Exhibit 4.22


 


DATE 16 September 2003


 


 


VIRGIN SKY INVESTMENTS LIMITED


 


VIRGIN EXPRESS HOLDINGS PLC


 


 


FACILITY AGREEMENT


 


for a secured loan facility of up to EUR 27,500,000


 


 


Macfarlanes


10 Norwich Street


London EC4A 1BD


 

















 


FACILITY AGREEMENT


 


DATE                     16 September 2003


 


PARTIES


 


1                              VIRGIN
SKY INVESTMENTS LIMITED (company number 4415765)
whose registered office is at 120 Campden Hill Road, London W8 7AR (the
“Lender”)


 


2                              VIRGIN
EXPRESS HOLDINGS PLC (company number 2743543) whose
registered office is at 120 Campden Hill Road, London W8 7AR (the “Borrower”)


 


RECITAL


 


This Facility Agreement (“this Agreement”) sets out
the terms and conditions of a secured uncommitted on-demand loan facility from
the Lender to the Borrower of up to twenty-seven million five hundred thousand
euro (EUR 27,500,000).


 


AGREEMENT


 


1                              Definitions


 


1.1                           In this Agreement and in the Recital and Schedule hereto, the
following words and expressions shall (unless the context otherwise requires)
have the following meanings:-


 


Base Rate: the euro base rate of
Lloyds TSB Bank plc from time to time;


 


Borrowed Money:  amounts borrowed or raised under any
transaction having the commercial effect of a borrowing or raising of finance;


 


Business Day:  a day (other than a Saturday or Sunday) on
which banks are open for business in the City of London;


 


Debenture:  a debenture to be executed by the Borrower in favour of the
Lender in such form as the Lender may approve;


 


Drawing:  a borrowing made or to be made under the Facility;


 


Drawdown Date:  in respect of any Drawing, the date for the making thereof requested
in the relevant Drawdown Notice;


 


Drawdown Notice:  a notice of drawing substantially in the
form set out in the Schedule hereto;


 


Encumbrance:  any mortgage, charge (whether fixed or floating), pledge, lien,
encumbrance, security interest or other security arrangement of any kind;


 


euro, euros, € or EUR:  the single currency of the member states of
the European Communities participating in European Monetary Union;


 


Facility:  the secured uncommitted on-demand loan facility granted by the
Lender to the Borrower pursuant to Clause 2;


 

















 


Margin:  three per cent. (3.0%) per annum;


 


Material Subsidiary:  any subsidiary of the Borrower which either
(a) trades or (b) owns assets worth more than £10,000 (or equivalent) in
aggregate;


 


Outstanding Drawings:  at any time, the aggregate principal amount
of all Drawings to the extent not repaid prior to such time.


 


1.2                           Any reference in this Agreement to:-


 


1.2.1                        Any provision of any Act shall include any modification,
re-enactment or extension thereof for the time being in force and also any
corresponding provision in repeated enactments.


 


1.2.2                        The singular includes a reference to the plural and vice versa.


 


1.2.3                        Any gender includes a reference to all other genders.


 


2                              Facility


 


2.1                           The Lender hereby, subject to the terms and conditions of this
Agreement, makes available to the Borrower a secured uncommitted on-demand loan
facility whereby at the request of the Borrower the Lender may make advances in
euro to the Borrower.


 


2.2                           The Outstanding Drawings shall not at any time exceed twenty-seven
million five hundred thousand euro (EUR 27,500,000).


 


2.3                           It is acknowledged that sums are still outstanding from the Borrower
to the Lender under the facility (the “Existing Facility”) which was made
available under a facility agreement dated 27 September 2000 made between
the Borrower and Barfair Limited as amended by agreement on 29 March 2001,
23 April 2002 and 5 November 2002 and which was assigned by Barfair
Limited to the Lender on 17 March 2003. 
As at 16 September 2003 such sums are EUR 1,135,093.45 of principal
(including capitalised interest) and EUR 8,891.57 of accrued interest.  The aggregate of such sums (both principal
and interest) shall be treated for all purposes as if it had been drawn as the
principal amount of a Drawing under this Agreement with effect from 16
September 2003;  and any terms
relating to such sums which are contrary to the terms set out in this Agreement
are hereby varied so that the terms of this Agreement shall govern such sums.  The Existing Facility is hereby replaced by
the Facility.


 


2.4                           If the board of directors of the Borrower approves any expansion of
the business of the Borrower and its Material Subsidiaries that requires
additional funding greater than the then undrawn amount of the Facility, and if
the Lender has received and is satisfied with the business plan, cost forecast
and other material details of the proposed project, the Lender will give
favourable consideration to increasing the maximum amount of the Facility as
necessary, but not to a total amount greater than fifty million euro (EUR
50,000,000).


 


2.5                           Any sum which is repaid, prepaid or otherwise discharged shall not
be available to be redrawn by the Borrower under any further Drawing.


 


2

















 


3                              Purpose


 


The Facility is intended to be used by the Borrower
for the general corporate purposes of the Borrower and its Material
Subsidiaries.


 


4                              Conditions
Precedent


 


The Borrower shall not be entitled to request the
making of a Drawing until the Lender shall have received the following in form
and substance satisfactory to it:-


 


4.1                           a certified copy of a resolution of the board of directors of the
Borrower approving the terms of this Agreement and the Debenture, authorising
an officer or officers to sign this Agreement and the Debenture on behalf of
the Borrower and authorising an officer or officers to make requests and give
notices on behalf of the Borrower pursuant to this Agreement or the Debenture;
and


 


4.2                           the Debenture duly and properly executed by the parties thereto.


 


5                              Drawdown


 


5.1                           Provided the Lender (in its absolute discretion) so agrees on each
occasion, the Borrower may make Drawings on Business Days.  The Borrower shall deliver to the Lender,
not less than two Business Days (or such shorter period as the Lender may
agree) prior to the proposed Drawdown Date:


 


5.1.1                        a duly completed and signed Drawdown Notice; and


 


5.1.2                        full details of the purpose to which the proceeds of the Drawing
will be applied.


 


5.2                           If the Lender decides on any occasion that it is not willing to make
a requested Drawing it shall as far as practicable advise the Borrower of the
reasons for that decision.


 


5.3                           Except at the discretion of the Lender or where the whole of the
undrawn amount of the Facility is being borrowed, the amount of any Drawing
shall not be less than EUR 150,000 and shall be an integral multiple of EUR
50,000.


 


5.4                           Each Drawdown Notice, once delivered, shall be irrevocable.


 


6                              Repayment
on Demand


 


All the Outstanding Drawings, together with all
accrued interest thereon and all other sums payable under this Agreement, shall
be repayable within 30 days after the Lender’s demand.


 


7                              Interest


 


7.1                           Subject to the provisions of Clause 9, the rate of interest payable
by the Borrower in respect of each Drawing shall be the rate determined by the
Lender from time to time to be the aggregate of:-


 


7.1.1                        the Margin; and


 


7.1.2                        Base Rate.


 


3

















 


7.2                           The determination by the Lender of the interest rate shall, save for
manifest error, be final, conclusive and binding upon the parties hereto.


 


7.3                           Interest shall accrue from day to day and shall be calculated for
any period on the basis of actual days elapsed and a 360 day year.


 


7.4                           Interest shall be paid to the Lender in arrear on 31 January, 30
April, 31 July and 31 October in each year and also on the date of
repayment of the Facility.


 


7.5                           Any amount of interest accrued in respect of any Drawing but not
paid on the due date may, at the absolute discretion of the Lender, be
capitalised and added to the amount of that Drawing.  Interest so capitalised shall itself accrue interest at the rate
detailed in this Clause 7.


 


8                              Security


 


The Facility shall be secured by the Debenture.


 


9                              Payments


 


Appendix A


 


9.2                           All payments to be made by the Borrower hereunder shall be made to
the Lender at such account as the Lender may from time to time notify the
Borrower of, in cleared funds not later than 10.00 a.m. for value on the day in
question.


 


9.3                           All amounts to be paid by the Lender to the Borrower under this
Agreement in respect of the making of Drawings shall be remitted to such
account of the Borrower as the Borrower may specify to the Lender for value on
the date in question by 10.00 a.m.


 


9.4                           If the Borrower fails to pay any amount on the due date for payment
in accordance with this Agreement the Borrower shall pay interest on that
amount from and including the time of default up to the time of actual payment
(as well after as before judgment) at the rate per annum which is determined by
the Lender to be the aggregate of:-


 


9.4.1                        two per cent. (2%) per annum;


 


9.4.2                        the Margin; and


 


9.4.3                        Base Rate.


 


9.5                           Interest referred to in Clause 9.3 shall accrue on the basis of
actual days elapsed and a 360 day year.


