Document:

Exhibit 10.2

 

Execution Copy

 

Dated March     , 2010

 

	
  (1)

  	
   

  	
  CORGENIX UK LIMITED

  
	
   

  	
   

  	
  (as Chargor)

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  FAUNUS GROUP INTERNATIONAL,
  INC

  
	
   

  	
   

  	
  (as Chargee)

  

 

 

DEBENTURE
(CLIENT)

(including mortgage over
plant, machinery and equipment)

 

 

 

Contents

 

	
  Clause

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  DEFINITIONS
  AND INTERPRETATION

  	
   

  	
  1

  
	
  2.

  	
   

  	
  CLAWBACK

  	
   

  	
  4

  
	
  3.

  	
   

  	
  COVENANT
  TO PAY

  	
   

  	
  5

  
	
  4.

  	
   

  	
  CREATION
  OF SECURITY

  	
   

  	
  5

  
	
  5.

  	
   

  	
  CRYSTALLISATION

  	
   

  	
  8

  
	
  6.

  	
   

  	
  TITLE
  DOCUMENTS, INSURANCE POLICIES AND TRANSFERS

  	
   

  	
  9

  
	
  7.

  	
   

  	
  COLLECTION
  OF OTHER DEBTS AND NON-VESTING DEBTS

  	
   

  	
  11

  
	
  8.

  	
   

  	
  NEGATIVE
  PLEDGE AND OTHER RESTRICTIONS

  	
   

  	
  12

  
	
  9.

  	
   

  	
  RIGHT OF
  APPROPRIATION

  	
   

  	
  12

  
	
  10.

  	
   

  	
  FURTHER
  ASSURANCE

  	
   

  	
  12

  
	
  11.

  	
   

  	
  CONTINUING
  SECURITY

  	
   

  	
  13

  
	
  12.

  	
   

  	
  LAND

  	
   

  	
  13

  
	
  13.

  	
   

  	
  PLANT,
  MACHINERY & EQUIPMENT

  	
   

  	
  15

  
	
  14.

  	
   

  	
  INTELLECTUAL
  PROPERTY RIGHTS

  	
   

  	
  16

  
	
  15.

  	
   

  	
  SPECIFIED
  INVESTMENTS

  	
   

  	
  17

  
	
  16.

  	
   

  	
  OPENING
  OF NEW ACCOUNTS

  	
   

  	
  17

  
	
  17.

  	
   

  	
  POWERS OF
  SALE, LEASING AND ACCEPTING SURRENDERS

  	
   

  	
  18

  
	
  18.

  	
   

  	
  APPOINTMENT
  OF A RECEIVER OR AN ADMINISTRATOR

  	
   

  	
  18

  
	
  19.

  	
   

  	
  POWERS OF
  A RECEIVER

  	
   

  	
  19

  
	
  20.

  	
   

  	
  POWER OF
  ATTORNEY

  	
   

  	
  20

  
	
  21.

  	
   

  	
  OTHER
  POWERS EXERCISABLE BY THE CHARGEE

  	
   

  	
  20

  
	
  22.

  	
   

  	
  APPLICATION
  OF MONEY RECEIVED BY THE CHARGEE OR A RECEIVER

  	
   

  	
  21

  
	
  23.

  	
   

  	
  PROTECTION
  OF THIRD PARTIES

  	
   

  	
  22

  
	
  24.

  	
   

  	
  PROTECTION
  OF THE CHARGEE AND RECEIVER

  	
   

  	
  22

  
	
  25.

  	
   

  	
  COSTS,
  EXPENSES AND LIABILITIES

  	
   

  	
  22

  
	
  26.

  	
   

  	
  INTEREST
  ON OVERDUE AMOUNTS

  	
   

  	
  23

  
	
  27.

  	
   

  	
  SET-OFF

  	
   

  	
  23

  
	
  28.

  	
   

  	
  ASSIGNMENT
  AND TRANSFER BY THE CHARGEE

  	
   

  	
  24

  
	
  29.

  	
   

  	
  RELEASE
  OF SECURITY

  	
   

  	
  24

  
	
  30.

  	
   

  	
  FORBEARANCE,
  SEVERABILITY, VARIATIONS AND CONSENTS

  	
   

  	
  24

  
	
  31.

  	
   

  	
  COUNTERPARTS

  	
   

  	
  25

  
	
  32.

  	
   

  	
  NOTICES

  	
   

  	
  25

  
	
  33.

  	
   

  	
  THIRD
  PARTY RIGHTS

  	
   

  	
  25

  
	
  34.

  	
   

  	
  GOVERNING
  LAW

  	
   

  	
  25

  
	
  35.

  	
   

  	
  ENFORCEMENT

  	
   

  	
  25

  
	
  SCHEDULE 1 REGISTERED LAND TO BE MORTGAGED

  	
   

  	
  26

  

 

2

 

	
  SCHEDULE 2 NOTICE TO ACCOUNT BANK

  	
   

  	
  27

  
	
  SCHEDULE 3 SPECIFIED INTELLECTUAL PROPERTY

  	
   

  	
  30

  
	
  SCHEDULE 4 FORM OF NOTICE TO INSURERS

  	
   

  	
  31

  
	
  SCHEDULE 6 PLANT, MACHINERY & EQUIPMENT

  	
   

  	
  34

  
	
  EXECUTION PAGE

  	
   

  	
  1

  

 

 

THIS DEBENTURE  is
made on March     , 2010

 

BETWEEN:

 

(1)                                  CORGENIX UK LIMITED a Lynchwood corporation
(03167445) whose registered office is at 40 Commerce Road, Lynchwood,
Peterborough, PE2 6LR  (the “Chargor”)

 

(2)                                  FAUNUS GROUP INTERNATIONAL, INC a company incorporated in Delaware  having offices  at 80 Broad Street, 22nd Floor, New York, New
York 10004 (“Chargee”)

 

WITNESSES AS
FOLLOWS:

 

1.             Definitions and Interpretation

 

1.1                                 Unless
the context otherwise requires, words or expressions defined in, or by reference
in, the Receivables Financing Agreement shall have the same meanings in this
Debenture.

 

1.2                                 In
addition, in this Debenture, unless the context requires otherwise, the
following words and expressions shall have the following meanings:

 

Account:  the account maintained by the Chargor with
the Account Bank, with account number 09825479 and includes any replacement
account or sub-division or sub-account of any such account and “Accounts”  shall be
construed accordingly;

 

Account Bank:  National Westminster Bank PLC, Peterborough
Branch, or such other bank as may be agreed between the Chargee and the
Chargor;

 

Act:  the Companies Act 1985;

 

Assets:  in
relation to the Chargor, all its undertaking, property, assets, revenues and
rights of every description (including, but not limited to, the Plant &
Machinery, the Other Debts and all Non-vesting Debts), or any part of them,
present and future, and any interest therein;

 

Corgenix Medical Corporation: Corgenix Medical Corporation, a
corporation incorporated in Nevada whose registered number is C6200-1994

 

Corgenix Incorporated: Corgenix Incorporated, a
corporation incorporated in Delaware whose registered number is 

 

Declared Default: 
the Chargee first exercising its rights arising in respect of any
Termination Event;

 

Derivative Rights: 
all dividends, interest or distributions and all other rights and
benefits of an income nature accruing at any time in respect of any
Investments;

 

Finance Documents: the
Receivables Financing Agreements, the Debentures, the Floating Charge, the
Guarantee and Finance Document shall mean any
one of them;

 

Fixed Security Asset: 
an Asset for the time being comprised within an assignment created by
clause 4.1 (Assignments) or within a mortgage or
fixed charge created by clause 4.2 (Mortgage of Plant, Machinery & Equipment) by clause 4.3 (Fixed security);

 

Floating Charge Asset: 
an Asset for the time being comprised within
the floating charge created by clause 4.4 (Creation of Floating
Charge);

 

1

 

Insurance Policy:  any contract or policy of insurance of the
Chargor (including all cover notes) of whatever nature, including but not
limited to the P&M Insurance, which is from time to time taken out by or on
behalf of the Chargor or (to the extent of its interest) in which the Chargor
has an interest at any time;

 

Intellectual Property:  in relation to the Chargor, all its patents
(including supplementary protection certificates), utility models, registered
and unregistered trade marks (including service marks), rights in passing off,
copyright, database rights, registered and unregistered rights in designs and,
in each case, any extensions and renewals of, and any applications for, such
rights;

 

Intellectual Property Rights: 
in relation to the Chargor, all and any of
its Intellectual Property and all other intellectual property rights, causes of
action, interests and assets charged by it pursuant to paragraphs (c)(xi) to
(xvi) inclusive of clause 4.3 (Fixed security);

 

Investments:  all shares, stock, debentures, debenture
stock, bonds and other investments (as listed in Part III of the Financial
Services and Markets Act 2000 (Regulated Activities Order 2001, SI 2001/544 (as
amended)), whether certificated or uncertificated and whether in registered or
bearer form (whether or not marketable) now or in the future owned at law or in
equity by the Chargor, including all depository interests representing any of
them and including all rights and benefits of a capital nature accruing at any
time in respect of any Investments by way of redemption, repayment,
substitution, exchange, bonus or preference, option, rights or otherwise;

 

Land:  freehold
and leasehold, and any other estate in, land and (outside England and Wales)
immovable property and in each case all buildings and structures upon and all
things affixed thereto (including trade and tenant’s fixtures);

 

Liability: 
any liability, damage, loss, costs, claim or expense of any kind or
nature, whether direct, indirect, special, consequential or otherwise;

 

Non-vesting Debts: 
all Debts that are intended to, but which do not for any reason, vest
absolutely and effectively in the Chargee under the Receivables Financing
Agreement together with any related rights to such Debts;

 

Other Debts:  all present and future book and other debts
of the Chargor, all moneys from time to time standing to the credit of any
account of the Chargor and all moneys whether arising under contracts or in any
other manner due, owing or incurred to the Chargor (and including owing to the
Chargee) other than:

 

(i)                                    Debts
absolutely and effectively vested in the Chargor under the Receivables Financing Agreement;
and

 

(ii)                                 Non-vesting
Debts;

 

P&M Insurance: 
the meaning given to it in clause 6.2(a)(i) (Insurance);

 

Permitted
Security Interest: any of the following:

 

(a)                                  Security
Interests arising under the Finance Documents;

 

(b)                                 a
lien or right of set off arising solely by operation of law in the ordinary
course of trading (or by contractual provisions having substantially similar
effect) except for any lien the rights to which have been asserted; and

 

(c)                                  any
other Security Interest that the Chargee agrees in writing from time to time
may be a Permitted Security Interest;

 

2

 

Plant, Machinery & Equipment:  all of the plant, machinery and
equipment specified in Schedule 6 (Plant, Machinery &
Equipment) together with all other plant and machinery, equipment,
fittings, installations and apparatus, inventory, furniture, tools, motor
vehicles and all other assets of a similar nature whatsoever, wherever situate,
which are now, or at any time after the date of this Debenture become, the
property of the Chargor;

 

Receiver: 
a receiver and manager appointed under clause
18 (Appointment of a Receiver or an Administrator)
including (where the context requires or permits) any substituted receiver and
manager;

 

Receivables Financing
Agreement:  the
receivables financing agreement dated on or about the date of this Debenture
between the Chargee and the Chargor as Client;

 

Relevant System:  the meaning given to that term by the
Uncertificated Securities Regulations 2001 and includes the CREST system and
also any other system or facility (whether established in the United Kingdom or
elsewhere) providing means for the deposit of, and clearance of transactions
in, Investments;

 

Secured Obligations: 
all moneys, obligations and
liabilities, howsoever arising, now or at any time in the future due, owing or
incurred by the Chargor to the Chargee on any account whatsoever (whether or
not evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, including without
limitation all interest (as well after as before any demand made or judgment
given), fees, charges, expenses, legal fees and accounting fees chargeable to
and payable by the Chargor under or in relation to any such moneys, obligations
and/or liabilities

 

Specified Intellectual
Property:  the
Intellectual Property listed in Schedule 3 Specified Intellectual  Property);
and

 

Specified Investments: 
all Investments that at any time:

 

(a)                                  represent
a holding in a Subsidiary of the Chargor;

 

(b)                                 are
held in the name of the Chargee or its nominee or to its order; or

 

(c)                                  that
the Chargor has deposited certificates for with the Chargee or which, if
uncertificated, are held in an escrow or other account in favour of the Chargee
or its nominee.

