Document:

Exhibit 10.26

 

EMPLOYMENT AGREEMENT

 

	
  DATE:

  	
  August 9, 2004

  	
   

  
	
   

  	
   

  	
   

  
	
  PARTIES:

  	
  eCollege.com, Inc., a Delaware corporation

  	
  (the “Company”)

  
	
   

  	
   

  	
   

  
	
   

  	
  Marguerite M. Elias, a resident of Illinois

  	
  (the “Employee”)

  

 

RECITAL:

 

The Company is engaged in the business of providing value added
information services to the post-secondary and related education markets.  The Company desires to employ and retain the
unique experience, abilities, and services of the Employee as the Company’s Senior
Vice President and General Counsel and the Employee desires to hold such
positions under the terms and conditions of this Employment Agreement (the
“Agreement”).

 

AGREEMENT:

 

The parties agree as follows:

 

1.                                       EMPLOYMENT

 

(a)                                  Duties.  The Company shall employ the Employee as
Senior Vice President and General Counsel and the Employee accepts employment
with the Company on the terms and conditions set forth in this Agreement.  The Employee agrees to devote her full time
and attention (reasonable periods of illness excepted) to the performance of
her duties under this Agreement.  In
general, such duties shall consist of the duties and responsibilities described
on Schedule A to this Agreement and such other duties as the Board of Directors
of the Company (the “Board”) may determine so long as such duties are not
materially inconsistent for a similarly situated executive of a public
company.  In performing such duties, the
Employee shall be subject to the direction and control of the Chief Executive
Officer of the Company (the “CEO”).  The
Employee further agrees that in all aspects of such employment, the Employee
shall comply with the reasonable policies, standards, and regulations of the
Company established from time to time of which the Employee is or should be
aware, and shall perform her duties in good faith with due care and in the best
interests of the Company.  The devotion
of reasonable periods of time by the Employee for personal investment, outside
business or charitable activities shall not be deemed a breach of this
Agreement, provided that such activities are approved by the Board in writing
(for the purposes of this paragraph, the term “personal investment, outside
business or charitable activities” shall not include passive investment by the
Employee of her personal assets which investment shall be deemed not a breach
of this Agreement provided such investment does not violate Section 2
hereof).  Notwithstanding the foregoing,
the Employee shall be entitled to engage in and continue the activities set
forth in Schedule B of this Agreement; provided that the Board may review such
activities on an annual basis and if the Board determines that such activities 

 

 

are interfering with the performance of her duties
hereunder and so notifies the Employee in writing, the Employee shall terminate
such activities within 60 days of such notice.

 

(b)                                 Term.  Employment of the Employee as Senior Vice
President and General Counsel began on July 12, 2004 (the “Commencement Date”) and shall end on the
date of termination pursuant to Section 5 of the Agreement.

 

2.                                       RESTRICTIVE COVENANTS; CONFIDENTIALITY

 

(a)                                  Noncompetition;
Nondisclosure; Inventions.  In
consideration for the compensation and benefits to be provided hereunder,
including the severance arrangements set forth in Sections 5 and 6 hereof, and
in consideration of the Employee’s exposure to the Company’s confidential and
proprietary information, the Employee covenants to the following:

 

(1)                                  Noncompetition
and Nonsolicitation.  During the term
of this Agreement and for a period of twelve (12) months after the termination
of the Employee’s employment with the Company, the Employee shall not, within
any locality or region of the United States, Canada or any other country in
which the Company had operations or conducted business at the time of the termination
of this Agreement, directly or indirectly: (1) (A) own directly or beneficially
(as a proprietor, partner, stockholder, or otherwise) an equity or debt
interest of five percent (5%) or more in; or (B) participate (as an officer,
director, or in any other capacity) in the management, operation, or control
of; or (C) perform services as or act in the capacity of an employee,
independent contractor, consultant, lender, principal or agent of any division
or business unit of an enterprise, to the extent that such division or business
unit is engaged, directly or indirectly, or any company or other entity engaged
primarily, in the provision of value added information services to the
post-secondary and related education markets that are competitive with the
services provided by the Company or such other business activity that the
Company is engaged in on the date of termination, except with the prior written
consent of the Board; or, (2) contact, solicit or direct or influence any
person, firm, or corporation to contact or solicit, any of the Company’s
customers, prospective customers, or business brokers for the purpose of
selling or attempting to sell, any products and/or services that are the same
as, or similar to, the provision of value added information services to the
post-secondary and related education markets or other products and services
provided by the Company to its customers during the term of the Employee’s
employment hereunder.

 

The Employee expressly agrees that this noncompete provision is
necessary to protect the Company’s trade secrets and business and is further
justified by virtue of the fact that the Employee is a senior executive officer
of the Company.  The Employee further
acknowledges and agrees that the restrictions set forth in this section of the
Agreement 

 

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are reasonable and necessary to protect the interest of the
Company.  For purposes of this Section
2(a), the term Company includes all of its subsidiaries and affiliates and the
activities listed in Schedule B of this Agreement are deemed not to be
competitive with the Company, unless the Board provides written notice to the
Employee that such activities have become competitive with the Company in which
case the Employee shall terminate such activities within 60 days of such
notice.

 

In addition, during the term of the Employee’s employment hereunder and
for a period of twelve (12) months after the termination of this Agreement, the
Employee will not disclose the identity of any such business brokers,
customers, or prospective customers, or any part thereof, whose relationship
with the Company is not then a matter of public record or public knowledge
(other than as a result of unauthorized disclosure by the Employee), to any
person, firm, corporation, association, or other entity for any reason or
purpose whatsoever, other than pursuant to court order or government inquiry;
provided, the Employee must give the Company written notice of the court order
or inquiry at least 15 days prior to the disclosure, or, if later, immediately
upon the Employee’s learning of the court order or government inquiry.  Moreover, the Employee will not solicit,
directly or indirectly, or accept if offered to him, with or without
solicitation, on her own behalf or on behalf of any other person, the services
of any person who is an employee of the Company during the six month period
prior to the termination of the Employee’s employment with the Company, nor,
directly or indirectly, solicit any of the Company’s employees to terminate
employment with the Company, nor directly or indirectly agree to hire any
employee of the Company to provide service for himself or any company,
individual or other entity; provided that the foregoing shall not prohibit the
Employee from soliciting or hiring any such employee after the date on which
such person’s employment with the Company was terminated by the Company.

 

(2)                                  Confidentiality.  The Employee acknowledges and agrees that all
product specifications, product planning information, lists of the Company’s
customers and suppliers, business brokers, marketing plans, financial
information, and other Company data related to its business (“Confidential Information”) are valuable
assets of the Company.  Except as necessary
in connection with the Employee’s performance of her duties hereunder, the
Employee shall not, directly or indirectly, during or after her employment with
the Company, disclose any Confidential Information to any person or use any
Confidential Information for the benefit of the Employee or any other person,
except with the prior written consent of the Board; provided, however, that the
foregoing restriction on Confidential Information shall not apply to
information that is (1) information that the Employee knew before the
commencement of her employment with the Company, (2) information that becomes a
matter of public record or public knowledge other than as a result of
unauthorized disclosure by the Employee, or (3) is disclosed by the Employee
pursuant 

 

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to court order or government inquiry, so long as the Employee gives the
Company written notice of the court order or inquiry at least 15 days prior to
the disclosure, or, if later, immediately upon the Employee’s learning of the
court order or government inquiry.

 

(3)                                  Ideas,
Inventions.  The Employee recognizes
and agrees that all ideas, inventions, enhancements, plans, writings, and other
developments or improvements (the “Inventions”)
conceived by the Employee, alone or with others, during the term of her
employment with the Company, whether or not during working hours, that are
within the scope of the Company’s business operations or that relate to any of
the Company’s work or projects, are the sole and exclusive property of the
Company.  The Employee further agrees
that (1) she will promptly disclose all Inventions to the Company and hereby
assigns to the Company all present and future rights she has or may have in
those Inventions, including without limitation those relating to patent,
copyright, trademark or trade secrets; and (2) all of the Inventions eligible
under the copyright laws are “work made for hire.” At the request the Company,
the Employee will do all things deemed by the Company to be reasonably
necessary to perfect title to the Inventions in the Company and to assist in
obtaining for the Company such patents, copyrights or other protection as may
be provided under law and desired by the Company, including but not limited to
executing and signing any and all relevant applications, assignments or other
instruments.

 

Notwithstanding the foregoing, the Company hereby notifies the Employee
that the provisions of this Section 2(a)(3) shall not apply to any Inventions
for which no equipment, supplies, facility or Confidential Information of the
Company was used and which were developed entirely on the Employee’s own
personal time, unless (1) the Invention relates (i) to the business of the
Company, or (ii) to actual or demonstrably anticipated research or development
of the Company, or (2) the Invention results from any work performed by the
Employee for the Company.

 

(b)                                 Nondisparagement.  During the term of the Employee’s employment
with the Company and for a period of two years thereafter, the parties shall
not make any statements concerning the other party that would tend to diminish
the esteem, respect, good will, or confidence in which that party is held by
members of the community in which that party, or its officers, directors and
employees, conduct their business affairs or that would provoke adverse or
derogatory feelings or opinions in such members of those communities as to that
party; provided, however, that this Section 2(b) shall not preclude either
party from responding to a court order or government inquiry so long as the
responding party has given the other party written notice of such court order
or government inquiry at least 15 days prior to the disclosure, or, if later,
immediately upon the party’s learning of the court order or government inquiry.

 

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(c)                                  Return
of Documents and Computer Data.  The
Employee acknowledges and agrees that all originals and copies of all computer
data, records, reports, documents, lists, plans, drawings, memoranda, notes,
and other documentation related to the business of the Company or containing
any Confidential Information shall be the sole and exclusive property of the
Company, and shall be returned to the Company (without any copies being
maintained by Employee other than copies of her address book, calendar (each
whether paper or electronic) and other personal information) upon the
termination of employment with the Company or earlier upon the written request
of the Company.

 

(d)                                 Injunction.  The Employee and the Company agree that the
services to be rendered by her to the Company and the Confidential Information
to which she has access are of a special and unique character, the loss of
which would result in damages which would be difficult to measure from any
breach by the Employee or the Company of Section 2(a) or 2(b) and that monetary
damages would be an inadequate remedy for any such breach which may cause the
Company irreparable injury. Accordingly, the Employee and Company agrees that
if the Employee or Company shall breach or take steps preliminary to breaching
Section 2(a) or 2(b), the Employee or Company, as appropriate, shall be
entitled, in addition to all other remedies it may have at law or in equity, to
an injunction or other appropriate orders to restrain any such breach, without
showing or proving any actual damage sustained by the Employee or Company, or
without posting of any bond or security.

 

(e)                                  No
Release.  The Employee agrees that
the termination of employment with the Company shall not release the Employee
from any obligations set forth herein pursuant to Section 2(a), 2(b) or 2(c) or
the Company from any obligations set forth herein pursuant to Section 2(b),
Section 5 or Section 6.

 

(f)                                    Enforceability.  If any one or more of the provisions
contained in Section 2 of this Agreement shall be held to be excessively broad
as to duration, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the fullest extent
permitted by law.

 

3.                                       COMPENSATION

 

(a)                                  Base
Compensation; Bonus Compensation.  In
consideration of all services to be rendered by the Employee to the Company and
the other terms and conditions of this Agreement, the Company shall pay to the
Employee base and bonus compensation as described on Schedule A of this
Agreement.

 

(b)                                 Other
Benefits.  The Employee has been
provided with a brochure that provides a brief, general description of the
Company’s benefit programs.  The Employee
agrees and acknowledges that the benefits provided by the Company may be
changed or amended from time to time, and at any time, at the sole discretion
of the Company.  The Employee shall be
entitled to not less than four weeks vacation each year which shall not accrue
from year to year.  The Employee shall be
allowed to participate in any hospitalization, health and disability insurance 

 

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plans, other health programs, pension and profit sharing plans and
other similar benefit programs maintained by the Company for the benefit of its
employees and any bonus plans, equity incentive plans and other benefit
programs generally available to senior executive officers of the Company.

 

4.                                       COMPANY POLICIES

 

(a)                                  General
Policy Descriptions.  The Employee
has been provided with the eCollege.com Employee Benefits Summary, which
includes descriptions of Medical Insurance and Prescription Card, Dental
Insurance, Flexible Reimbursement Program, Personal Days, Paid Holidays, Direct
Deposit, Bonus Programs, Employee Referral Program and Smoke Free Work
Environment as of March 31, 1999. 
Additional policies and standards of the Company will be provided to the
Employee from time to time during the Employee’s employment.

 

(b)                                 Changes
to Company Policies.  The Employee
agrees and acknowledges that the Company’s policies may be created, eliminated,
changed or amended from time to time, and at any time, at the sole discretion
of the Company.

 

5.                                       TERMINATION

 

(a)                                  At-Will
Employment.  The Employee agrees and
acknowledges that, just as she has the right to terminate her employment with
the Company at any time for any reason, the Company has the same right, and may
terminate her employment with the Company at any time for any reason.

 

(b)                                 Termination
without Cause; Termination For Good Reason. 
Subject to Section 6(b) below, upon termination of the Employee’s
employment with the Company by the Company without Cause (as defined in Section
5(f) below) or by the Employee for Good Reason (as defined in Section 5(f)
below), other than as a result of death or Disability, the Company shall pay to
or provide the Employee the following: (1) any unpaid base salary the Employee
has earned through the date of termination, (2) any unpaid annual bonus that
the Employee has earned with respect to a year ending prior to such
termination, (3) 12 months of the Employee’s then current base salary paid on
the Company’s normal payroll dates, (4) the pro-rated portion (based on the
number of days in the year completed through the date of termination) of the
Employee’s target bonus for the year of termination (paid on the normal date
for the payment of the bonus), such amount to be paid only if the Employee has
met her pro-rated objective performance targets through the date of
termination, (5) an amount equal to the Employee’s target bonus for the year of
termination, (6) the costs of COBRA continuation coverage for the Employee and
her dependents from the date the Employee’s employment terminates through the
earlier of (A) the first anniversary of such termination and (B) the date on
which the Employee becomes entitled to health coverage of a similar type from
another employer, plus/less (7) any positive/negative accrued vacation
days.  In addition to the foregoing, upon
a termination of the Employee’s employment described in this Section 5(b), any
stock options, stock appreciation rights, performance shares, restricted stock,

 

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share rights and all other similar types of equity incentives held by
the Employee immediately prior to the termination of the Employee’s employment
that, but for the termination of the Employee’s employment, would have become
vested and, if applicable, exercisable by the first anniversary of the date of
her termination of employment, will become immediately vested and, if
applicable, exercisable.  No amount shall
be payable and no benefits shall be provided pursuant to this Section 5(b)
until the Employee has executed a release and waiver agreement (substantially
in the form attached hereto as Schedule C) releasing and waiving any claims
against the Company and in which the Company releases and waives claims against
the Employee and if the Employee is serving as a Director of the Company a
valid and effective resignation from the Board unless the Employee beneficially
owns, directly or indirectly, 5% or more of the Company’s Common Stock.

 

(c)                                  Termination
for Cause.  Upon termination of the
Employee’s employment with the Company by the Company for Cause, the Company
shall pay to the Employee any unpaid base salary the Employee has earned
through the date of termination and no more. 
No amount shall be payable and no benefits shall be provided pursuant to
this Section 5(c) until the Employee has executed a release and waiver
agreement (substantially in the form attached hereto as Schedule C) releasing
and waiving any claims against the Company and in which the Company releases
and waives claims against the Employee and if the Employee is serving as a
Director of the Company a valid and effective resignation from the Board.

 

(d)                                 Termination
as a Result of Death or Disability. 
Upon termination of the Employee’s employment by the Company as a result
of death or Disability, the Company shall pay to the Employee the
following:  (1) any unpaid base salary
the Employee has earned through the date of termination, (2) any unpaid annual
bonus that the Employee has earned with respect to a year ending prior to such
termination, and (3) 12 months of the Employee’s then current base salary paid
on the Company’s normal payroll dates, less in the case of termination as a
result of Disability any amounts paid to Employee as a result of disability
insurance policies maintained by the Company.

 

(e)                                  Termination
by Employee Without Good Reason. 
Upon termination of the Employee’s employment with the Company by
Employee without Good Reason, the Company shall pay to the Employee the
following: (1) any unpaid base salary the Employee has earned through the date
of termination and (2) any unpaid annual bonus that the Employee has earned
with respect to a year ending prior to such termination.  No amount shall be payable and no benefits
shall be provided pursuant to this Section 5(e) until the Employee (or her
representative) has executed a release and waiver agreement (substantially in
the form attached hereto as Schedule C) releasing and waiving any claims
against the Company and in which the Company releases and waives claims against
the Employee and if the Employee is serving as a Director of the Company a
valid and effective resignation from the Board unless the Employee beneficially
owns, directly or indirectly, 5% or more of the Company’s Common Stock.

 

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(f)                                    Definitions.

