the making of such deduction or
         withholding (including any deduction or withholding applicable to
         additional sums payable under this clause), the Security Trustee
         receives and retains (free from any liability in respect of any such
         deduction or withholding) a net sum equal to the sum which it would
         have received and so retained had no such deduction or withholding been
         made or been required to be made. If any Charging Company makes any
         payment under this Debenture in respect of which it is required by law
         to make any deduction or withholding it shall pay the full amount to be
         deducted or withheld to be relevant taxation or other authority within
         the time allowed for such payment under applicable law and shall
         deliver to the Security Trustee (no later than one week after the end
         of the time allowed for such payment under applicable law) an original
         receipt or other appropriate evidence issued by such authority
         evidencing the payment to such authority of all amounts so required to
         be deducted or withheld from such payment.

19.3     TAX CREDITS

         If any Charging Company makes an increased payment under clause 19.2
         for the account of any person and such person in its sole opinion and
         based on its own interpretation of any relevant laws or regulations
         (but acting in good faith) determines that it has received or been
         granted a credit against or relief or remission for or in respect of
         any tax paid or payable by it in respect of or calculated by reference
         to the deduction or withholding giving rise to such payment, such
         person shall, to the extent that it determines that it can do so
         without prejudice to the retention of the amount of such credit,
         relief, remission or payment and, to the extent it is reasonably
         identifiable and quantifiable, as soon as practicable pay to such
         Charging Company an amount equal to such part or all of such credit,
         relief, remission or repayment as can be made available to such
         Charging Company in such a way as to leave such person (after such
         payment) in no better or worse position than it would have been in if
         such Charging Company had not been required to make such deduction or
         withholding. Nothing contained in this clause 19.3 shall interfere with
         the right of a person to arrange its tax affairs in whatever manner it
         thinks

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         fit nor oblige any person to disclose any information in relation to
         its tax affairs or any computation in respect thereof.

19.4     REINSTATEMENT

         Any settlement or discharge under this Debenture between the Security
         Trustee and any Charging Company shall be conditional upon no security
         or payment to the Security Trustee or any Beneficiary by such Charging
         Company or any other person being avoided or set aside or ordered to be
         refunded or reduced by or pursuant to any applicable law or regulation
         and, if such condition is not satisfied, the Security Trustee shall be
         entitled to recover from such Charging Company on demand the value of
         any such security or the amount of any such payment as if such
         settlement or discharge had not occurred.

19.5     RELEASES

         Without prejudice to any of the terms of any of the Finance Documents
         regarding the giving of consents, releases and/or discharges to any
         Charging Company (whether to facilitate any disposition in relation to
         any of the Collateral of any Charging Company or otherwise) the
         Security Trustee shall, at the request and cost of the Charging
         Companies following the irrevocable payment and discharge in full of
         the Secured Obligations (with no Beneficiary being under any further
         obligation, actual or contingent, to any Charging Company) and provided
         that the security constituted by this Debenture shall not have been
         enforced, and the Security Trustee is satisfied that such payment is
         not subject to avoidance or liable to be set aside, refunded or reduced
         as referred to in clause 19.4, duly execute and do all such deeds, acts
         and things as may be necessary to release from the security constituted
         by this Debenture the assets which are then subject to it. Each
         Charging Company agrees that if any of its Investments charged by this
         Debenture are released from such charge, the Security Trustee may
         release securities of the same class and denomination as the
         Investments concerned rather than the identical Investments deposited
         or transferred under this Debenture.

20       CURRENCY

         Any amount received or recovered by the Security Trustee in respect of
         any sum expressed to be due to it (whether for itself or as trustee for
         any other person) from any Charging Company under this Debenture in a
         currency other than the currency (the "CONTRACTUAL CURRENCY") in which
         such sum is so expressed to be due (whether as a result of, or of the
         enforcement of, any judgement or order of a court or tribunal of any
         jurisdiction, the winding-up of a Charging Company or otherwise) shall
         only constitute a discharge to such Charging Company to the extent of
         the amount of the contractual currency that the Security Trustee is
         able, in accordance with its usual practice, to purchase with the
         amount of the currency so received or recovered on the date of receipt
         or recovery (or, if later, the first date on which such purchase is
         practicable). If the amount of the contractual currency so purchased is
         less than the amount of the contractual currency so expressed to be due
         such Charging Company

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<PAGE>

         shall indemnify the Security Trustee against any loss sustained by it
         as a result, including the cost of making any such purchase.

21       LAND REGISTRY

         Wherever any application shall be made to note this Debenture in the
         charges register relating to the title to any registered land of any
         Charging Company which shall be the subject of any of the charges
         constituted by this Debenture the parties hereto apply and agree to
         apply to the Registrar for the following entries to be made on the
         register of such Charging Company's title relating to any such
         registered land:

         21.1     ["No disposition or other dealing by the proprietor of the
                  land is to be registered or noted on the register without the
                  consent of the proprietor for the time being of the charge
                  referred to in entry no. [ ] of the Charges Register".]

         21.2     [" are under an obligation to make further advances."]

22       NOTICES

22.1     GENERAL

         Any demand, notice or other communication to be made on or delivered to
         a Charging Company hereunder or in respect of the Secured Obligations
         shall be made or delivered by facsimile transmission (referred to as
         "FAX") or otherwise in writing and shall be treated as having been
         served if served in accordance with clause 22.2. Each demand, notice or
         other communication to be made on or delivered to any party to this
         Debenture may (unless that party has by 15 days' written notice to the
         other party or parties specified another address, telex or fax number)
         be made or delivered to that other person at its registered office or
         the address or fax number (if any) set out under its name at the end of
         this Debenture.

22.2     MODE OF SERVICE

         Service may be made on any Charging Company:

         22.2.1   personally on any director or the company secretary of such
                  Charging Company;

         22.2.2   by leaving it at the address for service of such Charging
                  Company referred to in clause 22.1;

         22.2.3   by sending it by pre-paid first class letter (or by airmail if
                  to or from an address outside the United Kingdom) through the
                  post to the address for service of such Charging Company
                  referred to in clause 22.1; or

         22.2.4   by fax to the fax number of such Charging Company and so that
                  any fax shall be deemed to be in writing and, if it bears the

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                  signature of the server or its authorised representative or
                  agent, to have been signed by or on behalf of the server.