 


9.6                           In the event of the failure by the Borrower to pay any sum on the
due date on which such sum is expressed to be due and payable pursuant to this
Agreement the Borrower shall indemnify the Lender against any losses or
expenses (including loss of profit) which the Lender may sustain or incur as a consequence
of such failure by the Borrower.


 


9.7                           Any sum which, but for this clause, would fall due for payment
hereunder on a day which is not a Business Day shall be payable on the next
succeeding Business Day.


 


4

















 


9.8                           All amounts payable by the Borrower hereunder (whether of principal,
interest or otherwise) shall be paid in full without any set-off, counterclaim,
deduction or withholding (whether on account of any taxes, duties, levies or
charges or otherwise), unless the Borrower shall be required by law to make a
deduction or withholding, in which case the Borrower shall:


 


9.8.1                        ensure or procure that the deduction or withholding is made and that
it does not exceed the minimum legal requirement therefor;


 


9.8.2                        pay, or procure the payment of, the full amount deducted or withheld
to the relevant taxation or other authority in accordance with the applicable
law; and


 


9.8.3                        promptly deliver or procure the delivery to the Lender a receipt
evidencing the deduction or withholding that has been made, to the extent that
such a receipt is made available to the Borrower.


 


10                            Undertakings


 


So long as any amount (including, but not limited to,
principal and interest) is owing to the Lender by the Borrower under the terms
of this Agreement, the Borrower undertakes that (except to the extent the
Lender agrees otherwise in writing):-


 


10.1                         it shall furnish to the Lender a copy of the consolidated audited
accounts and annual report of the Borrower and each of its subsidiaries for
each financial year as soon as practicable (and in any event within 180 days
after the end of the relevant year);


 


10.2                         it shall furnish to the Lender promptly upon request such further
information regarding the business, assets and financial condition of the
Borrower;


 


10.3                         it shall obtain and promptly renew from time to time and comply with
all the terms and conditions of all such authorisations, approvals, consents,
licences and exemptions, and shall promptly effect all filings, registrations
and notarisations and promptly comply with all other requirements, in any such
case as may at any time or from time to time be required under any applicable
law or regulation to enable it to exercise its rights or perform its
obligations under this Agreement and the Debenture or required for the validity
or enforceability of this Agreement and the Debenture;


 


10.4                         forthwith upon becoming aware that the same may be threatened or
pending and in any case immediately after the commencement thereof, it shall
give to the Lender notice in writing of any litigation or administrative or
arbitration proceedings before or of any court, tribunal, arbitrator or other
relevant authority or any dispute with any governmental or other authority or
any other dispute of any kind, in each case which might materially and
adversely affect the business assets or financial condition of the Borrower;


 


10.5                         it shall not, directly or indirectly (whether by way of personal
obligation or otherwise), give or permit to subsist any guarantee, indemnity or
other assurance against loss or become or remain liable contingently or
otherwise in respect of any present or future indebtedness or liability of any
other person, except where


 


5

















 


such guarantee, indemnity or assurance is necessary in the ordinary
course of business of an operational Material Subsidiary;


 


10.6                         it shall not change or threaten to change its business as presently
conducted;


 


10.7                         it shall not sell, transfer, lend, lease or otherwise dispose of
(otherwise than in the normal course of business) the whole or any substantial
part of its properties, assets or revenues, whether by one transaction or a
series of transactions (related or not); and


 


10.8                         it shall not create or permit to subsist any Encumbrance on all or
any part of its properties, assets or revenues (present or future), except if
necessary in the ordinary course of business of an operational Material
Subsidiary.


 


11                            Set-off


 


The Borrower authorises the Lender to apply any credit
balance on any account of the Borrower with the Lender in satisfaction of any
sum immediately due and payable by the Borrower hereunder but unpaid.  For this purpose the Lender 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.  The Lender shall not be obliged to exercise
any right given to it by this Clause but shall if practicable give prior notice
to the Borrower of any such application by it.


 


12                            Assignment


 


12.1                         This Agreement shall be binding upon and inure to the benefit of the
Lender the Borrower and their respective successors and assigns.


 


12.2                         The Borrower may not assign or transfer all or any of its rights
and/or obligations under this Agreement.


 


12.3                         The Lender may assign or transfer all or any part of its rights and
benefits hereunder and under the Debenture and may disclose to an actual or
potential assignee such information about the Borrower as the Lender shall
consider appropriate.


 


13                            Severability
and Partial Invalidity


 


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


 


14                            No
Waivers;  Remedies Cumulative


 


14.1                         No failure or delay by the Lender in exercising any right or remedy
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise or waiver of any right or remedy preclude its further exercise or the
exercise of any other right or remedy.


 


14.2                         The rights and remedies herein provided are cumulative and not
exclusive of any rights and remedies provided by law.


 


6

















 


15                            Costs


 


15.1                         The Borrower shall on demand reimburse the Lender for all reasonable
costs and expenses (including reasonable legal fees) incurred by the Lender in
the negotiation, preparation and execution of this Agreement and the Debenture.


 


15.2                         The Borrower shall indemnify the Lender on demand in respect of all
proper costs and expenses (including legal fees) incurred by it in connection
with the enforcement of this Agreement or the Debenture or the preservation of
its rights under this Agreement or the Debenture as a result of any breach by
the Borrower of its obligations hereunder or thereunder.


 


16                            Clause
Headings


 


16.1                         Clause headings contained herein are for convenience only and have no
legal effect.


 


16.2                         References to Clauses, Sub-Clauses, Schedules or Recitals (save
where the context otherwise requires) are to Clauses, Sub-Clauses, Schedules or
Recitals (as the case may be) of or to this Agreement.


 


17                            No
Third Party Rights


 


A person who is not a party to this
Agreement has no right under the Contracts (Rights of Third Parties) Act 1999
to enforce any term of this Agreement.


 


18                            Notices


 


18.1                         Any notice, statement, claim or demand for payment by one party
hereunder shall (without prejudice to any other effective mode of making the
same) be deemed to have been properly served on the other party if served on
any one of its directors or on its Secretary or delivered or sent by first
class letter post fax to it at its registered office or at any of its principal
places of business.


 


18.2                         Any such notice, statement, claim or demand sent by first class
letter post shall if posted before the last scheduled collection of letters
from the place of posting on any day be deemed to have been served on the
addressee at 10 a.m. on the next succeeding Business Day following the day of
posting unless it is returned undelivered. 
In proving such service it shall be sufficient to prove that the notice,
statement, claim or demand was properly addressed and posted.


 


18.3                         Any notice, statement, claim or demand sent by fax on a Business Day
shall be deemed to have been served at the time of despatch and if sent on a
day other than a Business Day shall be deemed to have been served at 9.00 a.m.
(local time) on the immediately following Business Day


 


18.4                         Any such notice, statement, claim or demand or any certificate as to
the amount at any time due and owing hereunder shall be conclusive and binding
upon the Borrower if signed by an officer of the Lender.


 


7

















 


19                            Counterparts


 


This Agreement may be executed in counterparts, each
of which shall be an original, and all of such counterparts taken together
shall be deemed to constitute one and the same instrument.


 


20                            Law


 


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


 


21                            Jurisdiction


 


21.1                         The parties hereto irrevocably agree for the benefit of the Lender
that the courts of England shall have jurisdiction to hear and determine any suit,
action or proceedings and to settle any disputes which may arise out of or in
connection with this Agreement or the Debenture and for such purpose
irrevocably submit to the jurisdiction of such courts.


 


21.2                         The submission to the jurisdiction of the courts of England shall
not (and shall not be construed so as to) limit the right of the Lender to take
proceedings against the Borrower 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.


 


AS WITNESS the hands of the duly authorised
representatives of the parties the day and year first above written.


 


8

















 


SCHEDULE


Drawdown Notice


 


 


[Date]


 


To:          Virgin Sky Investments
Limited


 


 


Attention:


 


 


Facility Agreement dated
[                ]  2003 (“the Facility Agreement”)


 


This Drawdown Notice is issued pursuant to Clause 5 of
the Facility  Agreement.


 


We hereby:-


 


1                              give you notice that we wish to make a Drawing under the Facility  Agreement
as follows:


 


(a)           Requested
Amount:            EUR [            ]


 


(b)           Drawdown
Date:                  [                     ]


 


2                              request you to remit the Drawing to Account No [          ] at [     bank details     ].