 

(1)                                  Cause.  For purposes of this Agreement, “Cause” shall mean the Employee’s:

 

(A)                              willful
failure or refusal to comply, in a material manner, with the reasonable
policies, standards, and regulations of the Company following written notice of
breach and a reasonable opportunity to cure; or

 

(B)                                engaging
in fraud;

 

(C)                                engaging
in dishonesty that results in a demonstrable material harm to the Company; or

 

(D)                               engaging
in any act of misconduct in the performance of her duties on behalf of the
Company that results in material harm to the Company; or

 

(E)                                 failure
to perform any material provision of this Agreement to be performed by the
Employee or breach by the Employee of this Agreement, provided however, that if
such failure or breach can be cured, the Employee will receive written notice
of such failure or breach and a reasonable opportunity to cure such breach;

 

provided, however, that Cause shall in no event be deemed to exist
except upon a finding reflected in a resolution of the Board approved by at
least 50% of the members of the Board, whose finding shall not be binding upon
or entitled to any deference by any court, arbitrator or other decision-maker
ruling on this Agreement, at a meeting of which the Employee shall have been
given proper notice and at which the Employee (and her counsel) shall have a
reasonable opportunity to be heard.

 

(2)                                  Disability.  For purposes of this Agreement, Disability means the Employee’s incapacity
due to physical or mental illness as determined for purposes of the Company’s
long-term disability insurance plans.

 

(3)                                  Good
Reason.  For purposes of this
Agreement, the Employee will have Good Reason
to terminate her employment with the Company if one or more of the following
occurs without her prior written consent:

 

(A)                              The
material breach of this Agreement by the Company; or

 

(B)                                A
material lessening of the Employee’s role, duties or status with the Company,
including without limitation a requirement that the Employee report to anyone
other than the Company’s President, the CEO or the Board; or

 

(C)                                The
requirement that the Employee’s principal office be other than in the Chicago,
Illinois metropolitan area; or

 

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(D)                               The
assignment to the Employee of duties materially inconsistent with her position.

 

provided, however, that (i) the Employee must deliver
written notice of her intention to terminate her employment for Good Reason,
specifying the event or condition giving rise to Good Reason, to the Company
within 45 days after the Employee first becomes aware of the event or condition
in order for the Employee’s resignation with Good Reason to be effective
hereunder and (ii) no event or condition described above shall constitute Good
Reason if the Company cures the event or condition within a reasonable period
after written notice thereof to the Company; and (iii) the Company shall only
be permitted the opportunity to cure one time during each three-year term of
the Employee’s employment hereunder.

 

6.                                       CHANGE IN CONTROL EVENT; HOSTILE TAKE-OVER.

 

(a)                                  Equity
Compensation.  If a Change in Control
Event (as defined in the Company’s 1997 Stock Option Plan, as amended April 13,
1999) occurs, then, immediately prior to and contingent upon the Change in
Control Event, (1) all presently outstanding stock options, stock appreciation
rights, performance shares, share rights and all other similar types of equity
incentives held by the Employee immediately prior to the date of the Change in
Control Event will become fully vested and, if applicable, exercisable, and (2)
all restrictions on restricted stock presently held by the Employee immediately
prior to the date of the Change in Control Event will lapse.

 

(b)                                 Termination
Following Change in Control.  If,
within the two-year period following a Change in Control Event, the Employee’s
employment with the Company is terminated by the Company without Cause or by
the Employee for Good Reason, then the amounts and benefits payable pursuant to
Section 5(a) above shall be paid to the Employee in a lump sum within 5 days of
the termination of the Employee’s employment with the Company; provided, that
no amount shall be payable and no benefits shall be provided pursuant to this
Section 6(b) until the Employee has executed a release and waiver agreement
(substantially in the form attached hereto as Schedule B) releasing and waiving
any claims against the Company and in which the Company releases and waives
claims against the Employee.

 

(c)                                  Hostile
Take-Over.  Notwithstanding any other
provision of this Agreement, any termination by the Employee of her employment
with the Company, for any reason or no reason, during the 30-day period
immediately following the 180th day after the completion of the Hostile
Take-Over (as defined in the Company’s 1999 Stock Incentive Plan, as amended
through July 1, 2002) shall be treated for purposes of this Agreement as a
termination for Good Reason.

 

9

 

(d)                                 Parachute
Payments.

 

(1)                                  In
General.  The payments under Section
6 of this Agreement will be made without regard to whether the deductibility of
such payments (considered together with any other entitlements or payments
otherwise paid or due to the Employee) would be limited or precluded by Section
280G of the Code and without regard to whether such payments would subject the
Employee to a Parachute Excise Tax (as defined below).

 

(2)                                  Additional
Payment.  If payment of Total
Payments (as defined below) result in the imposition of a Parachute Excise Tax,
the Employee will be entitled to an additional payment in an amount such that,
after the payment of all federal and state income, employment and excise taxes
on both the Total Payments and the additional payment made pursuant to this
Section 6(d)(2), the Employee will be in the same after-tax position as if no
Parachute Excise Tax had been imposed.

 

(3)                                  Payment
Determination and Adjustments.  The
determination of the amount of the Total Payments and whether and to what
extent payments under Section 6(d)(2) are required to be made will be made at
the Company’s expense by the Company’s independent auditor.  In the event of any underpayment or
overpayment to the Employee (determined after the application of this Section
6(d), the amount of such underpayment or overpayment will be immediately paid
by the Company to the Employee or refunded by the Employee to the Company.

 

(e)                                  Enforcement
Expenses.  The Company shall pay the
Employee on demand the amount necessary to reimburse the Employee 50% of all
expenses (including 50% of all reasonable attorneys’ fees and legal expenses)
incurred by the Employee in enforcing any of the obligations of the Company
under this Section 6 following a Change of Control Event; provided, however,
that the Company will reimburse the Employee for the remaining 50% of such
expenses if the Employee prevails on any material issue in her attempt to
enforce those obligations.

 

7.                                       REPRESENTATIONS AND WARRANTIES OF EMPLOYEE

 

(a)                                  No
Other Employment Agreements.  The
Employee represents and warrants to the Company that there is no employment
contract or any other contractual obligation to which the Employee is subject,
which prevents the Employee from entering into this Agreement or from
performing fully the Employee’s duties under this Agreement.

 

(b)                                 Special
Needs. There are no special accommodations required to be made by Company
for the Employee to perform her duties and responsibilities.

 

8.                                       MISCELLANEOUS PROVISIONS

 

(a)                                  Indemnification.  During the Employee’s employment hereunder
and thereafter, the Company agrees to indemnify the Employee against all claims
arising out of 

 

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actions or omissions during the Employee’s service to
the Company, to the same extent and on the same terms and conditions provided
for in Section 6 of the Company’s Amended and Restated Bylaws as in effect on
the Commencement Date.  The Company
agrees it will use its best effort to continue to maintain directors’ and
officers’ liability insurance at the same levels of coverage as exist on the
Commencement Date during the term of this Agreement.

 

(b)                                 Notices.
Any notice, election, waiver, consent, acceptance or other communication
required or permitted to be given under this Agreement shall be in writing and
shall be hand delivered, transmitted via fax, by e-mail or sent via nationally
recognized third party delivery (such as Federal Express or UPS) for next day
delivery, addressed to the parties as follows:

 

If to Company:

 

eCollege

eCollege Building

Attn:                    President

4900 South Monaco Street

Denver, Colorado 80237

Fax:                           1-303-873-3849

 

 

If to the Employee:

 

Marguerite M. Elias

957 W. Belden Ave.

Chicago, IL 60614

 

Copy to:

 

Nancy O. Ryan

Pepper Hamilton LLP

3000 Two Logan Square

Philadelphia, PA 19103

Fax: 215-981-4750

 

Any notice or other communication shall be deemed to be given at the
date the notice is hand delivered to the individual, the date the notice is
sent via fax, or the date following the date of deposit with any nationally
recognized third party delivery (such as Federal Express or UPS) for next day
delivery to the addresses The addresses to which notices or other
communications shall be sent may be changed from time to time by giving written
notice to the other party as provided in this Paragraph.

 

(c)                                  Amendments.
This Agreement may be amended only by an instrument in writing executed by all
the parties.

 

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(d)                                 Entire
Agreement. This Agreement (including the schedules) sets forth the entire
understanding of the parties with respect to the subject matter of this
Agreement and supersedes any and all prior understandings and agreements,
whether written or oral, between the parties with respect to such subject
matter.  The Employee represents that, in
executing this Agreement, she does not rely and has not relied upon any
representation or statement not set forth herein with regard to the subject
matter or effect of this Agreement or otherwise.

 

(e)                                  Counterparts.
This Agreement may be executed by the parties in separate counterparts, each of
which when executed and delivered shall be an original, but all of which
together shall constitute one and the same Instrument. Fax signatures shall
have the same effect as an original signature.

 

(f)                                    Severability.
If any provision of this Agreement shall be invalid or unenforceable in any
respect for any reason, the validity and enforceability of any such provision
in any other respect and of the remaining provisions of this Agreement shall
not be in any way impaired; provided, however, that the parties will attempt to
agree upon a valid and enforceable provision which shall be a reasonable
substitute for each invalid provision or unenforceable provision in light of
the tenor of this Agreement and, upon so agreeing, shall incorporate such
substitute provision Into this Agreement.

 

(g)                                 Waiver.
A provision of this Agreement may be waived only by a written instrument
executed by the party waiving compliance. No waiver of any provision of this
Agreement shall constitute a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver. Failure to
enforce any provision of this Agreement shall not operate as a waiver of such
provision or any other provision.

 

(h)                                 Further
Assurances. From time to time, each of the parties shall execute,
acknowledge, and deliver any instruments or documents necessary to carry out
the purposes of this Agreement.

 

(i)                                     No
Third-Party Beneficiaries.. Nothing in this Agreement, express or implied,
is intended to confer on any person, other than the parties to this Agreement,
any right or remedy of any nature whatsoever.

 

(j)                                     Expenses.  The Company will pay (or reimburse the
Employee for) the reasonable legal fees and expenses incurred by her in
connection with the negotiation and documentation of this Agreement up to a
maximum of $5,000.

 

(k)                                  Exhibits.
The exhibits and schedules referenced in this Agreement are a part of this
Agreement as if fully set forth in this Agreement

 

(l)                                     Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the United States of America and the State of Delaware; without
regard to the principles of conflicts of law thereof.

 

12

 

(m)                               Waiver
of Jury Trial.  As a specifically
bargained for inducement for each of the parties hereto to enter into this
Agreement (after having the opportunity to consult with counsel), each party
hereto expressly waives the right to trial by jury in any lawsuit or proceeding
relating to or arising in any way from this Agreement or the matters contemplated
hereby.

 

(n)                                 Withholding.  All payments to the Employee under this
Agreement shall be reduced by all applicable withholding required by federal,
state or local law.

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first written above.

 

	
   

  	
  eCollege.com, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Oakleigh Thorne

  	
   

  
	
   

  	
  Oakleigh Thorne, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Marguerite M. Elias

  	
   

  
	
   

  	
  Marguerite M. Elias

  
					

 

13

 

SCHEDULE A

 

COMPENSATION AND DUTIES

 

1.                                       BASE SALARY. For the period beginning on
the Commencement Date through July 11, 2005, the base salary payable
to the Employee shall be at the rate of $220,000 per year, payable on the
Company’s normal payroll dates.

 

2.                                       BASE SALARY ADJUSTMENT.  The Employee’s base salary for periods after
July 11, 2005 shall be at the rate as set by the Board of the
Company, at the recommendation of the CEO and the Compensation Committee,
payable on the Company’s normal payroll dates. 
Salary adjustments will include, at a minimum, any cost of living
increase to the extent provided generally to all members of the Management
Committee.  Base salary will not be
adjusted downward unless the Employee consents in advance in writing to such
adjustment.

 

3.                                       BONUS/OTHER COMPENSATION.  The Employee’s annual target bonus for each
year of the term of this Agreement, pursuant to the eCollege 2004 Annual
Corporate Incentive Plan, is 35% of her base salary, subject to the Company’s
achieving the criteria set forth in that Plan or as may be approved by the
Compensation Committee for years after 2004; provided, however, that with
respect to 2004, the Employee’s annual bonus will be pro-rated for portion of
year actually worked, with a guaranteed minimum bonus for 2004 of $38,500.  The bonus will be paid within 30 days
following the annual audit of the Company’s financial records.  Subject to the foregoing, in any year in
which the Employee is not employed by the Company for the entire year, the
bonus will be prorated according to the number of days in the year that the
Employee was employed by the Company.

 

4.                                       LONG TERM INCENTIVE COMPENSATION.  The Employee understands that the Company is
currently structuring a new long-term equity incentive plan, the 2004
Performance Equity Plan, which is expected to be in place in August, 2004.  The Company agrees that for the year 2004 the
Employee will receive 4% of the pool to be established under the plan, the form
of which will be determined by the Compensation Committee of the Board, and any
future long-term equity incentive compensation will be determined by the
Compensation Committee.

 

5.                                       EXPENSES. 
The Company shall reimburse the Employee for all necessary and
reasonable travel and other business expenses incurred by the Employee in the
performance of her duties hereunder in accordance with the normal expense
reimbursement policies of the Company as may be adopted generally from time to
time for executive officers.

 

6.                                       DUTIES AND JOB DESCRIPTION. As Senior Vice
President and General Counsel, the Employee’s duties shall include oversight of
all legal affairs and human resource matters for the Company.  The Employee shall also serve as the
Company’s Secretary.

 

A-1

 

SCHEDULE B

 

PERMITTED OUTSIDE ACTIVITIES

 

Volunteer Activities with and on behalf of
Playing 2 Win 4 Life, a foundation for ALS.

 

B-1

 

SCHEDULE C

 

THIS MUTUAL RELEASE AND NON-DISPARAGEMENT AGREEMENT (this “Mutual
Release”) is made as of the
         day of
           ,
          by and between
[Executive] (“Executive”) and eCOLLEGE.COM, INC. (the “Company”).

 

WHEREAS, Executive’s employment as an executive of the Company has
terminated; and

 

WHEREAS, pursuant to Section[s] [5] [and] [6] of the Employment
Agreement by and between the Company and Executive dated June
     , 2004 (the “Employment Agreement”), the
Company has agreed to pay Executive certain amounts and to provide her with
certain rights and benefits, subject to the execution of this Mutual Release.

 

NOW THEREFORE, in consideration of these premises and the mutual
promises contained herein, and intending to be legally bound hereby, the
parties agree as follows:

 

SECTION 1.                                Consideration.  Executive acknowledges that: (i) the
payments, rights and benefits set forth in Section[s] [5] [and] [6] of the
Employment Agreement constitute full settlement of all her rights under the
Employment Agreement, (ii) she has no entitlement under any other severance or
similar arrangement maintained by the Company, and (iii) except as otherwise
provided specifically in this Mutual Release, the Company does not and will not
have any other liability or obligation to Executive.  Executive further acknowledges that, in the
absence of her execution of this Mutual Release, the benefits and payments
specified in Section[s] [5] [and] [6] of the Employment Agreement would not
otherwise be due to Executive.

 

SECTION 2.                                Mutual
Release and Covenant Not to Sue.

 

2.1.                              The
Company (including for purposes of this Section 2.1, its parents, affiliates
and subsidiaries) hereby fully and forever releases and discharges Executive
(and her heirs, executors and administrators), and Executive hereby fully and
forever releases and discharges Company (including all predecessors and
successors, assigns, officers, directors, trustees, employees, agents and
attorneys, past and present) from any and all claims, demands, liens,
agreements, contracts, covenants, actions, suits, causes of action,
obligations, controversies, debts, costs, expenses, damages, judgments, orders
and liabilities, of whatever kind or nature, direct or indirect, in law, equity
or otherwise, whether known or unknown, arising through the date of this Mutual
Release, out of Executive’s employment by the Company or the termination
thereof, including, but not limited to, any claims for relief or causes of
action under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq., or any other federal, state or local statute,
ordinance or regulation regarding discrimination in employment and any claims,
demands or actions based upon alleged wrongful or retaliatory discharge or
breach of contract under any state or federal law.

 

2.2.                              Executive
expressly represents that she has not filed a lawsuit or initiated any other
administrative proceeding against the Company (including for purposes of this
Section 2.2, its parents, affiliates and subsidiaries) and that she has not
assigned any claim against the Company or any affiliate to any other person or
entity.  The Company expressly represents
that it 

 

C-1

 

has not filed a lawsuit or
initiated any other administrative proceeding against Executive and that it has
not assigned any claim against Executive to any other person or entity.  Both Executive and the Company further
promise not to initiate a lawsuit or to bring any other claim against the other
arising out of or in any way related to Executive’s employment by the Company
or the termination of that employment. 
This Mutual Release will not prevent Executive from filing a charge with
the Equal Employment Opportunity Commission (or similar state agency) or
participating in any investigation conducted by the Equal Employment
Opportunity Commission (or similar state agency); provided,
however, that any claims by Executive for personal relief in
connection with such a charge or investigation (such as reinstatement or
monetary damages) would be barred.

 

2.3.                              
The foregoing will not be deemed to release the Executive or the Company from
(a) claims solely to enforce this Mutual Release, (b) claims solely to enforce
Sections 2, 5 or 6 of the Employment Agreement, or (c) claims solely to enforce
the terms of any equity incentive award agreement or arrangement between the Executive
and the Company, including without limitation any awards to the Executive under
the Company’s 2004 Performance Equity Plan, or (d) claims for indemnification
under the Company’s By-Laws, under any indemnification agreement between the
Company and Executive or under any similar agreement.

 

SECTION 3.                                Restrictive
Covenants.  Executive and the Company
acknowledges that restrictive covenants contained in Section 2 of the
Employment Agreement will survive the termination of her employment.  Executive affirms that those restrictive
covenants are reasonable and necessary to protect the legitimate interests of
the Company, that she received adequate consideration in exchange for agreeing
to those restrictions and that she will abide by those restrictions.