 

1.3                                 Construction

 

In this Debenture, a
reference to:

 

(a)                                  the “Chargor” or the “Chargee” shall
be construed so as to include its successors in title, permitted assigns and
permitted transferees;

 

(b)                                 “Assets” include present and future properties, any interest
in such property (legal or equitable), revenues rights of every description and
any thing in action;

 

(c)                                  a “Finance Document” or any other agreement or instrument is a
reference to that Finance Document or other agreement or instrument as amended
or novated;

 

(d)                                 “including” and “in particular”
shall not be construed restrictively but shall mean respectively “including and
without prejudice to the generality of the foregoing/but not limited to” and “in
particular, but without prejudice to the generality of the foregoing/but not
limited to”;

 

3

 

(e)                                  a “person” includes any person, firm, company, corporation,
government, state or agency of a state or any association, joint venture, trust
or partnership (whether or not having separate legal personality) of two or
more of the foregoing;

 

(f)                                    “property” includes any interest (legal or equitable) in real
or personal property and any thing in action;

 

(g)                                 a “regulation” includes any regulation, rate, official
directive, request or guideline (whether or not having the force of law) of any
governmental, international or supranational body, agency, department or
regulatory, self-regulatory or other authority or organisation;

 

(h)                                 subject
to clause 30.4 (Variations), references to this
Debenture or to any other document (including any Finance Document) include
references to this Debenture or such other document as varied in any manner
from time to time;

 

(i)                                     references
to uncertificated Investments are to Investments the title to which can be
transferred by means of an electronic or other entry in a Relevant System and
references to certificated Investments are to Investments which are not
uncertificated Investments;

 

(j)                                     words
denoting the singular only shall include the plural and vice versa and any
gender shall include the other genders;

 

(k)                                  a
clause or a Schedule is a references to a clause of or a schedule to this
Debenture;

 

(l)                                     a
time of day is a reference to London time;

 

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

 

(n)                                 clause
and Schedule headings are for ease of reference only; and

 

(o)                                 a
Default (other than an Termination Event) is “continuing”
if it has not been remedied or waived and an Termination Event is “continuing” if it has not been waived.

 

1.4                                 The
parties to this document intend it to be a deed and agree to execute and
deliver it as a deed.

 

2.                                      Clawback

 

2.1           If
the Chargee considers in good faith that any amount paid or credited to it is
capable of being avoided or reduced by virtue of any bankruptcy, insolvency,
liquidation or similar laws the liability of the Chargor under this Debenture
and the security constituted hereby will continue and such amount will not be
considered to have been irrevocably paid.

 

2.2           Where
any discharge (whether in respect of the obligations of the Chargor or any
security for those obligations or otherwise) is made in whole or in part or any
arrangement is made on the faith of any payment, security or other disposition
which is avoided or must be restored on insolvency, liquidation or otherwise,
the liability of the Chargor under this Debenture shall continue as if the
discharge or the arrangements had not occurred.

 

2.3           The
Chargee may concede or compromise any claim that any payment, security or other
disposition is liable to avoidance or restoration.

 

4

 

3.             Covenant to Pay

 

3.1                                 Covenant
to pay

 

The Chargor covenants with
the Chargee that it will pay, discharge and satisfy the Secured Obligations in
accordance with their terms.

 

3.2                                 Proviso

 

The covenants contained in
this clause and the security created by this Debenture shall not extend to or
include any liability or sum which would otherwise cause any such covenant or
security to be unlawful or prohibited by any applicable law.

 

3.3                                 Demands

 

(a)                                  The
making of one demand shall not preclude the Chargee from making any further
demands.

 

(b)                                 Any
third party dealing with the Chargee or any Receiver shall not be concerned to
see or enquire as to the validity of any demand under this Debenture.

 

4.             Creation of security

 

4.1                                 Assignments

 

The Chargor, with full title
guarantee, as security for the payment or discharge of all Secured Obligations,
assigns to the Chargee all of its rights, claims, title and interest from time
to time in respect of any sums payable to it pursuant to the Insurance
Policies, including but not limited to the P&M Insurance.

 

4.2                                 Mortgage
of Plant, Machinery & Equipment

 

The Chargor, with
full title guarantee, as security for the payment or discharge of all Secured
Obligations, mortgages and charges to the Chargee all of the Chargor’s Plant,
Machinery & Equipment.

 

4.3                                 Fixed
Security

 

The Chargor, with full title
guarantee, as security for the payment or discharge of all Secured Obligations,
charges to the Chargee the following:

 

(a)                     by
way of legal mortgage, all Land in England and Wales now vested in it and
registered at the Land Registry or which will be subject to first registration
at the Land Registry upon the execution and delivery of this Debenture,
including the Land (if any) described under its name in Schedule 1 (Registered Land to be Mortgaged);

 

(b)                    by
way of legal mortgage, all other Land in England and Wales now vested in it and
not registered at the Land Registry;

 

(c)                     by
way of first fixed charge:

 

(i)                                     all
other Land which is now, or in the future becomes, its property;

 

(ii)                                  all
interests and rights in or relating to Land or the proceeds of sale of Land now
or in the future belonging to it;

 

5

 

(iii)                             all
plant and machinery now or in the future attached to any Land which, or an
interest in which, is charged by it under the preceding provisions of this
clause 4.2;

 

(iv)                             all
income of any kind whatsoever and all debts and claims now or in the future due
or owing to it under or in connection with any lease, agreement or licence
relating to Land;

 

(v)                                all
Specified Investments which are now, or in the future become, its property;

 

(vi)                             all
Derivative Rights now or in the future accruing in respect of its Specified
Investments;

 

(vii)                          all
Investments (other than Specified Investments) which are now, or in the future
become, its property, and all Derivative Rights now or in the future accruing
in respect of those Investments;

 

(viii)                      where
Investments are held in a Relevant System, all its rights against the operator
of the Relevant System or any participant in respect of such Investments;

 

(ix)                              all
insurance or assurance contracts or policies now or in the future held by or
otherwise benefiting it which relate to Fixed Security Assets or which are now
or in the future deposited by it with the Chargee, together with all its rights
and interests in such contracts and policies (including the benefit of all
claims arising and all money payable under them) apart from any claims which
are otherwise subject to a fixed charge or assignment (at law or in equity) in
this Debenture;

 

(x)                                 all
its goodwill and uncalled capital for the time being;

 

(xi)                              all
Specified Intellectual Property belonging to it;

 

(xii)                           all
other Intellectual Property presently belonging to it, including any
Intellectual Property to which it is not absolutely entitled or to which it is
entitled together with others;

 

(xiii)                        all
Intellectual Property that may be acquired by or belong to it in the future,
including any such Intellectual Property to which it is not absolutely entitled
or to which it is entitled together with others;

 

(xiv)                       the
benefit of all agreements and licences now or in the future entered into or
enjoyed by it relating to the use or exploitation of any Intellectual Property
in any part of the world;

 

(xv)                          all
its rights now or in the future in relation to trade secrets, confidential
information and knowhow in any part of the world enjoyed now or in the future;

 

(xvi)                       all
its rights and causes of action in
respect of infringement(s) (past, present or future) of the rights
referred to in sub-paragraphs (c)(xi) to (xv) inclusive of this clause
4.2;

 

(xvii)                    all
Non-vesting Debts and all Other Debts;

 

6

 

(xviii)               the
benefit of all instruments, guarantees, charges, pledges and other security and
all other rights and remedies available to it in respect of any Fixed Security
Asset except to the extent that such items are for the time being effectively
assigned under clause 4.1 (Assignments);

 

(xix)                       any
beneficial interest, claim or entitlement it has in any pension fund now or in
the future;

 

(xx)                            all
rights, money or property accruing or payable to it now or in the future under
or by virtue of a Fixed Security Asset except to the extent that such rights,
money or property are for the time being effectively assigned or charged by
fixed charge under the foregoing provisions of this Debenture;

 

(xxi)                       all
its interests, rights and receipts in respect of moneys at any time standing to
the credit of the Account;

 

(xxii)                    all moneys at any time
standing to the credit of any of its other bank accounts; and

 

(xxiii)                 the
benefit of all licences, consents and authorisations held in connection with
its business or the use of any Asset and the right to recover and receive all
compensation which may be payable in respect of them.

 

4.4                                 Creation of floating charge

 

The Chargor, with full title
guarantee, charges to the Chargee as security for the payment or discharge of
all Secured Obligations, by way of floating charge:

 

(a)                                  all
its Assets (now or in the future owned), except to the extent that such Assets
are for the time being effectively assigned by way of security by virtue of
clause 4.1 (Assignments) or effectively
mortgaged or charged under clause 4.2 (Mortgage of Plant,
Machinery & Equipment) clause 4.3 (Fixed
security), including any Assets comprised within a charge which is
reconverted under clause 5.4 (Reconversion);
and

 

(b)                                 without
exception, all its Assets in so far as they are for the time being situated in
Scotland,

 

but in each case
so that the Chargor shall not create any mortgage or any fixed or floating
charge or other security over any such Asset (whether having priority over, or
ranking pari passu with or subject to, this floating charge) or take any other
step referred to in clause 8 (Negative pledge and other
restrictions) with respect to any such Asset, and the Chargor shall
not, without the consent of the Chargee, sell, transfer, part with or dispose
of any such Asset except by way of sale in the ordinary course of its business.

 

4.5                                 Notices of Assignment

 

The Chargor shall on the
date of this Debenture give notice to the insurers (and any broker) (as set out
in Schedule 4 (Form of Notice to Insurers))
of the security over the Insurance Policies (including but not limited to the
P&M Insurance) and their proceeds created by this Debenture, and shall use
all endeavours (including expending reasonable costs and expenses) to procure
the execution and delivery to the Chargee of acknowledgments by the addressees
of the notices delivered to them.

 

4.6                                 Priority

 

(a)                                  Any
fixed security created hereunder by the Chargor and subsisting in favour of the
Chargee shall (save as the Chargee may otherwise declare at or after the time
of its 

 

7

 

creation) have priority over the floating charge created by clause 4.4
(Creation of floating charge).

 

(b)                                 Any
security created in the future by the Chargor (except in favour of the Chargee)
shall be expressed to be subject to this Debenture and shall rank in order of
priority behind the charges created by this Debenture.

 

4.7                                 Application to the Land Registry

 

The Chargor:

 

(a)                                  in
relation to each register of title of any present and future Land of the
Chargor which is charged to the Chargee under this Debenture or pursuant to
clause 10 (Further Assurance), consents to
the Chargee (or its solicitors) at any time:

 

(i)                                     submitting
a form RX1 (application to register a restriction)
in the following terms:

 

“No disposition of the
registered estate by the proprietor of the registered estate is to be
registered without a written consent signed by the proprietor for the time
being of the charge dated [date] in favour
of Faunus Group International, Inc referred to the charges register or, if appropriate,
signed on such proprietor’s behalf by its secretary or conveyancer”; and

 

(ii)                                  submitting
a form CH2 (application to enter an obligation to make further advances); and

 

(b)                                 covenants
to submit an application to the appropriate Land Registry for the first
registration of any unregistered Land in England and Wales mortgaged by clause
4.2 (Fixed security) at its own expense,
immediately following its execution of this Debenture.