 


 


for and on behalf of


Virgin Express Holdings plc


 


 


	
  By:

  	
   

  	
   

  
	
   

  
	
  Title:

  



 


9

















 


	
  SIGNED by

  	
  )

  
	
  for and on behalf of VIRGIN SKY

  	
  )

  
	
  INVESTMENTS LIMITED by

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  VIRGIN EXPRESS HOLDINGS PLC

  	
  )

  
	
  by

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  



 


10

















 


DATE 16 September 2003


 


 


VIRGIN EXPRESS HOLDINGS PLC


 


VIRGIN SKY INVESTMENTS LIMITED


 


 


DEBENTURE


 


 


Macfarlanes


10 Norwich Street


London EC4A 1BD


 

















 


DEBENTURE


 


DATE                     16
September 2003


 


PARTIES


 


1                              VIRGIN
EXPRESS HOLDINGS PLC (company number 2743543) whose
registered office is at 120 Campden Hill Road, London W8 7AR (“the Company”)


 


2                              VIRGIN
SKY INVESTMENTS LIMITED (company number 4415765)
whose registered office is at 120 Campden Hill Road, London W8 7AR (“the
Lender”)


 


 


1                              Definitions
and interpretation


 


1.1                           In this Debenture the following words and expressions shall have the
meanings respectively set out against them below:-


 


Business Day: a day (other than a
Saturday or Sunday) on which banks are generally open for business in the City
of London;


 


Charged Property: all the property,
assets, undertaking and rights for the time being subject to the security
interests created by this Debenture (and references to the Charged Property
include references to any part of it);


 


Debts: all book debts, other debts,
receivables and liabilities of any kind whatsoever now or at any time hereafter
(and from time to time) due, owing or payable to the Company, including the
benefit of any judgement or order to pay a sum of money, and the benefit of all
rights, securities and guarantees of any nature enjoyed or held by it in
relation to any of the same and all cash deposits in any account of the Company
with any person and all bills of exchange, promissory notes and other
negotiable instruments for the time being owned or held by the Company, but
excluding the Proceeds of Debts;


 


Encumbrance: any mortgage, charge,
pledge, lien, assignment by way of security, hypothecation or any other type of
security interest or encumbrance or agreement or arrangement having the effect
of conferring security;


 


Environmental Law: any law, bye-law,
regulation, order or code of practice concerning the protection of the
environment or human health, the condition of any Property or of any place of
work or the production, storage treatment, transport or disposal of any
substance capable of causing harm to any living organism or the environment;


 


Equipment: all equipment, plant,
machinery, tools, vehicles, furniture and other tangible moveable property now
or at any time hereafter (and from time to time) owned by the Company, and any
part thereof, together with all spare parts, replacements, modifications and
additions thereto;


 


Facility Agreement: the facility
agreement dated on or around the date of this Debenture and made between the
Company and the Lender, as from time to time amended, extended, varied or
supplemented;


 


Intellectual Property: any present or
future rights or interests of the Company in respect of any patent, trademark,
service mark, trade name, registered design,


 

















 


design rights, copyrights, know-how and any other
rights in intellectual property whether registered or unregistered and any
registration or application for registration including all present and future
fees, royalties and other income or rights derived therefrom or incidental
thereto and including the benefit of all present and future agreements relating
to the use of a licensing or exploitation of any such rights;


 


Issuer:  the issuer of any Securities which are charged to the Lender
pursuant to this Debenture;


 


Proceeds of Debts: any cash and any
amounts from time to time standing to the credit of any bank (or other) account
of the Company, in each case deriving from the payment or collection of any
Debts;


 


Properties: all freehold and leasehold
properties now or at any time hereafter (and from time to time) owned by the
Company;


 


Secured Liabilities: all present and
future moneys, obligations and liabilities owed by the Company to the Lender,
whether actual or contingent and whether owed jointly or severally, as
principal or surety and/or in any other capacity whatsoever, under or in
connection with the Facility Agreement (and references to the Secured Liabilities
include references to any of them);


 


Securities: all stocks, shares, loan
capital, securities, bonds and investments of any kind whatsoever (whether or
not marketable) now or at any time hereafter (and from time to time) owned (at
law or in equity) by the Company (including, but not limited to, the shares and
other securities owned by the Company in its current direct subsidiaries listed
in Schedule 2), together with all allotments offered or arising in respect
thereof or incidental thereto and all stocks, shares, loan capital, securities,
bonds, investments, rights, money or property accruing, deriving, offered or
paid from time to time by way of dividend, distribution, interest, exchange,
capital reorganisation, conversion, redemption, bonus, rights, preference,
option or otherwise in respect thereof;


 


Security Period: the period beginning
on the date of this Debenture and ending on the date on which all the Secured
Liabilities have been unconditionally and irrevocably paid and discharged in
full.


 


1.2                           In this Debenture, unless the context requires otherwise:-


 


1.2.1                        references to the Company and to the Lender include references to
their respective successors, assigns and persons deriving title through them;


 


1.2.2                        references to any agreement, deed or document include references to
such agreement, deed or document as amended, supplemented or novated from time
to time;


 


1.2.3                        any reference to any statute or statutory provision shall be
construed as including a reference to any modification, re-enactment or
extension of such statute or statutory provision for the time being in force,
to any subordinate legislation made under it and to any former statute or
statutory provision which it consolidated or re-enacted;


 


1.2.4                        any reference to any gender includes a reference to all other
genders;


 


2

















 


1.2.5                        any reference to the singular includes the plural and vice versa;


 


1.2.6                        any reference to a Clause or Schedule is to a Clause or
Schedule (as the case may be) of or to this Debenture.


 


1.3                           The headings contained in this Debenture are for the purposes of
convenience only and do not form part of it and shall not affect the
construction of this Debenture or any part of it.


 


1.4                           The Schedules hereto form part of this Debenture.


 


1.5                           If the Lender considers that an amount paid by the Company in
respect of the Secured Liabilities is capable of being avoided or otherwise set
aside on the liquidation or administration of the Company or otherwise, then
that amount shall not be considered to have been irrevocably paid for the
purposes of this Debenture.


 


1.6                           Any covenant made by or obligation imposed on the Company in this
Debenture shall remain in force throughout the Security Period.


 


1.7                           A reference in this Debenture to a charge or mortgage of any
Property includes:-


 


1.7.1                        all buildings and fixtures (including trade and tenant’s fixtures)
which are at any time situated on that Property;


 


1.7.2                        the proceeds of sale of any part of that Property; and


 


1.7.3                        the benefit of any covenants for title given or entered into by any
predecessor in title of the Company in respect of that Property or any monies
paid or payable in respect of those covenants.


 


1.8                           The terms of the Facility Agreement are incorporated in this
Debenture to the extent required to ensure that any purported disposition of
the Charged Property contained in this Debenture is a valid disposition in
accordance with Section 2(1) of the Law of Property (Miscellaneous
Provisions) Act 1989.


 


1.9                           For the purposes only of Rule 139 of the Land Registration Rules
1925 (as amended) the Facility Agreement does not form part of the terms and
conditions of this Debenture.


 


1.10                         No term of this Debenture shall be enforceable by a third party
(being any person other than the Company and the Lender and their successors
and permitted assigns) by virtue of the Contracts (Rights of Third Parties) Act
1999 alone.


 


1.11                         Paragraph 14 of Schedule 16 of the Enterprise Act 2002 applies
to this Debenture.


 


2                              Covenant
to Pay


 


2.1                           The Company hereby covenants with the Lender that it will pay and
discharge the Secured Liabilities to the Lender when they become due (or, if
they are payable on demand, upon first demand made by the Lender).


