**DATED**

**2008**

|   | MARTECH                  SYSTEMS (WEYMOUTH) LIMITED | (1)    |
|--------|-----------------------------------------------------|--------|
|   | And                                                 |   |
|   | THE                  ROYAL BANK OF SCOTLAND PLC     | (2)    |

**____________________________________**

**DEBENTURE**

**____________________________________**

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| **DATE                OF DEBENTURE** |  **2008** |
|--------------------------------------|----------------|

**BETWEEN:-**

| (1) | MARTECH                          SYSTEMS (WEYMOUTH) LIMITED (Company Number 2300406) whose                          registered                          office is at 14 Albany Road, Granby Industrial Estate,                          Weymouth, Dorset                          DT4 9TH (the “**Company**”);                          and |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
| (2) | THE                      ROYAL BANK OF SCOTLAND PLC (Registered Number 90312) acting                      through its                      London offices located at 135 Bishopsgate, London EC2M 3UR                      (the                      “**Subscriber**”); |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**IT        IS AGREED THAT:**

| **1.** | **DEFINITIONS** |
|--------|-----------------|

| 1.1 | Unless                  the context otherwise requires the following expressions shall                  have the                  following meanings wherever used in this agreement and its                  introduction: |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **"Act"**                                                    | means                  the Insolvency Act 1986.                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                         |                                                                                                                                                                                                                                                        |
|   | **“Agreed                  Form”**               | in                  relation to any document means the form agreed and for the purposes                  of                  identification only initialled by or on behalf of COGI and the                  Subscriber.                                    |
|   |                                                         |                                                                                                                                                                                                                                                        |
|   | **“Business                  Day”**              | means                  a day (excluding Saturdays, Sundays and any public holiday) on                  which banks                  are open for business in London for the transaction of normal banking                  business.                        |
|   |                                                         |                                                                                                                                                                                                                                                        |
|   | **“Charged                  Property”**          | means                  all of the undertaking, assets, rights, revenues and property (present                  and                  future) of the Company charged to the Subscriber under paragraph                  4 of this                  Debenture. |
|   |                                                         |                                                                                                                                                                                                                                                        |
|   | **“COGI”**                                       | Coda                  Octopus Group, Inc. incorporated in the State of Delaware, whose                  principal                  place of business is at 164 West 25th                  Street, New York, New York 10001.                                 |
|   |                                                         |                                                                                                                                                                                                                                                        |
|   | **“Completion”**                                 | means                  the carrying out by the parties of their obligations under Clauses                  3.1 to                  3.3 of the Subscription Agreement.                                                                                       |
|   |                                                         |                                                                                                                                                                                                                                                        |
|   | **“Completion                  Date”**           | means                  the date hereof.                                                                                                                                                                                                                     |
|   |                                                         |                                                                                                                                                                                                                                                        |
|   | **“Confidentiality                  Agreement”** | means                  the agreement dated on or around the Completion Date between COGI                  and the                  Subscriber whereby the Subscriber agrees, inter alia, to keep certain                  information confidential.         |