 

SECTION 6.                                Rescission
Right.  Executive expressly
acknowledges and recites that (a) she has read and understands the terms of
this Mutual Release in its entirety, (b) she has entered into this Mutual
Release knowingly and voluntarily, without any duress or coercion; (c) she has
been advised orally and is hereby advised in writing to consult with an
attorney with respect to this Mutual Release before signing it; (d) she was
provided twenty-one (21) calendar days after receipt of the Mutual Release to
consider its terms before signing it; and (e) she is provided seven (7)
calendar days from the date of signing to terminate and revoke this Mutual
Release, in which case this Mutual Release shall be unenforceable, null and
void.  Executive may revoke this Mutual Release
during those seven (7) days by providing written notice of revocation to the
Company.

 

SECTION 8.                                Miscellaneous.

 

8.1                                 Successors
and Assigns.  This Mutual Release
shall inure to the benefit of and be binding upon the Company and Executive and
their respective successors, executors, administrators and heirs.  Executive not may make any assignment of this
Mutual Release or any interest herein, by operation of law or otherwise.  The Company may assign this Mutual Release to
any successor to all or substantially all of its assets and business by means
of liquidation, dissolution, merger, consolidation, transfer of assets, or
otherwise.

 

C-2

 

8.2                                 Severability.  Whenever possible, each provision of this
Mutual Release will be interpreted in such manner as to be effective and valid
under applicable law.  However, if any
provision of this Mutual Release is held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
will not affect any other provision, and this Mutual Release will be reformed,
construed and enforced as though the invalid, illegal or unenforceable
provision had never been herein contained.

 

8.3                                 Entire
Agreement; Amendments.  Except
as otherwise provided herein, this Mutual Release contains the entire agreement
and understanding of the parties hereto relating to the subject matter hereof,
and merges and supersedes all prior and contemporaneous discussions, agreements
and understandings of every nature relating subject matter hereof.  This Mutual Release may not be changed or
modified, except by an agreement in writing signed by each of the parties
hereto.

 

8.6                                 Governing
Law.  This Mutual Release shall be
governed by, and enforced in accordance with, the laws of the State of Delaware
without regard to the application of the principles of conflicts of laws.

 

8.7                                 Counterparts
and Facsimiles.  This Mutual Release
may be executed, including execution by facsimile signature, in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

 

IN WITNESS WHEREOF, the Company has caused this Mutual Release to be
executed by its duly authorized officer, and Executive has executed this Mutual
Release, in each case as of the date first above written.

 

	
   

  	
  eCOLLEGE.COM, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name & Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  [EXECUTIVE]

  
	
   

  	
   

  
	
   

  	
   

  	
   

  

 

C-3[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24(b)-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT
10.10

DATED 24TH JUNE 2004

VIEWSONIC EUROPE
LIMITED

AND

BURDALE FINANCIAL LIMITED

FACILITY
AGREEMENT

US$20,000,000

 

Nabarro Nathanson

Lacon House

Theobald’s Road

London WC1X 8RW

Tel: 020 7524 6000

  

  

Table of Contents

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
   

  	
  DEFINITIONS
  AND INTERPRETATION

  	
   

  	
  1

  
	
  2.

  	
   

  	
  THE
  FACILITIES

  	
   

  	
  10

  
	
  3.

  	
   

  	
  PURPOSE

  	
   

  	
  11

  
	
  4.

  	
   

  	
  CONDITIONS OF UTILISATION

  	
   

  	
  11

  
	
  5.

  	
   

  	
  UTILISATION

  	
   

  	
  11

  
	
  6.

  	
   

  	
  RESTRICTIONS
  APPLICABLE TO INDIVIDUAL FACILITIES

  	
   

  	
  12

  
	
  7.

  	
   

  	
  RECEIVABLES
  FINANCE

  	
   

  	
  13

  
	
  8.

  	
   

  	
  PROVISIONS
  CONCERNING L/CS

  	
   

  	
  14

  
	
  9.

  	
   

  	
  CURE
  RIGHTS

  	
   

  	
  15

  
	
  10.

  	
   

  	
  REPAYMENT

  	
   

  	
  15

  
	
  11.

  	
   

  	
  CANCELLATION

  	
   

  	
  18

  
	
  12.

  	
   

  	
  INTEREST
  AND PURCHASE COMMISSION

  	
   

  	
  19

  
	
  13.

  	
   

  	
  FEES

  	
   

  	
  19

  
	
  14.

  	
   

  	
  SET-OFF
  AND TAX GROSS UP

  	
   

  	
  20

  
	
  15.

  	
   

  	
  INCREASED
  COSTS

  	
   

  	
  21

  
	
  16.

  	
   

  	
  OTHER
  INDEMNITIES

  	
   

  	
  22

  
	
  17.

  	
   

  	
  COSTS
  AND EXPENSES

  	
   

  	
  22

  
	
  18.

  	
   

  	
  GUARANTEE
  AND INDEMNITY

  	
   

  	
  23

  
	
  19.

  	
   

  	
  REPRESENTATIONS

  	
   

  	
  25

  
	
  20.

  	
   

  	
  INFORMATION
  UNDERTAKINGS

  	
   

  	
  27

  
	
  21.

  	
   

  	
  GENERAL
  UNDERTAKINGS

  	
   

  	
  27

  
	
  22.

  	
   

  	
  EVENTS
  OF DEFAULT

  	
   

  	
  30

  
	
  23.

  	
   

  	
  CHANGES TO THE LENDER

  	
   

  	
  33

  
	
  24.

  	
   

  	
  CHANGES TO THE OBLIGORS

  	
   

  	
  34

  
	
  25.

  	
   

  	
  NOTICES

  	
   

  	
  34

  
	
  26.

  	
   

  	
  MISCELLANEOUS
  PROVISIONS

  	
   

  	
  35

  
	
  27.

  	
   

  	
  REMEDIES
  AND WAIVERS

  	
   

  	
  35

  
	
  28.

  	
   

  	
  COUNTERPARTS

  	
   

  	
  35

  
	
  29.

  	
   

  	
  GOVERNING
  LAW

  	
   

  	
  35

  
	
  SCHEDULE
  1 THE ORIGINAL OBLIGORS

  	
   

  	
  36

  
	
  SCHEDULE
  2 CONDITIONS PRECEDENT

  	
   

  	
  37

  
	
  SCHEDULE
  3 REPORTING AND FINANCIAL UNDERTAKINGS

  	
   

  	
  39

  
	
  SCHEDULE
  4 FORMS OF REQUEST

  	
   

  	
  44

  
	
  SCHEDULE 5 FORM OF
  ACCESSION LETTER

  	
   

  	
  48

  

 

 i

FACILITY
AGREEMENT

DATE  24th
JUNE 2004

PARTIES

(1)                                    VIEWSONIC
EUROPE LIMITED (the “Company”);

(2)                                    THE
SUBSIDIARIES of the Company listed in part
II of Schedule 1 as original
guarantors (together with the Company the “Original Guarantors”);

(3)                                    BURDALE
FINANCIAL LIMITED (Registered in England and Wales No 2656007) ((together with
its successors and assigns) the “Lender”).

IT IS AGREED AS FOLLOWS:

1.                                           DEFINITIONS AND INTERPRETATION

1.1                                    Definitions

In this Agreement:

“Accession Letter”

means a document substantially in the form set out in Schedule 5 (Form of Accession Letter);

“Additional Borrower”

means a company which becomes an Additional Borrower
in accordance with clause 24.2 (Changes to the Obligors);

“Actual Date of Payment”

means in relation to a Purchased Receivable, the date
on which full payment in respect of that Purchased Receivable is made into a
Blocked Account by the relevant account debtor or the relevant Facility
Company;

“Additional Guarantor”

means a company which becomes an Additional Guarantor
in accordance with clause 24.3 (Changes to the Obligors);

“Additional Obligor”

means an Additional Borrower or an Additional
Guarantor;

“Affiliate”

means, in relation to any person, a Subsidiary of that
person or a Holding Company of that person or any other Subsidiary of that
Holding Company;

“Authorisation”

means an authorisation, consent, approval, resolution,
licence, exemption, filing, notarisation or registration;

“Availability Limit”

means each of the Availability Limits established or
referred to in clause 6
(Restrictions applicable to individual Facilities);

 1
 

“Availability Period”

means the period from and including the date of this
Agreement to and including the date falling five Business Days prior to the
Final Repayment Date, or such later date as the Lender may allow;

“Blocked Accounts”

has the meaning given to it in the Debenture;

“Borrower”

means the Company and any Additional Borrower;

“Business Day”

means a day (other than a Saturday or Sunday) on which
banks are open for general business in London;

“Charged Accounts”

means the Blocked Account and the Other Accounts;

“Cash Request”

means a request in the form set out in part II of Schedule 4.

“Debenture”

means the first-ranking debenture executed or to be
executed by the Obligors in favour of the Lender;

“Deed of Accession”

has the meaning given to it in the Debenture;

“Default”

means an Event of Default or any event or circumstance
specified in clause 22 (Events of
Default) which would (with the expiry of a grace period, the giving of notice,
the making of any determination under the Finance Documents or any combination
of any of the foregoing) be an Event of Default;

“Dilution Rate”

means the monthly value of credit notes and non-cash
credits issued by a Borrower as a percentage of the monthly value of sales;

“Documents”

means any and all documents which represent or relate
to any Goods and/or the possession of and/or ownership of and/or insurance of
and/or warehousing of and/or any other dealing in or with any Goods;

“Dollars”, “US Dollars” and “$”

means the lawful currency of the United States of
America;

“Dutch Pledge”

means a pledge over Stock held for the Company by
Furness Logistics BV, at Trade Boulevard 4, Haven nummer 5284761, RL Moerdijk,
the Netherlands and other locations;

 2
 

“Eligible Country”

means (i) any country which was a Member State of
the European Union on 1 January 2004, (ii) Israel, (iii) Norway,
and (iv) Switzerland;

“Eligible Receivables”

has the meaning given to it in Schedule 3;

“Eligible Stock”

has the meaning given to it in Schedule 3;

“Event of Default”

means any event or circumstance specified as such in clause 22 (Events of Default);

“Expiry Date”

means for an L/C, the last day of its Term;

“Facility”

includes the Receivables Finance Facility and the
Revolving Credit Facility;

“Facility Companies’’

includes the Borrowers and the Guarantors;

“Facility Limit”

means US $20,000,000;

“Final Repayment Date”

means the date falling 36 months after the date of
this Agreement;

“Finance Document”

means this Agreement, the Security Documents, any
Accession Letter and any other document designated as such by the Lender and
the Company;

“Financial Indebtedness”

means any
indebtedness for or in respect of:

(a)                                    moneys
borrowed;

(b)                                    any
amount raised by acceptance under any acceptance credit facility;

(c)                                     any
amount raised pursuant to any note purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar instrument;

(d)                                    the
amount of any liability in respect of any lease or hire purchase contract which
would, in accordance with GAAP, be treated as a finance or capital lease;

(e)                                     receivables
sold or discounted (other than any receivables to the extent they are sold on a
non-recourse basis);

(f)                                       any
amount raised under any other transaction (including any forward sale or
purchase agreement) having the commercial effect of a borrowing;

 3
 

(g)                                     any
derivative transaction entered into in connection with protection against or
benefit from fluctuation in any rate or price (and, when calculating the value
of any derivative transaction, only the marked to market value shall be taken
into account);

(h)                                    any
counter-indemnity obligation in respect of a guarantee, indemnity, bond,
standby or documentary letter of credit or any other instrument issued by a
bank or financial institution; and

(i)                                       the
amount of any liability in respect of any guarantee or indemnity for any of the
items referred to in paragraphs (a) to
(g) above;

“GAAP”

means generally accepted accounting principles in the
United Kingdom or other country of incorporation where applicable;

“Goods”

means all Stock, produce inventory and/or other goods
and in respect of which an L/C has been issued;

“Guarantor”

means an Original Guarantor or an Additional
Guarantor;

“Holding Company”

means, in relation to a company or corporation, any
other company or corporation in respect of which it is a Subsidiary;

“Ineligible Country”

means any country
other than:

(a)                                    an
Eligible Country; and

(b)                                    any
country or territory in the Middle East;

‘‘L/C’’

means a letter of
credit, guarantee or similar assurance which is from time to time either:

(c)                                     opened
by the Lender for the account of a Borrower; or

(d)                                    with
respect to which the Lender has agreed to indemnify the issuer or to guarantee
the obligations of a Borrower to such issuer;

“L/C Exposure”

means:

(a)                                    in
relation to an L/C opened for the purpose of purchasing Eligible Stock, the
face amount of such L/C less the aggregate of:

(i)                                       the
relevant Stock Percentage of the cost of such Eligible Stock covered by that
Letter of credit; and

(ii)                                   all
freight, taxes, duties and other amounts estimated by the Lender to be payable
in order to ensure the delivery of such Eligible Stork to the premises
designated by the relevant Borrower in the Netherlands or in such other country
as the Lender may approve; and

 4
 

(b)                                    in
relation to any other L/C, the face amount of such L/C and other commitments
assumed by the Lender with respect thereto;

“L/C Limit”

means $1,000,000;

“L/C Request”

means a request in the form set out in part III of Schedule 4;

“LIBOR”

means:

(a)                                    the
30 day LIBOR US Dollar rate (or, as the case may be, the rate for the other
Permitted Currency in which the relevant amount is deposited or outstanding) on
the first day of each month in the Financial Times, London edition as
conclusively determined by the Lender; or

(b)                                    if,
for any reason, the Financial Times, London edition ceases or fails to quote
such a rate) the 30 day LIBOR US Dollar Rate (or, as the case may be, the rate
for the Permitted Currency in which the relevant amount is outstanding) from
whichever source it may reasonably select;

“Mandatory Cost”

means the cost (calculated as a percentage rate per
annum) of the London branch of Wachovia N.A. (or any other bank from which the
Lender obtains funding for its provision of the Facilities) of complying with
the requirements of the Bank of England and/or the Financial Services Authority
and/or any other applicable regulatory authority in respect of monetary
control, liquidity or otherwise in relation to amounts similar to those made
available under this Agreement;

“Margin”

means two per cent, per annum;

“Material Adverse Effect”

means an effect
which (in the reasonable opinion of the Lender) results in or is likely to
result in a material adverse change in:

(a)                                    the
business, performance, operations or assets of the Obligors (whether
individually or collectively); or

(b)                                    the
ability of any Obligor to perform any of its respective obligations under any
of the Finance Documents; or

(c)                                     the
legality, validity, priority or enforceability of any obligations or security
created by or arising under any Finance Document.

Where, however, the Company is required to represent,
warrant or otherwise to confirm that no Event of Default involving a Material
Adverse Effect has occurred, such representation, warranty or other
confirmation shall be made or given by reference to the reasonable opinion of
the company.

 5
 

“Maturity Date”

means, in relation
to a Receivable, the Business Day which is, or immediately succeeds, the date
which is the earlier of:

(a)                                    60
days after the contractual due date for payment in respect of such Receivable;
and

(b)                                    90
days after the date of the invoice in respect of such Receivable;

“Net Stock Value”

means the net value of Stock as determined by the
relevant Obligor in accordance with its customary practices and procedures (as
disclosed to the Lender prior to the date of this Agreement and as may be
varied from time to time with the Lender’s written consent);

“Obligor”

means a Borrower or a Guarantor;

“Original Obligor”

means an Original Borrower or an Original Guarantor;

“Other Accounts”

means the bank accounts of the Obligors specified as
Other Accounts in the Debenture and/or such other bank accounts of the Obligors
as the, Lender may permit;

“Outstanding Purchase Price”

means the aggregate amount from time to time of the
Purchase Prices actually paid or (pursuant to clause
7.3.1) deemed to be paid by the Lender under this Agreement and which have not
been repaid;

“Permitted Currencies”

means US dollars, euro and sterling;

“Permitted Security Interest”

means a charge over a deposit of £31,000 in the
Company’s premium business account number [*],
sort code [*] executed by the
Company in favour of [*] and dated
[*];

“Purchase Commission”

means the purchase commission payable pursuant to clause 12.1. (Calculation of Interest and
Purchase Commission);

“Purchase Date”

means, in relation to a Purchased Receivable, the date
on which the Lender receives the applicable Purchase Request;

“Purchase Price”

means the purchase
price to be paid by the Lender in respect of an Eligible Receivable upon
receipt of a Cash Request, being:

(a)                                    in
relation to any Eligible Receivable owing by a debtor in an Eligible Country,
80 per cent of such Eligible Receivable;

* Confidential Treatment Requested

 6
 

(b)                                    in
relation to Eligible Receivables owing by debtors in an Ineligible Country:

(i)                                       during
the period May- August, in any year, 40 per cent; and

(ii)                                   during
any other period, 20 per cent, provided that (x) (in each case) such percentage
shall be increased to 70 per cent if the Company arranges for those Receivables
to be covered by trade insurance acceptable to the Lender (y) the maximum
amount to be advanced in reliance upon such Receivables shall not exceed
$2,500,000 at any time and (z) the maximum amount of such Receivables owing by
a single debtor shall not exceed $350,000;

“Purchase Request”

means a request in the form of part I of Schedule
4;

“Purchased Receivable”

means a Receivable purchased by the Lender under this
Agreement;

“Receivable”

means any debt owing to a Borrower, together with all
connected rights, claims, deposits and payments;

“Receivables Finance Facility”

means the receivables finance facility made available
under this Agreement as described in clause 2.1
(a);

“Reserves”

means reserves from
time to time established by the Lender to reflect:

(a)                                    the
full amount of any liabilities or amounts which may (by virtue of any Security
Interest, the provisions of the Enterprise Act 2002, any other statutory
provision or otherwise) rank equally with or in priority to the Security
Interests granted to the Lender under the Finance Documents or which may
otherwise be unavailable to the Lender in the event of an insolvency;

(b)                                    the
amounts believed by the Lender (acting reasonably) to represent three months of
all third party warehouse lease costs and similar liabilities; and

(c)                                     the
amounts believed by the Lender (acting reasonably) to be necessary to provide
for possible inaccuracies in any report or in any information provided to the
Lender in connection with this Agreement;

“Review Period”

means each twelve month period ending on the last day
of each calendar month;

“Revolving Credit Facility”

means the revolving credit facility made available
under this Agreement as described in clause 2.1(b);

“Revolving Credit Limit”

means $14,000,000;

 7
 

“Revolving Loan”

means a Loan made in respect of the Revolving Credit
Facility;

“Sales Days”

means the number of units of stock for a specific
product divided by the number of units of that product sold for the last three
months multiplied by 90 days;

“Security Documents”

includes:

(a)                                    the
Debenture;

(b)                                    the
Dutch Pledge; and

(c)                                     any
other document from time to time executed by any person by way of security for
the obligations of any Obligor pursuant to this Agreement;

“Security Interest”

means a mortgage,
charge, pledge, lien or other security interest securing any obligation of any
person, or any arrangement having similar effect but excluding any such
interests which:

(a)                                    are
created in favour of the Lender,

(b)                                    which
arise by operation of law in the ordinary course of trading; or

(c)                                     are
Permitted Security Interest;

“Stock”

means each Borrower’s stock and inventory at any time;

“Stock Percentage”

means with respect
to each specific line of Stock held on land or in transit by sea:

(d)                                    the
first 180 Sales Days of Stock, 55 per cent; and

(e)                                     the
Stock between 181 and 360 Sales Days, 25 per cent.