 


2.2                           This Debenture secures further advances.


 


3

















 


3                              Grant
of Security


 


3.1                           As a continuing security for the payment or discharge of the Secured
Liabilities, the Company with full title guarantee hereby:-


 


3.1.1                        charges to the Lender, by way of first legal mortgage, all
Properties now owned by the Company, including (but not limited to) the
properties which are briefly described in Schedule 1;


 


3.1.2                        charges to the Lender, by way of first fixed charge, all Securities;


 


3.1.3                        charges to the Lender, by way of first fixed charge:-


 


3.2                           all Properties hereafter acquired by the Company;


 


3.3                           all present and future interests of the Company not effectively
mortgaged or charged under the preceding provisions of this Clause 3 in or over
freehold or leasehold property;


 


3.4                           all present and future rights, licences, guarantees, rents,
deposits, contracts, covenants and warranties relating to the Properties;


 


3.5                           all present and future goodwill of the Company and all uncalled
capital for the time being of the Company;


 


3.6                           the Equipment;


 


3.7                           all Intellectual Property;


 


3.8                           the Debts;


 


3.9                           any monies standing to the credit of any Designated Account; and


 


3.10                         (subject to Clause 3.5 and following the making of any directions
pursuant to Clause 5.2.2) the Proceeds of Debts;


 


3.10.1                      assigns to the Lender all right, title and interest of the Company
to and in and in claims under any present or future policies of insurances or
assurance (including, without limitation, any insurances relating to the
Properties or the Equipment) and charges to the Lender any proceeds thereof;


 


3.10.2                      assigns to the Lender to the extent the same are assignable:-


 


3.11                         the benefit of any agreements to which the Company is party and the
benefit of any guarantee or security for the performance of such agreements;


 


3.12                         the benefit of all licences, consents and authorisations held by the
Company and the right to recover or receive any sum of money pursuant to them;
and


 


3.12.1                      charges to the Lender, by way of first floating charge, all the
undertaking, property, assets and rights of the Company at any time not
otherwise effectively mortgaged, charged or assigned pursuant to Clauses 3.1.1
to 3.1.5 inclusive.


 


4

















 


3.13                         The Company shall on the execution of this Debenture (or, if later,
the date of acquisition of the relevant Charged Property) deposit with the
Lender and the Lender shall during the continuance of this security be entitled
to hold:-


 


3.13.1                      all deeds and documents of title relating to the Properties which are
in the possession or control of the Company (and, if not within the possession
and/or control of the Company, the Company hereby undertakes to obtain
possession of such deeds and documents of title);


 


3.13.2                      all insurance policies relating to any of the Charged Property to
which policies the Company is entitled to possession;


 


3.13.3                      all certificates and documents of title relating to the Securities
and such instruments of transfer in blank and other documents as the Lender may
from time to time reasonably require for perfecting its title to the Securities
or for vesting or enabling it to vest the Securities in itself or its nominee
or in any purchaser; and


 


3.13.4                      declarations of trust in favour of the Company executed by all
persons (other than the Company) in whose name any Securities are registered.


 


3.14                         In respect of any leasehold Property which is subject to a
restriction on the creation of mortgages or charges without the landlord’s
consent, the Company will use its best endeavours to obtain such consent as
soon as possible after the execution of this Debenture (or, if later, the date
of acquisition of that Property).


 


3.15                         The Lender may at any time and from time to time by written notice
to the Company convert the floating charge created under Clause 3.1.6 into a
fixed charge as regards any part of the Charged Property if the Lender
considers (in its sole discretion) that such part of the Charged Property, or
the Lender’s security interest in it, is or may be in danger of being seized or
subjected to any distress or execution or otherwise in jeopardy.  In addition (and without prejudice to any
other circumstances in which such floating charge may crystallise) such
floating charge shall automatically and immediately be converted into a fixed
charge as regards any part of the Charged Property if the Company creates or
attempts to create an Encumbrance in favour of another person over such part of
the Charged Property or disposes or attempts to dispose of such part of the
Charged Property otherwise than by way of sale in the ordinary course of the
Company’s business.


 


3.16                         In the absence of any directions from the Lender pursuant to Clause
5.2.2, the Proceeds of Debts shall stand released from the fixed charge created
by Clause 3.1.3.9 and shall stand subject to the floating charge created by
Clause 3.1.6 (but subject always to Clause 3.4).  Any such release shall in no respects derogate from the
subsistence and continuance of the fixed charge created hereby on all the other
assets charged pursuant to Clause 3.1 (including the Debts).


 


4                              No
other security interests or disposals


 


4.1                           The Company hereby covenants with the Lender that the Company will
not, except with the prior written consent of the Lender:-


 


4.1.1                        create or purport to create or permit to subsist any Encumbrance on
or in relation to the Charged Property other than this Debenture; or


 


5

















 


4.1.2                        sell, assign, transfer, lease, share occupation of or otherwise
dispose of any or all of the Charged Property or of the equity of redemption of
any such Charged Property or any interest in any such Charged Property, except
(in the case of Charged Property charged by way of floating charge only) in the
ordinary course of the Company’s business and for the purpose of carrying on
that business.


 


4.2                           In respect of any part of or interest in any Property title to which
is registered at H.M. Land Registry, the Company hereby applies to H.M. Chief
Registrar to enter the following restriction on the Proprietorship Register of
the title to such Property:


 


“Except under an order of the Registrar no disposition
or dealing is to be registered without the consent of the proprietor for the
time being of the Debenture dated                     2003 in favour of Virgin Sky Investments  Limited”.


 


5                              Covenants
relating to Debts


 


5.1                           The Company shall not except with the prior written consent of the
Lender release, exchange, compound, set-off, grant time or indulgence in
respect of, or in any other manner deal with, all or any of the Debts save as
hereinafter expressly provided.


 


5.2                           The Company shall:-


 


5.2.1                        get in and realise the Debts in the ordinary course of its business
(which shall not extend to selling or assigning or in any other way factoring
or discounting them);


 


5.2.2                        pay into such account as the Lender may from time to time specify
all the Proceeds of Debts forthwith upon receipt and thereafter pay or
otherwise deal with (or refrain from paying or dealing with) such Proceeds of
Debts in accordance with any directions given by the Lender from time to time
in writing; and


 


5.2.3                        if called upon so to do by the Lender, execute a legal assignment of
the Debts to the Lender in such terms as the Lender may require and give such
notice thereof to the debtors from whom the Debts are due, owing or incurred.


 


6                              Covenants
relating to the Properties


 


The Company hereby covenants with the Lender that the
Company will:-


 


6.1                           keep all buildings on each Property and all fixtures belonging to
the Company thereon and therein in good and substantial repair and condition
and insure and keep insured all such buildings and fixtures with such insurer
and against such risks and in such amounts and otherwise upon such terms as the
Lender may require (and failing such requirement in accordance with the
practice in respect of items of the same type from time to time current amongst
prudent men of business) and will procure that the interest of the Lender is
noted upon all policies of such insurance or at the option of the Lender that
such policies are issued in the joint names of the Lender and the Company and
(if the Lender so requires) will produce to or deposit with the Lender all such
policies and the receipts for all premiums and other payments necessary for
effecting and keeping up such policies and it is hereby agreed that (whether or
not the security constituted by this Debenture shall have become enforceable)
all sums at any time payable


 


6

















 


under any of such policies of insurance shall be paid to the Lender
(and if the same be not paid directly to the Lender by the insurers then the
Company shall be trustee of the same for the benefit of the Lender and shall
account to the Lender accordingly) and shall at the option of the Lender be
applied in making good or recouping expenditure in respect of the loss or
damage for which such monies are received or (but subject to Clause 18.4) in or
towards discharge or reduction of any of the Secured Liabilities;


 


6.2                           not without the prior written consent of the Lender pull down or
remove the whole or any part of any buildings forming part of any Property or
sever or unfix or remove any of the fixtures thereto nor (except for the
purpose of effecting necessary repairs thereto or of replacing the same with new
or improved models or substitutes) remove any of the Equipment thereon or
therein belonging to or in use by the Company and will whenever any of the said
Equipment is destroyed or damaged or deteriorates forthwith repair, replace and
make good the same;


 


6.3                           carry on the trade and business of the Company on such parts (if
any) of the Properties as are now or may hereafter be used for the purposes of
trade or business in accordance with the standards of good management from time
to time current in such trade or business;


 


6.4                           within 7 days after becoming aware thereof give full particulars to
the Lender of any notice, order, direction, designation, resolution or proposal
having specific application to any Property or to the locality in which it is
situated given or made by any planning authority or other public body or
authority whatsoever and (if the Lender so requires) forthwith and at the cost
of the Company take all reasonable and necessary steps to comply with any such
notice, order, direction, designation or resolution and make or join with the
Lender in making such objections or representations in respect of any such
proposal as the Lender may desire;


 


6.5                           observe and perform all covenants, stipulations and conditions to
which each Property or the user thereof is now or may hereafter be subjected
and (if the Lender so requires) produce to the Lender evidence sufficient to
satisfy the Lender that such covenants, stipulations and conditions have been
observed and performed and (without prejudice to the generality of the
foregoing) as regards any lease under which any Property or part of a Property
is held duly and punctually pay all rents due or to become due thereunder and
perform and observe all the covenants and conditions on the part of the tenant
which are therein contained;


 