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|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **“Debts”**                                  | means                  all present and future book and other debts and any other monies                  of any                  nature whatsoever due to the Company (and whether or not yet due                  and                  payable) now or at any time during the continuance of the security                  interest created under this Debenture.                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | **“Deed                  of Guarantee”**     | means                  a deed in the Agreed Form to be entered into at Completion whereby                  those                  Subsidiaries which are registered in the United Kingdom agree to                  guarantee                  the obligations of COGI under the Transaction Documents                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | **“Equipment**                                     | means                  all plant, machinery, jigs, moulds, fixtures, fittings (not being                  landlord’s fixtures) furniture, equipment and tools now or at any time                  during the continuance of this security belonging to the                  Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | **“Floating                  Charges”**      | means                  the two floating charges to be granted on the date hereof in favour                  of the                  Subscriber, one floating charge to be granted by Coda Octopus Products                  Ltd                  and the other by Coda Octopus R & D Ltd and “Floating Charge” shall                  mean whichever of the Floating Charges as the context                  admits                                                                                                                                                                                                                                                                                                                     |
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | **“Goodwill”**                               | means                  the goodwill of the Company’s business as carried on by the Company after                  the date of this Debenture;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | **“Intellectual                  Property”** | means                  all customer information, patterns, drawings, product names, intellectual                  property and design rights including (without limitation) trade                  marks or                  trade names (whether registered or not), all patents, patent applications,                  registered designs, copyright, letters patent, service marks, business                  names, inventions, trade secrets, confidential information and                  know-how                  (together with the benefit but subject to the burden of any licences                  consents or permissions relating to them) of or used by the Company                  in the                  Company’s business. |
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | **“Intercreditor                  Deed”**    | means                  a deed entered into on or around the Completion Date among COGI,                  the                  Subscriber and FGI regulating the priorities of the various charges                  and                  security interests held by the Subscriber and FGI.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | **“Loan                  Note Instrument”**  | means                  the loan note instrument executed by COGI on the Completion Date                  pursuant                  to which the Notes are constituted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|-----------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **“Lock-up                  Agreements”**     | means                  certain agreements entered into on or around the date hereof between                  the                  directors and board members of COGI and the Subscriber undertaking                  (with                  certain exceptions) not to sell or transfer or otherwise dispose                  of any of                  their shares in COGI.                                                                                                                                                                       |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **“Noteholder”**                              | means                  the person for the time being entered in the Register as a holder                  of any                  part of the Notes.                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **“Notes”**                                   | means                  USD 12,000,000 Convertible Loan Notes due 21 February 2015 constituted                  by                  the Loan Note Instrument, or, as the case may be the Principal                  Amount                  Outstanding (as defined in the Loan Note Instrument) represented                  by them,                  and each “Note” shall be for a nominal amount of USD 100,000.                                                                                                                      |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **“Permitted                  Encumbrance”**  | A                  debenture dated 30 October 2006 and registered on 7 November 2006                  granted                  by the Company in favour of Faunus Group International, Inc (**“FGI”**)                  a                  Delaware corporation whose principal place of business is 80 Pine                  Street,                  32nd                  Floor, New York, New York 10005.                                                                                                                             |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **“Securities”**                              | means                  all stocks, shares, debentures, debenture stock, loan stock, bonds                  and                  securities issued by any company or person (other than the Company)                  and                  all other investments (as listed in Part II of Schedule 2 to the                  Financial                  Services and Markets Act 2000).                                                                                                                                                                |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **“Security                  Agreement”**     | means                  an agreement in the Agreed Form to be entered into at Completion                  whereby                  COGI and those of its Subsidiaries incorporated in the United States                  of                  America grant a continuing and first security interest in and over                  the                  assets of COGI and those of its Subsidiaries incorporated in the                  United                  States of America                                                                      |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **"Stock"**                                               | means                  all stock in trade and raw materials now or at any time during                  the                  continuance of this security belonging to the Company.                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **“Subscription                  Agreement”** | means                  the subscription agreement dated the Completion Date between the                  Subscriber and COGI.                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | **“Transaction                  Documents”**  | means                  the Subscription Agreement, the Loan Note Instrument, the Deed                  of                  Guarantee, this Debenture and the debenture to be granted on the                  Completion Date by Coda Octopus (UK) Holdings Ltd, the Floating                  Charges,                  the Lock-up Agreements, the Security Agreement, the Confidentiality                  Agreement, the Intercreditor Deed and all other documents entered                  into in                  connection with any of them. |