5.             Crystallisation

 

5.1                                 Crystallisation by notice

 

The floating charge created
by the Chargor in clause 4.4 (Creation of floating
charge) may be crystallised into a fixed charge by notice in writing
given at any time by the Chargee to the Chargor if:

 

(a)                                  a
Declared Default has occurred;

 

(b)                                 the
Chargee in good faith considers that a Default has occurred and is continuing;
or

 

(c)                                  the
Chargee in good faith considers that any of the Assets expressed to be charged
to the Chargee by this Debenture may be in jeopardy or in danger of being
seized or sold pursuant to any form of legal process; or

 

(d)                                 a
circumstance envisaged by paragraph (a) of clause 5.2 (Automatic Crystallisation) occurs and the Chargee in good
faith considers that such crystallisation is desirable in order to protect the
priority of its security.

 

Such crystallisation shall
take effect over the Floating Charge Assets or class of Assets specified in the
notice.  If no Floating Charge Assets are
specified, it shall take effect over all Floating Charge Assets of the Chargor.

 

8

 

5.2           Automatic crystallisation

 

If, without the Chargee’s
prior written consent:

 

(a)           the
Chargor resolves to take or takes any step to:

 

(i)            create
a create or permit to subsist any Security Interest over any of its Floating
Charge Assets, except for a Permitted Security Interest;

 

(ii)           create
a trust over any of its Floating Charge Assets; or

 

(iii)          dispose
of any Floating Charge Asset, except by way of sale in the ordinary course of
the Chargor’s business; or

 

(b)           any
person resolves to take or takes any step to seize or sell any Floating Charge
Asset pursuant to any form of legal process; or

 

(c)           an
Termination Event has occurred and is continuing,

 

then the floating charge created by clause 4.4 (Creation of
floating charge) shall be automatically and instantly crystallised
(without the necessity of notice) into a fixed charge over such Floating Charge
Asset or, in the case of paragraph (c) above into a fixed charge over all
Floating Charge Assets of the Chargor.

 

5.3           Future Floating Charge Assets

 

Except as otherwise stated
in any notice given under clause 5.1 (Crystallisation by notice)
or unless the crystallisation relates to all its Floating Charge Assets,
prospective Floating Charge Assets acquired by the Chargor after
crystallisation has occurred under clause 5.1 (Crystallisation
by notice) or clause 5.2 (Automatic crystallisation)
shall become subject to the floating charge created by clause 4.4 (Creation of floating charge), so that the crystallisation
shall be effective only as to the specific Floating Charge Assets affected by
the crystallisation.

 

5.4           Reconversion

 

Any charge which has
crystallised under clause 5.1 (Crystallisation by notice)
or 5.2 (Automatic crystallisation) may, by
notice in writing given at any time by the Chargee to the Chargor, be
reconverted into a floating charge in relation to the Assets specified in such
notice.

 

6.             Title documents, insurance policies and
transfers

 

6.1           Documents

 

Subject to the rights of any
prior chargee and except as otherwise expressly agreed in writing by the
Chargee, the Chargor shall:

 

(a)           deposit
with the Chargee, and the Chargee shall be entitled to retain during the
continuance of the security created by this Debenture, all deeds and documents
of title relating to all its Fixed Security Assets, all policies of insurance
and assurance, certificates of registration and certificates constituting or
evidencing Specified Investments and Intellectual Property Rights; and

 

(b)           execute
and deliver to the Chargee such documents and transfers and give such instructions
and perform such other acts as the Chargee may require at any time to 

 

9

 

constitute or
perfect an equitable or legal charge (at the Chargee’s option) over its
Specified Investments, including any eligible to participate in a Relevant
System.

 

6.2           Insurance

 

(a)       The
Chargor shall:

 

(i)            maintain
at all times:

 

(A)         insurance
on the Plant, Machinery & Equipment (the “P&M
Insurance”) in respect of loss or damage to any of the same,
howsoever occurring, in an amount equal to:

 

(1)           its
market replacement value from time to time; or

 

(2)           if
higher, on an agreed value basis; and

 

(B)           all
such other insurance policies against such risks (but in any event to include
third party liability insurance and insurance against acts of terrorism) as are
usual for companies carrying on a business such as that carried out by the
Chargor, and in an amount at least equal to the reinstatement costs of the
assets thereby insured,

 

in each case with insurers
acceptable to the Chargee and in any such case comply with the terms of all
such insurance policies, including any stipulations or restrictions as to use
or operation of any asset, and shall not do or permit anything which may make
any insurance policy void or voidable;

 

(ii)          make
notifications to insurers of any claims or prospective claims in accordance
with the provisions of the relevant insurance policy and diligently pursue the
making of recoveries from insurers;

 

(iii)         procure
that the Chargee be shown as first loss payee on the face of all its insurance
policies in such form as the Chargee may require;

 

(iv)         make
all premium and other payments necessary for effecting or maintaining such
insurances and on demand shall produce to the Chargee the receipts of such payments;
and;

 

(v)          use
all reasonable endeavours to cause the policies of insurance maintained by it
as required by this clause 6.2 to be forthwith amended to include clauses in
form satisfactory to the Chargee to ensure that the policies shall not be voidable
by the insurers as a result of any misrepresentation, non-disclosure of
material facts or breach of warranty.

 

(b)           If
any default shall at any time be made in effecting or maintaining such
insurance or in producing any such receipt to the Chargee on demand or
depositing any policy with the Chargee pursuant to this Debenture, the Chargee
may take out or renew such insurances in such sums as the Chargee may think
expedient and all money expended by the Chargee under this provision shall be
recoverable by the Chargee under clause 25 (Costs,
expenses and liabilities).

 

(c)           The
Chargor shall procure that its insurance broker undertakes in writing to the
Chargee that:

 

(i)            as
soon as it becomes aware that the Chargor has failed to pay any premium or
renew any insurance, it will keep the Chargee’s interest in such insurance 

 

10

 

in force up to
the full sum insured and for the same risks (subject to the premium for any
such period of extended cover being paid by the Chargee for the account of the
Chargor);

 

(ii)           it
will advise the Chargee of any proposed cancellation of the policy at least 14
days before such cancellation is due to take effect;

 

(iii)          if
the insurance cover is to be reduced or any insured risks are to be restricted,
it will advise the Chargee at least 14 days before such reduction or
restriction is due to take effect;

 

(iv)          it
will advise the Chargee immediately of any act, omission or event which comes
to the knowledge of the insurer or the broker (as the case may be) and which
might invalidate the insurance or render it unenforceable, in whole or in part;
and

 

(v)           it
will advise the Chargee if any claim with a value in excess of £5,000 is
rejected by insurers or if insurers impose a reservation of rights following
the notification of any claim.

 

7.             Collection of Other Debts and
Non-vesting Debts

 

7.1           During  the continuance of this Debenture:-

 

(i)            pay
into the Account all moneys which it may receive in respect of the Other Debts
and (subject to any rights of the Account Bank in respect thereof) pay or
otherwise deal with such moneys standing in such account in accordance with any
directions from time to time given in writing by the Chargee;

 

(ii)           if
called upon to do so by the Chargee execute a legal assignment of the  Other Debts to the Chargee in such terms as
the Chargee may require and give notice thereof to the debtors from whom those
debts are owing or incurred and take such other steps as the Chargee may require
to perfect such legal assignment;

 

(iii)          deal
with the Other Debts in accordance with any directions from time to time given
in writing by the Chargee and in default of and subject to any such directions
deal with the same only in the ordinary course of getting in and realising the
same (but not sell, assign, factor or discount the same in any way);

 

(iv)          permit
the Account Bank to furnish directly to the Chargee from time to time upon
request full statements and particulars of all the Chargor’s accounts with the
Account Bank and such other financial statements and other information
respecting the assets and liabilities of the Chargor as are from time to time
available to the Account Bank;

 

(v)           only
deal with Non-Vesting Debts as if they were Debts (and their related rights)
purchased by the Chargee under the Receivables Financing Agreement and in
particular will not bank or deal with any payments (by whatever method) in
respect of the Non-Vesting Debts except by dealing with them in accordance with
the Receivables Financing Agreement; and

 

(vi)          after
crystallisation of the floating charge (if any) created pursuant to clause  2.1(c) into a fixed charge, not (except
as permitted by the Chargee) withdraw any credit balance representing payments
relating to Other Debts from the Account or any of the Chargor ‘s other bank
accounts;

 

11

 

7.2           Notice to Account Bank

 

The Chargor shall,
immediately after the execution of this Debenture, give notice to the Account
Bank in the form set out in Part 1 of Schedule 2 (Notice to
Account Bank) and use all reasonable endeavours (including incurring
reasonable costs and expenses) to ensure that the Account Bank delivers to the
Chargee an acknowledgement in the form set out in Part 2 of Schedule 2 (Notice to Account Bank);

 

8.             Negative pledge and other restrictions

 

Save as may be expressly
permitted under the Finance Documents, the Chargor shall not, without the prior
written consent of the Chargee:

 

(a)           create
or permit to subsist any Security Interest or any trust over any of its Assets,
except for Permitted Security Interests; or

 

(b)           sell,
assign, lease, license or sub-license, or grant any interest in, any of its
Fixed Security Assets, or part with possession or ownership of them, or purport
or agree to do so.

 

9.             Right of appropriation

 

Without prejudice to any
other rights and remedies under this Debenture, to the extent that any of the
Fixed Security Assets or Floating Charge Assets constitutes “financial collateral” and are subject to a legal or
equitable mortgage under this Debenture which is or forms part of a “security
financial collateral arrangement” (in each case as defined in, and for the
purposes of, the Financial Collateral Arrangements (No. 2) Regulations
2003 (SI 2003 No. 3226) (the “Regulations”), the
Chargee shall also have the right to appropriate all or any part of such
financial collateral in or towards discharge of the Secured Obligations. For
this purpose, the parties agree that the value of such financial collateral so
appropriated shall be:

 

(a)           in
the case of cash, the amount standing to the credit of the Account, together
with accrued but unposted interest, at the time the right of appropriation is
exercised; and

 

(b)           in
the case of Investments, the market price of such Investments at such time as
determined by the Chargee (acting reasonably) by reference to a relevant public
index or by such other process as the Chargee may select, including independent
valuation. In each case, the parties agree that the method of valuation
provided for in this Debenture shall constitute a commercially reasonable
method of valuation for the purpose of the Regulations.

 

10.           Further assurance

 

(a)           The
Chargor shall promptly do all such acts and execute all such documents
(including assignments, transfers, mortgages, charges, notices and
instructions) as the Chargee may specify and in such form as the Chargee may
require (in favour of the Chargee or its nominee(s)) in order to:

 

(i)            perfect
or protect the security created or intended to be created by this Debenture
(which may include the execution of a mortgage, charge, assignment, transfer,
notice, instruction or other security over all or any of the Assets which are,
or are intended to be, the subject of the security constituted by this
Debenture);

 

(ii)           confer
on the Chargee security over any Assets of the Chargor located in any
jurisdiction outside England and Wales which is (to the extent permitted by 

 

12

 

local law)
equivalent or similar to the security intended to be conferred by or pursuant
to this Debenture; and/or

 

(iii)          facilitate
the realisation of the Assets subject to the security conferred or intended to
be conferred by this Debenture or the exercise of any rights vested in the
Chargee, any Receiver, Administrator or nominee, including executing any
transfer, conveyance, charge, assignment or assurance of all or any of the
Assets which are the subject of the security constituted by this Debenture,
making any registration and giving any notice, order or instructions.

 

(b)           The
Chargor shall take all such action as is available to it (including making all
filings and registrations) as may be necessary for the purpose of the creation,
perfection, protection or maintenance of any security conferred or intended to
be conferred on the Chargee by or pursuant to this Debenture.  Without prejudice to the generality of this
clause 10, at the request of the Chargee the Chargor will promptly execute a
legal mortgage, charge or assignment over any of the Assets subject to or
intended to be subject to any fixed security created by this Debenture in
favour of the Chargee in such form as the Chargee may require.