22.3     DEEMED SERVICE

         Any demand, notice or other communication shall be served or treated as
         served at the following times:

         22.3.1   in the case of service personally or in accordance with clause
                  22.2.2, at the time of such service;

         22.3.2   in the case of service by post, at 9.00 am on the working day
                  next following the day on which it was posted or, in the case
                  of service to or from an address outside the United Kingdom,
                  at 9.00 am on the fourth working day following the day on
                  which it was posted; and

         22.3.3   in the case of service by fax, if sent before 9.00 am on a
                  working day, at 11.00 am on the same day, if sent between 9.00
                  am and 5.30 pm on a working day, two hours after the time of
                  such service or, if sent after 5.30 pm on a working day, or if
                  sent on a day other than a working day, at 9.00 am on the next
                  following working day.

         For the purpose of this clause 22 the term "WORKING DAY" shall mean a
         day (other than a Saturday or a Sunday) upon which the recipient of any
         demand, notice or other communication is normally open for business in
         the country of its address for service referred to in clause 22.1 and
         references to any time of day shall be construed as references to the
         time of day in such country.

22.4     PROOF OF SERVICE

         In proving service of a demand, notice or other communication served:

         22.4.1   by post, it shall be sufficient to prove that such demand,
                  notice or other communication was correctly addressed, full
                  postage paid and posted; and

         22.4.2   by fax, it shall be sufficient to prove that the fax was
                  followed by such machine record as indicates that the entire
                  fax was sent to the relevant number.

23       SET-OFF

         Each Charging Company authorises the Security Trustee, the Agent and
         any Lender, subject and without prejudice to the provisions of the
         Agreement, at any time after the occurrence of an Event of Default
         which is continuing and without notice to such Charging Company, to
         apply any credit balance (whether or not then due) to which such
         Charging Company is at any time beneficially entitled on any account at
         any office of such person in or towards satisfaction of the Secured
         Obligations (and on or at any time after the Security Trustee shall
         become entitled to appoint a Receiver that person may make such
         application notwithstanding any specified maturity of any deposits

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<PAGE>

         standing to the credit of any account of such Charging Company with
         such person) and for this purpose such person is authorised to purchase
         with the monies standing to the credit of any such account such other
         currencies as may be necessary to effect such application. Any person
         so entitled shall not be obliged to exercise any of its rights under
         this clause which shall be without prejudice to and in addition to any
         rights of set-off, combination of accounts, consolidation or other
         rights to which it is at any time otherwise entitled (whether by
         operation of law, contract or otherwise).

24       TRUSTEE PROVISIONS

24.1     DECLARATION OF TRUST

         The Security Trustee shall hold the security constituted by this
         Debenture and the benefit of all related rights in trust for the
         benefit of the Beneficiaries on the terms and subject to the conditions
         set out in this Debenture and the Agreement.

24.2     PERPETUITY PERIOD

         The perpetuity period under the rule against perpetuities (if
         applicable to this Debenture) shall be the period of eighty years from
         the date of this Debenture.

24.3     APPLICATION OF SUMS RECEIVED

         Subject to the other provisions of this clause 24, the Security Trustee
         shall apply all amounts standing to the credit of any account referred
         to in clause 14.6 and any other amounts realised pursuant to the
         exercise of any rights or powers it might have pursuant to this
         Debenture:

         24.3.1   first, in the payment of any costs, charges and expenses of or
                  incidental to the appointment of any Receiver pursuant to this
                  Debenture, the payment of his remuneration and the payment and
                  discharge of any other Expenses incurred by or on behalf of
                  the Receiver;

         24.3.2   secondly, 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;

         24.3.3   thirdly, in or towards payment and discharge pro rata of any
                  Secured Obligations then due, owing or incurred to the
                  Security Trustee, in its capacity as Security Trustee (and not
                  in any other capacity) for its own account;

         24.3.4   fourthly, in payment to the Agent in or towards payment and
                  discharge of the balance of the Secured Obligations (if any)
                  in accordance with the provisions of the Agreement provided
                  that, when distributing sums in accordance with this clause
                  24.3, the Security Trustee will treat any contingent liability
                  as an actual liability and distribute to the party entitled
                  thereto accordingly (any

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<PAGE>

                  such party receiving sums in respect of a contingent liability
                  shall place such sums on deposit with such bank (not being a
                  bank entitled to exercise any right of set-off or combination
                  or consolidation of accounts or having the benefit of any
                  encumbrance over such deposit) and on such terms as the
                  Security Trustee may approve and, if such contingent liability
                  shall fail to mature, shall return such sums (together with
                  any interest earned thereon) to the Security Trustee for
                  distribution in accordance with the terms of this clause
                  24.3); and

         24.3.5   fifthly, in payment of the surplus (if any) to the Charging
                  Companies or other person entitled thereto.

24.4     SECURITY TRUSTEE'S SOLE RIGHT TO APPROPRIATE

         No Charging Company shall have the right to appropriate any payment to,
         or other sum received, recovered or held by, the Security Trustee in or
         towards payment of any particular part of the Secured Obligations and
         the Security Trustee shall have the exclusive right to appropriate any
         such payment or other sum as provided in this clause 24.

24.5     TIMING OF DISTRIBUTION

         Distributions by the Security Trustee shall be made at such times as
         the Security Trustee in its absolute discretion determines to be as
         soon as is reasonably practicable, having regard to all relevant
         circumstances, and the Security Trustee shall have no liability
         whatsoever for any loss or damage which any Beneficiary might sustain
         as a consequence of the timing of any such distribution.

24.6     DATE FOR CALCULATION OF SECURED OBLIGATIONS

         For the purpose of any distribution by the Security Trustee, the
         Security Trustee may, by notice to the Beneficiaries, fix a date (being
         not earlier than the date of such notice) as at which the amount of the
         Secured Obligations are to be calculated.

24.7     CERTIFICATE FROM BENEFICIARY

         For the purposes of determining the amount of any payment to be made to
         any Beneficiary pursuant hereto the Security Trustee shall be entitled
         to call for and rely upon (and it is the intention of the parties that
         the Security Trustee shall rely upon) a certificate from the relevant
         Beneficiary of the amount and nature of any amount due, owing or
         incurred to the relevant Beneficiary at the date fixed by the Security
         Trustee for such purpose and as to such other matters as the Security
         Trustee may deem necessary or desirable to enable it to make a
         distribution.

24.8     MISTAKEN PAYMENTS

         If the Security Trustee makes any distribution contrary to any of the
         provisions of this clause 24 or any distribution made by it otherwise
         transpires to have

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<PAGE>

         been invalid or the Security Trustee and the person receiving such
         distribution agree that it should be refunded, the recipient shall, to
         the extent that no charge is thereby created, hold the proceeds of that
         distribution on trust to repay to the Security Trustee forthwith on
         demand. If the trust imposed by this clause 24.8 cannot be given effect
         to for whatever reason, including the possible creation thereby of a
         charge, the relevant recipient shall, if and when so requested by the
         Security Trustee, pay an amount equal to the proceeds of that
         distribution required to be held on trust to the Security Trustee.