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|   |                                    |                                                                                                                                                                                                                                                  |
|--------|-----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | **"VAT"**                               | means                  Value Added Tax.                                                                                                                                                                                                               |
|   |                                    |                                                                                                                                                                                                                                                  |
|   | **"Vehicles"**                          | means                  all vehicles now or at any time during the continuance of this                  security                  owned by the Company.                                                                                                |
|   |                                    |                                                                                                                                                                                                                                                  |
|   | **"Work                  in Progress"** | means                  all partly completed goods or services allocated by the Company                  from time                  to time to its contracts with its customers for the supply of goods                  or                  services. |
|   |                                    |                                                                                                                                                                                                                                                  |
|   | **"1925                  Act"**         | means                  the Law of Property Act 1925                                                                                                                                                                                                   |

| 1.2 | In                  interpreting this agreement: |
|-----|--------------------------------------------------|

|   | 1.2.1 | references                  to clauses and schedules are, unless otherwise stated, references                  to                  clauses, sub-clauses and schedules in or annexed to this                  agreement; |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.2 | the                  headings used in this agreement are for convenience only and shall                  not                  affect its interpretation; |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.3 | where                  any agreement, obligation, covenant, warranty, undertaking or                  representation is expressed to be made, undertaken or given by                  two or more                  persons they shall be jointly and severally responsible in respect                  of such                  matter; |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.4 | reference                  to "a person" shall be construed so as to include any individual,                  firm,                  company or partnership (whether or not having a separate legal                  personality                  and whether incorporated or not); |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.2.5 | references                  to any enactment shall be deemed to include references to such                  enactment                  as re-enacted, amended or extended. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **2.** | **COVENANT                  TO PAY** |
|--------|--------------------------------------|

| **3.** | **LIABILITIES                  SECURED BY THE DEBENTURE** |
|--------|-----------------------------------------------------------|

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|   | 3.1 | all                  present and future indebtedness of the Company to the Subscriber                  and the                  Noteholders arising under the terms of the Transaction Documents;                  and |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | all                  costs, charges, expenses, claims and liabilities of any kind whatsoever                  and howsoever arising owed to or incurred directly or indirectly                  by the                  Subscriber and the Noteholders in relation to the enforcement of                  this                  security, |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **4.** | **PROPERTY                  CHARGED BY THE DEBENTURE** |
|--------|--------------------------------------------------------|

|   | 4.1 | charges                  by way of fixed charge all right, title and interest in any freehold                  or                  leasehold property now or at any time during the continuance of                  this                  security belonging to the Company, including all present future                  rights,                  licences, guarantees, rents, deposits and                  contracts; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2 | charges                  by way of fixed charge all right, title and interest in any stocks,                  shares                  or other securities and monies standing to the credit of any bank                  account                  now or at any time during the continuance of this security belonging                  to                  the Company; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.3 | assigns                  by way of first fixed mortgage its rights in any policies of insurances,                  assurances present or future; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.4 | charges                  by way of fixed charge its Goodwill and Intellectual                  Property; |
|--------|-----|----------------------------------------------------------------------------------------------------------|

|   | 4.5 | charges                  by fixed charge all its Equipment and Vehicles;                  and |
|--------|-----|-----------------------------------------------------------------------------------------------|

|   | 4.6 | charges                  by floating charge all of the Company’s undertaking and all Debts, stock                  and work in progress, and all other property, assets and rights                  now or at                  any time during the continuance of this security belonging to the                  Company                  not otherwise charged by the charges set out in paragraphs 4.1                  to 4.5                  inclusive. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| **5.** | **ACKNOWLEDGEMENT                  OF PRIOR CHARGE** |
|--------|------------------------------------------------------|