 

(c)           Without
prejudice to the Chargors’ obligations under paragraph (b) of clause
12.1  (Positive Covenants), the Chargor
irrevocably authorises the Chargee to effect such registrations, renewals,
payments and notifications or carry out such acts or things at the expense of
the Chargor as shall, in the opinion of the Chargee, be necessary or prudent to
protect the Chargee’s interests in relation to the Intellectual Property Rights
or to protect or maintain the Intellectual Property Rights or any of them.  The Chargor shall give the Chargee all such
assistance as it may request.

 

(d)           For
so long as no Termination Event has occurred and is continuing the Chargee will
act reasonably in exercising its rights under this clause 10.

 

11.           Continuing security

 

This Debenture shall be a
continuing security for the Chargee, notwithstanding any intermediate payment
or settlement of accounts or other matter whatever, and shall be in addition to
and shall not prejudice or be prejudiced by any right of set-off, combination,
lien or other rights exercisable by the Chargee as banker against the Chargor
or any security, guarantee, indemnity and/or negotiable instrument now or in
the future held by the Chargee.

 

12.           Land

 

12.1         Positive Covenants

 

The Chargor covenants that
it shall:

 

(a)           Repair: keep all its buildings and all its plant,
machinery, fixtures, fittings and other effects charged by it under this
Debenture in good and substantial repair (fair wear and tear excepted) and in
good working order and condition and will not, without the prior written
consent of the Chargee, alter, pull down, remove or dispose of any of them,
except in the ordinary course of repair, maintenance or improvement;

 

(b)           Payments: punctually pay or cause to
be paid all rates, taxes, levies, charges, duties, assessments, impositions and
outgoings whatever assessed, charged or imposed, now or in the future, in
respect of its Land or Land in which it has an interest to the extent that
failure to do so could be reasonably be expected to materially adversely affect
the value of the Land or the value of the security 

 

13

 

constituted by
this Debenture and, when reasonably required by the Chargee, produce to it
proof of such payment;

 

(c)           Contracts: comply in all material
respects with the terms of all agreements, assignments, contracts, conveyances,
grants and other deeds and documents for the time being binding on it or
affecting its Land or its use or enjoyment and not take any action which, or
omit to take any action the omission of which, results in any of its interests
or estates in its Land being adversely affected;

 

(d)           Compliance with lease: punctually pay the rents
reserved by and observe and perform in all material respects the other material
covenants, agreements or obligations on its part to be observed and performed
which are contained in any lease, agreement for lease, tenancy agreement or
licence to occupy relating to any Land and enforce the observance and
performance by the landlord or licensor of its material obligations under any
such document;

 

(e)           Notices, orders and proposals: supply to the
Chargee copies of any notice, order or proposal affecting its Land which may be
materially adverse to the interests of the Chargee:

 

(i)         within
seven days of receipt where it is received from any competent authority or
tenant; and

 

(ii)        within
three days of receipt where it is received from any landlord,

 

and at its cost either
punctually comply with such notice or order or (if so requested by the Chargee
make or join with the Chargee in making such objections or representations or
taking such other steps as the Chargee may think fit;

 

(f)            Building operations: complete with reasonable
expedition any building operations to the reasonable satisfaction of any
competent authority and in conformity with all requisite planning and by-law
consents;

 

(g)           Valuation reports: promptly on receipt, cause
a copy of each professional valuation report which it obtains in relation to
its Land to be provided to the Chargee;

 

(h)           Notification of non-compliance: notify the
Chargee, promptly on receipt, of any claim, notice or other communication
received by it alleging non-compliance by it in relation to any matter referred
to in this clause 12.1;

 

(i)            Acquisitions: notify the Chargee
immediately upon its acquisition of any Land;

 

(j)            Access to Land: permit the Chargee (but
without the Chargee being under any obligation to do so) to:

 

(i)       inspect,
at reasonable times and on reasonable notice, any of its Land, and

 

(ii)      enter
upon all or any of its Land to effect such repairs as the Chargee may consider
necessary, without becoming liable as a mortgagee in possession.

 

12.2         Negative covenants

 

Save as may be permitted
under the Finance Documents, the Chargor shall not without the prior written
consent of the Chargee:

 

14

 

(a)           No building: carry out any building
work on its Land, or make any structural alteration to any building on its
Land, or apply for any planning consent for the development or change of use of
its Land, or at any time sever, remove or dispose of any fixture on it if any
such action would be reasonably likely to materially adversely affect the value
of such Land;

 

(b)           No onerous obligations: enter into any onerous or
restrictive obligation affecting its Land or create or permit to arise any
overriding interest or any easement or right whatever in or over it which would
be reasonably likely to affect adversely its value or the value of the security
constituted by this Debenture over it;

 

(c)           No leasing: exercise any power of
leasing in relation to its Land, or accept surrenders of leases of any Land or
agree to do so;

 

(d)           No lease extensions: extend, renew on
substantially different terms or vary any lease or tenancy agreement or give
any licence to assign or underlet in relation to its Land;

 

(e)           No elections: make any election to waive
the exemption under paragraph 2 of Schedule 10 of the Value Added Tax Act 1994
in its capacity as landlord of any such Land;

 

(f)            Possession: part with possession of
its Land (except on the determination of any lease, tenancy or licence granted
to it or as permitted under paragraph (c) above or paragraph (g) below);
or

 

(g)           No sharing: share the occupation of
any Land with any other person or agree to do so other than for the purposes of
conferences, music, special events, and exhibition venues provided that in none
of the foregoing instances is the relationship of landlord and tenant created
or exclusive possession conferred.

 

12.3         Consolidation of Mortgages

 

Section 93 of the Law
of Property Act 1925, dealing with the consolidation of mortgages, shall not
apply to this Debenture.

 

13.           Plant, Machinery & Equipment

 

The Chargor shall:

 

13.1         Maintenance:  keep and maintain the Plant, Machinery & Equipment in good and
serviceable repair and condition and working order, and:

 

(a)        at its own expense, replace all worn or damaged parts thereof and make
all alterations or modifications required thereto by applicable law or
regulation;

 

(b)        save as provided in paragraph (a) above, not make any alterations,
additions or modifications thereto without the Chargor’s prior written consent;

 

(c)        not permit any item of Plant, Machinery & Equipment to be used
or handled other than in compliance with all applicable laws and in a careful
and proper by persons properly qualified and trained to use it and in
accordance with all operating instructions given by the supplier or
manufacturer thereof;

 

(d)        not permit any item of Plant, Machinery & Equipment to be
overloaded or to be used for any purpose for which it is not designed or
reasonably suitable

 

15

 

(e)        where it is uneconomic to maintain or repair any item of Plant,
Machinery & Equipment as required by this clause 13.1, replace such
item with another similar item of equal or greater quality or value;

 

13.2         Plating:  if so required by the Chargee,
place and maintain at the Chargor’s expense on each item of Plant, Machinery &
Equipment the value of which is equal to or greater than £2,500 (unless a
Default has occurred, in which case the threshold of £2,500 shall not apply), in
a conspicuous place, a clearly legible identification plate containing the
following wording:

 

“NOTICE OF SECURITY INTEREST

 

This
item and the ancillary equipment is subject to a mortgage dated [          ] 200[  ] in favour of Faunus Group International,
Inc”; and

 

13.3         Removal:  not
unfix or remove any item of Plant, Machinery or Equipment from the Land on
which it is kept as at the date of this Debenture, except for the purpose of
effecting necessary maintenance or repairs to or replacing it in accordance
with clause 13.1 (Maintenance)
(and the Chargor shall, forthwith upon request by the Chargee, provide the
Chargee with written confirmation of the current location(s) of the Plant,
Machinery & Equipment

 

14.           Intellectual Property Rights

 

14.1         Positive Covenants

 

The Chargor
shall:

 

(a)           Consents: promptly obtain any
consent required for the creation of a fixed charge over any Intellectual
Property Rights;

 

(b)           Filings and registrations: via the agency
created in this paragraph, promptly file and register in or with such patent,
trade mark or other intellectual property register or authority as may be
available for the purpose (in the UK or elsewhere) in such name as may be
required by the law of the place of registration, such of the following as may
be capable of filing or registration there:

 

(i)            this
Debenture;

 

(ii)           if
so requested by the Chargee all licences of Intellectual Property granted to or
acquired by it; and

 

(iii)          all
future assignments, mortgages and/or charges of Intellectual Property Rights
made pursuant to this Debenture,

 

and maintain or renew such
filings and registrations where applicable. 
The Chargor hereby appoints the Chargee as its authorised agent to make
any filings, registrations or renewals referred to in this paragraph (b) at
the UK Patent Office or otherwise as the Chargee shall see fit.

 

14.2         Negative covenants

 

Save as may be expressly
permitted under the Finance Documents, the Chargor shall not except with the
prior written consent of the Chargee:

 

(a)           No disposals etc: sell, assign, lease,
license, sub-license or grant any interest in its Intellectual Property Rights,
or purport or agree to do so or part with possession or ownership of them, or
allow any third party access to, or the right to use or exploit, any Intellectual
Property Rights;

 

16

 

(b)           Contracts: enter into any contract or
arrangement for supply or otherwise whereby any third party obtains any
assignment of or any right or licence in relation to any Intellectual Property
Rights on the occurrence or non-occurrence of any future event or circumstance
whatever;

 

(c)           Trade marks: amend the specification of
any registered trade mark included in its Intellectual Property Rights to the
extent that it would be likely to materially adversely affect its value or the
value of the security constituted by this Debenture or authorise or permit any
third party to register any trade mark which is the same as or confusingly
similar to any such trade mark in respect of goods or services which are the
same as or similar to the goods or services for which such trade mark is
registered;

 

(d)           Patents: amend the specification or
drawings referred to in any granted patent; or

 

(e)           Chargee’s name: use the Chargee’s name in
or join the Chargee into any proceedings relating to infringement or ownership
of any Intellectual Property Rights.

 

15.           Specified Investments

 

Voting and other rights:
The Chargor undertakes not to exercise any voting or other rights in a way
which would be reasonably likely to prejudice the value of its Specified
Investments or otherwise to jeopardise the security constituted by this
Debenture over them.  Unless and until
the occurrence of a Declared Default:

 

(a)           all
voting and other rights attaching to Specified Investments belonging to the
Chargor shall continue to be exercised by the Chargor for so long as it remains
their registered owner and the Chargor shall not permit any person other than
the Chargor, the Chargee or the Chargee’s nominee to be registered as holder of
such Specified Investments or any part of them; and

 

(b)           if
Specified Investments belonging to the Chargor are registered in the name of
the Chargee or the Chargee’s nominee, all voting and other rights attaching to
them shall be exercised by the Chargee or the Chargee’s nominee in accordance
with instructions in writing from time to time received from the Chargor and,
in the absence of any such instructions, the Chargee or the Chargee’s nominee
shall not exercise any such rights.

 

16.           Opening of New Accounts

 

16.1         Creation of new account

 

On receiving notice that the
Chargor has granted security over or otherwise encumbered or disposed of any of
its Assets in contravention of any Finance Document, the Chargee may rule off
all its accounts and open new accounts with the Chargor.

 

16.2         Credits to new account

 

If the Chargee does not open
a new account immediately on receipt of such notice, it shall nevertheless be
treated as if it had done so on that day. From that day, all payments made by
the Chargor to the Chargee shall be treated as having been credited to a new
account and shall not operate to reduce the amount owing from the Chargor under
any Finance Document at the time when it received such notice.

 

17

 

17.           Powers of Sale, Leasing and Accepting
Surrenders

 

17.1         Section 103 of the LPA

 

Section 103 of the Law
of Property Act 1925 shall not apply to this Debenture, and the statutory power
of sale shall arise on, and be exercisable at any time after, the execution of
this Debenture.  However, the Chargee
shall not exercise such power of sale until this Debenture has become
enforceable in accordance with clause 18.1.