6.6                           not without the prior written consent of the Lender grant or agree
to grant any licence or tenancy affecting any Property or part of a Property
nor exercise the powers of leasing or agreeing to lease or of accepting or
agreeing to accept surrenders conferred by Sections 99 or 100 of the Law of
Property Act 1925 nor in any other way dispose or agree to dispose of or
surrender or create any legal or equitable estate or interest in any Property
or any part thereof;


 


6.7                           procure that no person shall be registered under the Land
Registration Acts 1925 to 1988 as proprietor of any Property or any part
thereof without the prior written consent of the Lender and the Company shall
be liable for the costs incurred by the Lender in lodging from time to time
cautions against the registration of the title to any Property or any part
thereof;


 


6.8                           not without the prior written consent of the Lender carry out or
permit or suffer to be carried out on any Property any development as defined
in the Town and


 


7

















 


Country Planning Act 1990 or change or permit or suffer to be changed
the user of any Property;


 


6.9                           properly discharge all duties of care and responsibility placed upon
it by Environmental Law and observe and perform all the requirements of
Environmental Law both in the conduct of its general business and in the
management possession or occupation of each Property and apply for and obtain
all authorisations, licences and consents necessary to ensure that it does not
breach Environmental Law;


 


6.10                         procure that no person shall become entitled to assert any
proprietary or other like right or interest over any Property or any part
thereof without the prior written consent of the Lender;


 


6.11                         promptly pay all taxes, fees, duties, rates, charges and other
outgoings in respect of the Properties and if so requested by the Lender
produce evidence of payment to the Lender;


 


6.12                         permit the Lender, any Receiver (as defined in Clause 14.1) and any
person appointed by either of them to enter upon and inspect any Property upon
reasonable prior notice; and


 


6.13                         inform the Lender promptly of any acquisition by the Company of, or
contract made by the Company to acquire, any freehold or leasehold property or
any interest therein.


 


7                              Covenants
relating to the Equipment


 


7.1                           The Company hereby covenants with the Lender as follows:-


 


7.1.1                        to maintain the Equipment in good and serviceable condition (fair
wear and tear excepted) and not to permit the same to be used or handled other
than by persons properly qualified and trained or to be overloaded or to be
used for any purpose for which the Equipment is not designed or reasonably
suitable;


 


7.1.2                        promptly to pay all taxes, fees, licence duties, registration
charges, insurance premiums and other outgoings in respect of the Equipment and
on demand produce evidence thereof to the Lender; and


 


7.1.3                        to give the Lender such information concerning the location,
condition, use and operation of the Equipment as the Lender may require and to
permit any persons designated by the Lender at all reasonable times to inspect
and examine the Equipment and the records maintained in connection therewith.


 


7.2                           The Company shall at its own expense procure that the Equipment
shall be covered and kept covered by insurance of a kind satisfactory to the
Lender with insurers approved by the Lender (such approval not to be
unreasonably withheld) for full comprehensive insurance cover, which shall
include but not be limited to fire, theft and accident, in an amount agreed
with the Lender, and shall if the Lender so requires procure that the interest
of the Lender is noted upon all policies of such insurance or at the option of
the Lender that such policies are issued in the joint names of the Lender and
the Company.  The Company shall with
respect to third party liabilities maintain insurance in such amount and on


 


8

















 


such terms as is usual for users of the equipment of the same type as
the Equipment.


 


7.3                           The Company shall if so requested by the Lender, place and maintain
on each item of Equipment, in a conspicuous place, a clearly legible
identification plate containing the following wording:


 


“NOTICE OF CHARGE


 


This [description of item] and ancillary equipment is
subject to a fixed charge in favour of Virgin Sky Investments  Limited.”


 


8                              Covenants
relating to the Intellectual Property


 


The Company hereby covenants with the Lender:


 


8.1                           to take all necessary action to safeguard and maintain its rights
present and future, in or relating to the Intellectual Property including,
without limitation, observing all covenants and stipulations relating thereto
and paying all applicable renewal fees, licence fees and other outgoings;


 


8.2                           to use all reasonable efforts to effect registration of applications
for registration of any Intellectual Property and keep the Lender informed of
all matters relating to such registration; and


 


8.3                           not to permit any Intellectual Property to be abandoned, cancelled
or to lapse.


 


9                              Provisions
relating to the Securities


 


9.1                           The Lender may at any time cause any or all of the Securities to be
registered in the name of the Lender or its nominee.  The Company agrees to execute and deliver to the Lender all such
transfers and other documents and do all such things as may be necessary or
desirable to bring about any such registration.


 


9.2                           The Company hereby grants and agrees to procure as necessary, all
consents, waivers, approvals and permissions which are necessary, under the
articles of association of any Issuer or otherwise, for the transfer of the
Securities to the Lender or its nominee or to a purchaser upon enforcement of
this Debenture.  The Company further
agrees to procure the amendment of the share transfer provisions of each
Issuer’s articles of association in such manner as the Lender may require in
order to permit such a transfer.


 


9.3                           Until the security constituted by this Debenture becomes
enforceable:-


 


9.3.1                        any cash dividends paid in respect of any of the Securities and
received by the Lender or its nominee shall, on request by the Company, be
released and paid to the Company; and


 


9.3.2                        the Lender will exercise all voting and other rights and powers
attaching to the Securities and exercisable by the Lender or its nominee as the
Company may from time to time direct provided that acting in accordance with
such directions would not in the Lender’s opinion prejudice the Lender’s
security under this Debenture or the value of the Securities or contravene any
agreement between the Lender and the Company.


 


9

















 


9.4                           After the security constituted by this Debenture has become
enforceable:-


 


9.4.1                        all dividends and other distributions paid in respect of the
Securities and received by the Company shall be held on trust for the Lender
and forthwith paid over to the Lender or, if received by the Lender, shall be
retained by the Lender; and


 


9.4.2                        the Lender may exercise, or direct the exercise of, all voting and
other rights and powers attaching to the Securities as the Lender may in its
absolute discretion think fit and the Company shall, and shall procure that its
nominees shall, comply with any directions from the Lender concerning the
exercise of such rights and powers.


 


10                            Covenants
relating to the Securities


 


The Company further covenants with the Lender that:-


 


10.1                         it shall duly and promptly pay all calls, instalments and other
moneys which may be payable from time to time in respect of the Securities it
being acknowledged by the Company that the Lender shall be under no liability
whatsoever in respect of any such calls, instalments or other moneys;


 


10.2                         it shall not without the Lender’s prior written consent amend, or
agree to the amendment of, the memorandum or articles of association of any
Issuer or the rights or liabilities attaching to any of the Securities;


 


10.3                         it shall ensure (insofar as it is able by the exercise of all voting
rights, powers of control and other means available to it to do so) that no
Issuer will:-


 


10.3.1                      consolidate or sub-divide any of its Securities or reduce or
re-organise its share capital in any way;


 


10.3.2                      issue any new shares or stock; or


 


10.3.3                      refuse to register any transfer of any of its Securities which may
be lodged for registration by or on behalf of the Lender or the Company in
accordance with this Debenture;


 


10.4                         it shall promptly send to the Lender copies of all notices,
circulars, reports, accounts and other documents which are sent to holders of
any Securities;


 


10.5                         it shall not do, or permit to be done, any act or thing which will
or might materially diminish the value of any of the Charged Property or the
effectiveness of the security created by this Debenture; and


 


10.6                         it shall pay to the Lender on demand the amount of all costs, expenses
or liabilities which the Lender may incur in, or with a view to, perfecting or
enforcing the security created by this Debenture, together with interest
thereon at the rate applicable under Clause 9.3 of the Facility Agreement.


 


11                            Power
to remedy


 


If the Company is at any time in breach of any of its
obligations contained in this Debenture, the Lender shall be entitled (but
shall not be bound) to remedy such


 


10

















 


breach and the Company hereby irrevocably authorises
the Lender and its agents to do all such things necessary or desirable in
connection therewith.  The Company shall
be liable to the Lender for the expenses of the Lender in so doing together
with interest at the rate applicable under Clause 9.3 of the Facility Agreement
from the date of payment to the Lender until the date of repayment.  The rights of the Lender contained in this
Clause 11 are without prejudice to any other rights of the Lender hereunder.  The exercise by the Lender of its rights
under this Clause shall not make the Lender liable to account as a mortgagee in
possession.