24.9     SUPPLEMENT TO TRUSTEE ACTS 1925 AND 2000

         By way of supplement to the Trustee Acts 1925 and 2000 it is expressly
         declared as follows:

         24.9.1   EXPERTS: the Security Trustee may, in relation to this
                  Debenture, act or rely upon the opinion or advice of, or any
                  information obtained from, any lawyer, valuer, surveyor,
                  broker, auctioneer, accountant or other expert commissioned by
                  the Security Trustee and shall not be responsible to anyone
                  for any loss or damage occasioned by so acting or relying. Any
                  such opinion, advice or information may be sent or obtained by
                  letter, telex, cable, facsimile transmission or otherwise and
                  the Security Trustee will not be liable to anyone for acting
                  in good faith on any opinion, advice or information purporting
                  to be conveyed by such means even if it contains some error or
                  is not authentic or validly signed;

         24.9.2   CERTIFICATE OF A CHARGING COMPANY: the Security Trustee may
                  call for and may accept as sufficient evidence a certificate
                  of any Charging Company signed by any director of such
                  Charging Company to the effect that any particular dealing,
                  transaction, step or thing is, in the opinion of the said
                  director, suitable or expedient or as to any other fact or
                  matter upon which the Security Trustee may, in the exercise of
                  any of its rights, powers or duties hereunder, require to be
                  satisfied and the Security Trustee need not call for further
                  evidence and will not be responsible to anyone for any loss or
                  damage occasioned by acting on any such certificate;

         24.9.3   INTERPRETATION OF THIS DEBENTURE: the Security Trustee (as
                  between itself and each of the Beneficiaries) shall have full
                  power to determine in good faith all questions and doubts
                  arising in relation to any of the provisions of this Debenture
                  and every such determination, whether made upon such a
                  question actually raised or implied in the acts or proceedings
                  of the Security Trustee, shall be conclusive and shall (save
                  for manifest error) bind the Security Trustee and each
                  Beneficiary;

         24.9.4   TITLE: the Security Trustee shall accept without enquiry,
                  requisition, objection or investigation such title as the
                  relevant Charging Company has to the Collateral to the intent
                  that the Security Trustee shall not in any way be responsible
                  for its inability

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<PAGE>

                  to exercise any of its rights or powers or duties hereunder or
                  for any loss or damage thereby occasioned;

         24.9.5   PERFECTION OF SECURITY: the Security Trustee shall not be
                  liable for any failure, omission or defect in perfecting any
                  security created or purported to be created by or pursuant to
                  this Debenture including (without prejudice to the generality
                  of the foregoing):

                  (a)      failure to obtain any licence, consent or other
                           authority for the execution, delivery, validity,
                           legality, adequacy, performance, enforceability or
                           admissibility in evidence of this Debenture or any
                           other document;

                  (b)      failure to effect or procure registration of or
                           otherwise protect any security created or purported
                           to be created by or pursuant to this Debenture or any
                           other document by registering under any applicable
                           registration laws in any territory, any notice,
                           caution or other entry prescribed by or pursuant to
                           the provisions of the said laws;

                  (c)      failure to take or require any of the Charging
                           Companies to take any steps to render the security
                           created or purported to be created by or pursuant to
                           this Debenture effective as regards any property
                           outside England and Wales or to secure the creation
                           of any ancillary charge under the laws of any
                           territory concerned; or

                  (d)      failure to call for delivery of documents of title to
                           or require transfers, legal mortgages, charges or
                           other further assurances in relation to any of the
                           Collateral;

         24.9.6   ACTS AND OMISSIONS: the Security Trustee shall not in
                  fulfilling its duties and discharging its responsibilities as
                  Security Trustee be liable or responsible for any loss or
                  damage which may result from anything done or omitted to be
                  done by it in accordance with the provisions of this Debenture
                  (save where caused by fraud, gross negligence or wilful
                  default on the part of the Security Trustee);

         24.9.7   COMPLIANCE WITH LAWS: the Security Trustee may refrain from
                  doing anything which would or might in its opinion be contrary
                  to any law of any jurisdiction or any regulation or which
                  would or might otherwise render it liable to any person and
                  may do anything which is, in its absolute discretion,
                  necessary to comply with any such law or regulation;

         24.9.8   DEPOSIT OF TITLE DOCUMENTS: the Security Trustee shall be at
                  liberty to place all title deeds and other documents
                  certifying, representing or constituting the title to any of
                  the Collateral for the time being in its hands in any safe
                  deposit, safe or receptacle selected by the

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<PAGE>

                  Security Trustee or with any bankers or banking company
                  (including the Security Trustee or any of the other
                  Beneficiaries) or company whose business includes undertaking
                  the safe custody of documents or solicitors or firm of
                  solicitors, may pay all reasonable sums required to be paid on
                  account of or in respect of such deposit and may make any such
                  arrangements as it thinks fit for allowing any of the Charging
                  Companies or their respective lawyers, auditors or other
                  professional advisors access to or possession of such title
                  deeds and other documents when necessary or convenient and the
                  Security Trustee shall not be responsible for any loss
                  incurred in connection with any such deposit, access or
                  possession;

         24.9.9   USE OF NOMINEES: any investment of any part or all of the
                  Collateral may, at the discretion of the Security Trustee, be
                  made or retained in the names of nominees;

         24.9.10  DELEGATION: the Security Trustee may, whenever it thinks fit,
                  delegate by power of attorney or otherwise to any person or
                  persons, or fluctuating body of persons, all or any of the
                  rights, powers, authorities and discretions vested in it by
                  the Agreement or this Debenture and such delegation may be
                  made upon such terms and subject to such conditions (including
                  the power to sub-delegate) and subject to such regulations as
                  it may think fit and it shall not be bound to supervise, or to
                  be in any way responsible for any loss, liability, costs,
                  charges or expenses incurred by reason of any misconduct or
                  default on the part of, any such delegate or sub-delegate
                  (other than as a result of its fraud, gross negligence or
                  wilful misconduct); and

         24.9.11  INSURANCE: without prejudice to any other provision of the
                  Agreement or this Debenture, the Security Trustee shall not be
                  under any obligation to insure any of the Collateral or to
                  require any other person to maintain any such insurance and
                  shall not be responsible for any loss or damage which may be
                  suffered by any person as a result of the lack of or
                  inadequacy or insufficiency of any such insurance.