 

17.2         Powers of sale extended

 

The statutory powers of
sale, leasing and accepting surrenders exercisable by the Chargee by virtue of
this Debenture are extended so as to authorise the Chargee (whether in its own
name or that of the Chargor) to:

 

(a)           grant
a lease of any Land vested in the Chargor or in which it has an interest on
such terms and conditions as the Chargee shall think fit; and

 

(b)           sever
any fixtures from Land vested in the Chargor and sell them separately.

 

18.           Appointment of a Receiver or an
Administrator

 

18.1         Appointment

 

Paragraph 14 of Schedule B1
to the Insolvency Act 1986 shall apply to this Debenture.  At any time after:

 

(a)           the
occurrence of a Declared Default; or

 

(b)           a
request has been made by the Chargor to the Chargee for the appointment of a
Receiver or an administrator over its Assets or in respect of the Chargor,

 

then this Debenture shall
become enforceable and, notwithstanding the terms of any other agreement
between the Chargor and any other person (including the Chargee), the Chargee
may (unless precluded by law) appoint in writing any person or persons to be a
receiver and manager or receivers and managers of all or any part of the Assets
of the Chargor or, an administrator or administrators of the Chargor, as the
Chargee may choose in its entire discretion.

 

18.2         Power to act separately

 

Where more than one Receiver
or administrator is appointed, the appointees shall have power to act
separately unless the Chargee shall specify to the contrary.

 

18.3         Receiver’s remuneration

 

The Chargee may from time to
time determine the remuneration of a Receiver.

 

18.4         Removal of Receiver

 

The Chargee may (subject to
section 45 of the Insolvency Act 1986) remove a Receiver from all or any of the
Assets of which he is the Receiver.

 

18.5         Further appointments of a Receiver

 

Such an appointment of a
Receiver shall not preclude:

 

18

 

(a)                                  the
Chargee from making any subsequent appointment of a Receiver over all or any
Assets over which a Receiver has not previously been appointed or has ceased to
act; or

 

(b)                                 the
appointment of an additional Receiver to act while the first Receiver continues
to act.

 

18.6                           Receiver’s agency

 

The Receiver shall be the
agent of the Chargor (which shall be solely liable for his acts, defaults and
remuneration) unless and until the Chargor goes into liquidation, after which
time he shall act as principal and shall not become the agent of the Chargee.

 

19.                                Powers of a Receiver

 

The Receiver may exercise,
in relation to the Chargor over whose Assets he is appointed, all the powers,
rights and discretions set out in Schedules 1 and 2 to the Insolvency Act 1986
and in particular, by way of addition to and without limiting such powers, the
Receiver may, with or without the concurrence of others:

 

(a)                                  sell,
lease, let, license, grant options over and vary the terms of, terminate or
accept surrenders of leases, licences or tenancies of, all or any of the Assets
of the Chargor, without the need to observe any of the provisions of Sections
99 and 100 of the Law of Property Act 1925, in such manner and generally on
such terms and conditions as he shall think fit in his absolute and unfettered
discretion and any such sale or disposition may be for cash, Investments or
other valuable consideration (in each case payable in a lump sum or by
instalments) and carry any such transactions into effect in the name of and on
behalf of the Chargor;

 

(b)                                 promote
the formation of a Subsidiary of the Chargor with a view to such Subsidiary
purchasing, leasing, licensing or otherwise acquiring interests in all or any
of the Assets of the Chargor;

 

(c)                                  sever
any fixtures from Land and/or sell them separately;

 

(d)                                 exercise
all voting and other rights attaching to Investments owned by the Chargor;

 

(e)                                  arrange
for the purchase, lease, licence or acquisition of all or any Assets of the
Chargor by any Subsidiary contemplated by paragraph (b) above on a basis
whereby the consideration may be for cash, Investments, shares of profits or
sums calculated by reference to profits or turnover or royalties or licence
fees or otherwise, whether or not secured on the assets of such Subsidiary and
whether or not such consideration is payable or receivable in a lump sum or by
instalments over such period as the Receiver may think fit;

 

(f)                                    make
any arrangement or compromise with the Chargee or others as he shall think fit;

 

(g)                                 make
and effect all repairs, renewals and improvements to the Assets of the Chargor
and effect, renew or increase insurances on such terms and against such risks
as he shall think fit;

 

(h)                                 appoint
managers, officers and agents for the above purposes at such remuneration as
the Receiver may determine;

 

(i)                                     redeem
any prior Security Interest and settle and pass the accounts of the
encumbrancer and any accounts so settled and passed shall (subject to any
manifest 

 

19

 

error) be
conclusive and binding on the Chargor and the money so paid shall be deemed an
expense properly incurred by the Receiver;

 

(j)                                     pay
the proper administrative charges of the Chargee in respect of time spent by
their agents and employees in dealing with matters raised by the Receiver or
relating to the receivership of the Chargor;

 

(k)                                  commence
and/or complete any building operations upon any Land of the Chargor and apply
for and obtain any planning permissions, building regulation consents or
licences, in each case as he may in his absolute discretion think fit;

 

(l)                                     take
all steps necessary to effect all registrations, renewals, applications and
notifications as the Receiver may in his discretion think prudent to maintain
in force or protect any of the Chargor’s Intellectual Property Rights; and

 

(m)                               do
all such other acts and things as may be considered by the Receiver to be
incidental or conducive to any of the above matters or powers or otherwise
incidental or conducive to the preservation, improvement or realisation of the
relevant Assets.

 

20.                                 Power of attorney

 

20.1                           Appointment of attorney

 

The Chargor, by way of
security and to more fully secure the performance of its obligations under this
Debenture, hereby irrevocably appoints the Chargee (whether or not a Receiver
or administrator has been appointed) and any Receiver separately to be its
attorney (with full power to appoint substitutes and to delegate) with power in
its name and on its behalf, and as its act and deed or otherwise, to:

 

(a)                                  do
anything which the Chargor is obliged to do (but has not done) in accordance
with this Debenture, including to execute and deliver and otherwise perfect any
agreement, assurance, deed, instrument or document; and

 

(b)                                 enable
the Chargee or any such Receiver to exercise (or to delegate) all or any of the
rights conferred on it by this Debenture or by statute in relation to this
Debenture or the Assets mortgaged, assigned or charged, or purported to be
mortgaged, assigned or charged, by it hereunder.

 

20.2                           Ratification

 

The Chargor ratifies and
confirms whatever any attorney does or purports to do pursuant to his
appointment under this clause.

 

20.3                           Sums recoverable

 

All sums expended by the
Chargee or any Receiver under this clause 20 shall be recoverable from the
Chargor under clause 25 (Costs, expenses and
liabilities).

 

21.                                Other powers exercisable by the Chargee

 

21.1                           Receiver’s powers

 

All powers of a Receiver
conferred by this Debenture may be exercised by the Chargee after this
Debenture has become enforceable.  In
that event, paragraph (i) of clause 19 (Powers of a
Receiver) shall be read and construed as if the words “be charged on
the Assets of the 

 

20

 

Chargor” were substituted
for the words “be deemed an expense properly incurred by the Receiver”.

 

21.2                           Receipt of debts

 

The Chargee or any manager,
officer, nominee or agent of the Chargee is hereby irrevocably empowered to:

 

(a)                                  receive
all trade debts  and other debts and
claims which may be assigned to the Chargee pursuant to this Debenture and/or
clause 10 (Further Assurance);

 

(b)                                 on
payment give an effectual discharge for them and on non-payment to take and
institute (if the Chargee in its sole discretion so decides) all steps and
proceedings either in the name of the Chargor or in the name of the Chargee for
their recovery; and

 

(c)                                  agree
accounts and make allowances and give time to any surety.

 

The Chargor ratifies and
confirms whatever the Chargee or any manager or officer of the Chargee shall do
or purport to do under this clause.

 

21.3                           Chargee’s powers

 

The Chargee shall have no
liability or responsibility to the Chargor arising out of the exercise or
non-exercise of the powers conferred on it by this clause 21, except for gross
negligence or wilful misconduct.

 

21.4                           No duty of enquiry

 

The Chargee need not enquire
as to the sufficiency of any sums received by it in respect of any debt or
claim or make any claim or take any other action to collect in or enforce them.

 

22.                                 Application of money received by the
Chargee or a Receiver

 

22.1                           Suspense account

 

Until all the Secured
Obligations have been unconditionally and irrevocably paid and discharged in
full, the Chargee may place and keep to the credit of an interest bearing
suspense account any money received from or realised in respect of the Chargor’s
liability under this Debenture.  The
Chargee shall have no intermediate obligation to apply such money in or towards
the discharge of any of the Secured Obligations.  Amounts standing to the credit of any such
suspense account shall bear interest at a rate considered by the Chargee in
good faith to be a fair market rate.

 

22.2                           Discretion to apply

 

Until all Secured
Obligations have been unconditionally and irrevocably paid and discharged in
full, the Chargee may refrain from applying or enforcing any other moneys,
security or rights held by it in respect of the Secured Obligations or may
apply and enforce such moneys, security or rights in such manner and in such
order as it shall decide in its unfettered discretion.

 

21

 

23.                                Protection of third parties

 

23.1                           No duty to enquire

 

No purchaser from, or other
person dealing with, the Chargee or any Receiver or administrator appointed
under this Debenture shall be concerned to enquire whether any of the powers
which the Chargee has exercised or purported to exercise has arisen or become
exercisable, or whether this Debenture has become enforceable, or whether a
Receiver or administrator has been validly appointed, or whether any event or
cause has happened to authorise the Chargee or a Receiver or administrator to
act or as to the propriety or validity of the exercise or purported exercise of
any such power, and the title of such a purchaser and the position of such a
person shall not be impeachable by reference to any of those matters.

 

23.2                           Receipt

 

The receipt of the Chargee
shall be an absolute and a conclusive discharge to a purchaser and shall
relieve him of any obligation to see to the application of any money paid to or
by the direction of the Chargee.

 

24.                                Protection of the Chargee and Receiver

 

24.1                           Limitation

 

Neither the Chargee nor any
Receiver shall be liable in respect of any Liability which arises out of the
exercise or the attempted or purported exercise of, or the failure to exercise,
any of their respective powers under or by virtue of this Debenture, except if
and in so far as such Liability results from its own gross negligence or wilful
default.

 

24.2                           Entry into possession

 

Without prejudice to the
generality of clause 24.1 (Limitation),
neither the Chargee nor any Receiver shall be liable to account as mortgagee in
possession or otherwise for any sum not actually received by it or him
respectively.  If and whenever the
Chargee enters into possession of any Assets, it shall be entitled at any time
at its discretion to go out of possession.

 

25.                                Costs, expenses and liabilities

 

25.1                           Costs and expenses

 

The Chargor will, within
three (3) Business Days of the Chargee’s written demand from time to time,
reimburse the Chargee for all costs and expenses (including legal fees) on a
full indemnity basis, together with VAT thereon, reasonably and properly
incurred by it in connection with:

 

(a)                                  the
negotiation, preparation, printing, execution, completion and perfection of
this Debenture; and

 

(b)                                 the
completion of the transactions and perfection of the security contemplated in
this Debenture in clause 10 (Further Assurance).

 

25.2                           Enforcement costs

 

The Chargor will, within
three (3) Business Days of the Chargee’s written demand, pay to the
Chargee, on a full indemnity basis, the amount of all costs and expenses
(including legal, valuation, accountancy and consultancy fees and disbursements
and out-of-pocket expenses), and any VAT thereon, incurred by the Chargee in
connection with the exercise, enforcement 

 

22

 

and/or preservation of any
of its rights under this Debenture (or any of the documents contemplated by
such documents) or any proceedings instituted by or against the Chargee, in any
jurisdiction as a consequence of taking or holding the security or enforcing
those rights.