“Subsidiary”

means a subsidiary within the meaning of section 736
of the Companies Act 1985;

“Tax”

means any tax, levy, impost, duty or other charge or
withholding of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the same);

“Tax Credit”

means a credit against, relief or remission for, or
repayment of any Tax;

“Tax Deduction”

means a deduction or withholding for or on account of
Tax from a payment under a Finance Document;

 8
 

“Tax Payment”

means an increased payment made by an Obligor to a
Lender under clause 14.2 (Tax
gross-up) or a payment under clause
14.3 (Tax indemnity);

“Term”

means each period determined under this Agreement for
which the Lender is under a liability under or with respect to an L/C;

“Total Availability”

means at any relevant time: (i) the Total
Receivables Availability; PLUS (ii) the Total Stock Availability; LESS (iii) the
amount of the Reserves;

“Total Receivables Availability”

means at any time the applicable Purchase Price of the
Eligible Receivables less maximum discounts, credits and allowances of any
nature which may be taken by or granted to any account debtor or any other
person in connection with the Eligible Receivables at such time;

“Total Stock Availability”

means at any time, the Stock Percentage of the Net
Stock Value of Eligible Stock at such time;

“Trading Cashflow”

means, in relation
to any Review Period, the profit before tax on ordinary activities of the
Company for that period:

(a)                                    adding
back any depreciation or amortisation;

(b)                                    adjusting
for any unrealised currency gains or losses;

(c)                                     excluding
any extraordinary or exceptional profits;

(d)                                    deducting
any capital expenditure; and

(e)                                     making
such other adjustments as the Lender may from time to time approve in writing;

“Unpaid Sum”

means any sum due and payable but unpaid by an Obligor
under the Finance Documents;

“Utilisation”

means a utilisation of a Facility;

“Utilisation Date”

means the date specified by the Company in any
Utilisation Request on which a Utilisation is, or is to be, made;

“Utilisation Request”

includes (as the context may require) a Purchase
Request, a Cash Request, and an L/C Request;

 9
 

“VAT”

means value added
tax as provided for in the Value Added Tax Act 1994 and any other tax of a
similar nature.

1.2                                    Construction

1.2.1                          Unless
a contrary indication appears, any reference in this Agreement to;

(a)                                     “assets” includes present and
future properties, revenues and rights of every description;

(b)                                     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;

(c)                                      “indebtedness” includes any
obligation (whether incurred as principal or as surety) for the payment or
repayment of money, whether present or future, actual or contingent;

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

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

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

(g)                                      a
time of day is a reference to London time.

Clause and Schedule
headings are for ease of reference only.

1.2.2                          A
Default (other than an Event of Default) is continuing if it has not been
remedied or waived and an Event of Default is continuing if it has not been waived.

1.2.3                          If
at any time there are no persons who are Guarantors, the term Obligors shall be
construed, while such circumstance is continuing, as a reference solely to the
Facility Companies and if at that time the Company is the only Facility Company
the references in this Agreement to Facility Company shall, whilst such
circumstance is continuing, be construed accordingly.

1.3                                    Third
party rights

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

2.                                           THE FACILITIES

2.1                                    The
Facilities

Subject to the terms of this Agreement, and during the
Availability Period, the Lender makes available to the Borrowers:

2.1.1                          a
receivables finance facility (the “Receivables
Finance Facility”) pursuant to which the Lender will from time to
time during the Availability Period purchase Receivables from the Facility
Companies; and

 10

2.1.2                          a
revolving credit facility (the “Revolving
Credit Facility”) pursuant to which the Lender will from time to
time:

(a)                                     make
Revolving Loans to the Borrowers, and

(b)                                     issue
or procure the issue of L/Cs for the account of the Borrowers.

3.                                           PURPOSE

3.1                                    Purpose

Each Borrower shall apply all amounts borrowed or
raised by it in respect of the Revolving Credit Facility, for its general
corporate and working capital purposes and to the extent permitted pursuant to clause 6.4, for the repayment of
intra-group indebtedness.

3.2                                    Monitoring

The Lender is not bound to monitor or verify the
application of any amount borrowed pursuant to this Agreement. A contravention
of clause 3.1 shall not affect the
obligations of the Obligors under the Finance Documents.

4.                                           CONDITIONS OF UTILISATION

4.1                                    Initial
conditions precedent

No Borrower may deliver a Utilisation Request unless
the Lender has received all of the documents and other evidence listed in Schedule 2 (Conditions precedent) in form and substance satisfactory to
the Lender.

4.2                                    Further
conditions precedent

The Lender will only be obliged to comply with the
terms of a Utilisation Request if on the date on which it is given and on the
proposed Utilisation Date:

4.2.1                          no
Default is continuing or would result from the proposed Utilisation; and

4.2.2                          the
representations set out in clause
19 are true in all material respects with reference to the facts and
circumstances then subsisting.

5.                                           UTILISATION

5.1                                    Delivery
of a Utilisation Request

A Borrower may utilise a Facility by delivery to the
Lender of a duly completed Utilisation Request with respect to the relevant
Facility not later than 11.00 am on the proposed Utilisation Date. The relevant
Borrower will deliver the form of Utilisation Request appropriate to the
desired form of Utilisation.

5.2                                    Completion
of a Utilisation Request

5.2.1                          Each
Utilisation Request is irrevocable and will not be regarded as having been duly
completed unless:

(a)                                     the
proposed Utilisation Date is a Business Day within the Availability Period applicable
to the Facility in question; and

(b)                                     the
Utilisation Request is expressed in a Permitted Currency and it otherwise
complies with (and contains the information and enclosures required by) the
applicable form of Utilisation Request.

5.2.2                          Only
one type of Utilisation may be requested in each Utilisation Request.

 11
 

5.3                                    Lender’s
obligations

If the conditions set out in this Agreement have been
met, the Lender shall comply with the terms of a duly completed Utilisation
Request on the applicable Utilisation Date.

5.4                                    Reutilisation

Subject to the terms of this Agreement, the Revolving
Credit Facility is of a revolving nature and amounts recovered or repaid in
respect of the Revolving Credit Facility may accordingly be redrawn, For this
purpose, amounts received in respect of the Revolving Credit Facility will be
applied in reduction of the relevant Obligor’s liabilities on the Business Day
of actual receipt by the Lender

6.                                           RESTRICTIONS APPLICABLE TO INDIVIDUAL FACILITIES

6.1                                    Specific
Facility Limits

6.1.1                          The
aggregate amount of:

(a)                                     the
Outstanding Purchase Price;

(b)                                     all
Revolving Loans; and

(c)                                      all
L/C Exposures shall not at any time exceed the lesser of:

(i)                                       the
Facility Limit; and

(ii)                                   the
Total Availability.

6.1.2                          The
aggregate amount of.

(a)                                     all
Revolving Loans; and

(b)                                     all
L/C Exposures shall not exceed the Revolving Credit Limit.

6.1.3                          The
aggregate of the Revolving Loans made in respect of Eligible Stock shall not
exceed $14,000,000 at any time.

6.1.4                          The
aggregate of the Revolving Loans made in respect of Eligible Stock on water
shall not exceed $7,500,000 at any time.

6.1.5                          The
aggregate amount of all L/C Exposures shall not at any time exceed the L/C
Limit.

6.2                                    Revolving
Loans

No Revolving Loan may be drawn pursuant to a Cash
Request unless either:

6.2.1                          the
Receivables Finance Facility is fully utilised; or

6.2.2                          the
Obligors have no Receivables with which to utilise the Receivables Finance
Facility.

6.3                                    Adjustments

The Lender may (after consultation with the Company)
from time to time:

6.3.1                          reduce
the Purchase Price in proportion to an increase in the Dilution Rate;

6.3.2                          reduce
the Total Stock Availability (or any component of it) to reflect:

(a)                                     any
reduction in the rate of turnover, quality, liquidation value or other matter
affecting patterns of sale; or

(b)                                     any
reduction in the Facility Limit pursuant to any provision of this Agreement;

 12
 

6.3.3                          allocate
the Reserves among the Borrowers in such proportions as the Lender may deem
appropriate; and

6.3.4                          establish,
in relation to each Borrower, such sub-limits with respect to the Utilisation
of the Facilities as it may deem appropriate.

6.4                                    Intra-group
Repayments

So long as no
Default has occurred, the proceeds of a Utilisation may be applied by an
Obligor in the repayment of indebtedness owing to ViewSonic Corporation
provided that:

(a)                                     during
the period in which such Utilisation is outstanding, the aggregate amount of (i) all
outstanding Utilisations; (ii) the amount of such repayment; and (iii) $3,000,000
are less than the Total Availability; or

(b)                                     the
repayment is approved by the Lender.

6.5                                    Prohibition
on Utilisations

No Utilisation may be made if it would cause any of
the limits referred to in this clause
6 to be exceeded.

6.6                                    Deemed
Utilisations

If the Lender makes any payment pursuant to or in respect
of any L/C then the Obligor for whose account such payment was made shall be
deemed on the date of such payment to have received the proceeds of a
Utilisation. A Utilisation so deemed to be made shall be deemed to be a
Revolving Loan and the other provisions of this Agreement (as to interest,
repayment and otherwise) shall apply to such Utilisation accordingly.

7.                                           RECEIVABLES FINANCE

7.1                                    Sale
of Receivables

Subject to the terms of this Agreement, each Borrower
shall offer to sell its Receivables to the Lender by delivery to the Lender at
intervals of five Business Days of duly completed Purchase Requests, Delivery
of a Purchase Request will oblige the relevant Borrower to sell the Receivables
stated in such Purchase Request upon and subject to the terms and conditions of
this Agreement.

7.2                                    Determination
of Purchase Price

The Lender shall determine the Purchase Price for the
Receivables specified in a Purchase Request and will (upon request) advise the
relevant Borrower of such determination. The Purchase Price shall only be
payable if a valid Cash Request has been delivered to the Lender. When made
under the terms of this Agreement, payment of the Purchase Price shall (without
further act or document) suffice to constitute the assignment of the relevant
Receivable in favour of the Lender.

7.3                                    Order
of Application

7.3.1                          Any
amounts paid by the Lender pursuant to a Cash Request shall be deemed to be
applied (firstly) in the payment of any outstanding and unpaid Purchase Price
and (secondly) in the drawing of a Revolving Loan.

7.3.2                          The
Lender’s obligation to pay the Purchase Price of any Receivable (or any unpaid
portion of it) shall terminate on the earlier of:

(a)                                     the
date on which the relevant account debtor pays such receivable; and

 13
 

(b)                                     the
Maturity Date.

7.3.3                          To
the extent to which any moneys paid by the Lender to a Borrower (the “Debtor Company”) represent payment of
Purchase Price in relation to the Purchased Receivables of another Obligor (the
“Creditor Company”) then (without
double counting with the provisions of clause
6.5) the Creditor Company shall be deemed to have made an on-demand loan (an “Intercompany Loan”) to the Debtor Company
in an amount equal to the amount of such payment by the Lender.

8.                                           PROVISIONS CONCERNING L/CS

8.1                                    No
Utilisation request with respect to an L/C may be delivered unless the form and
content of the requested L/C has previously been approved by the Lender.

8.2                                    A
Borrower which requests the Lender to issue an L/C:

8.2.1                          authorises
the Lender to pay any claim made or purported to be made under such L/C and
which appears on the face of it to be in order (a “claim”);

8.2.2                          undertakes
immediately and unconditionally on demand:

(a)                                     to
pay to the Leader an amount equal to the amount of any claim; and

(b)                                     to
indemnify the Lender against any cost, loss or liability incurred by the Lender
in connection with the L/C or its performance or any other matter relating
thereto, other than such cost, loss or liability arising out of the negligence
or wilful misconduct of the Lender;

8.2.3                          acknowledges
that:

(a)                                     the
Lender is not obliged to carry out any investigation or to seek any
confirmation from such Borrower or any other person before paying a claim,

(b)                                     the
Lender will deal in Documents only and will thus not be concerned with any matters
concerning any Goods or other issues relating to the underlying transaction;
and

(c)                                      such
Borrower will be bound by any action taken by the Lender in good faith in
relation to any L/C (including any decision to amend or extend the L/C and any
interpretation of the terms or effect of any L/C); and

8.2.4                          acknowledges
that its obligations of payment and reimbursement under this clause 8.2 will not be in any way
prejudiced, affected or diminished by:

(a)                                     any
unenforceability of, or amendment to or extension of, any L/C or any other
document or security;

(b)                                     the
validity, legitimacy or accuracy of any document or claim submitted pursuant to
any L/C or any action taken or omitted with respect thereto; or

(c)                                      any
other matter or thing which (but for this provision) might otherwise have the
effecting of diminishing or extinguishing the Borrower’s liability pursuant to
this clause 8.2.

8.3                                    Pledge

All Goods and Documents are hereby and shall upon
despatch from the supplier of any Goods be deemed to be pledged by the relevant
Borrower to the Lender and the Goods and the proceeds of all insurances in
relation to them and all sales of them and all of the relevant Borrower’s
rights as unpaid seller of them shall be a continuing security for the payment
and discharge in full of all of the obligations of the relevant Borrower under
the Finance Documents.

 14
 

8.4                                    Perfection
of Pledge

The Lender shall be entitled at its option to obtain
possession of the Goods in order to perfect the pledge made by clause 8.3. The relevant Borrower assigns
to the Lender its right, title and interest in and to the Documents and all
claims and rights arising from them and the relevant Borrower irrevocably and
unconditionally authorises the Lender, following the occurrence of an Event of
Default, to sign all documents and do all such other things as may be necessary
to obtain possession of and to realise the Goods, and to apply the proceeds in
reduction of amounts owing under this Agreement.

8.5                                    Trust
Receipts

The Goods and the Documents shall only be released to
the relevant Borrower by the Lender against receipt by the Lender of a duly
executed trust receipt from the relevant Borrower in the Lender’s standard form
at the time or (failing such execution) shall be deemed to be subject to a
trust receipt in such form.

8.6                                    Separation

Each Borrower undertakes to keep the Documents and the
Goods separate and distinct from any other bills of lading, documents of title
or goods.

9.                                           CURE RIGHTS

9.1                                    Cure
Defaults

The Lender (acting in the name of and on behalf of,
the relevant Obligor) may, at its option and upon notice to the Company to that
effect:

9.1.1                          cure
any default by any Obligor under any agreement with respect to a Receivable or
under any other agreement with a third party as the Lender may consider
necessary to facilitate the collection of Receivables or to facilitate access
to any Security under any of the Security Documents;

9.1.2                          make
any payment, reach any settlement or compromise, issue, make or pay any bond;
appeal any judgment against an Obligor or take any other action it may deem
necessary to prevent any repossession, seizure, execution, attachment or
similar process against any plant, machinery or other asset of an Obligor which
might impair the Security (or the enforcement of any Security) granted to the
Lender under any Security Document; and

9.1.3                          discharge
any Taxes and any other Security Interests from time to time subsisting with
respect to any asset of any Obligor.

10.                                    REPAYMENT

10.1                             Receivables
Finance

10.1.1                   If
the Lender determines that it has not received (in accordance with clause 10.7) full payment in respect of a
Purchased Receivable on the applicable Maturity Date, then the relevant
Borrower shall on demand pay to the Lender an amount equal to the Outstanding
Purchase Price in respect of such Purchased Receivable.