| **6.** | **COMPANY’S                  COVENANTS** |
|--------|------------------------------------------------|

|   | 6.1 | in                  accordance with the terms of the Permitted Encumbrance the Company                  shall                  take all steps required by contract and law to satisfy its indebtedness                  to                  FGI secured by the Permitted Encumbrance no later than 31 January                  2009 and                  to secure the discharge of the registered charges no later than                  28                  February 2009. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.2 | to                  register the Debenture with the Registrar of Companies for England                  and                  Wales no later than 21 days after the date of execution of this                  Debenture. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.3 | upon                  discharge of the Permitted Encumbrance the Company shall take all                  steps                  required under the laws of England and Wales to ensure that the                  Subscriber                  has a first ranking security interest in the Charged                  Property. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.4 | if                  required by the Subscriber to forthwith deposit with the Subscriber                  all or                  any documents, deeds, or other papers whatsoever relating to the                  Charged                  Property as the Subscriber may                  require; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.5 | to                  make timely payment of all lawful amounts in respect of the Charged                  Property when due including all rents, periodic charges and outgoings                  of                  any nature. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.6 | to                  keep all of the Charged Property in a good state of repair and                  in proper                  and good working order and condition and to permit the Subscriber                  and such                  other persons as the Subscriber may from time to time appoint for                  the                  purpose to enter and view the Charged Property’s state and condition on                  reasonable notice; |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.7 | to                  insure and keep insured all of the Charged Property which are of                  an                  insurable nature against loss or damage by fire and all other usual                  risks                  as the Subscriber may require in the full amount of their reinstatement                  value in such name and in such offices as the Subscriber shall                  approve in                  terms not permitting the insurers to cancel the policy of insurance                  without giving at least 14 days’ notice to the Company and to pay when due                  all premiums and any other charges necessary for effecting and                  maintaining                  such insurance and, if requested by the Subscriber, to have the                  interest                  of the Subscriber noted on any policy or policies and if required                  to                  deliver to the Subscriber such policy or policies and the receipt                  for                  every premium payable in respect of such policy or                  policies; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 6.8 | to                  hold all money received on any insurance whatsoever in respect                  of loss,                  damage or destruction of the Charged Property whether under the                  covenant                  in paragraph 6.7 or otherwise on trust for the Subscriber to be                  applied in                  making good the loss or damage in respect of which the money is                  received                  or in or towards discharge of the sums for the time being owing                  to the                  Subscriber under this Debenture as the Subscriber may in its absolute                  discretion require; |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.9 | not                  without the previous written consent of the Subscriber to create                  or                  attempt to create any mortgage, pledge, fixed or floating charge                  or other                  encumbrance or security interest on or over any of the Charged                  Property; |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.10 | except                  for the Permitted Encumbrance, not to take or omit to take any                  action that                  might or would have the result of materially impairing the security                  interests created by this Debenture. The Company will not grant                  to any                  person other than the Subscriber and the Noteholders any interest                  whatsoever in the Charged Property; |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.11 | to                  inform the Subscriber immediately on becoming bound to complete                  the                  purchase of any estate or interest in any freehold or leasehold                  property                  after the date of this Debenture and to deposit with the Subscriber                  the                  deeds and documents of title relating to such property                  ; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.12 | to                  execute at any time upon request over all or any of the property                  referred                  to in paragraph 6.11, charge by way of legal mortgage in favour                  of the                  Subscriber in such form as the Subscriber shall                  require; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.13 | to                  execute and do all such assurances and things including (without                  prejudice                  to the generality of the foregoing) legal mortgages, charges and                  assignments as the Subscriber may require for perfecting the security                  constituted by this Debenture and for facilitating the realisation                  of the                  Charged Property and for exercising all powers, authorities and                  discretions conferred by this Debenture upon the Subscriber or                  any                  receiver appointed by the Subscriber and to give notice of any                  such                  assurance or other thing to any person the Subscriber may                  require; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.14 | to                  comply with any and all covenants and undertakings which the Company                  has                  entered into in the other Transaction                  Documents. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **7.** | **DEFAULT** |
|--------|-------------|