 

25.3                           Indemnity for Liabilities

 

The Chargor shall also,
within three (3) Business Days of the Chargee’s written demand, reimburse
or pay to the Chargee, its employees or agents, on demand (on the basis of a
full indemnity) the amount of all Liabilities incurred by the Chargee, its
employees or agents, in connection with:

 

(a)                                  any
default or delay by the Chargor in the performance of any of its obligations
under this Debenture;

 

(b)                                 the
exercise, or the attempted or purported exercise, by or on behalf of the
Chargee of any of its powers or any other action taken by or on behalf of the
Chargee with a view to or in connection with the recovery of the Secured
Obligations, the enforcement of the security created by this Debenture or for
any other purpose contemplated in this Debenture;

 

(c)                                  the
carrying out or consideration of any other act or matter which the Chargee may
consider to be conducive to the preservation, improvement or benefit of any
Asset; and

 

(d)                                 any
stamp duty, stamp duty reserve tax or similar tax which may be payable as a
result of the execution or performance of this Debenture.

 

26.                                Interest on overdue amounts

 

(a)                                  Any
amount not paid in accordance with this Debenture when due shall (subject to
paragraph (b) below) carry interest at the rate and in accordance with the
terms contained in the Finance Documents, or other terms governing such amount,
in relation to overdue sums or at such other rate as may be agreed between the
Chargor and the Chargee from time to time. 
In each case, interest shall accrue on a day to day basis until the date
of irrevocable and unconditional repayment in full and, if unpaid, shall be
compounded on the terms so agreed or (in the absence of such agreed terms) with
quarterly rests on the Chargee’s usual quarterly interest days.  Interest shall continue to be charged and
compounded on this basis after as well as before any demand or judgment.

 

(b)                                 Paragraph
(a) above shall not apply to the extent that default interest on such
amount for such period is charged pursuant to the relevant Finance
Document and itself constitutes part of the Secured Obligations.

 

27.                                Set-off

 

The Chargee may (but is not
obliged to) retain any money standing to the credit of the Chargor with the
Chargee in any currency upon any account or otherwise (whether or not in the
Chargor’s name) as cover for any Secured Obligations and/or at any time or
times without notice to the Chargor combine or consolidate all or any of such
money with all or such part of the Secured Obligations due or owing by it as
the Chargee may select and the Chargee may purchase with any such money any
other currency required to effect such combination or consolidation.  The rights of the Chargee under this clause
27 are in addition to, and not in substitution for, its rights under the
general law.

 

23

 

28.                                Assignment and Transfer by the Chargee

 

28.1                           The
Chargor may not transfer or assign any of its rights under this Debenture.

 

28.2                           The
Chargee may, without notice, transfer or assign all or any part of and/or grant
one or more participations in the security (created hereunder) to any company,
person or body and the Chargor hereby irrevocably consents to any such
transfer, assignment or participations (and the disclosure by the Chargee to a
transferee, assignee or participant of any information about the Chargor or the
Group and the security (created hereunder) as the Chargee may consider
appropriate) and undertakes to execute any documentation the Chargee may
require to effect any such transfer or assignment or participation.

 

29.                                Release of security

 

29.1                           Redemption

 

Subject to clause 29.2 (Avoidance of Payments), if all Secured Obligations have been
unconditionally and irrevocably paid in full the Chargor is not under any
further actual or contingent liability to make advance or provide other
financial accommodation to any person under any Finance Document, the Chargee
will (at the request and cost of the Chargors), execute and do all such
reasonable acts as may be necessary to release the Assets from the security
constituted by this Debenture.  Such
release shall not prejudice the rights of the Chargee under clause 25 (Costs, expenses and liabilities).

 

29.2                           Avoidance of Payments

 

If the Chargee considers in
good faith that any amount received in payment or purported payment of the
Secured Obligations is capable of being avoided or reduced by virtue of any
insolvency, bankruptcy, liquidation or other similar laws, the liability of the
Chargor under this Debenture and the security constituted by this Debenture
shall continue and such amount shall not be considered to have been irrevocably
paid.

 

30.                                Forbearance, severability, variations
and consents

 

30.1                           Delay etc

 

All rights, powers and
privileges under this Debenture shall continue in full force and effect,
regardless of the Chargee exercising, delaying in exercising or omitting to
exercise any of them.

 

30.2                           Severability

 

No provision of this
Debenture shall be avoided or invalidated by reason only of one or more other
provisions being invalid or unenforceable.

 

30.3                           Illegality, invalidity, unenforceability

 

Any provision of this
Debenture which is or becomes illegal, invalid or unenforceable shall be
ineffective only to the extent of such illegality, invalidity and
unenforceability, without invalidating the remaining provisions of this
Debenture.

 

30.4                           Variations

 

No variation of this
Debenture shall be valid and constitute part of this Debenture, unless such
variation shall have been made in writing and signed by the Chargee and the
Chargor.

 

24

 

30.5                           Consents

 

Save as otherwise expressly
specified in this Debenture, any consent of the Chargee may be given absolutely
or on any terms and subject to any conditions as the Chargee may determine in
its entire discretion.

 

31.                                Counterparts

 

This Debenture may be
executed in any number of counterparts, and this has the same effect as if the
signatures were on a single copy of this Debenture.

 

32.                                Notices

 

The provisions of clause 19
(Notices) of the Recievables Financing
Agreement will apply to all notices and communications to be given under this
Debenture as if such provisions were set out in extenso
in this Debenture and as if references therein to “this Agreement” were
references to “this Debenture”.

 

33.                                Third party rights

 

(a)                                  Unless
expressly provided to the contrary in the Recievables Financing Agreement or
this Debenture, a person who is not a party to this Debenture has no rights
under the Contracts (Right of Third Parties) Act 1999 to enforce or to enjoy
the benefit of any term of this Agreement.

 

(b)                                 Notwithstanding
any term of any Finance Document, the consent of any person who is not a party
to this Debenture is not required to rescind or vary this Debenture at any
time.

 

34.                                Governing law

 

This Debenture is to be
governed by and construed in accordance with the laws of England and Wales.

 

35.                                Enforcement

 

This Debenture shall be governed
by and construed in accordance with English law and the Obligors hereby submit
to the jurisdiction of the English Courts.

 

IN
WITNESS of which this Debenture has been executed by each of
the Chargee and the Chargor as a deed it shall take effect on the date first
set out above

 

25

 

Schedule 1

 

Registered Land to be
mortgaged

 

None at the date of this debenture

 

Unregistered land subject to first registration
upon the execution of this Debenture

 

None at the date of this debenture

 

The address for
service of the Chargee in the case of registered land is Faunus Group
International, Inc, 80 Broad Street, 22nd Floor, New York, New York 10004

 

26

 

Schedule 2

 

Notice to Account
Bank

 

Part 1

 

 

Form of
notice to be served at completion by the Chargor on the Account Bank pursuant
to

clause 7.2

 

 

[On the headed notepaper of Chargor]

 

National
Westminster Bank Plc

9 Market Place

Oundle,
Peterborough, PE8 4BB

 

For the attention
of

 

[date]

 

Dear Sirs

 

Debenture dated [·]
(the “Debenture”) between Corgenix UK Limited (the “Chargor”) and Faunus Group
International, Inc (the “Chargee”)

 

1.             This letter constitutes
notice to you that, under the Debenture, we have:

 

(a)           charged our Non-vesting
Debts and all other Debts (as defined therein) to the Chargee by way of fixed
charge;

 

(b)           undertaken to the Chargee to
pay into the account number 09825479 held with you (the “Account”)
all money which we receive in respect of our Non-vesting Debts and all other
Debts (as defined therein) and, pending such payment, to hold all money so
received on trust for the Chargee; and

 

(c)           charged all our interests
and rights (if any) in or to any money at any time standing to the credit of
the Account to the Chargee by way of fixed charge.

 

2.             We each hereby irrevocably
and unconditionally instruct and authorise you (notwithstanding any previous
instructions which we may have given you to the contrary):

 

(a)           to disclose to the Chargee,
without any reference to or further authority from us and without any enquiry
by you as to the justification for such disclosure, such information relating
to the Account and the amount from time to time standing to their credit as the
Chargee may, at any time and from time to time, request you to disclose to it;

 

(b)           at any time and from time to
time upon receipt by you of instructions in writing from the Chargee, to pay or
release to the Chargee all or any of the money standing to the credit of the Account
and generally to act in accordance with such instructions in relation to the
Account, without any reference to or further authority from us and without any
enquiry by you as to the justification for such instructions or their validity;

 

27

 

(c)           to comply with the terms of
any written instructions in any way relating or purporting to relate to the
Account which you may receive at any time and from time to time from the
Chargee without any reference to or further authority from us and without any
enquiry by you as to the justification for such notice, statement or
instructions or its or their validity;

 

(d)           not to act upon our
instructions with regard to the Account unless the Chargee confirms those instructions
to you in writing; and

 

(e)           to hold all sums from time
to time standing to the credit of the Account to the order of the Chargee.

 

3.             The Chargor is not permitted
to withdraw any amount from any Account without the prior written consent of
the Chargee.

 

4.             The instructions and
authorisations contained in this letter shall remain in full force and effect
until we and the Chargee together give you notice in writing revoking them.

 

5.             The terms defined in the
Debenture shall, where the context so admits, have the same meaning in this
letter.

 

6.             This letter shall be
governed by and construed in accordance with the laws of England and Wales.

 

7.             Please will you acknowledge
receipt of this letter and confirm your acceptance of the instructions and authorisations
contained in it by sending a letter addressed to us and to the Chargee in the
form attached to this letter.

 

	
  Yours faithfully

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  For and on behalf of

  	
   

  	
   

  
	
  CORGENIX UK LIMITED

  	
   

  	
   

  

 

28

 

Part 2

 

 

Form of Acknowledgement to be delivered by
the Account Bank to the Chargee pursuant to

clause 7.2

 

 

[On the headed notepaper of
the Account Bank]

 

To:          Faunus Group International, Inc

80 Broad Street

22nd Floor

New York

NY 10004

 

For the attention of [                         ]

 

[date]

 

Dear Sirs

 

Accounts

 

We hereby acknowledge receipt of a letter (a copy of
which is attached) dated [·] (the “Notice”)
addressed to us by the Chargor.  We
confirm that we hold the Account.

 

We hereby agree with the Chargee that we:

 

(a)           accept the instructions
contained in the Notice and undertake to act in accordance and comply with the
Notice;

 

(b)           have not received notice of
the interest of any third party in the Account;

 

(c)           have neither claimed or
exercised nor will claim or exercise without your prior written consent any
security interest, set-off, counterclaim or other rights in respect of the
Account or funds in it or debts represented by them;

 

(d)           shall not accept from the
Chargor any further instructions received by us in respect of the Account
without having received your written confirmation of such instructions;

 

(e)           shall pay all moneys
received by us for the account of the Chargor to (and only to) the credit of
the Account unless you otherwise agree or direct in writing; and

 

(f)            shall not permit any amount
to be withdrawn from the Account without your prior written consent.

 

The expressions
defined or incorporated by reference in the Notice shall, unless the context
otherwise require, have the same meanings in this letter.

 

This letter shall
be governed by and construed in accordance with the laws of England and Wales.

 

	
  Yours faithfully

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  For and on behalf of

  	
   

  	
   

  
	
  [Account Bank]

  	
   

  	
   

  

 

29

 

Schedule 3

 

Specified Intellectual Property

 

Domain
Names

 

	
  Domain

  	
   

  	
  Registrar

  	
   

  	
  Expiry Date

  	
   

  	
  Comment

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Patents

 

	
  Patent Family Title

  	
   

  	
  US Patent

  	
   

  	
  UK Patent Status

  	
   

  	
  European Patent

  Application

  
	
  None at the date of this
  debenture

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Trade marks

 

	
  Trade mark

  	
   

  	
  Territory

  	
   

  	
  Class (es)

  	
   

  	
  Status

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

30

 

Schedule 4

 

Form of
Notice to Insurers

 

To:

 

[date]

 

Dear Sirs

 

We refer to a Debenture (the “Debenture”)
dated       2010 made between Faunus Group
International, Inc (the “Chargee”) and
ourselves.  Unless otherwise stated in
this letter, terms defined in the Debenture are to have the same meanings as in
this letter.