24.10    RELATIONSHIP WITH THE BENEFICIARIES

         The Security Trustee shall, for the purposes of the Agreement and this
         Debenture, be entitled to deal with each of the Beneficiaries by
         dealing exclusively with the Agent.

24.11    INDEMNITY PROVISIONS

         The Security Trustee and every attorney, agent or other person
         appointed by it under the Agreement or this Debenture may indemnify
         itself or himself out of the Collateral against all claims, demands,
         liabilities, proceedings, costs, fees, charges, losses and expenses
         incurred by any of them in relation to or arising out of the taking or
         holding of the Collateral, the exercise or purported exercise of the
         rights, trusts, powers and discretions vested in any of them or

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<PAGE>

         any other matter or thing done or omitted to be done in connection with
         the Agreement or this Debenture or pursuant to any law or regulation
         (otherwise than as a result of its fraud, gross negligence or wilful
         misconduct).

24.12    APPOINTMENT OF ADDITIONAL SECURITY TRUSTEES

         The Security Trustee may at any time appoint any person (whether or not
         a trust corporation) to act either as a separate trustee or as a
         co-trustee jointly with it (i) if it considers such appointment to be
         in the interests of the Beneficiaries or (ii) for the purposes of
         conforming to any legal requirements, restrictions or conditions which
         the Security Trustee deems relevant for the purposes hereof and the
         Security Trustee shall give prior notice to the Charging Companies of
         any such appointment. Any person so appointed shall (subject to the
         provisions of the Agreement or this Debenture) have such powers,
         authorities and discretions and such duties and obligations as shall be
         conferred or imposed on such person by the instrument of appointment
         and shall have the same rights, powers, discretions and benefits under
         the Agreement and this Debenture as the Security Trustee. Save where
         the contrary is indicated or unless the context otherwise requires any
         reference in the Agreement and this Debenture to the Security Trustee
         shall be construed as a reference to the Security Trustee and each such
         separate trustee and co-trustee. The Security Trustee shall have power
         in like manner to remove any person so appointed. Such remuneration as
         the Security Trustee may pay to any person so appointed, and any costs,
         charges and expenses incurred by such person in performing its
         functions pursuant to such appointment, shall for the purposes hereof
         be treated as costs, charges and expenses incurred by the Security
         Trustee in performing its function as trustee hereunder.

24.13    RESIGNATION

         The Security Trustee may, following consultation with the
         Beneficiaries, resign at any time by giving not less than 30 days
         notice in writing to that effect to each of the Beneficiaries provided
         that such resignation shall not become effective until a successor to
         the Security Trustee has been appointed and accepted its appointment
         and all necessary documents have been entered into to ensure that the
         benefit of this Debenture is held by such successor.

25       COUNTERPARTS

         This Debenture may be executed in any number of counterparts and by way
         of facsimile transmission and by different parties on separate
         counterparts each of which will constitute an original and all the
         counterparts together will constitute the same instrument.

26       CONSENTS

         Where any matter relating to the Chessington Property requires the
         consent of the Security Trustee pursuant to the terms of this
         Debenture, such consent shall not be withheld or delayed by the
         Security Trustee if the relevant subject matter also requires the
         consent of the Chessington Mortgagee and the Chessington Mortgagee has
         granted its consent.

                                       44
<PAGE>

27       LAW AND JURISDICTION

27.1     LAW

         This Debenture and the rights and obligations of the parties hereto
         shall be governed by and construed in accordance with English law.

27.2     JURISDICTION

27.2.1   SUBMISSION: Each of the parties to this Debenture (other than the
         Security Trustee) agrees for the benefit of the Security Trustee (on
         behalf of the Beneficiaries) that the courts of England shall have
         jurisdiction to hear and determine, any suit, action or proceeding, and
         to settle any dispute, which may arise out of or in connection with
         this Debenture and, for such purposes, irrevocably submits to the
         jurisdiction of such courts.

27.2.2   FORUM: Each Charging Company irrevocably waives any objection which it
         might now or hereafter have to the courts referred to in clause 27.2.1
         being nominated as the forum to hear and determine any suit, action or
         proceeding, and to settle any dispute, which may arise out of or in
         connection with this Debenture and agrees not to claim that any such
         court is not a convenient or appropriate forum.

27.2.3   SERVICE OF PROCESS: BMEBV agrees that the process by which any suit,
         action or proceeding is begun may be served on it by being delivered,
         in connection with any suit, action or proceeding in England, to Ideal
         at its registered office for the time being.

27.2.4   OTHER COMPETENT JURISDICTIONS: The submission to the jurisdiction of
         the courts referred to in clause 27.2.1 shall not (and shall not be
         construed so as to) limit the right of the Security Trustee to take
         proceedings against any Charging Company in any other court of
         competent jurisdiction nor shall the taking of proceedings in any one
         or more jurisdictions preclude the taking of proceedings in any other
         jurisdiction, whether concurrently or not.

27.2.5   CONSENT TO ENFORCEMENT: Each Charging Company hereby consents generally
         in respect of any legal action or proceeding arising out of or in
         connection with this Debenture to the giving of any relief or the issue
         of any process in connection with such action or proceeding including,
         without limitation, the making, enforcement or execution against any
         property whatsoever of such Charging Company (irrespective of its use
         or intended use) of any order or judgment which may be made or given in
         such action or proceeding.

IN WITNESS whereof each Charging Company has duly executed this Debenture as a
deed and intends to deliver and hereby delivers the same on the date first above
written and, prior to such delivery, this Debenture has been duly signed on
behalf of the Security Trustee, in the manner appearing below.

                                       45
<PAGE>

                                   SCHEDULE 1

                         THE ORIGINAL CHARGING COMPANIES

<TABLE>
<S>                                            <C>
Company Name                                   Company Number
Ideal Hardware Limited                         03969946
Bell Microproducts Europe Export Limited       03711148
Bell Microproducts Europe B.V.                 N/A
Bell Microproducts Limited                     04079671
Unifund Limited                                03942210
</TABLE>

                                       46
<PAGE>

                                   SCHEDULE 2

                             RECEIVABLES ACCOUNT(S)

<TABLE>
<CAPTION>
                          NAME AND ADDRESS OF ENTITY AT
NAME OF ACCOUNT HOLDER    WHICH ACCOUNT IS HELD               ACCOUNT DETAILS        CURRENCY
<S>                       <C>                              <C>                       <C>
Ideal Hardware Limited    NatWest Bank plc                 Receivables Account No:     $US
                          Berkeley Square and Mayfair      06320287
                          Branch
                          PO Box 2153
                          1-4 Berkeley Square House
                          Berkeley Square
                          London W1A 1SN