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|   | 7.1 | if                  there is an Event of Default (as detailed in Condition 9.1 of the                  Loan                  Note Instrument) which has not been remedied as provided for in                  Condition                  9.2 of the Loan Note Instrument; |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 7.2 | if                  the** **Company                  fails to observe or commits any breach of any of the covenants,                  undertakings, conditions or provisions of this Debenture provided                  always                  that (save for a breach of Paragraphs 6.1 or 6.2 of this Debenture                  or a                  breach of Condition 9.1 (e) of the Loan Note Instrument) before                  this                  security becomes enforceable the Company shall have a period of                  30 days                  (or such longer period as is reasonable in the circumstances and                  which is                  agreed between the Company and the Subscriber, both parties acting                  reasonably) from the earlier of (i) the date the Company becomes                  aware, or                  ought reasonably to be aware, of the failure to observe or commission                  of                  the breach and (ii) the date the Company is given notice by either                  the                  Subscriber or a majority (by value) of the Noteholders in which                  to remedy                  any failure to observe or breach. If the Company remedies the failure                  to                  observe or breach in accordance with this Paragraph 7.2 then this                  security                  shall not become immediately enforceable as a result of the failure                  to                  observe or breach which has been                  remedied; |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 7.3 | if                  an order is made for the winding up of the Company by the court                  or if an                  effective resolution is passed for the members' or creditors' voluntary                  winding up of the Company; |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 7.4 | if                  a petition is presented for an administration order to be made                  in relation                  to the Company pursuant to the Act;                  or |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 7.5 | if                  a receiver is appointed of all or any part of the property and                  assets of                  the Company. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| **8.** | **APPOINTMENT                  OF A RECEIVER, ADMINISTRATOR, LIQUIDATOR OR PROVISIONAL                  LIQUIDATOR** |
|--------|----------------------------------------------------------------------------------------------------------------------|

| 8.1 | Paragraph                  14 of Schedule B1 to the Act (the power by the holder of a floating                  charge                  to appoint an administrator of the Company) shall apply to this                  Debenture.                  At any time after the Subscriber has demanded payment of any of                  the                  liabilities secured by Paragraph 3, or any step or proceeding has                  been                  taken for the appointment of a receiver, administrator, liquidator                  or                  provisional liquidator, or with a view to seeking a moratorium                  or a                  voluntary arrangement, in respect of the Company, or if requested                  by the                  Company, the Subscriber may appoint by writing, insofar as permitted                  by                  law, any person or persons to be a receiver and manager of all                  or any of                  the Charged Property or an administrator or administrators; and                  this                  Debenture shall in any of such events become immediately                  enforceable. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 8.2 | Where                  the Subscriber appoints more than one person as receiver, liquidator                  or                  provisional liquidator or administrator, they shall have power                  to act                  separately unless the Subscriber specifies to the contrary in the                  appointment. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.3 | The                  Subscriber may from time to time determine the remuneration of                  the                  receiver, administrator, liquidator or provisional                  liquidator. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.4 | Once                  a receiver, administrator, liquidator or provisional liquidator                  is                  appointed, the Subscriber will not be precluded from making any                  subsequent                  appointment of a receiver, administrator, liquidator or provisional                  liquidator over any Charged Property, whether or not any receiver,                  administrator, liquidator or provisional liquidator previously                  appointed                  continues to act. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.5 | The                  receiver, administrator, liquidator or provisional liquidator will                  be the                  agent of the Company and the Company will be solely liable for                  his acts,                  defaults and remuneration unless the Company goes into liquidation,                  after                  which he shall act as principal and not become the agent of the                  Subscriber. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.6 | The                  receiver, administrator, liquidator or provisional liquidator will                  be                  entitled to exercise all the powers set out in Schedules 1 and                  2 to the                  Act. In addition, but without limiting these powers and without                  prejudice                  to the Subscriber’s powers (including the power of the Subscriber to sell                  or otherwise dispose of all or any part of the Charged Property                  (at the                  times, in the manner and on the terms it thinks fit) and to apply                  the                  proceeds of such sale or other disposal in paying the costs of                  that sale                  or disposal and in or towards the discharge of the Secured Liabilities).                  Such power of sale or other disposal shall operate as a variation                  and                  extension of the statutory power of sale under section 101 of the                  1925 Act                  and the receiver, administrator liquidator or provisional liquidator                  will                  have power with or without the concurrence of others and subject                  always to                  the rights under the Permitted                  Encumbrance: |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6.1 | to                  sell, let, lease or grant licences of, or vary the terms or terminate                  or                  accept surrenders of leases, tenancies or licences of, all or any                  of the                  Charged Property, or grant options over them, on any terms the                  Receiver                  thinks fit in his absolute discretion and any sale or disposition                  may be                  for cash, payable in a lump sum or by instalments, or other valuable                  consideration; |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 8.6.2 | to                  sever any fixtures from land and/or sell them                  separately; |
|--|-------|------------------------------------------------------------------------------------------------|

|  | 8.6.3 | to                  promote a company to purchase all or any Charged Property or any                  interest                  in them; |
|--|-------|------------------------------------------------------------------------------------------------------------------------------------------|