 

In this letter, “Insurance
Documents” means each of the following insurance policies:

 

	
  Policy
  name

  	
   

  	
  Policy
  number

  	
   

  	
  Insurer

  	
   

  	
  Insured

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

We hereby give you notice that we have assigned to
the Chargee all our rights, title and interest in and to the Insurance
Documents and charged by way of fixed charge all insurance and assurance
contracts and policies (including the benefit of all claims arising and all
money payable under them) as security for certain obligations owed by us to the
Chargee.

 

We irrevocably and unconditionally instruct and
authorise you (notwithstanding any previous directions which we may have given
you to the contrary):

 

1.             to comply with the terms of
any written notice or instructions from the Chargee to effect or renew any such
Insurance Document either in its name or in the name of any member of the Group
with an endorsement of the Chargee’s interest;

 

2.             to procure that the Chargee
is shown as first loss payee on the face of all Insurance Documents;

 

3.             to procure that each
Insurance Document contains a provision under which the proceeds payable in
respect of that Insurance Document are payable to us, the relevant member of
the Group or the Chargee; and

 

4.             to procure that each
Insurance Document contains:

 

(a)           a mortgagee clause whereby
such Insurance Policy will not be vitiated or avoided in the event of or as a
result of any misrepresentation, act, neglect or failure to make disclosure on
the part of the insured party (other than the Chargee) or any circumstances
beyond the control of any insured party and a waiver of all rights of
subrogation against the Chargee; and

 

(b)           terms providing that it will
not be invalidated so far as the Chargee is concerned for failure to pay any
premium due without you first giving to the Chargee not less than seven days’
written notice;

 

31

 

5.             as soon as you become aware
that a member of the Group has failed to pay any premium or renew any
insurance, to keep the Chargee’s interest in such insurance in force up to the
full sum insured and for the same risks (subject to the premium for any such
period of extended cover being paid by the Chargee for the account of the
relevant member of the Group);

 

6.             to advise the Chargee of any
proposed cancellation of an Insurance Document at least 14 days before such cancellation
is due to take effect;

 

7.             if the insurance cover is to
be reduced or any insured risks are to be restricted, to advise the Chargee at
least 14 days before such reduction or restriction is due to take effect;

 

8.             to advise the Chargee
immediately of any act, omission or event which comes to the knowledge of you
or the relevant insurer (as the case may be) and which might invalidate the
insurance or render it unenforceable, in whole or in part; and

 

9.             to advise the
Chargee if any claim with a value in excess of £5,000 is rejected by insurers
or if insurers impose a reservation of rights following the notification of any
claim.

 

Please sign and
return the enclosed copy of this notice to the Chargee (with a copy to us) by
way of confirmation that you agree to act in accordance with the provisions of
this notice.

 

The instructions
and authorisations contained in this letter shall remain in full force and
effect until we and the Chargee together give you notice in writing revoking
them.

 

This letter shall
be governed by and construed in accordance with the laws of England and Wales.

 

Please confirm
your acknowledgement of this Notice by signing the acknowledgements set out at
the foot of the enclosed duplicate hereof and by returning the same to Faunus
Group International, Inc, 80 Broad Street, 22nd Floor, New York, New York 10004 marked for the
attention of [                      ]

 

	
  Signed

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  for and on behalf of

  	
   

  	
   

  
	
  Corgenix UK Limited

  	
   

  	
   

  

 

32

 

[on copy]

 

Acknowledgement

 

To:          Corgenix UK Limited

40 Commerce Road

Lynchwood

Peterborough PE2 6LR

 

To:          Faunus Group International, Inc

80 Broad Street

22nd Floor

New York

NY 1005

 

For the attention of

 

We,                                                   hereby acknowledge receipt of a
notice of assignment from Corgenix UK Limited,  of
which the attached is a copy (the “Notice of Assignment”)
and confirm the matters set out in paragraphs (1) to (9) of the
Notice of Assignment.

 

	
  For and on behalf of

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  

 

33

 

Schedule 6

 

Plant, Machinery & Equipment

 

 

Please see the attached list

 

34

 

Execution Copy

 

Execution Page

 

Chargor

 

	
  SIGNED as a DEED by

  	
  )

  	
   

  	
   

  
	
  CORGENIX UK LIMITED

  	
  )

  	
   

  	
   

  
	
  acting by:

  	
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  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Director/Secretary

  	
   

  
						

 

Chargee

 

	
  SIGNED as a DEED by

  	
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  FAUNUS GROUP INTERNATIONAL, INC.

  	
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  acting by:

  	
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  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Vice-President/SecretaryExhibit 10.3

 

Execution Copy

 

GUARANTY

 

This Guaranty (“Agreement”) is
made and executed this      day of March, 2010 by Corgenix Medical
Corporation, a corporation, duly incorporated and validly existing pursuant to
the laws of Nevada (“Guarantor”), having its principal place of business at 11575
Main Street, Broomfield, CO, in favor of FAUNUS GROUP
INTERNATIONAL, INC., a Delaware corporation (“FGI”),
having its principal place of business at 80 Broad Street, 22nd Floor, New
York, New York 10004.

 

BACKGROUND

 

A.            FGI intends to establish
financing arrangements with, extend credit to and/or purchase receivables from Corgenix
UK Limited, (“Client”) pursuant to the terms
and conditions of the certain Receivable Finance Agreement dated as of the date
hereof between Client and FGI (as may hereafter be amended, supplemented,
restated or replaced from time to time, the “Corgenix UK
Agreement”).

 

B.            In order to
induce FGI to enter into the financing arrangements with and make loans and
extend credit to the Client, Guarantor undertakes and agrees as set forth
below.

 

1.             Obligations Guaranteed.  To induce FGI
to enter into the Corgenix UK Agreement and consider extending or continuing to
extend credit or purchase receivables from time to time to Client thereunder,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Guarantor, intending to be legally bound hereby,
absolutely and unconditionally guarantees and becomes surety for the payment
and performance when due (at maturity, upon acceleration, or otherwise) of all
of the debts and obligations of Client of every kind or nature, whether joint
or several, due or to become due, absolute or contingent, now existing or
hereafter arising, and whether principal, interest, fees, costs, expenses or
otherwise, and arising under the Corgenix UK Agreement or otherwise (including
without limitation any interest and/or expenses accruing following the
commencement of any insolvency, receivership, reorganization or bankruptcy case
or proceeding relating to Client, whether or not a claim for post-petition
interest and/or expenses is allowed in such case or proceeding) (collectively,
the “Obligations”).  Guarantor shall also pay or reimburse FGI on
demand for all costs and expenses, including without limitation attorneys’
fees, incurred by FGI at any time to enforce, protect, preserve, or defend FGI’s
rights hereunder and with respect to any property securing this Agreement.  All payments hereunder shall be made in
lawful money of the United States, in immediately available funds. Unless
otherwise defined herein, all capitalized terms shall have the respective
meanings given to such terms in the Corgenix UK Agreement.

 

2.             Representations and Warranties. 
Guarantor represents and warrants that:

 

(a)           Guarantor’s execution and performance of
this Agreement shall not (i) violate or result in a default or breach
(immediately or with the passage of time) under any contract, agreement or
instrument to which Guarantor is a party, or by which Guarantor or any asset of
Guarantor is bound, (ii) violate or result in a default or breach under
any order, decree, award, injunction, judgment, law, regulation or rule, (iii) cause
or result in the imposition or 

 

 

creation
of any lien or other encumbrance upon any property or asset of Guarantor, or (iv) violate
or result in a breach of the certificate of incorporation or bylaws of
Guarantor.

 

(b)           Guarantor has the full power and authority to enter
into and perform under this Agreement, which has been authorized by all
necessary corporate action on behalf of Guarantor.

 

(c)           No consent, license or approval of, or filing or
registration with, any governmental authority is necessary for the execution
and performance hereof by Guarantor.

 

(d)           This Agreement constitutes the valid and binding
obligation of Guarantor enforceable in accordance with its terms.

 

(e)           This Agreement promotes and furthers the business and
interests of Guarantor and the creation of the obligations hereunder will
result in direct financial benefit to Guarantor.

 

3.             Guarantor Acknowledgements.

 

(a)           Guarantor hereby waives notice of (i) acceptance
of this Agreement, (ii) the existence or incurring from time to time of
any Obligations guaranteed hereunder, (iii) nonpayment, the existence of
any Termination Event, the making of demand, or the taking of any action by
FGI, under the Corgenix UK Agreement, and (iv) default and demand
hereunder.

 

(b)           Guarantor acknowledges that Guarantor (i) has
examined or had the opportunity to examine the Corgenix UK Agreement and
related agreements and (ii) waives any defense which may exist resulting
from Guarantor’s failure to receive or examine at any time the Corgenix UK
Agreement or any amendments, supplements, restatements or replacements
therefor.

 

(c)           Guarantor acknowledges that it shall not do anything
to impede or interfere in any manner with the normal collection and payment of
the Approved Debts assigned and sold to FGI.

 

(d)           Guarantor acknowledges that in entering into this
Agreement Guarantor is not relying upon any statement, representation, warranty
or opinion of any kind from FGI as to the present or future financial
condition, performance, assets, liabilities or prospects of Client or as to any
other matter.

 

4.             FGI Actions.  Guarantor
hereby consents and agrees that FGI may at any time or from time to time in FGI’s
discretion (a) extend or change the time of payment and/or change the
manner, place or terms of payment of any or all Obligations, (b) amend,
supplement, restate or replace the Corgenix UK Agreement or any related
agreements, (c) renew or extend any financing now or hereafter reflected
by the Corgenix UK Agreement or the maturity thereof or increase (without limit
of any kind and whether related or unrelated) or decrease loans and extensions
of credit to Client, (d) modify the terms and conditions under which
loans, extensions of credit or purchases of receivables may be made to Client, (e) settle,
compromise or grant releases for liabilities of Client, and/or any other Person
or Persons liable with Guarantor for, any 

 

2

 

Obligations, (f) exchange, compromise, release or
surrender, or subordinate or release any lien on, any property (including any
collections therefrom or proceeds thereof) of Client or any other Person or
Persons now or hereafter securing any of the Obligations, and (g) apply
any and all payments and proceeds of any property of any Person securing any or
all of the Obligations received by FGI at any time against the Obligations in
any order as FGI may determine; all of the foregoing in such manner and upon
such terms as FGI may see fit, and without notice to or further consent from
Guarantor, who hereby agrees to be and shall remain bound upon this Agreement
notwithstanding any such action on FGI’s part.

 

5.             Scope of Guaranty.  The Agreement
is an agreement of suretyship and a guaranty of payment and not of
collection.  The liability of Guarantor
hereunder is absolute, primary, unlimited and unconditional and shall not be
reduced, impaired or affected in any way by reason of (a) any failure to
obtain, retain or preserve, or the lack of prior enforcement of, any rights
against any Person or Persons liable for the Obligations (including Client and
Guarantor) or in any property, (b) the invalidity, unenforceability or
voidability of any Obligations or any liens or rights in any property pledged
by any Person or Persons, (c) any delay in making demand upon Client or
any delay in enforcing, or any failure to enforce, any rights against Client or
any other Person or Persons liable for any or all of the Obligations or in any
property pledged by any Person or Persons, even if such rights are thereby
lost, (d) any failure, neglect or omission on FGI’s part to obtain,
perfect or continue any lien upon, protect, exercise rights against, or realize
on, any property of Client, Guarantor or any other party securing the
Obligations, (e) the existence or nonexistence of any defenses which may
be available to the Client with respect to the Obligations, (f) the
granting of any waiver or forbearance at any time and for any period with
respect to any performance by Client or any Termination Event(s) under the
Corgenix UK Agreement, (g) the commencement of any bankruptcy,
reorganization, liquidation, dissolution or receivership proceeding or case
filed by or against Client or any Guarantor or (h) any other fact, event,
condition or omission which may give rise to a suretyship defense. Guarantor
promises and undertakes to make all payments hereunder free and clear of any
deduction, offset, defense, claim or counterclaim of any kind.