10.1.2                   Nothing
in paragraph (a) above shall
prevent the Lender from pursuing payment in respect of the relevant Purchased
Receivable from the account debtor or from receiving payment of such Purchased
Receivable to the credit of a Blocked Account. Each Obligor shall tender such
assistance as the Lender may reasonably require for that purpose.

 15
 

10.1.3                   The
Lender may deduct from payments in respect of Purchased Receivables made by
account debtors or any of the Obligors into a Blocked Account the then
Outstanding Purchase Price in respect of such Purchased Receivables. Any
balance remaining after such deduction shall be applied in accordance with clause 10.2.

10.2                             Other
Utilisations

Subject to the other provisions of this Agreement, all
amounts standing to the credit of the Blocked Accounts shall be applied in the
following order:

10.2.1                   in
repayment of the outstanding principal amount of any Revolving Loans in such
order and manner as the Lender may determine;

10.2.2                   in
payment of any fees, costs and expenses due from any Obligor to the Lender
under any Finance Document;

10.2.3                   in
payment of.

(a)                                     all
interest due on any Revolving Loans made or deemed to be made under this
Agreement; and

(b)                                     all
Purchase Commission outstanding or falling due for payment on the last Business
Day of the then current month;

10.2.4                   in
or towards payment of any other amounts owing by any Obligor under any Finance
Document; and

10.2.5                   to
the relevant Borrower by payment into such Other Account as it may specify.

10.3                             Revision
of Order of Application

10.3.1                   If
an Event of Default is continuing, clause
10.2 shall not apply and all amounts standing to the credit of a Blocked
Account shall be applied to the liabilities of the Obligors under the Finance Documents
in such order and manner as the Leader may determine.

10.3.2                   If
any amount standing to the credit of one Borrower’s Blocked Account is applied
in discharge of the liabilities of another Obligor, then such Obligor shall
become indebted to the relevant Borrower on the basis set out in clause 7.3(c), with necessary adaptations.

10.4                             Currencies

Where (i) any amount is held or is to be applied
by the Lender in reduction of amounts owing under this Agreement and (ii) the
relevant amounts are denominated in different currencies, the Lender may apply
the amounts so held or to be applied in the purchase of the latter currency at
such rate (including commissions) as the Lender (acting reasonably) may deem to
be appropriate. Alternatively, the Lender may hold those funds pending receipt
of the Borrower’s instructions. In that event the Lender shall credit the
Borrower with interest on such amounts at LIBOR, to the extent to which the
sums held do not exceed $20,000,000. The foregoing provision for payment of interest
shall only apply to amounts in US dollars or another Permitted Currency.

10.5                             Repayments
and Facility Limits

If at any time and for any reason (whether by reason
of any Receivables ceasing to be Eligible Receivables, by reason of any
fluctuation in the exchange rate of any Permitted Currency as against the US
dollar, or otherwise) any outstanding Utilisations cause any applicable limit
established pursuant to clause 6
to be exceeded, then the Company will immediately repay or procure the
repayment of such amounts (together with accrued interest on such amounts) as
may be necessary to remedy the position. If necessary for that purpose, the
Company shall also 

 16
 

provide or procure the provision of cash cover to the
Lender in respect of any Outstanding Purchase Price and/or any contingent
obligations assumed by the Lender pursuant to this Agreement.

10.6                             Final
Repayment

On the Final Repayment Date, the Company will pay (or
procure payment) to the Lender in full all outstanding amounts and unpaid
liabilities under the Finance Documents (whether by way of principal, interest,
commission, fees, costs, expenses or otherwise) and shall pay to the Lender
such amount as is necessary to provide full cash collateral for any Outstanding
Purchase Price and any outstanding obligations (contingent or otherwise)
assumed by the Lender pursuant to the terms of this Agreement.

10.7                             Collection
of Receivables

With respect to the collection of Receivables, each
Obligor undertakes with the Lender as follows:

10.7.1                   it
will collect and hold the proceeds of such Receivables as agent and trustee for
the Lender and immediately pay all amounts so received into a Blocked Account
(but pending such payment will not commingle such amounts with any other
funds);

10.7.2                   if
any account debtor makes a payment into any account which is not a Blocked
Account, it will immediately (i) transfer the relevant amounts to a
Blocked Account and (ii) direct the relevant account debtor to make future
payments to a Blocked Account;

10.7.3                   the
payments and collections described in (a) and (b) above shall be
carried out on a daily basis or (following a Default) at such other intervals
as the Lender may require;

10.7.4                   it
will collect all Receivables as agent and trustee for the Lender and pay the
proceeds thereof directly to an account prescribed by the Lender for that
purpose;

10.7.5                   to
the extent to which the Lender does not obtain title to any Purchased
Receivable, it will hold such Receivable on trust for the Lender and deal with
it in accordance with the other provisions of this clause 10.7;

10.7.6                   it
will not grant any credit, discount or similar allowance in respect of any
Receivable except in the ordinary course of business in accordance with its
normal policies or with the Lender’s consent;

10.7.7                   it
will indemnify the Lender on demand against any liability incurred to any bank
or person involved in the operation of a Blocked Account.

10.8                             Business
Days

If any payment under any Finance Document would
otherwise be due on a day which is not a Business Day, it will be due on the
next Business Day or (if that Business Day falls in the following month) on the
preceding Business Day.

10.9                             Calculation
of Interest

All interest and Purchase Commission under this
Agreement shall be calculated on the basis of actual days elapsed and a 365 day
year. For the purposes of calculating interest and Purchase Commission, any
repayments received in respect of the Facilities concerned shall be credited to
the relevant Facility three Business Days following receipt by the Lender.

 17
 

10.10                      Cash
Collateral

Any amount to be provided under this Agreement by way
of cash collateral in respect of any contingent liability shall stand charged
to the Lender by way of cash cover in respect of such obligation and shall be
held by the Lender in a blocked interest bearing account for application
against such contingent liability. Withdrawals from such account may only be
made in order to pay amounts owing to the Lender in respect of the liability
concerned and (if so requested by the Lender) the relevant Borrower shall
execute a charge over such account in such form as the Lender may require. After
such liability has expired or has been settled, any remaining balance shall be
applied (i) in settlement of any other amounts then owing to the Lender under
any Finance Documents and (ii) in repayment to the Obligor which provided
such cash collateral.

11.                                    CANCELLATION

11.1                             Illegality

If it becomes unlawful in any applicable jurisdiction
for the Lender to perform or maintain any of its obligations as contemplated by
this Agreement then the Lender may notify the Company to that effect. The
Facilities shall thereupon be cancelled and the Borrowers to which outstanding
Utilisations have been made shall upon demand (i) pay to the Lender all
amounts then owing by them under this Agreement (including any accrued
interest, fees and other amounts) and (ii) provide cash cover to the
Lender in respect of all L/Cs or other contingent obligations assumed it the
request of that Borrower.

11.2                             Voluntary
cancellation

The Company may, if it gives the Lender not less than
10 Business Days’ prior notice, cancel the whole or any part of a Facility
whereupon such Facility shall be cancelled to the extent stated in such notice.
No cancellation notice may be given in respect of amounts represented by
outstanding Utilisations.

11.3                             Cancellation
Fee

If the
whole or any part of a Facility is cancelled as a result of (i) a notice
given by the Lender or the Company under this clause
11 or (ii) a notice given by the Lender under clause 23 (Events of
Default) then and in each such case the Company shall pay to the
Lender on the effective date of such cancellation a cancellation fee calculated
as a percentage of the amount of the Facilities so cancelled, as follows:

	
  (1)

  	
   

  	
  (2)

  
	
   

  	
  Number of Months 

  From date of this Agreement

  	
   

  	
   

  	
   

  	
  Applicable Percentage

  	
   

  
	
  0-12

  	
   

  	
  2
  per cent

  
	
  12-24

  	
   

  	
  1.5
  percent

  
	
  24-36

  	
   

  	
  1 per cent

  
							

 

11.4                             Restrictions
and conditions

Any notice of cancellation or prepayment given this clause 11 shall be irrevocable and, shall
specify the date or dates upon which the relevant cancellation or prepayment is
to be made and the amount of that cancellation or prepayment.

11.4.1                   Any
repayment or prepayment under this Agreement shall be made together with
accrued interest and any other amounts owing in respect of the amount repair or
prepaid the amount prepaid.

 18
 

11.4.2                   No
amount of any Facility which is cancelled may subsequently be reinstated. Save
as provided by clause 5.4 (Reutilisation) no amount repaid or prepaid
may be redrawn.

11.4.3                   The
Borrowers shall not repay, prepay or cancel the Facilities or any part of them
except at the times and in the manner expressly provided for in this Agreement.

12.                                    INTEREST AND PURCHASE COMMISSION

12.1                             Calculation
of interest and Purchase Commission

The rate of interest on each Revolving Loan and the
rate of purchase commission payable in respect of the Outstanding Purchase
Price for each Purchased Receivable shall be the percentage rate per annum
which is the aggregate of:

12.1.1                   the
Margin;

12.1.2                   LIBOR;
and

12.1.3                   the
Mandatory Cost.

12.2                             Payment
of interest and Purchase Commission

12.2.1                   The
Borrower to which a Revolving Loan has been made shall pay accrued interest on
that Revolving Loan on the last Business Day of each month.

12.2.2                   The
Borrower which has sold a Receivable to the Lender shall on the last Business
Day of each month pay accrued Purchase Commission with respect thereto
calculated from the date on which the Purchase Price was paid until the Actual
Date of Payment.

12.3                             Default
interest

If an Event of Default has occurred and so long as the
same is continuing, interest shall accrue on all amounts owing under the
Finance Documents at a rate which is three per cent higher than the rate
ascertained pursuant to clause
12.1 (Calculation of interest and Purchase
Commission). Any interest accruing under this clause 12.3 shall be payable on demand and
may be compounded on such basis as the Lender deems appropriate.

13.                                    FEES

13.1                             Commitment
fee

The Company shall pay to the Lender a fee computed at
the rate of 0.15 per cent, of the undrawn/unutilised amount of the Facility
Limit. For these purposes, the amount deemed to be utilised in respect of any
period shall be the average outstanding balance of the aggregate of the
Revolving Loans, the Outstanding Purchase Price and the L/C Exposure throughout
the period in which the calculation falls to be made. The accrued commitment
fee is payable on the last day of each calendar month which ends during the
relevant Availability Period, on the last day of the Availability Period and,
if cancelled in full, on the effective date of such cancellation.

13.2                             Arrangement
fee

The Company shall pay to the Lender an arrangement fee
of $180,000. That fee shall be payable by instalments of $15,000. The first
such instalment shall be paid on the date of this Agreement and each subsequent
instalment shall be payable on each of the dates falling at three monthly
intervals after that date.

 19

13.3                             Monitoring
Fee

The Company shall pay to the Lender a monitoring fee
of £1,500 on the date of this Agreement and on each of the dates falling at
three-monthly intervals after that date until all moneys owing under this
Agreement have been paid in full.

13.4                             L/C
Fee

Each Borrower shall pay to the Lender a fee equal to
2.4 per cent per annum on the face amount of each L/C issued at the request of
that Borrower in respect of the period from the date of issue until the expiry
of such L/C. Such fee shall be paid monthly in arrears and on the Expiry Date
of such L/C.

14.                                    SET-OFF AND TAX GROSS UP

14.1                             No
Set-Off by Obligors

All payments to be made by an Obligor under the
Finance Documents shall be calculated and be made without (and free and clear
of any deduction for) any set-off or counterclaim.

14.2                             Tax gross-up

14.2.1                   Each
Obligor shall make all payments to be made by it without any Tax Deduction,
unless a Tax Deduction is required by law.

14.2.2                   The
Company shall promptly upon becoming aware that an Obligor must make a Tax
Deduction (or that there is any change in the rate or the basis of a Tax
Deduction) notify the Lender accordingly.

14.2.3                   If
a Tax Deduction is required by law to be made by an Obligor, the amount of the
payment due from that Obligor shall be increased to an amount which (after
making any Tax Deduction) leaves an amount equal to the payment which would
have been due if no Tax Deduction had been required.

14.2.4                   If
an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax
Deduction and any payment required in connection with that Tax Deduction within
the time allowed and in the minimum amount required by law.

14.2.5                   Within
30 days of making either a Tax Deduction or any payment required in connection
with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to
the Lender evidence reasonably satisfactory to the Lender that the Tax
Deduction has been made or (as applicable) any appropriate payment paid to the
relevant taxing authority.

14.3                             Tax indemnity

14.3.1                   The
Company shall (within three Business Days of demand by the Lender) pay to the
Lender an amount equal to the loss, liability or cost which the Lender
determines will be or has been (directly or indirectly) suffered for or on
account of Tax by the Lender in respect of a Finance Document.

14.3.2                   Paragraph (a) above shall not
apply to any Tax assessed on the Lender if that Tax is imposed on or calculated
by reference to the net income received or receivable (but not any sum deemed
to be received or receivable) by the Lender.

14.4                             Tax Credit

If an Obligor makes
a Tax Payment and the Lender determines that:

14.4.1                   a
Tax Credit is attributable to that Tax Payment; and

 20
 

14.4.2                   the
Lender has obtained, utilised and retained that Tax Credit,

the Lender shall pay an amount to the Obligor which
the Lender determines will leave the Lender (after that payment) in the same
after-Tax position as it would have been in had the Tax Payment not been made
by the Obligor.

14.5                             Stamp
taxes

The Company shall
pay and, within three Business Days of demand, indemnify the Lender against any
cost, loss or liability the Lender incurs in relation to all stamp duty,
registration and other similar Taxes payable in respect of any Finance
Document.

14.6                             Value
added tax

14.6.1                   All
consideration expressed to be payable under a Finance Document by an Obligor to
a Lender shall be deemed to be exclusive of any VAT. If VAT is chargeable on
any supply made by the Lender to an Obligor in connection with a Finance
Document, that Obligor shall pay to the Lender (in addition to and at the same
time as paying the consideration) an amount equal to the amount of the VAT.

14.6.2                   Where
a Finance Document requires an Obligor to reimburse a Lender for any costs or
expenses, that Obligor shall also at the same time pay and indemnify the Lender
against all VAT incurred by the Lender in respect of the costs or expenses to
the extent that the Lender reasonably determines that it is not entitled to
credit or repayment of the VAT.

15.                                    INCREASED COSTS

15.1                             Increased
costs

15.1.1                   Subject
to clause 15.3 (Exceptions) the Company shall, within
three Business Days of a demand by the Lender, pay to the Lender the amount of
any Increased Costs incurred by the Lender or any of its Affiliates as a result
of (i) the introduction of or any change in (or in the interpretation,
administration or application of) any law or regulation or (ii) compliance
with any law or regulation made after the date of this Agreement.

15.1.2                   In
this Agreement “Increased Costs”
means:

(a)                                     a
reduction in the rate of return from the Facility or on the Lender’s (or its
Affiliate’s) overall capital;

(b)                                     an
additional or increased cost; or

(c)                                      a
reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Lender or any of
its Affiliates to the extent that it is attributable to the Lender having
entered into this Agreement or funding or performing its obligations under any
Finance Document.

15.2                             Increased
cost claims

If the Lender intends to make a claim pursuant to clause 15.1 (Increased costs) it shall notify the Lender of the event
giving rise to the claim.

15.3                             Exceptions

Clause 15.1 (Increased costs) does not apply to the
extent any Increased Cost is:

15.3.1                   attributable
to a Tax Deduction required by law to be made by an Obligor;

 21
 

15.3.2                   compensated
for by clause 14.3 (Tax indemnity) (or would have been
compensated for under clause 14.3
(Tax indemnity) but was not so
compensated solely because the exclusion in paragraph
(b) of clause 14.3 (Tax indemnity) applied);

15.3.3                   compensated
for by the payment of the Mandatory Cost; or

15.3.4                   attributable
to the negligence of or wilful breach by the relevant Lender or its Affiliates
of any law or regulation.

16.                                    OTHER INDEMNITIES

16.1                             Currency
indemnity

If any sum due from
an Obligor under the Finance Documents (a “Sum”),
or any order, judgment or award given or made in relation to a Sum, has to be
converted from the currency (the “First
Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

16.1.1                   making
or filing a claim or proof against that Obligor;

16.1.2                   obtaining
or enforcing an order, judgment or award in relation to any litigation or
arbitration proceedings,

that Obligor shall as an independent obligation, within
three Business Days of demand, indemnify the Lender against (i) any cost,
loss or liability arising out of or as a result of the conversion including any
discrepancy between (a) the rate of exchange used to convert that Sum from
the First Currency into the Second Currency and (b) the rate or rates of
exchange available to that person at the time of its receipt of that Sum and (ii) the
costs involved in effecting any such currency conversion.

16.2                             Other
indemnities

The Company shall
(or shall procure that an Obligor will), within three Business Days of demand,
indemnify the Lender against any cost, loss or liability (including loss of
Margin) incurred by the Lender as a result of:

16.2.1                   the
occurrence of any Event of Default;

16.2.2                   a
failure by an Obligor to pay any amount due under a Finance Document on its due
date;

16.2.3                   funding,
or making arrangements to fund, any amount requested by a Borrower in a
Utilisation Request but not advanced or paid by reason of the operation of any
one or more of the provisions of this Agreement; or

16.2.4                   any
amount not being prepaid in accordance with a notice of prepayment given by a
Borrower or the Company.