                          Sort Code: 60-02-20

Ideal Hardware Limited    NatWest Bank plc                 Receivables Account No:     GBP
                          Berkeley Square and Mayfair      32733992
                          Branch
                          PO Box 2153
                          1-4 Berkeley Square House
                          Berkeley Square
                          London W1A 1SN

                          Sort Code: 60-02-20

Ideal Hardware Limited    NatWest Bank plc                 Receivables Account No:     EUR
                          Berkeley Square and Mayfair      06704077
                          Branch
                          PO Box 2153
                          1-4 Berkeley Square House
                          Berkeley Square
                          London W1A 1SN

                          Sort Code: 60-02-20

Bell Microproducts        NatWest Bank plc                 Receivables Accounts        GBP
Europe Export Limited     Berkeley Square and Mayfair      No: 50344927
                          Branch
                          PO Box 2153
                          1-4 Berkeley Square House
                          Berkeley Square
                          London W1A 1SN

                          Sort Code: 60-02-20

Bell Microproducts        NatWest Bank plc                 Receivables Accounts        $US
Europe Export Limited     Berkeley Square and Mayfair      No: 8146268
                          Branch
                          PO Box 2153
                          1-4 Berkeley Square House
</TABLE>

                                       47
<PAGE>

<TABLE>
<S>                       <C>                              <C>                         <C>
                          Berkeley Square
                          London W1A 1SN

                          Sort Code: 60-02-20

Bell Microproducts        NatWest Bank plc                 Receivables Accounts        EUR
Europe Export Limited     Berkeley Square and Mayfair      No: 8146276
                          Branch
                          PO Box 2153
                          1-4 Berkeley Square House
                          Berkeley Square
                          London W1A 1SN

                          Sort Code: 60-02-20
</TABLE>

                                       48
<PAGE>

                                   SCHEDULE 3

                        DETAILS OF POLICIES AND CONTRACTS

                                     PART 1

                                  THE POLICIES

<TABLE>
<CAPTION>
   CHARGING COMPANY                     INSURER           POLICY NO                         TYPE
<S>                              <C>                      <C>                       <C>
Ideal Hardware Limited           Royal & Sun Alliance     RKJ987335                 Material Damage &
                                                                                    Business Interruption
                                                                                    (inc Terrorism "Buy
                                                                                    Back")

Ideal Hardware Limited           Zurich Commercial        EP334086                  Material Damage &
                                                                                    Business Interruption
                                                                                    (inc Terrorism "Buy
                                                                                    Back")

Ideal Hardware Limited           Royal & Sun Alliance     SJ/RKK66456-2             Money

Ideal Hardware Limited           Royal & Sun Alliance     CP9863                    Computer (inc Terrorism
                                 Engineering                                        "Buy Back")

Bell Microproducts Europe        EULER Trade Indemnity    191554601                 Credit Insurance
Export Limited

Ideal Hardware Limited           EULER Trade Indemnity    KI13/01/190177701         Credit Insurance
</TABLE>

                                     PART 2

                                  THE CONTRACTS

<TABLE>
<CAPTION>
CHARGING COMPANY            DETAILS OF CONTRACT           COUNTERPARTY/IES
<S>                         <C>                           <C>
[              ]            [                 ]           [              ]
</TABLE>

                                       49
<PAGE>

                                   SCHEDULE 4

                                      FORMS

                         A1 FORM OF NOTICE OF ASSIGNMENT

TO:      [DEBTOR/THIRD PARTY OBLIGOR]

[Date]

Dear Sirs,

We hereby give you notice that we have assigned by way of security pursuant to a
debenture dated [        ] (such debenture, as the same may from time to time be
amended, varied, supplemented, novated or replaced being referred to as the
"DEBENTURE") between, inter alia, ourselves and Bank of America, National
Association in its capacity as trustee for the Beneficiaries referred to in the
Debenture (the "SECURITY TRUSTEE") all our rights, title and interest in and to
the [here set out details of relevant debt or agreement in respect of which
rights have been assigned].

We irrevocably and unconditionally instruct and authorise you (notwithstanding
any previous instructions which we may have given you to the contrary and
without requiring you to make any reference to or seek any further authority
from us or to make any enquiry as to the justification for or validity of any
notice, statement, requirement or direction) as follows:

(1)      to disclose to the Security Trustee such information relating to the
         [debt/agreement] as the Security Trustee may, at any time and from time
         to time, request you to disclose to it; and

(2)      to make all payments under or arising from the [debt/agreement] to the
         Security Trustee or to its order and otherwise to comply with the terms
         of any written notice, statement or instructions which you receive at
         any time from the Security Trustee and which in any way relate to or
         purport to relate to the Debenture or the [debt/agreement].

You should note that, by virtue of the assignment by way of security comprised
in the Debenture to which reference is made above:

(A)      all remedies under or in relation to the [debt/agreement] or available
         at law or in equity in respect thereof are exercisable by the Security
         Trustee;

(B)      all rights to compel performance of the [specify relevant obligations]
         are exercisable by the Security Trustee; and

(C)      all rights, title and interest whatsoever accruing to or for the
         benefit of ourselves arising from the [debt/agreement] belong to the
         Security Trustee.

The terms of and the instructions and authorisations contained in this letter
shall remain in full force and effect until the Security Trustee gives you
notice to the contrary.

                                       50
<PAGE>

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

Please acknowledge receipt of this letter and your acceptance of its terms and
the instructions and authorisations contained in it by signing the attached form
of acknowledgement and agreement and returning it to [Carmen Bernardis] at Bank
of America, NA at Bank of America House, 1 Alie Street, London, E1 8DE.

Yours faithfully,

For and on behalf of

[(RELEVANT CHARGING COMPANY)]

                                       51
<PAGE>

                    A2 FORM OF ACKNOWLEDGEMENT AND AGREEMENT

To:      Bank of America, NA
         Business Credit Unit
         Bank of America House
         1 Alie Street
         London E1 8DE

Attn: [Carmen Bernardis]

                                                                          [Date]

Dear Sirs,

We acknowledge receipt of a Notice dated [        ] and addressed to us by [ ]
(the "ASSIGNOR") regarding the [debt/agreement] referred to in such Notice and
we hereby acknowledge our acceptance of the terms of and the instructions and
authorisations contained in such Notice.

We acknowledge and confirm that:

(1)      we have not received notice that any third party has or may have any
         rights, title or interest in or to, or has made or may be making any
         claim or demand or taking any action in respect of, the
         [debt/agreement];

(2)      no amendment, waiver or release of any rights, title or interest of the
         Assignor in or to the [debt/agreement] shall be effective without your
         prior written consent;

(3)      no termination of any such rights, title or interest in or to the
         [debt/agreement] shall be effective unless we have given you 30 days'
         written notice of the proposed termination and specifying the action
         necessary to avoid such termination; furthermore we confirm that no
         breach or default on the part of the Assignor of any of the terms of
         the [agreement giving rise to the debt/agreement] shall be deemed to
         have occurred unless we have given notice of such breach to you
         specifying how to make good such breach.