 


12                            Representations and Warranties


 


12.1                         The Company represents and warrants to the Lender as follows:


 


12.1.1                      it is the legal and beneficial owner of the Charged Property;


 


12.1.2                      the Charged Property is free from any Encumbrance other than the
Encumbrances created by this Debenture;


 


12.1.3                      it has not received or acknowledged notice of any adverse claim by
any person in respect of the Charged Property or any interest in it;


 


12.1.4                      there is no breach of any law or regulation which materially
adversely affects the Charged Property;


 


12.1.5                      there are no covenants, agreements, reservations, conditions,
interests, rights or other matters whatever which materially adversely affect
the Charged Property;


 


12.1.6                      no facility necessary for the enjoyment and use of the Charged
Property is subject to terms entitling any person to terminate or curtail its
use;


 


12.1.7                      nothing has arisen or has been created or is subsisting which would
be an overriding interest in any Property;


 


12.1.8                      no charge expressed to be created pursuant to this Debenture is
liable to be avoided or otherwise set aside on the liquidation or
administration of the Company or otherwise;


 


12.1.9                      there is no prohibition on assignment in any insurances, agreements,
licences, consents or authorisations referred to in Clause 3.1.4 or 3.1.5, or
the relevant clauses of them as the case may be, and the Company’s entering
into this Debenture will not constitute a breach of any such insurances,
agreements, licences, consents or authorisations; and


 


12.1.10                    the Company has at all times complied in all material respects with
all applicable Environmental Law.


 


12.2                         The representations and warranties set out in Clause 12.1 will be
deemed to be repeated by the Company on each day of the Security Period by
reference to the facts and circumstances then existing.


 


12.3                         The Company will promptly upon becoming aware of all the same give
the Lender notice in writing of any breach of any representation or warranty
set out in Clause 12.1.


 


11

















 


13                            Enforcement


 


13.1                         The security constituted by this Debenture shall become
enforceable:-


 


13.1.1                      if any of the Secured Liabilities shall not be paid or discharged
when the same ought to be paid or discharged by the Company (whether on demand
or at scheduled maturity or by acceleration or otherwise as the case may be);
or


 


13.1.2                      if the Company shall be in breach of any of the obligations binding
on the Company under this Debenture or under any other agreement between the
Company and the Lender and such breach (if capable of remedy) has not been
remedied to the satisfaction of the Lender before the expiry of 14 days after
notice calling upon the Company to do so has been given by the Lender; or


 


13.1.3                      if the Company becomes unable to pay its debts as they fall due,
commences negotiations with any one or more of its creditors with a view to the
general readjustment or rescheduling of its indebtedness or makes a general
assignment for the benefit of or a composition with its creditors; or


 


13.1.4                      if the Company passes any resolution or takes any corporate action
or a petition is presented or proceedings are commenced by any person for its
winding-up, dissolution, administration or re-organisation or for the
appointment of a receiver, administrative receiver, administrator, trustee or
similar officer of it or of any or all of its revenues and assets; or


 


13.1.5                      if a distress, execution, attachment or other legal process is
levied or enforced upon or sued out against all or any part of the assets of
the Company and remains undischarged for 7 days;


 


and thereupon and at any time thereafter (whether or
not any of the above events is continuing), without prejudice to any other
rights of the Lender, the powers of sale under the Law of Property Act 1925
shall immediately be exercisable and the Lender may in its absolute discretion
enforce all or any part of the security created by this Debenture as it sees fit.


 


13.2                         The statutory power of sale shall, as between the Lender and a
purchaser from the Lender, arise on and be exercisable at any time after the
execution of this Debenture, provided that the Lender shall not exercise such
power of sale unless and until one of the events referred to in Clause 13.1
shall have occurred.


 


13.3                         The statutory powers of sale, leasing and accepting surrenders
exercisable by the Lender under this Debenture are extended so as to authorise
the Lender whether in its own name or in that of the Company to grant a lease
or leases of the whole or any part or parts of the freehold and leasehold
property of the Company with whatever rights relating to other parts of it and
containing whatever covenants on the part of the Company and generally on such
terms and conditions (including the payment of money to a lessee or tenant on a
surrender) and whether or not at a premium as the Lender thinks fit.


 


13.4                         No person dealing with the Lender or any Receiver appointed
hereunder, or its agents or brokers, shall be concerned to enquire whether the
security constituted by this Debenture has become enforceable, or whether any
power exercised or purported to be exercised has become exercisable, or whether
any money remains


 


12

















 


due upon this Debenture, or as to the necessity or expediency of the
stipulations and conditions subject to which any sale of any Charged Property
shall be made, or otherwise as to the propriety or regularity of any sale of
any of the Charged Property, or to see to the application of any money paid to
the Lender or such Receiver, or its agents or brokers, and such dealing shall
be deemed to be within the powers hereby conferred and to be valid and
effectual accordingly.


 


13.5                         The Lender shall not nor shall the Receiver be liable to account as
mortgagee in possession in respect of all or any of the Charged Property nor be
liable for any loss upon realisation or for any neglect or default of any
nature whatsoever in connection with all or any of the Charged Property for
which a mortgagee in possession might as such be liable and all costs, charges
and expenses incurred by the Lender or the Receiver (including the costs of any
proceedings in relation to this Debenture or to the Secured Liabilities) shall
be paid by the Company on a full indemnity basis.


 


14                            Receiver


 


14.1                         At any time after the security constituted by this Debenture becomes
enforceable, or at the request of the Company, the Lender may without further
notice appoint under seal or by writing under hand of a duly authorised officer
of the Lender any one or more person or persons to be a receiver or a receiver
and manager or (if permitted by law) an administrative receiver (each the
“Receiver”, which expression shall where the context so admits include any
person substituted as receiver, receiver and manager or administrative receiver
under the power hereinafter contained) of all or any of the Charged Property
and may from time to time under seal or by writing under hand of a duly
authorised officer of the Lender remove any person appointed to be the Receiver
and may in like manner appoint another in his place.


 


14.2                         Where more than one person is appointed Receiver, they will have
power to act separately (unless the appointment by the Lender specifies to the
contrary).


 


14.3                         The power to appoint a Receiver conferred by this Debenture shall be
in addition to all statutory and other powers of the Lender under the Law of
Property Act 1925 or otherwise and the powers of sale and appointing a Receiver
shall be exercisable without the restrictions contained in Sections 103 and 109
of that Act or otherwise and the power to appoint a Receiver (whether conferred
by this Debenture or by statute) shall be and remain exercisable by the Lender notwithstanding
any prior appointment in respect of all or any part of the Charged Property.


 


15                            Powers
of Receiver


 


15.1                         A Receiver appointed by the Lender under this Debenture shall be the
agent of the Company and the Company shall be solely responsible for his acts
and remuneration as well as for any defaults committed by him and further the
Receiver shall in addition to the powers conferred on him by the Law of
Property Act 1925 have power:-


 


15.1.1                      to do all such acts and things as an absolute owner could do in the
management of all or any of the Charged Property and in particular:-


 


13

















 


15.1.2                      to undertake or complete any works of repair, building or
development on the Properties;


 


15.1.3                      to grant or to accept surrenders of any leases or tenancies
affecting the Properties upon such terms and subject to such conditions as he
thinks fit;


 


15.1.4                      to provide services and employ or engage such managers contractors
and other personnel and professional advisors on such terms as he deems
expedient; and


 


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


 


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


 


15.3                         to collect and get in the Charged Property in respect of which he is
appointed or any part thereof and for that purpose to make such demands and
take any proceedings as may seem expedient and to take possession of the
Charged Property with like rights;


 


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


 


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


 


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


 


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


 


15.8                         to make and effect such improvements to the Equipment as he may
think expedient;


 


15.9                         to make calls conditionally or unconditionally on the members of the
Company in respect of the uncalled capital with such and the same powers for
that purpose and for the purpose of enforcing payments of any calls so made as
are conferred by the Articles of Association of the Company on its Directors in
respect of calls authorised to be made by them;


 


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


 


14

















 


15.11                       if he thinks fit, but without prejudice to the indemnity contained
in Clause 17, to effect with any insurer any policy or policies of insurance
either in lieu or satisfaction of or in addition to such indemnity;


 


15.12                       to exercise all powers provided for in the Law of Property Act 1925
in the same way as if the Receiver had been duly appointed thereunder;


 


15.13                       for any of the purposes authorised by this Clause to raise money by
borrowing from the Lender or from any other person on the security of all or
any of the Charged Property in respect of which the Receiver is appointed upon
such terms (including if the Lender shall consent terms under which such
security ranks in priority to this Debenture) as the Receiver shall think fit;


 


15.14                       to redeem any prior Encumbrance and to settle and pass the accounts
to which the Encumbrance relates and any accounts so settled and passed will be
conclusive and binding on the Company and the moneys so paid will be deemed to
be an expense properly incurred by the Receiver;


 


15.15                       to do all such other acts and things as he may consider to be
incidental or conducive to any of the matters or powers aforesaid or which the
Receiver lawfully may or can do as agent for the Company; and


 


15.16                       to exercise any of the above powers on behalf of the Company or on
his own behalf (or, in the case of the power contained in Clause 15.9, on
behalf of the Directors of the Company).