17.                                    COSTS AND EXPENSES

17.1                             Transaction
expenses

The Company shall
on demand pay the Lender the amount of all costs and expenses (including legal
and valuation fees) reasonably incurred by it in connection with the
negotiation, preparation, printing and execution of:

17.1.1                   this
Agreement and any other documents referred to in this Agreement; and

17.1.2                   any
other Finance Documents executed after the date of this Agreement.

 22
 

17.2                             Amendment
costs

If an Obligor requests an amendment, waiver or
consent, the Company shall, within three Business Days of demand, reimburse the
Lender for the amount of all costs and expenses (including legal fees)
reasonably incurred by the Lender in responding to, evaluating, negotiating or
complying with that request or requirement.

17.3                             Collection
Costs

The Company shall
on demand pay the Lender the amount of all costs and expenses (including legal
fees) incurred by the Lender in connection with:

17.3.1                   the
remission of loan proceeds, collection of cheques and other items, the issue,
maintenance and renewal of L/C’s, establishing and maintaining Charged
Accounts, together with the Lender’s associated and customary fees; and

17.3.2                   as
out of pocket expenses and costs from time to time (including those incurred
prior to the date of this Agreement) during the course of periodic field
examinations and appraisals of the Obligor’s assets, operations financial
records, systems and forecasts plus a daily charge at the rate of five hundred
pounds (£500) for the Lender’s examinations in the field and office for up to
four such specific field examinations in any 12 month period prior to a Default
and for any other or additional such examinations following a default. The
aggregate annual amount charged to the Company in any period of 12 months shall
not exceed twelve thousand pounds (£12,000), unless an Event of Default has
occurred during that period.

17.4                             Enforcement
and other costs

The Company shall, within three Business Days of
demand, pay to the Lender the amount of all costs and expenses (including legal
fees) incurred by the Lender in connection with the exercise or enforcement of,
or the preservation of any rights or discretions under, any Finance Document
(including, without limitation, any payments made to third parties in
accordance with the terms of the Finance Documents to preserve, protect or
enhance any security interest granted to the Lender).

18.                                    GUARANTEE AND INDEMNITY

18.1                             Guarantee
and indemnity

Each Guarantor
irrevocably and unconditionally jointly and severally:

18.1.1                   guarantees
to the Lender punctual performance by each Borrower of all that Borrower’s
obligations under the Finance Documents;

18.1.2                   undertakes
with the Lender that whenever a Borrower does not pay any amount when due under
or in connection with any Finance Document, that Guarantor shall immediately on
demand pay that amount as if it was the principal obligor; and

18.1.3                   indemnifies
the Lender immediately on demand against any cost, loss or liability suffered
by the Lender if any obligation guaranteed by it is or becomes unenforceable,
invalid or illegal. The amount of the cost, loss or liability shall be equal to
the amount which the Lender would otherwise have been entitled to recover.

18.2                             Continuing
guarantee

This guarantee is a continuing guarantee and will
extend to the ultimate balance of sums payable by any Obligor under the Finance
Documents, regardless of any intermediate payment or discharge in whole or in
part.

 23
 

18.3                             Reinstatement

If any payment by
an Obligor or any discharge given by a Lender (whether in respect of the
obligations of any Obligor or any security for those obligations or otherwise)
is avoided or reduced as a result of insolvency or any similar event:

18.3.1                   the
Liability of each Obligor shall continue as if the payment, discharge,
avoidance or reduction had not occurred; and

18.3.2                   the
Lender shall be entitled to recover the value or amount of that security or
payment from any Obligor, as if the payment, discharge, avoidance or reduction
had not occurred.

18.4                             Waiver
of defences

The obligations of
each Guarantor under this clause
18 will not be affected by an act, omission, matter or thing which, but for
this Clause, would reduce, release or prejudice any of its obligations under
this clause 18 (without
limitation and whether or not known to it or the Lender) including:

18.4.1                   any
time, waiver or consent granted to, or composition with, any Obligor or other
person;

18.4.2                   the
release of any other Obligor or any other person under the terms of any
composition or arrangement with any creditor of any member of the Group;

18.4.3                   the
taking, variation, compromise, exchange, renewal or release of, or refusal or
neglect to perfect, take up or enforce, any rights against, or security over
assets of, any Obligor or other person or any non-presentation or
non-observance of any formality or other requirement in respect of any
instrument or any failure to realise the full value of any security:

(a)                                     any
incapacity or lack of power, authority or legal personality of or dissolution
or change in the members or status of an Obligor or any other person;

(b)                                     any
amendment (however fundamental) or replacement of a Finance Document or any
other document or security;

(c)                                      any
unenforceability, illegality or invalidity of any obligation of any person
under any Finance Document or any other document or security; or

(d)                                     any
insolvency or similar proceedings.

18.5                             Immediate
recourse

Each Guarantor waives any right it may have of first
requiring the Lender (or any trustee or Lender on its behalf) to proceed
against or enforce any other rights or security or claim payment from any
person before claiming from that Guarantor under this clause 18. This waiver applies irrespective
of any law or any provision of a Finance Document to the contrary.

18.6                             Appropriations

Until all amounts
which may be or become payable by the Obligors under or in connection with the
Finance Documents have been irrevocably paid in full, the Lender (or any
trustee or Lender on its behalf) may:

18.6.1                   refrain
from applying or enforcing any other moneys, security or rights held or
received by the Lender (or any trustee or Lender on its behalf) in respect of
those amounts, or apply and enforce the same in such manner and order as it
sees fit (whether against those amounts or otherwise) and no Guarantor shall be
entitled to the benefit of the same; and

 24
 

18.6.2                   hold
in an interest-bearing suspense account any moneys received from any Guarantor
or on account of any Guarantor’s liability under this clause 18.

18.7                             Deferral
of Guarantors’ rights

Until all amounts
which may be or become payable by the Obligors under or in connection with the
Finance Documents have been irrevocably paid in full and unless the Lender
otherwise directs, no Guarantor will exercise any rights which it may have by
reason of performance by it of its obligations under the Finance Documents:

18.7.1                   to
be indemnified by an Obligor;

18.7.2                   to
claim any contribution from any other guarantor of any Obligor’s obligations
under the Finance Documents; and/or

18.7.3                   to
take the benefit (in whole or in part and whether by way of subrogation or
otherwise) of any rights of the Finance Parties under the Finance Documents or
of any other guarantee or security taken pursuant to, or in connection with,
the Finance Documents by the Lender.

18.8                             Additional
security

This guarantee is in addition to and is not in any way
prejudiced by any other guarantee or security now or subsequently held by the
Lender. The obligations of each Guarantor shall be valid and enforceable
notwithstanding that those expressed to be assumed by any other Guarantor are
invalid or unenforceable for any reason whatsoever.

19.                                    REPRESENTATIONS

Each Obligor makes the representations and warranties
set out in this clause 19 to the
Lender on the date of this Agreement.

19.1                             Status

19.1.1                   It
is a corporation, duly incorporated and validly existing under the law of its
jurisdiction of incorporation.

19.1.2                   It
has the power to own its assets and carry on its business as it is being
conducted.

19.2                             Binding
obligations

The obligations expressed to be assumed by it in each
Finance Document are legal, valid, binding and enforceable obligations.

19.3                             Non-conflict
with other obligations

The entry into and
performance by it of, and the transactions contemplated by, the Finance
Documents do not and will not conflict with:

19.3.1                   any
law or regulation applicable to it;

19.3.2                   its
constitutional documents; or

19.3.3                   any
agreement or instrument binding upon or any of its assets.

19.4                             Power
and authority

It has the power to enter into, perform and deliver,
and has taken all necessary action to authorise its entry into, performance and
delivery of, the Finance Documents to which it is a party and the transactions
contemplated by those Finance Documents.

 25
 

19.5                             Validity
and admissibility in evidence

All Authorisations
required or desirable:

19.5.1                   to
enable it lawfully to enter into, exercise its rights and comply with its
obligations in the Finance Documents to which it is a party; and

19.5.2                   to
make the Finance Documents to which it is a party admissible in evidence in its
jurisdiction of incorporation,

have been obtained or effected and are in full force
and effect.

19.6                             No
filing or stamp taxes

Under the law of its jurisdiction of incorporation it
is not necessary that the Finance Documents be filed, recorded or enrolled with
any court or other authority in that jurisdiction or that any stamp,
registration or similar tax be paid on or in relation to the Finance Documents
or the transactions contemplated by the Finance Documents.

19.7                             No
default

19.7.1                   No
Event of Default is continuing or might reasonably be expected to result from
the making of any Utilisation.

19.7.2                   No
other event or circumstance is outstanding which constitutes a default under
any other agreement or instrument which is binding on it or any of its
Subsidiaries or to which its (or its Subsidiaries) assets are subject which
might have a Material Adverse Effect.

19.8                             No
misleading information

19.8.1                   Any
information provided by any member of the Group (i) in connection with the
negotiation of the Facilities and the Finance Documents and (ii) in
connection with any valuations or reports required to be prepared for the
purposes of this Agreement was (in each case) true and accurate in all material
respects as at the date it was provided or as at the date (if any) at which it
is stated.

19.8.2                   Nothing
has occurred since the date on which such information was provided which would
render it untrue or misleading in any material respect.

19.9                             Financial
statements

Its latest audited financial statement were prepared
in accordance with GAAP consistently applied.

Its latest audited financial statements fairly
represent its financial condition and operations (consolidated in the case of
the Company) during the relevant financial year.

There has been no material adverse change in its
business or financial condition since the date to which its latest audited
financial statements were made up.

19.10                      Pari
passu ranking

Its payment obligations under the Finance Documents
rank at least pari passu with the claims of all its other unsecured and
unsubordinated creditors, except for obligations mandatorily preferred by law
applying to companies generally.

19.11                      No
proceedings pending or threatened

No litigation, arbitration or administrative
proceedings of or before any court, arbitral body or agency which, if adversely
determined, might reasonably be expected to have a Material Adverse 

 26
 

Effect have (to the best of its knowledge and belief)
been started or threatened against it or any of its Subsidiaries.

19.12                      Retention
of Title

Any list provided to the Lender prior to the date of
this Agreement and which provides details of those suppliers whose terms of
business include retention of title provisions is complete and accurate in all
material respects.

19.13                      Bank
Accounts

All the accounts maintained or used by any Obligor at
any Bank or financial institution have been included within the definition of
Charged Accounts.

19.14                      Repetition

The representations in this clause 19 are deemed to be made by each Obligor by reference
to the facts and circumstances then existing on the date of each Utilisation
Request.

20.                                    INFORMATION UNDERTAKINGS

The undertakings in this clause 20 remain in force from the date of this Agreement for
so long as any amount is outstanding under the Finance Documents or any
Commitment is in force.

20.1                             Notification
of default

Each Obligor shall notify the Lender of any Default (and
the steps, if any, being taken to remedy it) promptly upon becoming aware of
its occurrence.

20.2                             Security
and Financial Undertakings

Each Obligor will comply with the undertakings set out
in Schedule 3 (Undertakings regarding Receivables etc).

21.                                    GENERAL UNDERTAKINGS

The undertakings in this clause 21 remain in force from the date of this Agreement for
so long as any amount is outstanding under the Finance Documents or any
Facility remains available for utilisation.

21.1                             Authorisations

Each Obligor shall
promptly:

21.1.1                   obtain,
comply with and do all that is necessary to maintain in full force and effect;
and

21.1.2                   supply
certified copies to the Lender of,

any Authorisation required under any law or regulation
of its jurisdiction of incorporation to enable it to perform its obligations
under the Finance Documents and to ensure the legality, validity,
enforceability or admissibility in evidence in its jurisdiction of
incorporation of any Finance Document.

21.2                             Compliance
with laws

Each Obligor shall comply in all respects with all
laws to which it may be subject, if failure so to comply would materially
impair its ability to perform its obligations under the Finance Documents.

 27
 

21.3                             Negative
pledge

No Obligor shall create or permit to subsist any
Security Interest (other than a Permitted Security Interest) over any of its
assets.

No Obligor shall:

21.3.1                   sell,
transfer or otherwise dispose of any of its assets on terms whereby they are or
may be leased to or re-acquired by an Obligor;

21.3.2                   enter
into any arrangement under which money or the benefit of a bank or other
account may be applied, set-off or made subject to a combination of accounts;
or

21.3.3                   enter
into any other preferential arrangement having a similar effect,

in circumstances where the arrangement or transaction
is entered into primarily as a method of raising Financial Indebtedness or of
financing the acquisition of an asset.

21.4                             Disposals

21.4.1                   No
Obligor shall enter into a single transaction or a series of transactions
(whether related or not) and whether voluntary or involuntary to sell, lease,
transfer or otherwise dispose of any asset.

21.4.2                   Paragraph (a) above does not
apply to any sale, lease, transfer or other disposal:

(a)                                     relating
to the disposal of Stock and made in the ordinary course of trading;

(b)                                     relating
to the application of cash in the acquisition of goods and services in the
ordinary course of trading and in a manner consistent with the Finance
Documents;

(c)                                      relating
to the disposal of obsolete assets where any proceeds of sale are paid into a
blocked account;

(d)                                     any
disposal of any asset where the higher of the market value or consideration
receivable (when aggregated with the higher of the market value or
consideration receivable for any other sale, lease, transfer or other disposal,
other than any permitted under paragraphs
(i) to (iii) above) does not exceed US$30,000 (or its equivalent in
another currency or currencies) in any financial year and the proceeds are paid
into a Blocked Account;

(e)                                      which
has been approved in writing by the Lender.

21.5                             Mergers
and Acquisitions

No Obligor shall enter into any amalgamation,
demerger, merger or corporate reconstruction or acquire any business,
undertaking or (except in the ordinary course of business) other assets of any
kind without the prior written consent of the Lender, such consent not to be
unreasonably withheld.

21.6                             Change
of business

The Company shall procure that no substantial change
is made to the general nature of the business of the Company any Obligor from
that carried on at the date of this Agreement.

21.7                             Intra-Group
Arrangements

No Obligor will,
without obtaining the Lender’s prior written consent (such consent not to be
unreasonably withheld):

21.7.1                   pay
any dividend or make any other distribution of any of its assets to its
shareholders or any of them; or

 28
 

21.7.2                   (subject
to (c) below) pay any other moneys, whether by way of interest, management
fees or otherwise howsoever, to any affiliate, subsidiary or any shareholder,
director or employee except for (i) payments in the ordinary course of,
and pursuant to the reasonable requirements of, trading and on arms length
commercial terms and (ii) payments which comply with the terms of clause 6.4;

21.7.3                   pay
any sales commissions to any of its Affiliates in excess of 10 per cent; or

21.7.4                   redeem
any of its ordinary or preference share capital.

21.8                             Financial
Indebtedness

No Obligor will
incur any Financial Indebtedness other than:

21.8.1                   under
the Finance Documents;

21.8.2                   normal
trade credit granted to it in the ordinary course of business;

21.8.3                   equipment,
vehicle and operating leases and hire purchase transactions entered into in the
ordinary course of business where the total annual Financial Indebtedness for
such leases and transactions for the Obligors as a whole does not exceed
US$500,000 at any one tune; or

21.8.4                   with
respect to loans made to it by another Obligor which is a Chargor under the
Debenture.

21.9                             Making
Loans

No Obligor will be
a creditor with respect to any Financial Indebtedness except for:

21.9.1                   the
grant of normal trade credit in the ordinary course of its trade;

21.9.2                   loans
made by it to another Obligor which is a Charger under the Debenture; and

21.9.3                   loans
made in compliance with the terms of clause
6.4.

21.10                      Bank
Accounts

No Obligor will, open or maintain any account of any
type with any bank or financial institution providing like services other than
the Charged Accounts.

21.11                      Insurance

21.11.1            Each
Obligor will:

(a)                                     as
regards all its assets and property of any kind (i) arrange and maintain
in full force and effect insurances (including consequential loss, business
interruption and public liability and damage and other insurances usually
maintained by companies carrying on the same type of business under similar
circumstances) in such amounts, on such terms and with such insurers as the
Lender may approve and (ii) arrange and maintain such further and other
insurances as the Lender may reasonably request;

(b)                                     procure
that the Lender’s interest is noted on all policies relating to insurances so
arranged in such manner as the Lender may in its absolute discretion require
and will use all reasonable endeavours to ensure that the Lender is named as
sole loss payee in respect of all assets and property of any kind of each
Obligor (but without having any obligation for premium);

(c)                                      ensure
that every policy of insurance contains a standard mortgagee clause, whereby
such insurance will not be invalidated, vitiated or avoided as against a
mortgagee (or such other terms as the Lender may agree);

 29

(d)                                     supply
to the Lender copies of all such policies of insurance and all endorsements and
renewals of such policies, together with receipts for premiums;

(e)                                      duly
and punctually pay all premiums in respect of its insurances and not do or omit
to do any act, matter or thing whereby any such insurance may be or becomes
void or voidable at the option of the insurers or settle any claim in respect
of those insurances without the prior written consent of the Lender, such
consent not to be unreasonably withheld or delayed;

(f)                                        comply
with, enforce and not waive, release, terminate or vary (or agree so to do) any
obligations arising under all policies of insurance and in particular, but
without limitation, it shall notify the Lender immediately upon receiving notice
from any insurer that the details of any insurance policy are to change in any
way and upon receiving notice from any insurer terminating any insurance
policies;

(g)                                      in
the event that it receives from any insurer notice that such insurer is
terminating any insurance policy, it shall use all reasonable endeavours to
enter into a corresponding policy with an insurer approved by the Lender and
procure that such steps are taken as may be necessary to ensure that such
policy complies in all respects with the terms of this Agreement;

(h)                                     as
soon as reasonably practicable give notice to the Lender of any occurrence
which gives rise, or might give rise, to a claim exceeding $20,000 under any
policy of insurance.