[[FOR DEBTS] We further confirm that we shall not make or exercise any claims or
demands, rights of combination, consolidation or set-off or any other equities
which we may have in respect of such debt and we shall send you copies of all
statements, orders and notices given by us relating to such debt.]

We undertake that, if we become aware at any time that any person or entity
other than yourselves has or may have any rights, title or interest in or to, or
has or may be making any claim or demand or taking any action in respect of, the
[debt/agreement] we will immediately give written notice to you of the terms of
such rights, title, interest, claim, demand or action.

                                       52
<PAGE>

...................

[Name of signatory]

For and on behalf of
[DEBTOR/THIRD PARTY OBLIGOR]

                                       53
<PAGE>

                  B1 FORM OF NOTICE OF ASSIGNMENT OF INSURANCES

TO                    [INSERT NAME AND ADDRESS OF INSURER]

                                                                        [ Date ]

Dear Sirs

POLICY NUMBER [                ]

We hereby give you notice that we have assigned by way of security all our
rights, title and interest in and to the above policy ("THE POLICY") to Bank of
America, National Association, Bank of America House, 1 Alie Street, London E1
8DE in its capacity as security trustee pursuant to a debenture dated [        ]
(the "SECURITY TRUSTEE").

We irrevocably and unconditionally authorise you to disclose to the Security
Trustee such information relating to the Policy and the proceeds of any claim
under it as the Security Trustee may at any time request you to disclose and
make all payments under or arising from the Policy to the Security Trustee or to
its order and otherwise to comply with the terms of any written notice or
instructions which you receive at any time from the Security Trustee in
connection with the Policy or any such proceeds.

Accordingly, we hereby request that, with effect from today's date, the Security
Trustee be noted on the Policy as first loss payee.

The terms of and the instructions and authorisations contained in this letter
shall remain in full force and effect until the Security Trustee gives you
notice to the contrary.

Please acknowledge receipt of this letter by signing the attached form of
acknowledgement and agreement and returning it to the Bank of America, National
Association, Bank of America House, 1 Alie Street, London E1 8DE, marked for the
attention of [Carmen Bernardis] on fax number 020 7634 4754.

Yours faithfully

for and on behalf of

[(RELEVANT CHARGING COMPANY)]

                                       54
<PAGE>

                           B2 FORM OF ACKNOWLEDGEMENT

To:      Bank of America, NA
         Business Credit Unit
         Bank of America House
         1 Alie Street
         London E1 8DE

Attn:    [Carmen Bernardis]

                                                                           Date:

Dear Sirs

We acknowledge receipt of a notice dated [          ] and addressed to us by
[        ] (the "ASSIGNOR") regarding policy number [         ] (the "POLICY")
and acknowledge the instructions and authorisations contained in that Notice.

We acknowledge and confirm that:

(i)      we shall forthwith endorse a memorandum on the Policy noting your
         interest as assignee and first loss payee;

(ii)     until you notify us in writing to the contrary, all payments in respect
         of claims under the Policy shall only be paid to you to account [  ];

(iii)    we have not received notice that any third party has or may have any
         rights, title or interest in or to, or has made or may be making any
         claim or demand or taking any action in respect of the Policy;

(iv)     no change in any of the terms of the Policy shall be effective without
         the prior written consent of the Security Trustee;

(v)      we shall advise you at least 30 days before any cancellation of the
         Policy; and

(vi)     we shall advise you immediately of any default in the payment of any
         premium payable in respect of the Policy and shall allow 30 days during
         which payment of such premium shall be accepted, such that the Policy
         shall continue in full force and effect if made by the Security Trustee
         on behalf of the Assignor and/or any other insured party.

Yours faithfully

for and on behalf of

[NAME OF INSURER]

                                       55
<PAGE>

                             B3 FORM OF ENDORSEMENT

Notwithstanding any other provision of this policy, the following endorsement
will take effect immediately:

1        By an assignment of insurances effected by the Insured pursuant to a
         guarantee and debenture dated [        ] in favour of Bank of America,
         NA as trustee for the beneficiaries referred to in such debenture(the
         "SECURITY TRUSTEE") the Insured granted to the Security Trustee all its
         right, title and benefit in and to this insurance and all the benefits
         thereof.

2        All claims in respect of loss or damage, if any, payable under this
         policy shall be paid first to the Security Trustee.

                                       56
<PAGE>

                                   SCHEDULE 5

                                 THE SECURITIES

<TABLE>
<CAPTION>
                                                           ISSUED SHARE         DESCRIPTION AND NUMBER
     OBLIGOR                   NAME OF COMPANY                CAPITAL                  OF SHARES
<S>                           <C>                          <C>                  <C>
Bell Microproducts            Ideal Hardware                L1,000,000            1,000,000 ordinary
Europe BV                     Limited                                             shares of L1

                              Bell Microproducts            L2                    2 ordinary shares of
                              Limited                                             L1

Ideal Hardware                Unifund Limited               L1                    1 ordinary share of
Limited                                                                           L1

                              Bell Microproducts            L2                    2 ordinary shares of
                              Europe Export                                       L1
                              Limited
</TABLE>

                                       57
<PAGE>

                                   SCHEDULE 6

             FORM OF ACCOUNT NOTICE AND FORM OF ACKNOWLEDGEMENT AND
                                   AGREEMENT

TO:      [THIRD PARTY LENDER DETAILS]

                                                                          [Date]

Dear Sirs,

We refer to the account in our name and maintained with you, designated
"[         ] Account" under account No. [        ] (the "ACCOUNT").

We hereby give you notice that we have assigned by way of security pursuant to a
debenture dated [        ] (such debenture, as the same may from time to time be
amended, varied, supplemented, novated or replaced being referred to as "the
DEBENTURE") between, inter alia, ourselves and Bank of America, National
Association as trustee for and on behalf of the beneficiaries referred to in the
Debenture (the "SECURITY TRUSTEE") all our rights, title and interest in and to
the Account and the monies from time to time standing to its credit.