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|  | 8.6.4 | to                  make and effect all repairs, renewals and improvements to the Charged                  Property and effect, renew or increase insurances on the terms                  and against                  the risks that he thinks fit; |
|--|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6.5 | to                  exercise all voting and other rights attaching to Securities and                  investments generally; |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6.6 | to                  redeem any prior encumbrance and settle and pass the accounts of                  the                  encumbrancer so that all accounts so settled and passed will (except                  for                  any manifest error) be conclusive and binding on the Company and                  the money                  so paid will be deemed to be an expense properly incurred by the                  receiver,                  administrator, liquidator or provisional                  liquidator; |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 8.6.7 | to                  pay the Subscriber’s proper charges for time spent by the Subscriber’s                  employees and agents in dealing with matters raised by the administrator,                  liquidator or provisional liquidator or relating to the administration;                  and |
|--|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.6.8 | to                  do all other acts and things which he may consider incidental or                  conducive                  to any of the above matters or powers or to the preservation, improvement                  or realisation of the Charged                  Property. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.7 | Subject                  to section 45 of the Act, the Subscriber may at any time remove                  a                  receiver, administrator, liquidator or provisional liquidator from                  all or                  any of the Charged Property of which he is the receiver, administrator,                  liquidator or provisional                  liquidator. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **9.** | **APPOINTMENT                  OF ATTORNEY** |
|--------|----------------------------------------------|

| **10.** | **INDEMNITY** |
|---------|---------------|

| 10.1 | The                  Company shall indemnify the Subscriber and any receiver, administrator,                  liquidator, provisional liquidator, attorney manager, agent or                  other                  person appointed by the Subscriber under this Debenture out of                  the Charged                  Property in respect of all actions, proceedings, costs, claims,                  liabilities and demands (“Liabilities”) incurred or suffered directly or                  indirectly by any of them in the execution or purported execution                  of any                  of their powers, duties or functions under this Debenture or otherwise                  and                  against all actions, proceedings, costs, claims, liabilities and                  demands                  of any nature in respect of any thing done or omitted to be done                  in any                  way relating to their powers duties and                  functions. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 10.2 | Any                  receiver, administrator, liquidator or provisional liquidator appointed                  under this Debenture may retain and pay all sums in respect of                  any of the                  liabilities and expenses referred to in paragraph out of any money                  received by him under the powers conferred by this                  Debenture. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | The                  Company shall ratify and confirm all transactions entered into                  by the                  Subscriber or any receiver, administrator, liquidator or provisional                  liquidator in the exercise or purported exercise of the Subscriber’s or                  the receiver’s powers and all documents entered into or things done by the                  Subscriber or the receiver or other person acting under the Power                  of                  Attorney in paragraph 9. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **11.** | **DEMANDS                  AND NOTICES** |
|---------|------------------------------------------|

| **12.** | **COMPLIANCE                  WITH CONSTITUTIONAL DOCUMENTS** |
|---------|---------------------------------------------------------------|

|   | 12.1 | it                  is duly incorporated and validly existing in the United Kingdom                  and has                  full authority to enter into this Debenture and to perform its                  obligations                  hereunder; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12.2 | this                  Debenture constitutes its legal, valid and binding obligation and                  is an                  effective security over the Charged                  Property; |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12.3 | that                  neither the execution of this Debenture nor the creation of any                  security                  under or pursuant to it contravenes or will contravene the provisions                  of                  the memorandum or articles of association of the Company or any                  equivalent                  constitutional documents governing the Company; |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12.4 | the                  Company is the sole legal and beneficial owner of the Charged Property                  subject to the Permitted Encumbrance or any other security interests                  disclosed in the Disclosure Letter; |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 12.5 | the                  Company has not stopped payment on any debts and is not insolvent                  or                  unable to pay its debts for the purpose of Section 123 of the                  Act; |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 12.6 | all                  approvals required to be obtained whether under the provisions                  of the                  Companies Act 1985 or any other enactment have been duly obtained                  and that                  it is in a position to enter into this                  Debenture; |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **13.** | **FOREIGN                  CURRENCY** |
|---------|---------------------------------------|