21.11.2            If
any Obligor at any time fails to perform any of its obligations contained in
this clause 21.12 the Lender may effect or renew such insurance as it thinks
fit and such Obligor shall reimburse the Lender for the costs thereby incurred
on demand.

21.12                      Financial
Year End

No Obligor will
alter its financial year end.

21.13                      Taxes

Each Obligor will
promptly pay all Taxes as and when they fall due (except where the Lender
agrees that any relevant amounts are subject to a bona fide dispute).

21.14                      Change
of Name

No Obligor will
change its name without giving the Lender 30 days’ prior written notice of the
proposed new name and will supply a copy of the relevant certificate of
incorporation on change of name to the Lender as soon as it becomes available.

22.                                    EVENTS OF DEFAULT

Each of the events or circumstances set out in clause 22 is an Event of Default.

22.1                             Non-payment

An Obligor does not pay on the due date any amount
payable pursuant to a Finance Document at the place at and in the currency in
which it is expressed to be payable unless (i) its failure to pay is
caused by administrative or technical error (not attributable to an Obligor)
and (ii) payment is made within two Business Days of its due date.

 30
 

22.2                             Other
obligations

22.2.1                   An
Obligor does not comply with the provisions of clauses 21.3 (Negative
Pledge), 21.4 (Disposals),
21.9 (Financial Indebtedness),
21.12 (Insurance) or any of the
financial undertakings set out in paragraph
(B) Schedule 3 (Reporting and Financial Undertakings).

22.2.2                   An
Obligor does not comply with any of the reporting undertaking set out in paragraph (A) of Schedule 3 (Reporting and Financial Undertakings) within two Business
Days of the date on which the Obligor ought to have so complied.

22.2.3                   An
Obligor does not comply with any other provision of the Finance Documents and,
where such non-compliance is capable of remedy, such Obligor fails to remedy
same with ten Business Days of becoming aware thereof.

22.3                             Misrepresentation

Any representation
or statement made or deemed to be made by an Obligor in the Finance Documents
or any other document delivered by or on behalf of any Obligor under or in
connection with any Finance Document is or proves to have been incorrect or
misleading in any material respect when made or deemed to be made.

22.4                             Cross
default

22.4.1                   Any
Financial Indebtedness of any Obligor exceeding US$50,000 (or its equivalent in
other currencies) in the aggregate is not paid when due.

22.4.2                   An
event of default (however described) occurs under any document relating to
Financial Indebtedness of any Obligor exceeding US$50,000 (or its equivalent in
other currencies).

22.4.3                   Any
Security Interest with respect to any Financial Indebtedness of any Obligor
becomes enforceable.

2.24.4                   An
amount in excess of US$2 million in aggregate owed to trade creditors of any
Obligor remains outstanding following the expiry of any customary trade credit
period.

22.5                             Insolvency

22.5.1                   An
Obligor is unable or admits inability to pay its debts as they fall due,
suspends making payments on any of its debts or, by reason of actual or anticipated
financial difficulties, commences negotiations with one or more of its
creditors with a view to rescheduling any of its indebtedness.

22.5.2                   The
value of the assets of any Obligor is less than its liabilities (taking into
account contingent and prospective liabilities).

22.5.3                   A
moratorium is declared in respect of any indebtedness of any Obligor.

22.6                             Insolvency
proceedings

Any corporate
action, legal proceedings or other procedure or step is taken in relation to:

22.6.1                   the
suspension of payments, a moratoriurn of any indebtedness, winding-up,
dissolution, administration or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) of any Obligor;

22.6.2                   a
composition, assignment or arrangement with any creditor of any Obligor;

22.6.3                   the
appointment of a liquidator, receiver, administrator, administrative receiver,
compulsory manager or other similar officer in respect of any Obligor or any of
its assets; or

 31
 

22.6.4                   enforcement
of any Security over any assets of any Obligor,

22.6.5                   or
any analogous procedure or step is taken in any jurisdiction.

22.7                             Cessation
of Business

Any Obligor ceases or threatens to cease, to carry on
all or a substantial part of its business without the Lender’s prior written
consent, such consent not to be unreasonably withheld.

22.8                             Creditors’
process

Any expropriation, attachment, sequestration, distress
or execution affects any asset of any Obligor and is not discharged within 14
days unless either (i) the Lender has given its written consent to that
effect or (ii) the Company has demonstrated to the satisfaction of the
Lender that such proceedings are being contested in good faith.

22.9                             Unlawfulness

It is or becomes unlawful for an Obligor to perform
any of its obligations under the Finance Documents.

22.10                      Change
of Control

Any single person or group of persons acting in
conceit (as defined in the City Code on Takeovers and Mergers) not having
control of the Company as at the date of this Agreement acquires or agrees to
acquire control (as defined in section 416 of the Income and Corporation Taxes
Act 1988) of the Company.

22.11                      Charged
Account Arrangements

Any bank repudiates or purports to terminate the
arrangements set out in the Debenture in relation to any Charged Account
(unless the Company has established alternative arrangements in all respects
satisfactory to the Lender) or a cash-sweep or payment required to be made
under any Finance Document from a Charged Account is not made in the amount and
manner required.

22.12                      Material
adverse change

An Event or series of events occurs which, in the
reasonable opinion of the Lender, could be expected to have a Material Adverse
Effect

22.13                      Acceleration

On and at any time after the occurrence of an Event of
Default which is continuing the Lender may, by notice to the Company:

22.13.1            cancel
the Facilities whereupon they shall immediately be cancelled;

22.13.2            declare
that all or part of the Loans, together with accrued interest, and all other
amounts accrued or outstanding under the Finance Documents be immediately due
and payable, whereupon they shall become immediately due and payable; and/or

22.13.3            declare
that all or part of the Loans be payable on demand, whereupon they shall
immediately become payable on demand by the Lenders.

22.13.4            declare
that the Company shall immediately pay or procure the payment of cash cover in
respect of the Outstanding Purchase Price and the L/Cs. The provisions of clause 10.10 (Cash collateral) shall apply to any cash cover to be
provided under this clause
22.13.4.

 32
 

22.14                      Leader’s
Rights following Default

Without prejudice to the other provisions of this clause 22 or any of its other rights under
any Finance Documents, the Lender may, at any time while a Default is
continuing (and without incurring any liability for the exercise or
non-exercise of any such power):

22.14.1            require
each Obligor immediately to deliver to it all original documents relating to
the Receivables and the contracts giving rise to them; and/or

22.14.2            give
notice (or require the relevant Obligors to give notice) to the account debtors
to the effect that the Receivables have been assigned to the Lender and
requiring that payment be made to such account as the Lender may specify;

22.14.3            extend
the time for payment of any Receivable or otherwise enter into any arrangements
for the settlement, compromise, release or discharge of any receivable; and/or

22.14.4            generally
take such action as it may deem fit for the protection of any rights, remedies
or security conferred upon it by any of the Finance Documents.

22.15                      Default
by Lender

On and at any time after the occurrence of any of the
events below which is continuing the Company may, by notice to the Lender
cancel the Facilities whereupon they shall immediately be cancelled and declare
that all sums accrued or outstanding from the Lender to the Company be
immediately due and payable:

22.15.1            the
Lender is unable or admits inability to pay its debts as they fall due,
suspends making payments on any of its debts or, by reason of actual or
anticipated financial difficulties, commences negotiations with one or more of
its creditors with a view to rescheduling any of its indebtedness;

22.15.2            the
value of the assets of the Lender is less than its liabilities (taking into
account contingent and prospective liabilities);

22.15.3            a
moratorium is declared in respect of any indebtedness of the Lender; or

22.15.4            any
corporate action, legal proceedings or other procedure or step is taken in
relation to:

(a)                                     the
suspension of payments, a moratorium of any indebtedness, winding-up,
dissolution administration or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) of the Lender;

(b)                                     a
composition, assignment or arrangement with any creditor of the Lender;

(c)                                      the
appointment of a liquidator, receiver, administrator, administrative receiver,
compulsory manager or other similar officer in respect of the Lender or any of
its assets; or

(d)                                     enforcement
of any security over any assets of the Lender.

23.                                    CHANGES TO THE LENDER

23.1                             Assignments
and transfers by the Lender

The Lender may at any time assign, transfer, delegate
or offer participations in all or a proportion of its rights and obligations
under the Finance Documents.

 33
 

24.                                    CHANGES TO THE OBLIGORS

24.1                             Assignments
and transfer by Obligors

No Obligor may assign any of its rights or transfer
any of its rights or obligations under the Finance Documents.

24.2                             Additional
Borrowers

The Company may request that any of its Subsidiaries
becomes an Additional Borrower. That Subsidiary shall become an Additional
Borrower if:

24.2.1                   the
Lender approves the addition of that Subsidiary;

24.2.2                   the
Company delivers to the Lender a duly completed and executed Accession Letter
and Deed of Accession;

24.2.3                   the
Company confirms that no Default is continuing or would occur as a result of
that Subsidiary becoming an Additional Borrower; and

24.2.4                   the
Lender has received with respect to the Additional Obligor, documentation
corresponding to that Listed in paragraph
(A) and (B) of Schedule
2 (Conditions precedent) in
relation to that Additional Borrower, each in form and substance satisfactory
to the Lender.

24.3                             Additional
Guarantors

The Company shall procure that each of its
Subsidiaries is a Guarantor. If any company becomes a Subsidiary after the date
of this Agreement, the Company shall procure that such Subsidiary becomes a
Guarantor by delivery to the Lender:

24.3.1                   a
duly completed and executed Accession Letter and Deed of Accession; and

24.3.2                   all
of the corresponding documents and other evidence listed in paragraphs (A) and (B) of Schedule 2 (Conditions precedent) in relation to that Guarantor, each in
form and substance satisfactory to the Lender.

The Company shall not be obliged to procure that
ViewSonic Limited becomes a Guarantor, unless and until it acquires any assets
or commences any business.

24.4                             Repetition
of Representations

Delivery of an Accession Letter constitutes
confirmation by the relevant Subsidiary that the Repeating Representations are
true and correct in relation to it as at the date of delivery as if made by
reference to the facts and circumstances then existing.

25.                                    NOTICES

25.1                             Communications

Any communication, consent or other approval to be
made or given under or in connection with the Finance Documents shall be made
in writing, may be made by fax or letter and shall be deemed to have been
received as follows:

25.1.1                   if
by way of fax, when received in legible form; or

25.1.2                   if
by way of letter, when it has been left at the relevant address or two Business
Days after being deposited in the post postage prepaid in an envelope addressed
to it at that address.

 34
 

25.2                             Address

Any
notice to be given to the Company or any Obligor shall be given to the Company
at the address or fax number set out on the execution pages. Each Obligor
irrevocably appoints the Company as its agent for the purpose of receiving any
such notice. Any notice to be given to the Lender shall be given to it at the
address or fax number set out on the execution pages. Either party may change
these details by notice to the other.

26.                                    MISCELLANEOUS PROVISIONS

26.1                             Certificates
and Determinations

Any
certification or determination by the Lender of a rate or amount under any
Finance Document is, in the absence of manifest error, conclusive evidence of
the matters to which it relates.

26.2                             Disclosure
of Information

The
Under may disclose to any person with whom it proposes to enter into (or has
entered into) any assignment, transfer, participation or other arrangement with
respect to this Agreement such information concerning the Obligors as it thinks
fit, and may advertise or publicise the transaction evidenced by this Agreement
to such extent and in such manner as it sees fit.

26.3                             Partial
Invalidity

If,
at any time, any provision of the Finance Documents is or becomes illegal, invalid
or unenforceable in any respect under any law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction will in any way be affected or impaired.

27.                                    REMEDIES AND WAIVERS

No
failure to exercise, nor any delay in exercising, on the part of the Lender,
any right or remedy under the Finance Documents shall operate as a waiver, nor
shall any single or partial exercise of any right or remedy prevent any further
or other exercise or the exercise of any other right or remedy. The rights and
remedies provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.

28.                                    COUNTERPARTS

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

29.                                    GOVERNING LAW

This
Agreement is governed by the law of England and Wales.

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

 35
 

SCHEDULE
1

The Original Obligors

Part I

The Original Borrowers

	
  Name of Original Borrower

  	
   

  	
  Registration number (or
  equivalent, if any)

  
	
  ViewSonic Europe Limited

  	
   

  	
  03131161

  

 

Part II

The Original Guarantors

	
  Name of Original Guarantor

  	
   

  	
  Registration number (or
  equivalent, if any)

  
	
  ViewSonic Sarl

  	
   

  	
  B404 220 139 (Commercial
  and Companies Registry of Versailles)

  
	
  ViewSonic Technology
  GmbH

  	
   

  	
  40 HRB 5493 (Commercial
  Court of Krefeld)

  

 36
 

SCHEDULE
2

Conditions Precedent

(A)                                   Original
Obligors

1.                                           A
certified copy of the constitutional documents of each Original Obligor.

2.                                           A
certified copy of a resolution of the board of directors of each Original
Obligor approving the execution of the Finance Documents and the taking of any
action required or permitted pursuant thereto.

3.                                           A
specimen of the signature of each person authorised to give notices on behalf
of each Obligor.

4.                                           A
certificate of each Obligor (signed by a director) confirming that the
execution and performance of this Agreement does not cause any borrowing,
guaranteeing or similar limit binding on any Original Obligor to be exceeded.

5.                                           Satisfactory
company and/or other searches.

6.                                           Such
legal opinions and other documents as the Lender may require to confirm the
validity and enforceability of the Finance Documents.

(B)                                  Security
And Other Documents

7.                                           The
Finance Documents, duly executed by the parties thereto together with such
further documents as the Lender may require in connection with the completion,
registration, perfection or enforceability thereof or of any security intended
to be created thereby.

8.                                           Certified
copies of (i) all notices of assignment and other notices required to be
given pursuant to the Debenture to Barclays Bank plc and (ii) all
acknowledgements required to be given with respect thereto, duly executed by
the recipient.

9.                                           A
report or other evidence as to the insurances maintained by each Obligor and their
conformity to the terms of the Finance Documents (including (i) confirmation
that the Lender is noted as mortgagee and loss payee in relation to the
property and assets of the Obligors and (ii) without limiting the
generality of this paragraph, confirmation that adequate insurance on stock at
bonded warehouses and at sea is in force).

10.                                    In
relation to Stock held in the Netherlands, a third party pledge holders
agreement.

11.                                    Evidence
that the Blocked Accounts have been opened, together with copies of the
completed mandates.

12.                                    Details
of the amounts standing to the credit of each Charged Account as at the date on
which such details are delivered.

13.                                    Evidence
that the assets and undertakings of each Obligor are free of any
Security Interest (other than a Permitted Security Interest).

14.                                    A
telephone and facsimile indemnity executed by each Borrower.

(C)                                  Availability Limit Information

15.                                    Such
information as the Lender may require in order to determine, as at the date of
this Agreement, (i) the amount of the Eligible Receivables, (ii) the
Net Stock Value and (iii) the Availability Limits pursuant to clause 6 (Restrictions
applicable to individual Facilities) and (ii) the Reserves).

 37
 

16.                                    Such
information as the Lender may require in order to identify or determine (i) those
Suppliers of Stock to the Obligors which supply on title retention terms, (ii) those
customers of the Obligors which acquire stock on sale or return terms, (iii) which
Stock is supplied by any Obligor otherwise than as principal (whether as a
consignee or otherwise) and (iv) the nature of the payment terms which
apply as between the Obligors and their customers.

17.                                    Evidence
that the total amount available for Utilisation (following the first
Utilisation) and net of any past due payables will be not less than $3,000,000.

(D)                                 Miscellaneous
Items

18.                                    Confirmation
that VAT and similar customs duties in the Netherlands either do not create the
requirement for a Reserve in accordance with the Lender’s normal lending
practices or, if a Reserve is required, that adequate provision has been made.

19.                                    Confirmation
that the Company is licensed by Viewsonic Corporation to use the brand name “Viewsonic”,
and that such licence is on terms acceptable to the Lender.

20.                                    Receipt
of Viewsonic Corporation’s financial statements for the period to 31 December 2003.

 38

SCHEDULE
3

Reporting and Financial Undertakings

(A)   REPORTING
REQUIREMENTS

1.   Immediate
Reporting Requirements

Each Obligor will furnish to the Lender full details
of each of the following matters as soon as such Obligor becomes aware thereof:

(a)         any
material delay in such Obligor’s performance of its obligations to an account
debtor, (ii) any assertion by any account debtor of any right of set-off,
defence, counterclaim or similar right with respect to any Receivable, (iii) any
information coming to its attention which may be materially adverse to the
financial condition of any account debtor and (iv) any information coming
to its attention which might lead the Lender to consider any Receivables as no
longer constituting Eligible Receivables;

(b)         any
return of Stock by an account debtor where that Stock has a value in excess of
US$50,000 and an equivalent replacement order has not been placed;

(c)          any
supplier who imposes retention of title clauses (other than any mentioned in a
list provided for the purposes of clause 19.12);

(d)         the
details of any litigation, arbitration or administrative proceedings which are
current, threatened or pending against any Obligor, and which might, if
adversely determined, have a Material Adverse Effect.