We irrevocably and unconditionally instruct and authorise you (notwithstanding
any previous instructions which we may have given you to the contrary and
without requiring you to make any reference to or seek any further authority
from us or to make any enquiry as to the justification for or validity of any
notice, statement, requirement or direction) as follows:

(1)      to disclose to the Security Trustee such information relating to the
         Account as the Security Trustee may, at any time and from time to time,
         request you to disclose to it;

(2)      subject to the Security Trustee's written directions, to hold all
         monies standing to the credit of the Account to the order of the
         Security Trustee;

(3)      at any time and from time to time upon receipt by you of written
         instructions from the Security Trustee (including, for the avoidance of
         doubt, by way of facsimile transmission) to credit and debit the
         Account (as the case may require) and to act in accordance with such
         instructions;

(4)      to promptly credit proceeds of all cheques, drafts or orders for the
         payment of money payable to us directly to the relevant Receivables
         Account in the currency of which such cheque, draft or order is
         payable;

(5)      to comply with the terms of any written notice, statement or
         instructions (including, for the avoidance of doubt, by way of
         facsimile transmission) which you receive at any time from the Security
         Trustee and which in any way

                                       58
<PAGE>

         relate to or purport to relate to any of the Debenture, the Account and
         the monies standing to the credit thereof from time to time; and

(6)      [at any time and from time to time upon receipt by you of written
         instructions from the Security Trustee (including, for the avoidance of
         doubt, by way of facsimile transmission)] to remit to the Security
         Trustee [on a daily basis] the proceeds of all cash, cheques, orders
         for the payment of money and other evidence of payment deposited in
         each of the Receivables Accounts, by wire transfer or otherwise as the
         Security Trustee may determine to [such account as the Security Trustee
         may specify] [Bank of America, National Association, 1 Alie Street,
         London E1 8DE, CHAPS Code: [    ]; Attn: [    ]]; and

(7)      not to agree any change to the mandate for the Account without the
         consent of the Security Trustee.

The instructions and authorisations which are contained in this letter shall
remain in full force and effect until the Security Trustee gives you written
notice revoking them.

In any circumstances where you are required under the terms of this letter to
act on the instruction of the Security Trustee, you shall act only on the
instruction of [   ] or [  ].

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

Please acknowledge receipt of this letter and your acceptance of the
instructions and authorisations contained in it by signing the attached form of
acknowledgement and agreement and returning it to Bank of America, National
Association marked for the attention of [Carmen Bernardis].

Yours faithfully,

for and on behalf of

[(RELEVANT CHARGING COMPANY)]

                                       59
<PAGE>

                      FORM OF ACKNOWLEDGEMENT AND AGREEMENT

To:      Bank of America, NA
         Business Credit Unit
         Bank of America House
         1 Alie Street
         London E1 8DE

Attn: [Carmen Bernardis]

                                                                          [Date]

Dear Sirs,

We acknowledge receipt of a Notice dated [         ] and addressed to us by
[        ] (the "ASSIGNOR") regarding the account mentioned in such Notice (the
"ACCOUNT") and we accept the instructions and authorisations contained in such
Notice.

We acknowledge and confirm that:

(1)      we do not have and, until you give us notice in writing (including, for
         the avoidance of doubt, by way of facsimile transmission) that the
         Account and the monies from time to time standing to the credit thereof
         have been re-assigned and released to the Assignor, will not make or
         exercise any claims or demands, rights of combination, consolidation or
         set-off or any other equities against the Assignor in respect of the
         Account and the monies from time to time standing to the credit
         thereof; and

(2)      we have not received any notice that any third party has or may have
         any rights, title or interest in or to, or has made or may be making
         any claim or demand or taking any action against, the Account and the
         monies from time to time standing to the credit thereof.

We undertake that, if we become aware at any time that any person or entity
other than yourselves has or may have any rights, title or interest in or to, or
has or may be making any claim or demand or taking any action against, the
Account, we will immediately give written notice to you of the terms of such
rights, title or interest, claim, demand or action.

We confirm that, until you give us notice in writing (including, for the
avoidance of doubt, by way of facsimile transmission) that the Account and the
monies from time to time standing to the credit thereof have been re-assigned
and released to the Assignor, we shall not permit any transfers or withdrawals
to be made from the Account without your prior written authority.

Yours faithfully,

for [DETAILS OF THIRD PARTY LENDER]

                                       60
<PAGE>

                                   SCHEDULE 7

                                  THE EQUIPMENT

                                                                   SERIAL NO:

[        ]                                                        [          ]

                                       61
<PAGE>

                                   SCHEDULE 8

                                  THE PROPERTY

<TABLE>
<CAPTION>
        PROPRIETOR                             ADDRESS                                TITLE NO.
<S>                                    <C>                                <C>
Bell Microproducts Limited             Fountain Court,                    SGL 638201: Freehold Interest
                                       Cox Lane,
                                       Chessington
                                       Surrey KT9 1SJ

Ideal Hardware Limited                 Unit 6A                            Unregistered: Leasehold Interest
                                       Faraday Avenue
                                       Hams Hall Distribution Park
                                       Coleshill
                                       Birmingham
</TABLE>

                                       62
<PAGE>

                                   SCHEDULE 9

                            FORM OF SUPPLEMENTAL DEED

THIS SUPPLEMENTAL DEED is dated                                            20[ ]

BETWEEN:

(1)      [        ] a company registered in England and Wales under number
         [        ] whose registered office is at [           ] (the "NEW
         CHARGING COMPANY");

(2)      THE COMPANIES whose respective names and registered offices are set out
         in the Schedule to this Deed (together the "EXISTING CHARGING
         COMPANIES"); and

(3)      BANK OF AMERICA, NATIONAL ASSOCIATION acting through its London branch
         at Bank of America House, 1 Alie Street, London E1 8DE as Security
         Trustee for the Beneficiaries (the "SECURITY TRUSTEE").

WHEREAS:

(A)      By a composite guarantee and debenture dated [        ] (such debenture
         as amended by supplementary deeds being referred to as the
         "DEBENTURE"), the Charging Companies have each covenanted to pay and
         discharge the Secured Obligations and have each guaranteed to the
         Security Trustee the obligations of each of the Obligors.

(B)      As security for their respective obligations under the Debenture, the
         Charging Companies have charged the Collateral to the Security Trustee
         in the manner set out in the Debenture.

(C)      The New Charging Company [became a [wholly-owned] subsidiary of the
         Borrower     on 20[ ]] has been required, pursuant to clause 5.1 of the
         Debenture, to grant a guarantee and debenture to the Security Trustee
         (as Security Trustee for the Beneficiaries) as set out below.

IT IS AGREED as follows:

1        Unless the context otherwise requires, terms used in this Deed and
         defined in the Debenture, but not otherwise defined in this Deed, shall
         have the same meanings as in the Debenture.