 

6.             Reinstatement.  If any or all
payments or proceeds of property securing any or all of the Obligations made
from time to time to FGI with respect to any obligation hereby guaranteed are
at any time recovered from, or repaid by, FGI in whole or in part in any
bankruptcy, reorganization, receivership, insolvency or similar case or
proceeding instituted by or against Client, this Agreement shall continue to be
fully applicable to (or, as the case may be, reinstated to be applicable to)
such obligation to the same extent as if the recovered or repaid payment(s) or
proceeds had never been originally paid to FGI.

 

7.             Cumulative Remedies.  All rights
and remedies hereunder and under the Corgenix UK Agreement, and related
agreements, are cumulative and not alternative, and FGI may proceed in any
order from time to time against Client, Guarantor and/or any other Person or
Persons liable for any or all of the Obligations and their respective
assets.  FGI shall not have any
obligation to proceed at any time or in any manner against, or exhaust any or
all of FGI’s rights against, Client or any other Person or Persons liable for
any or all of the Obligations prior to proceeding against Guarantor hereunder.

 

8.             Security Interest. As additional security for the Obligations, Guarantor
hereby 

 

3

 

grants to FGI a security interest in all of Guarantor’s
right, title and interest in and to the following assets, wherever located and
whether now or hereafter owned or acquired: (a) all Accounts, (b) Chattel
Paper, (c) Commercial Tort Claims, (d) Deposit Accounts, (e) Documents,
(f) Equipment, (g) General Intangibles, (h) Goods (including but
not limited to all files, correspondence, computer programs, tapes, disks and
related data processing software which contain informa­tion identifying or
pertaining to any of the Collateral or any Account Debtor or showing the
amounts thereof or payments thereon or otherwise necessary or helpful in the
realization thereon or the collection thereof, (i) Inventory, (j) Investments,
(k) Investment Property, (l) Letters of Credit and Letter of Credit
rights, (m) all Supporting Obligations and (n) all cash and non-cash
proceed of the foregoing (including insurance proceeds). Upon the occurrence of
a Termination Event under Corgenix UK Agreement or any breach or default by
Guarantor under this Agreement (each an “Event of Default”), FGI shall have all
the rights of a secured party under applicable law, and more specifically under
the Uniform Commercial Code (in effect in the State of New York) and shall have
all the rights and remedies set forth in the Corgenix UK Agreement. In addition
and without limitation, FGI may, without notice to or demand upon the Guarantor
and take possession of the Collateral, and for that purpose FGI may enter upon
any premises on which the Collateral may be situated and remove the same
therefrom; require Guarantor to assemble all or any part of the Collateral at
such location or locations within the jurisdiction(s) of Guarantor’s
principal office(s) or at such other locations as FGI may reasonably
designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the FGI shall
give to Guarantor at least five (5) Business Days prior written notice of
the time and place of any public sale of Collateral or of the time after, which
any private sale or any other intended disposition is to be made. The Guarantor
hereby acknowledges that five (5) Business Days prior written notice of
such sale or sales shall be reasonable notice. 
In addition, Guarantor waives any and all rights that it may have to a
judicial hearing in advance of the enforcement of any of FGI’s rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto. In addition, FGI shall have and may exercise any
or all other rights and remedies it may have available at law, in equity, or
otherwise. All of FGI’s rights and remedies, whether evidenced by this
Agreement, the Corgenix UK Agreement or any other writing, shall be cumulative
and may be exercised singularly or concurrently. Election by FGI to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Guarantor under this
Agreement, after Guarantor’s failure to perform, shall not affect FGI’s right
to declare a default and to exercise its remedies.

 

9.             Subrogation.  Any and all
rights of any nature of Guarantor to subrogation, reimbursement or indemnity
and any right of Guarantor to recourse to any assets or property of, or payment
from, Client or any other Person or Persons liable for any or all of the
Obligations as a result of any payments made or to be made hereunder for any
reason shall be unconditionally subordinated to all of FGI’s rights under the Corgenix
UK Agreement and Guarantor shall not at any time exercise any of such rights
unless and until all of the Obligations have been unconditionally paid in
full.  Any payments received by Guarantor
in violation of this Section 9 shall be held in trust for and immediately
remitted to FGI.

 

10.           FGI Records.  FGI’s books
and records of any and all of the Obligations, absent manifest error, shall be
prima facie evidence against Guarantor of the indebtedness owing or to 

 

4

 

become owing to FGI hereunder.

 

11.           Continuing Surety.  This
Agreement shall constitute a continuing surety obligation with respect to all
Obligations from time to time incurred or arising and shall continue in effect
until all Obligations are indefeasibly paid and satisfied and the liability of
Guarantor under this Agreement may not be revoked or terminated.

 

12.           Setoff.  Guarantor
agrees that FGI shall have a right of setoff against any and all property of
Guarantor now or at any time in FGI’s possession, including without limitation
deposit accounts, and the proceeds thereof, as security for the obligations of
Guarantor hereunder.

 

13.           Acceleration.  If a
Termination Event occurs and is continuing under the Corgenix UK Agreement,
then all of Guarantor’s liabilities of every kind or nature to FGI hereunder
shall, at FGI’s option, become immediately due and payable and FGI may at any
time and from time to time, at FGI’s option (regardless of whether the
liability of Client or any other Person or Persons liable for any or all of the
Obligations has matured or may then be enforced), take any and/or all actions
and enforce all rights and remedies available hereunder or under applicable law
to collect Guarantor’s liabilities hereunder.

 

14.           Enforcement Timing. 
Failure or delay in exercising any right or remedy against Guarantor
hereunder shall not be deemed a waiver thereof or preclude the exercise of any
other right or remedy hereunder.  No
waiver of any breach of any provision of this Agreement shall be construed as a
waiver of any subsequent breach or of any other provision.

 

15.           Confession.

 

(a)           GUARANTOR HEREBY
IRREVOCABLY AUTHORIZES AND EMPOWERS ANY ATTORNEY(S) OR THE CLERK OF ANY
COURT OF RECORD IN THE STATE OF NEW YORK, OR ELSEWHERE, FOLLOWING THE
OCCURRENCE OF A TERMINATION EVENT UNDER THE CORGENIX UK AGREEMENT, TO APPEAR
FOR GUARANTOR IN ANY SUCH COURT, WITH OR WITHOUT DECLARATION FILED, AS OF ANY
TERM OR TIME, AND CONFESS OR ENTER JUDGMENT AGAINST GUARANTOR IN FGI’S FAVOR
FOR ALL OBLIGATIONS DUE OR TO BECOME DUE BY GUARANTOR HEREUNDER, WITH COSTS OF
SUIT, RELEASE OF ERRORS AND FIFTEEN PERCENT (15%) OF SUCH SUMS ADDED AS
REASONABLE ATTORNEYS’ FEES; AND FOR THE PURPOSE HEREOF A COPY OF THIS AGREEMENT
SHALL BE SUFFICIENT WARRANTY. SUCH AUTHORITY AND POWER SHALL NOT BE EXHAUSTED
BY ANY EXERCISE THEREOF AND JUDGMENT MAY BE CONFESSED FROM TIME TO TIME
HEREUNDER AS FGI MAY DETERMINE.

 

(b)           GUARANTOR, BEING FULLY AWARE OF THE
RIGHT TO NOTICE AND A HEARING CONCERNING THE VALIDITY OF ANY AND ALL CLAIMS
THAT MAY BE ASSERTED AGAINST GUARANTOR BY FGI BEFORE A JUDGMENT CAN BE
ENTERED HEREUNDER OR BEFORE EXECUTION MAY BE LEVIED ON SUCH JUDGMENT
AGAINST ANY AND ALL PROPERTY OF 

 

5

 

GUARANTOR, HEREBY KNOWINGLY, VOLUNTARILY
AND UNCONDITIONALLY WAIVES THESE RIGHTS AND AGREES AND CONSENTS TO JUDGMENT
BEING ENTERED BY CONFESSION IN ACCORDANCE WITH THE TERMS HEREOF AND EXECUTION
BEING LEVIED ON SUCH JUDGMENT AGAINST ANY AND ALL PROPERTY OF GUARANTOR, IN
EACH CASE WITHOUT FIRST GIVING NOTICE AND THE OPPORTUNITY TO BE HEARD ON THE
VALIDITY OF THE CLAIM OR CLAIMS UPON WHICH SUCH JUDGMENT IS ENTERED.

 

16.           Successors and Assigns.  This
Agreement shall (a) be legally binding upon Guarantor, and Guarantor’s
successors and assigns, provided that
Guarantor’s obligations hereunder may not be delegated or assigned without FGI’s
prior written consent and (b) benefit any and all of FGI’s successors and
assigns.  FGI may assign its rights under
this Agreement without notice to or consent from Guarantor.

 

17.           Entire Agreement.  This
Agreement and the Corgenix UK Agreement embody the whole agreement and
understanding of the parties hereto relative to the subject matter hereof.  No modification or waiver of any provision
hereof shall be enforceable unless approved by FGI in writing.

 

18.           Governing Law, Submission to Jurisdiction
and Jury Trial.  THIS AGREEMENT, AND ALL MATTERS ARISING
HEREUNDER OR RELATING HERETO,   SHALL IN ALL RESPECTS BE INTERPRETED,
CONSTRUED AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.  GUARANTOR IRREVOCABLY KNOWINGLY AND
VOLUNTARILY (I) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSES OF ANY LITIGATION OR PROCEEDING HEREUNDER
OR CONCERNING THE TERMS HEREOF AND (II)  WAIVES THE RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY LITIGATION, CLAIMS OR PROCEEDING HEREUNDER OR CONCERNING
THE TERMS HEREOF OR OTHERWISE IN CONNECTION WITH GUARANTOR’S DEALINGS WITH FGI.

 

19.           Notices.

 

(a)           In any action or proceeding brought by FGI to enforce
the terms hereof, Guarantor waives personal service of the summons, complaint,
and any motion or other process, and agrees that notice thereof may be served (i) in
person, (ii) by registered or certified mail, return receipt requested, or
(iii) by nationally recognized overnight courier (in the case of (i) above,
on the date of delivery; in the case of (ii) above, three (3) days
after deposit in the U.S. Mail; and in the case of (iii) above, one (1) day
after delivery to the courier).  Service
may be made at the address of Guarantor set forth in the Preamble hereto or
such other address at which Guarantor is then located.

 

(b)           Any and all notices which may be given to Guarantor by
FGI hereunder shall be sent to Guarantor at the address of Guarantor set forth
in the Preamble hereto (or such other address at which Guarantor is then
located) and shall be deemed given to and received by 

 

6

 

Guarantor if sent by facsimile transmission or if sent
in the manner provided for service of process in Section 19(a) above.  Notices sent by facsimile shall be deemed
received on the date sent.  Notices
otherwise sent shall be deemed received on the applicable date(s) provided
for receipt of service of process under Section 19(a) above.

 

20.           Maximum Liability.  To the extent
that applicable law otherwise would render the obligations of Guarantor
hereunder invalid or unenforceable, Guarantor shall nevertheless remain liable
hereunder; provided however that Guarantor’s
obligations shall be limited to the maximum amount which does not result in
such invalidity or unenforceability. 
Notwithstanding the foregoing, Guarantor’s obligations hereunder shall
be presumptively valid and enforceable to their fullest extent in accordance
with the terms of this Agreement, as if this Section 19 were not a part of
this Agreement.

 

21.           Severability.  The
invalidity or unenforceability of any provision hereof shall not affect the
remaining provisions which shall remain in full force and effect.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

7

 

THIS GUARANTY is dated the date and year first above written.

 

 

	
   

  	
   

  	
  CORGENIX
  MEDICAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

[Signature page to Guaranty]

 

S-1

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