 


16                            Application
of Proceeds


 


16.1                         The Receiver shall apply all monies received by him (other than
insurance monies):-


 


16.1.1                      first in paying all rents, taxes, rates and outgoings of any kind
affecting any Charged Property;


 


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


 


16.1.3                      thirdly in paying his remuneration (as agreed between him and the
Lender);


 


16.1.4                      fourthly in or towards discharge of the Secured Liabilities in such
order and manner as the Lender shall determine; and


 


16.1.5                      finally in paying any surplus to the Company or any other person entitled
to it.


 


16.2                         Neither the Lender nor any Receiver shall be bound (whether by
virtue of Section 109(8) of the Law of Property Act 1925, which is hereby
varied accordingly, or otherwise) to pay or appropriate any receipt or payment
first towards interest rather than principal or otherwise in any particular
order as between any of the Secured Liabilities.


 


17                            Indemnity


 


The Company hereby agrees to indemnify and hold
harmless the Receiver from and against all actions, claims, expenses, demands
and liabilities whether arising


 


15

















 


out of contract or in tort or in any other way
incurred or which may at any time be incurred by him or by any manager, agent,
officer, servant or workman for whose debt, default or miscarriage he may be
answerable for anything done or omitted to be done in the exercise or purported
exercise of his powers under the provisions of this Debenture or pursuant
hereto.


 


18                            Powers
of the Lender


 


18.1                         At any time after the security constituted by this Debenture shall
have become enforceable, the Lender or any Receiver appointed by the Lender
under this Debenture may dispose of any chattels found on any Property as agent
for the Company and without prejudice to any obligation to account for the
proceeds of any sale of such chattels the Lender or such Receiver shall be
indemnified by the Company against any liability arising from such disposal.


 


18.2                         At any time after the security constituted by this Debenture shall
have become enforceable or after any powers conferred by any encumbrance having
priority to this Debenture shall have become exercisable, the Lender may redeem
such or any other prior encumbrance or procure the transfer thereof to itself
and may settle and pass the accounts of the encumbrancer and any account so
settled and passed shall be conclusive and binding on the Company and all
monies paid by the Lender to the encumbrancer in accordance with such accounts
shall as from such payment be due from the Company to the Lender on current
account and shall bear interest and be secured as part of the Secured
Liabilities.


 


18.3                         For the purpose of or pending the discharge of any of the Secured
Liabilities the Lender may convert any monies received, recovered or realised
by the Lender under this Debenture (including the proceeds of any previous
conversion under this Clause) from their existing currencies of denomination
into such other currencies of denomination as the Lender may think fit and any
such conversion shall be effected at the Lender’s then prevailing spot selling
rate of exchange for such other currency against the existing currency.  Each previous reference in this Clause to a
currency extends to funds of that currency and for the avoidance of doubt funds
of one currency may be converted into different funds of the same currency.


 


18.4                         All monies received, recovered or realised by the Lender under this
Debenture (including the proceeds of any conversion pursuant to
Clause 18.3) may at the discretion of the Lender be credited to any
suspense or impersonal account and shall bear interest at such rate, if any, as
may be agreed in writing between the Lender and the Company and may be held in
such account for so long as the Lender thinks fit pending the application from
time to time (as the Lender shall be entitled to do as it may think fit) of
such monies and accrued interest thereon (if any) in or towards the discharge
of any of the Secured Liabilities.


 


19                            Power
of attorney


 


The Company hereby irrevocably appoints the Lender and
(jointly and severally) each and every Receiver appointed by the Lender under
the provisions of this Debenture to be the attorney of the Company and in the
name and on behalf of the Company and as the Company’s act and deed or
otherwise to sign, execute, seal, deliver, complete any blanks in and otherwise
perfect any deed, transfer, assurance, agreement, instrument or act which such
Receiver or the Lender may consider expedient in the exercise of any of his or
its powers or in respect of the


 


16

















 


Company’s obligations under this Debenture.  The power of attorney hereby granted is to
secure the performance of obligations owed to the donees within the meaning of
the Powers of Attorney Act 1971.


 


20                            Independent
and continuing security


 


20.1                         This Debenture shall be in addition to and independent of every
other security or guarantee which the Lender may at any time hold for any of
the Secured Liabilities and it is hereby declared that no prior security held
by the Lender over the whole or any part of the Charged Property shall merge in
the security created by this Debenture.


 


20.2                         This Debenture shall remain in full force and effect as a continuing
security for the Secured Liabilities, notwithstanding any settlement of account
or intermediate payment or other matter or thing whatsoever, unless and until
the Lender discharges this Debenture in writing.


 


20.3                         Any release, discharge or settlement between the Company and the
Lender shall be deemed conditional upon no payment or security received by the
Lender in respect of the Secured Liabilities being avoided or reduced or
ordered to be refunded pursuant to any provision of any enactment relating to
insolvency, Lenderruptcy, winding-up or receivership and, notwithstanding any such
release, discharge or settlement:-


 


20.3.1                      the Lender or its nominee shall be at liberty to retain this
Debenture and the security created by or pursuant to this Debenture, including
all certificates and documents relating to the Charged Property or any part
thereof, for such period as the Lender shall deem necessary to provide the
Lender with security against any such avoidance or reduction or order for
refund; and


 


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


 


21                            Further
assurance


 


As and when required by the Lender the Company, at its
own cost, shall execute such further legal or other mortgages, charges or
transfers in favour of the Lender as the Lender shall from time to time require
over all or any of the Charged Property, further to secure the payment of the
Secured Liabilities, such further mortgages, charges or transfers to be
prepared at the cost of the Company and to contain a power of sale and such
other clauses for the benefit of the Lender as the Lender may reasonably
require.


 


22                            Indulgence


 


The Lender may in its discretion grant time or other
indulgence or make any other arrangement, variation or release with any person
or persons not party hereto (whether or not such person or persons are jointly
liable with the Company) in respect of any of the Secured Liabilities or of any
other security therefor without prejudice either to this Debenture or to the
liability of the Company for the Secured Liabilities.


 


17

















 


23                            Costs


 


The Company shall pay or reimburse to the Lender on
demand, on a full indemnity basis, all costs, charges and expenses (including
legal fees) in any way incurred by the Lender in relation to this Debenture or the
Charged Property or in protecting, perfecting, preserving or enforcing (or
attempting to do so) any of its rights under this Debenture or in suing for or
recovering any of the Secured Liabilities (including, without limitation, the
costs of any proceedings in relation to this Debenture or the Secured
Liabilities).


 


24                            New
accounts; Set-off


 


24.1                         If the Lender receives notice of any subsequent charge or other
interest affecting all or part of the Charged Property the Lender may open a
new account or accounts for the Company in its books and (without prejudice to
the Lender’s right to combine accounts) no money paid to the credit of the
Company in any such new account will be appropriated towards or have the effect
of discharging any part of the Secured Liabilities.  If the Lender does not open a new account or accounts immediately
on receipt of such notice then unless the Lender gives express written notice
to the contrary to the Company as from the time of receipt of such notice by
the Lender all payments made by the Company to the Lender in the absence of any
express appropriation by the Company to the contrary shall be treated as having
been credited to a new account of the Company and not as having been applied in
reduction of the Secured Liabilities.


 


24.2                         If the Lender shall have more than one account for the Company in
its books the Lender may at any time after the security constituted by this
Debenture has become enforceable or the Lender has received notice of any
subsequent charge or other interest affecting all or any part of the Charged
Property and without prior notice in that behalf forthwith transfer all or any
part of the balance standing to the credit of any such account to any other
such account which may be in debit but the Lender shall notify the Company of
the transfer having been made.


 


25                            Certificates


 


A certificate by the Lender as to any amount for the
time being due to it from the Company shall be conclusive evidence of the
amount so due in the absence of any manifest error.


 


26                            Demands
and notices


 


Clause 18 of the Facility Agreement shall apply as if
set out herein and as if references therein to the Facility Agreement were
references to this Debenture.