2        The New Charging Company covenants separately with the Security Trustee
         (as Security Trustee for the Beneficiaries) and each of the Existing
         Charging Companies that it will be bound by the terms of the Debenture
         in every way as from today's date, as if it had been named as a
         Charging Company in the Debenture.

3        The Existing Charging Companies each covenant separately with the
         Security Trustee and the New Charging Company that they will be bound
         by the terms

                                       63
<PAGE>

         of the Debenture in every way as from today's date, as if the New
         Charging Company had been named as a Charging Company in the Debenture.

The New Charging Company with full title guarantee and as a continuing security
for the discharge in full of the Secured Obligations mortgages, charges and/or,
as appropriate, assigns to the Security Trustee (as Security Trustee for the
Beneficiaries) each of the classes of assets or rights separately referred to in
clauses 2.1 to 2.3 (inclusive) of the Debenture now or hereafter owned or
enjoyed by it, in the same manner and upon the same terms and conditions,
mutatis mutandis, as if such clauses were set out in full in this Deed.

IN WITNESS the parties have caused this Deed to be duly executed on the date
first written above.

                                       64
<PAGE>

                                   SCHEDULE 10

                    DOCUMENTS TO ACCOMPANY SUPPLEMENTAL DEED

1        A copy, certified a true copy by a duly authorised officer of the
         proposed Charging Company, of the constitutive documents of such
         proposed Charging Company

2        A copy, certified a true copy by a duly authorised officer of the
         proposed Charging Company, of a board resolution of such proposed
         Charging Company approving the execution and delivery of the
         Supplemental Deed, the accession of such proposed Charging Company to
         this Debenture and the performance of its obligations under this
         Debenture and any other Finance Documents and authorising a person or
         persons (specified by name or office) on behalf of such proposed
         Charging Company to execute and deliver such Supplemental Deed, any
         other Finance Document and any other documents to be delivered by such
         proposed Charging Company pursuant hereto or thereto.

3        A certificate of a duly authorised officer of the proposed Charging
         Company setting out the names and signatures of the person or persons
         mentioned in the resolution referred to in paragraph 2 above.

4        A certificate addressed to the Agent signed by two authorised
         signatories of the proposed Charging Company stating that the execution
         by such proposed Charging Company of the Supplemental Deed and the
         performance of such proposed Charging Company of its obligations
         thereunder and under any other Finance Documents are within its
         corporate powers, have been duly approved by all necessary corporate
         action and will not cause any limit or restriction on any of its powers
         (whether imposed by law, decree, rule, regulation, its constitutive
         documents or agreement or otherwise) or on the right or ability of its
         directors to execute such powers, to be exceeded or breached.

5        A copy of its latest audited financial statements.

6        Legal opinion(s) of counsel to the Agent in a form satisfactory to the
         Agent.

7        [In connection with the acquisition of any company where such company
         or any of its Subsidiaries accedes as a Charging Company to the
         Debenture or otherwise executes a Security Document (such person thus
         becoming an "OBLIGOR"):

         7.1      a certificate addressed to the Agent from the Auditors
                  confirming in the context of section 155(2) Companies Act 1985
                  that:

                  7.1.1    in their opinion such Obligor had positive net assets
                           as defined in section 154(2) Companies Act 1985;

                  7.1.2    they are not aware of anything to indicate that the
                           decision of the directors of such Obligor not to make
                           a provision in relation to the giving of financial
                           assistance represented by the execution of each such
                           Security

                                       65
<PAGE>

                           Document to which it is a party has not been made on
                           fair and reasonable grounds; and

                  7.1.3    the giving of such financial assistance by such
                           Obligor would not cause those net assets to be
                           reduced,

         7.2      in each such case dated as at the date of the giving of such
                  financial assistance;

         7.3      a statutory declaration by all of the directors of such
                  Obligor as required by Section 155(6) Companies Act 1985 in
                  relation to such financial assistance, such statutory
                  declaration to be in the prescribed form and having attached
                  thereto the report addressed by the Auditors complying with
                  the provisions of Section 156(4) Companies Act 1985;

         7.4      a copy, certified by a duly authorised officer of such Obligor
                  as being a true copy, of the resolution of its board of
                  directors approving the matters and things required to be done
                  by it pursuant to this paragraph 8 and in particular the
                  giving of such financial assistance.]*

8        Such other documents or evidence relating to such proposed Charging
         Company as the Agent may reasonably require.

* This paragraph only applies where a company being acquired (or one or more of
its Subsidiaries) is acceding to the Debenture or otherwise executing a Security
Document to secure borrowings raised for its acquisition.

                                       66
<PAGE>

THE ORIGINAL CHARGING COMPANIES

EXECUTED AS A DEED by                   )
IDEAL HARDWARE LIMITED                  )
acting by:                              )

           Director
           Secretary

Address:   Fountain Court
           Cox Lane
           Chessington
           Surrey KT9 1SJ

Fax:       020 8286 5588

Attention: Nick Lee/Helen Hancock

EXECUTED AS A DEED by                   )
BELL MICROPRODUCTS EUROPE               )
EXPORT LIMITED                          )
acting by:                              )

           Director
           Secretary

Address:   Fountain Court
           Cox Lane
           Chessington
           Surrey KT9 1SJ

Fax:       020 8286 5588

Attention: Nick Lee/Helen Hancock

                                       67
<PAGE>

EXECUTED AS A DEED by                   )
BELL MICROPRODUCTS EUROPE               )
B.V. acting by its Managing Director:   )

           Managing Director

Address:   c/o Fountain Court
           Cox Lane
           Chessington
           Surrey KT9 1SJ

Fax:       020 8286 5588

Attention: Nick Lee/Helen Hancock

EXECUTED AS A DEED by                   )
BELL MICROPRODUCTS LIMITED              )
acting by:                              )

           Director
           Secretary

Address:   Fountain Court
           Cox Lane
           Chessington
           Surrey KT9 1SJ

Fax:       020 8286 5588

Attention: Nick Lee/Helen Hancock

                                       68
<PAGE>

EXECUTED AS A DEED by                   )
UNIFUND LIMITED                         )
acting by:                              )

           Director
           Secretary

Address:   Fountain Court
           Cox Lane
           Chessington
           Surrey KT9 1SJ

Fax:       020 8286 5588

Attention: Nick Lee/Helen Hancock

THE SECURITY TRUSTEE

Signed for and on behalf of             )
BANK OF AMERICA, NATIONAL               )
ASSOCIATION by:                         )

Address:   New Broad Street House
           35 New Broad Street
           London EC2M 1NH

Fax:       020 7809 5807

Attention: Graham Moffitt/Carmen Bernardis (Business Credit)

                                       69