**Contractual        Currency**

| **14.** | **CONTINUING                  SECURITY** |
|---------|------------------------------------------|

| **15.** | **ASSIGNMENT** |
|---------|----------------|

| **16.** | **SUBSCRIBER’S                  AND RECEIVER’S LIABILITY** |
|---------|------------------------------------------------------------------------|

| **17.** | **PROTECTION                  OF THIRD PARTIES** |
|---------|--------------------------------------------------|

----

|  | 17.1 | No                  person paying or handing over monies to the Subscriber or a receiver                  and                  obtaining a discharge shall have any responsibility or liability                  to see to                  their correct application. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 17.2 | No                  person dealing with the Subscriber or a receiver need                  enquire: |
|--|------|-----------------------------------------------------------------------------------------------------|

|  | 17.2.1 | whether                  any event has happened giving either the Subscriber or the receiver                  the                  right to exercise any of his                  powers; |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 17.2.2 | as                  to the propriety or regularity of any act purporting or intending                  to be an                  exercise of such powers; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 17.2.3 | as                  to the validity or regularity of the appointment of any receiver                  purporting to act or to have been appointed as such;                  or |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 17.2.4 | whether                  any money remains owing upon this                  security. |
|--|--------|---------------------------------------------------------------------------------------|

|  | 17.3 | All                  the protection to purchasers contained in Sections 104 and 107                  of the Law                  of Property Act 1925 shall apply to any person purchasing from                  or dealing                  with the receiver or the Subscriber as if the liabilities secured                  by this                  Debenture had become due and the statutory power of sale and appointing                  a                  receiver in relation to the Charged Property had arisen on the                  date of                  this Deed. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 17.4 | No                  person dealing with the Subscriber or the receiver shall be affected                  by                  express notice that any act is unnecessary or                  improper. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **18.** | **THIRD                  PARTIES** |
|---------|------------------------------------|

| **19.** | **GENERAL                  LAW AND CONSTRUCTION** |
|---------|---------------------------------------------------|

| 19.1 | This                  Debenture shall be construed and governed in all respects in accordance                  with English law and shall be subject to the non-exclusive jurisdiction                  of                  the English courts. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19.2 | The                  Company agrees that if any of the provisions in this Debenture                  is held to                  be invalid but would be valid if part of the wording were deleted                  or                  modified then such provision shall apply with such modification                  as may be                  necessary to make it enforceable. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 19.3 | No                  failure to exercise nor any delay in exercising, on the part of                  the                  Subscriber, any right or remedy under the terms of this Debenture                  shall                  operate as a waiver, nor shall any single or partial exercise of                  any right                  or remedy prevent its further exercise or the exercise of any other                  right                  or remedy. The rights and remedies provided in this Debenture are                  cumulative and not exclusive of any rights or remedies provided                  by law and                  nothing in this agreement shall operate to restrict or affect in                  any way                  any right of the Subscriber to be indemnified or to exercise a                  lien                  howsoever. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**AS        WITNESS**

| **EXECUTED                        AS A DEED**                        by                        ` Martech                        Systems (Weymouth) Limited acting                        by:-  | ))                    ) |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------|

|   |                                                                |
|--------|---------------------------------------------------------------------|
|   | .........................................  Director  |
|   |                                                                |
|   |                                                                |
|   | ......................................... Director/Secretary   |

| **EXECUTED                    AS A DEED**                    by                    ` THE                    ROYAL BANK OF SCOTLAND PLC acting                    by:-  | ))                    ) |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------|

|   | ......................................... |
|--------|-------------------------------------------|

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