 


27                            Rights
cumulative


 


The rights and powers which this Debenture confers on
the Lender are cumulative, may be exercised as often as the Lender considers
appropriate, and are in addition to its rights and powers under the general
law.  The rights of the Lender (whether
arising under this Debenture or under the general law) shall not be capable of
being waived or varied otherwise than by an express waiver or variation in
writing; and, in particular, any failure to exercise or any delay in exercising
any such right shall not operate as a variation or waiver of that or any


 


18

















 


other such right; any defective or partial exercise of
any such right shall not preclude any other or further exercise of that or any
other such right; and no act or course of conduct or negotiation on its part or
on its behalf shall in any way preclude the Lender from exercising any such
right or constitute a suspension or variation of any such right.


 


28                            Consolidation


 


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


 


29                            No
set-off


 


The Company waives any right of set-off it may have
now or at any time in the future in respect of the Secured Liabilities
(including sums payable by the Company under this Debenture).


 


30                            Assignment
and transfer


 


30.1                         The Lender may at any time, without the consent of the Company,
assign or transfer the whole or any part of the Lender’s rights under this
Debenture to any person.


 


30.2                         The Company may not assign any of its rights or transfer any of its
obligations under this Debenture or enter into any transaction which would
result in any of these rights or obligations passing to another person.


 


30.3                         The Lender may disclose to any person connected to or associated
with it, and to any person to whom it is proposing to assign or transfer (or
has assigned or transferred) any of its rights under this Debenture, any
information about the Company.


 


31                            Disclosure


 


The Company hereby consents to the disclosure by the
Lender of any information about the Company, this Debenture, the Charged
Property and the Secured Liabilities:-


 


31.1                         to any person to whom the Lender has assigned or transferred or
proposes or may propose to assign or transfer all or any of its rights and
benefits under this Debenture or the Secured Liabilities; or


 


31.2                         to any person with whom the Lender has entered or proposes or may
propose to enter into any contractual arrangements in connection with this
Debenture or the Secured Liabilities; or


 


31.3                         to any subsidiary or holding company or agent of the Lender; or


 


31.4                         to any other person if required or permitted by law to do so.


 


19

















 


32                            Severability


 


If any of the provisions of this Debenture is or
becomes invalid or unenforceable, the validity and enforceability of the
remaining provisions shall not be affected or impaired thereby.


 


33                            Release


 


Upon the expiry of the Security Period (but not
otherwise) the Lender shall, at the request and cost of the Company, take
whatever action is necessary to release the Charged Property from the security
constituted by this Debenture.


 


34                            Law
and jurisdiction


 


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


 


34.2                         The parties to this Debenture irrevocably submit to the exclusive
jurisdiction of the English Courts as regards any proceeding, claim, dispute or
matter arising out of or relating to this Debenture or any documents to be
executed pursuant to this Debenture.


 


34.3                         The submission to the jurisdiction of the laws of England shall not
(and shall not be construed so as to) limit the right of the Lender to take
proceedings against the 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 jurisdictions, whether concurrently or not.


 


35                            Counterparts


 


This Debenture may be executed in counterparts, all of
which taken together shall be deemed to constitute one and the same instrument.


 


IN WITNESS whereof this Debenture has been executed by
the Company and is intended to be and is hereby delivered as a deed the day and
year first above written and has been signed on behalf of the Lender.


 


20

















 


SCHEDULE 1


Properties currently owned


 


Part A: Registered Land


 


 


Part B: Unregistered Land


 


21

















 


SCHEDULE 2


Current direct subsidiaries


 


 


Virgin Express S.A.


Virgin Express (Ireland) Limited


Virgin Express Investments Limited


VEX Airlines (UK) Limited


 


22

















 


	
  EXECUTED as a DEED

  	
  )

  
	
  and DELIVERED by

  	
  )

  
	
  VIRGIN EXPRESS HOLDINGS PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director/Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  EXECUTED by

  	
  )

  
	
  VIRGIN SKY INVESTMENTS  LIMITED

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  



 


23

















 


DATED 29 January 2004


 


 


VIRGIN SKY INVESTMENTS LIMITED


 


VIRGIN EXPRESS HOLDINGS PLC


 


 


VARIATION AGREEMENT


RELATING TO A FACILITY AGREEMENT DATED 16 SEPTEMBER 2003


 

















 


VARIATION AGREEMENT


 


DATE:                    29 January2004


 


PARTIES:


 


1                              VIRGIN
SKY INVESTMENTS LIMITED (company number  4415765)
whose registered office is at 120 Campden Hill Road, London W8 7AR (the
“Lender”)


 


2                              VIRGIN
EXPRESS HOLDINGS PLC (company number 2743543) whose
registered office is at 120 Campden Hill Road, London W8 7AR (the “Borrower”)


 


BACKGROUND:


 


A.                            Pursuant to a facility agreement dated 16 September 2003 made
between the Borrower and the Lender, the parties have agreed the terms of a
secured uncommitted on demand loan facility of up to an aggregate principal
amount of €27,500,000 (the “Facility Agreement”).


 


B.                            By this Variation Agreement the parties wish to amend the Facility
Agreement.


 


AGREEMENT:


 


1                              Interpretation


 


1.1                           Unless the contrary intention appears, terms defined in the Facility
Agreement shall have the same meanings when used in this Variation Agreement.


 


1.2                           The provisions of Clauses 1.2 and 19 of the Facility Agreement shall
also apply to this Variation Agreement as if set out in this Variation
Agreement but with all necessary modifications.


 


2                              Conditions
Precedent


 


The
provisions of Clauses 3 and 4 below shall take effect on and from the date (the
“Effective Date”) on which the Lender receives (in form and substance
satisfactory to the Lender) a copy of a resolution of the board of directors of
the Borrower certified as a true copy by an officer of the Borrower approving
the terms of this Variation Agreement and authorising any Director or the
Secretary to sign this Variation Agreement on behalf of the Borrower.


 


3                              Amendment
and Increase


 


On and from the Effective Date the Facility Agreement
shall be amended by the increase of the principal amount of the Facility from
€27,500,000 to €34,000,000.


 

















 


4                              Costs and Expenses


 


The Borrower shall (whether or not the Effective Date
occurs) on demand pay to the Lender the amount of all reasonable and proper
costs and expenses (including, without limitation, the fees and expenses of the
Lender’s legal advisers) incurred by the Lender in connection with the
preparation, negotiation and execution of this Variation Agreement and any
other document referred to in this Variation Agreement or in connection with
the variations to the Facility to be made hereby, together with value added tax
or any similar tax thereon.


 


5                              Miscellaneous


 


The provisions of Clauses 15 (Assignment), 16
(Severability and Partial Invalidity), 17 (No Waivers; Remedies Cumulative) and
20 (Notices) of the Facility Agreement shall apply to this Variation Agreement
as if set out in this Variation Agreement, but as if references in those
clauses to the Facility Agreement were references to this Variation Agreement.


 


6                              Continuing
References


 


6.1                           Except insofar as amended or supplemented hereby, the Facility
Agreement will remain in full force and effect.


 


6.2                           References in the Facility Agreement to “this Agreement”, “hereof”,
“hereunder” and expressions of similar import shall, from the Effective Date,
be deemed to be references to the Facility Agreement as amended by this
Variation Agreement.


 


7                              Security


 


The Borrower acknowledges that the Debenture will
after the Effective Date continue to secure all of its present and future obligations
and liabilities, whether actual or contingent and whether owed jointly or
severally or in any other capacity whatsoever, to the Lender under the Facility
Agreement as amended by this Variation Agreement.


 


8                              Governing
Law and Jurisdiction


 


8.1                           This Variation Agreement shall be governed by and construed in
accordance with English law.


 


8.2                           The parties hereto irrevocably agree for the benefit of the Lender
that the courts of England shall have jurisdiction to hear and determine any
suit, action or proceedings and to settle any disputes which may arise out of
or in connection with this Variation Agreement and for such purpose irrevocably
submit to the jurisdiction of such courts.


 


8.3                           The submission to the jurisdiction of the courts of England shall
not (and shall not be construed so as to) limit the right of the Lender to take
proceedings against the Borrower in any other court of competent


 


2

















 


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.


 


This Variation Agreement has been entered into on the
date stated at the beginning of this Variation Agreement.


 


 


	
  SIGNED by

  	
  )

  
	
  for and on behalf of BARFAIR

  	
  )

  
	
  LIMITED

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  SIGNED by

  	
  )

  
	
  for and on behalf of

  	
  )

  
	
  VIRGIN EXPRESS HOLDINGS PLC

  	
  )

  
	
   

  	
   

  
	
   

  	
   

  
	
  Director

  	
   

  



 


3