2.   Daily
Reporting Requirements

On each day on which the
amount available for Utilisation under this Agreement is less than US$3,000,000
each Obligor will furnish to the Lender on a daily basis:

(a)         the
sales book for the day, listing invoices delivered;

(b)         schedules
of Receivables, collections and credits; and

(c)          schedules
of Receivables which are (or are alleged by the account debtor to be) subject
to any restriction on assignment or charge.

3.   Weekly
Reporting Requirements

Each Obligor will furnish
to the Lender on a weekly basis:

(a)         the
sales book for the week, listing invoices delivered;

(b)         a
report on any Stock and Receivables which may for any reason no longer fall to
be treated as Eligible Stock or Eligible Receivables;

(c)          (so
long as any amounts are outstanding under this Agreement) a weekly Stock
Report; and

(d)         (so
long as any amounts are outstanding under this Agreement) a report on Eligible
Stock and Eligible Receivables enabling the Lender to calculate the Total
Availability.

4.   Monthly Reporting Requirements

Each Obligor will
furnish to the Lender (in a format
acceptable to the Lender):

(a)         on
a monthly basis, a stock report in the form from time to time required by the
Lender;

 39
 

(b)         within
15 days of the end of each month or at such other times and with respect to
such other periods as the Lender may require, full details (in such form as the
Lender may from time to time require) of:

(i)             a
summary of ageings of payables and a detailed ageing of Receivables with dated
invoices;

(ii)         the
sales book for the month, listing invoices delivered;

(iii)     details
of any new retention of title clauses imposed by suppliers;

(iv)       a
report showing Stock and sales days, Stock returned by distributors and Stock
discontinued;

(v)           a
list of all shipments of Goods on water, showing those where bills of lading
are held and those where they are awaited;

(vi)       a
reconciliation of roll forward of Stock and Receivables to aged listings and to
management accounts; and

(vii)   all
Stock by category and location;

(c)          as
soon as the same become available, but in any event within 30 days after the
end of each monthly management accounting period (and in each case in a format
acceptable to the Lender):

(i)             fall
individual and consolidated accounts for that period for itself and each
Obligor, including profit and loss, balance sheet and cashflow statements;

(ii)         details
of Stock figures and valuations for that month, a breakdown of the value and
identity of preferential creditors for that month and details of all input and
output VAT; and

(iii)     a
report on future capital expenditure requirements;

(d)         together
with the accounts referred to in (c) above, a certificate from a Director
of the Company confirming that the Company was in compliance with the Trading
Cashflow Covenant in paragraph (B) below as at the date to which such
accounts were made up; and

(e)          on
a monthly basis and on a best endeavours basis, a summary of inventory held by
Ingram on behalf of the Obligors.

5.   Annual
Reporting Requirements

The Company shall supply to the Lender:

(a)         as
soon as the same become available, but in any event within 120 days after the
end of each of its financial years:

(i)             its
audited financial statements (consolidated where appropriate) for that
financial year; and

(ii)         the
audited financial statements of each Obligor and of ViewSonic Corporation for
that financial year;

(b)         together
with the accounts referred to in (a) above, a certificate from its
auditors confirming that the Company was in compliance with the Trading
Cashflow Covenant in paragraph (B) below
as at the date to which such accounts were made up.

(c)          no
later than the fifteenth day of each of its financial years:

(i)             its
forecasts for that year including profit and loss, balance sheet and cashflow
projections;

(ii)         a
physical count of Stock with a report thereon; and

 40
 

(iii)     a
copy of all its current insurance policies.

6.   On Request Reporting Requirements

Each
Obligor will Famish to the Lender (in a format acceptable to the Lender) upon
the Lender’s request to that effect:

(a)         an
appraisal of its Stock addressed to the Lender and in a form and prepared by an
appraiser acceptable to the Lender;

(b)         such
further information regarding the financial condition, business and operations
of any Obligor as the Lender may reasonably request.

7.   Reporting Requirements on Issue

Each Obligor will furnish to the Lender all documents
dispatched by the Company to its shareholders (or any class of them) or its
creditors generally at the same time as they are dispatched.

8.   Provisions with respect to Stock,
Receivables and Assets

(a)         If,
at any time, any Stock is returned to an Obligor by an account debtor or is
reclaimed or repossessed, then:

(i)             the
related Receivable will cease to be an Eligible Receivable; and

(ii)         if
so requested by the Lender, the relevant
Obligor shall (i) hold the returned Stock on trust for the Lender, (ii) segregate
die returned Stock from its other property,

(iii)     dispose
of the returned Stock only in accordance with the Lender’s instructions and (iv) not
issue and credits, discounts or allowances with respect to the returned Stock
without the Lender’s prior written consent

(b)         Each
Obligor undertakes to maintain complete, accurate and up to date debtor records
(including transport documents evidencing that goods have been despatched and
payment is due), and to allow the Lender access to those records on request.

(c)          Each
Obligor acknowledges that the Lender may take such steps as it may deem
appropriate to verify any asset of such Obligor (whether by direct enquiry with
account debtors or otherwise howsoever), on the proviso that it first informs
the relevant Obligor of such.

9.   Provisions with respect To Stock

(a)         With
respect to its Stock, each Obligor will:

(i)             at
all times maintain perpetual stock records acceptable to the Lender, which
shall accurately itemise and describe (i) the kind, type, quality and
quantity of such Stock, (ii) the cost of such Stock and (iii) the
daily additions to/withdrawals from such Stock;

(ii)         conduct
a physical count of such Stock at least once a year and (if an Event of Default
is continuing) at such other times as the Lender may require, and deliver to
the Lender a report acceptable to it with respect to such count;

(iii)     (except
for sales of Stock in the ordinary course of business and movements of Stock
for demonstration, inspection or testing or any other purpose previously
approved by the Lender in writing) not remove any Stock from property
controlled by it or from a public warehouse;

(iv)       produce,
use, store and maintain its Stock with reasonable care and in accordance with
all regulatory and material insurance requirements;

 41
 

(v)           not,
without the Lender’s prior written consent, sell any Stock exceeding US$10,000
on sale or return or similar terms except for (i) sales to Ingram and (ii) the
sale of Stock to distributors on a rotation basis in accordance with
arrangements previously disclosed to the Lender;

(vi)       keep
the Stock in good and marketable condition and not (without the prior written
consent of the Lender) accept any consignment stock.

10.   Provisions with respect to Financial
Statements and Audit

(a)         Each
set of financial statements delivered by the Company pursuant the provisions of
this schedule shall be certified by a director of the relevant company as
fairly representing its financial condition as at the date as at which those
financial statements were drawn up. The Company shall procure that all audited
financial statements so delivered are (i) prepared by auditors previously
approved by the Lender and (ii) prepared in accordance with GAAP and using
accounting principles and policies which are consistently applied.

(b)         Each Obligor will permit the Lender or its
appointed representatives or agents at the relevant Obligor’s expense to
conduct an audit of its financial records, systems and forecasts on a quarterly
basis or, following a Default at more frequent intervals as the Lender may
stipulate and will afford all co-operation to the Lender and its
representatives or agents to enable such audit to take place. The costs and
expenses of audits conducted by the Lender or its appointed representative
shall be restricted in accordance with
the provisions of clause 17.3.

11.   Definitions

“Eligible Receivables”   means, at any
time, any Receivables at such time which are evidenced by an invoice rendered
by a Borrower to account debtors save for any Receivable which (in the opinion
of the Lender):

(a)         does
not arise from the actual and bona fide sale and delivery of goods or rendering
of services in the ordinary come of the business of the relevant Borrower;

(b)         remains
fully or partly unpaid after its Maturity Date or such longer period as may be
agreed by the Lender;

(c)          is
owing by a single account debtor if Receivables representing 50 per cent or
more of the aggregate balance owing by such account debtor to the Borrowers are
not Eligible Receivables by reason of the operation of paragraph (b) above;

(d)         with
respect to which the account debtor is a director, officer, employee or
Affiliate of any Obligor;

(e)          with
respect to which the account debtor has or has asserted a counterclaim or has a
right of set off, to the extent of such counterclaim or set off;

(f)            as
to which (i) performance has not been completed by the relevant Borrower, (ii) no
invoice has been rendered or (iii) the relevant Borrower is not entitled
to assign;

(g)          with
respect to which the account debtor is the subject of any winding up,
administration or similar procedure indicative of insolvency;

(h)         with
respect to which the account debtor’s obligation to pay the Receivable is in
any respect conditional or subject to any right of return, rejection or similar
right;

 42
 

(i)            owed
by an account debtor whose total indebtedness to the Obligors exceeds any
credit limit set by the Lender from time to time, to the extent of such excess;

(j)            where
there are proceedings or actions which are threatened or pending against the
relevant account debtors which may result in any material adverse change in any
such account debtor’s financial condition;

(k)         where
there are facts, events or occurrences which would impair the validity,
enforceability, collectability or full recoverability of that Receivable.

Notwithstanding the foregoing provisions, Receivables
may be treated as Eligible Receivables for these purposes if:

(a)         they
are owing by debtors established in an Eligible Country and are approved by the
Lender on a case by case basis (in which event the provisions of paragraph (a) of the definition of “Purchase
Price” shall apply to them);

(b)         they
are owing by debtors established in an Ineligible Country and are approved by
the Lender on a case by case basis (in which event the provisions of paragraph (b) of the definition of “Purchase
Price” shall apply to them).

“Eligible Stock”   means all Stock
save for any Stock which, at any time and in the opinion of the Lender:

(a)         is
obsolete, slow-moving, (i.e. with over 360 Sales Days) not in good
condition or not currently usable or saleable;

(b)         is
held at third party premises without acceptable access arrangements for the
Lender;

(c)          constitutes
materials over which the Lender does not have a valid first ranking fixed or
floating charge under the Security Documents;

(d)         constitutes
consumables used in a Borrower’s business or constitutes packaging or shipping
materials;

(e)          constitutes
returned, damaged or defective materials;

(f)            is
held by a Borrower as consignee for a third party;

(g)          is
not the property of the relevant Borrower by virtue of retention of title or
Romalpa provisions in favour of any person;

(h)         is
spare parts or scrap;

(i)            is
in transit outside property which is owned and controlled by any Obligor or its
agents or representatives except in cases where they are (i) in transit on
water between a supplier and such properties and the aggregate value of such
Stock does not at any time exceed the sum of US$13,636,363 or (ii) in
transit to a an Obligor and the Lender has direct access to all originals of
the bills of lading or other documents of title with respect to such Stock and
has received all such other documents as the Lender requires to perfect its
security and to obtain possession from any third party; or

(j)            is
unsuitable for forming the basis of a lending decision as a result of any
legal, regulatory or similar consideration.

(B)   FINANCIAL
UNDERTAKINGS

Trading Cashflow Covenant

The
Company shall procure that the Trading Cashflow is greater than zero in respect
of each Review Period.

 43
 

SCHEDULE
4

Forms of Request

Part I—Form of
Purchase Request

[On letterhead of relevant Borrower)

	
  Date: 

  	
   

  	
   

  
	
  To: 

  	
  Burdale Financial
  Limited

  
	
   

  	
  53 Queen Anne
  Street

  
	
   

  	
  LONDON W1G9HP

  
	
  Attention: 

  	
  Company Secretary

  

 

Dear Sirs,

Facility Agreement
dated _______(the “Facility Agreement”)

We refer to the Facility Agreement, terms defined in
which have the same meaning when used in this Purchase Request.

1.                We wish to sell to
Burdale on or before ______ or such later date as we may agree with the Lender
(the “Purchase Date”) the
Receivables numbered assignment_______ amounting to £______ details of which
are set out in the attached Schedule, initialled on each page for the
purposes of identification.

2.                We hold the
invoice strictly to your order and agree to supply it, or a copy (certified by
an ______ officer of the relevant Facility Company or otherwise as the
Lender may from time to time approve) together with certified copies of
relevant shipping documents in respect of such Receivables, and a copy of our
irrevocable instructions to the account debtor to pay the full invoice amount
of the relevant Receivable (without deduction, withholding or set off) at
maturity to a Blocked Account, forthwith upon your request.

3.                We further confirm
that the relevant Receivables offered are readily identifiable from our books.

We confirm that no Default has occurred and is
continuing or would result from the Lender purchasing the Receivables offered,
no availability limit will be breached as a result of the Lender purchasing the
Receivables offered and all the representations and warranties in clause 19 of the Facility Agreement
which are to be made or repeated as at the date of this Purchase Request are
true and correct.

Yours
faithfully

for and on behalf of

VIEWSONIC EUROPE LIMITED

 44
 

SCHEDULE

	
  Invoice No

  	
   

  	
   

  	
   

  	
   

  	
  Account Debtor

  	
   

  	
   

  	
   

  	
  Invoice Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 45
 

PART II—Form of
Cash Request

[On
letterhead of relevant Borrower]

	
  Date: 

  	
   

  	
   

  
	
  To: 

  	
  Burdale Financial
  Limited

  
	
   

  	
  53 Queen Anne
  Street

  
	
   

  	
  LONDON W1G9HP

  
	
  Attention: 

  	
  Company Secretary

  

 

Dear Sirs,

Facility Agreement
dated _______(the “Facility Agreement”)

We refer to the Facility Agreement. Terms defined in
the Facility Agreement have the same meaning when used in this Cash Request.

Pursuant to the terms of the Facility Agreement, we
wish you to pay to us the sum of £________ ([WRITE AMOUNT IN WORDS ALSO]) as
follows:

(a)          Utilisation Date:               ___________

(b)         Payment Instructions:      Please credit the following account:

	
  

  	
  Account Name: ___________________

  
	
   

  	
  Bank: ___________________Bank
  plc

  
	
   

  	
  Branch: ___________________
  Branch

  
	
   

  	
  Account No: ___________________

  
	
   

  	
  Sort Code: __________ - __________
  - ______________

  

 

We confirm that no Default has occurred and remains
outstanding or would result from the requested Utilisation being made, no
Availability Limit would be breached by the making of the requested Utilisation
and that all the representations and warranties in clause 19 of the Facility Agreement (Representations)
which are to be made or repeated as at the date of this Cash Request
are true and correct.

Yours
faithfully

for and on behalf
of

[Borrower]

 46
 

PART III—Form of
L/C Request

[On
letterhead of relevant Borrower]

	
  Date: 

  	
   

  	
   

  
	
  To: 

  	
  Burdale Financial
  Limited

  
	
   

  	
  53 Queen Anne
  Street

  
	
   

  	
  LONDON W1G9HP

  
	
  Attention: 

  	
  Company Secretary

  

 

Dear Sirs,

Facility Agreement
dated _______(the “Facility Agreement”)

We refer to the Facility Agreement. Terms defined in
the Facility Agreement have the same meaning when used in this L/C Request.

We wish to have [state type of L/C] opened for our
account under the Facility Agreement as follows:

	
  (a)

  	
   

  	
  Issue Date:

  	
   

  	
  ________________

  
	
  (b)

  	
   

  	
  Expiry Date:

  	
   

  	
  ________________

  
	
  (c)

  	
   

  	
  Requested Amount:

  	
   

  	
  ________________

  
	
  (d)

  	
   

  	
  Beneficiary:

  	
   

  	
  ________________

  
	
  (e)

  	
   

  	
  Beneficiary’s bank
  account:

  	
   

  	
  ________________

  
	
  (f)

  	
   

  	
  Concerning:

  	
   

  	
  [Reference the
  agreement under which the liability arises, describe its nature and quantify
  it]

  

 

We confirm that no Default has occurred and is
continuing or would result from the requested Utilisation, no Availability
Limit will be breached as a result of the requested Utilisation and all the
representations and warranties in clause 19
(Representations) of the Facility
Agreement which are to be made or repeated as at the date of this L/C Request
are true and correct.

Yours faithfully

for and on behalf
of

[Borrower]

 47
 

SCHEDULE
5

Form of Accession Letter

	
  To:

  	
  Burdale Financial Limited as Lender

  
	
  From:

  	
  [Subsidiary]
  and ViewSonic Europe Limited

  
	
  Dated:

  	
   

  

 

Dear Sirs

ViewSonic Europe
Limited - $20,000,000 Facility Agreement dated [__________] (the “Agreement”)

1.                 We refer to the
Agreement. This is an Accession Letter. Terms defined in the Agreement have the
same meaning in this Accession Letter unless given a different meaning in this
Accession Letter.

2.                 [Subsidiary] agrees to become an Additional
[Borrower]/[Guarantor] and to be bound by the terms of the Agreement as an
Additional [Borrower]/[Guarantor] pursuant to clause [24.2 (Additional Borrowers)]/[clause 24.3 (Guarantors)] of the Agreement. [Subsidiary] is a company duly incorporated
under the laws of [name of relevant jurisdiction].

3.                 [Subsidiary’s] administrative details are
as follows:

Address:

Fax No:

Attention:

4.                 The following
bank accounts shall be Blocked Accounts of the Additional Obligor for the
purposes of the Agreement. [Details to be
inserted]

5.                 This Accession
Letter is governed by the law of England and Wales.

[This Guarantor Accession Letter is entered into by
deed.]

ViewSonic Europe Limited     [Subsidiary]

 48
 

EXECUTION
PAGES

THE COMPANY

	
  Signed for and on behalf of

  	
   

  	
  )

  	
   

  
	
  VIEWSONIC EUROPE LIMITED

  	
   

  	
  )

  	
  /s/ Christopher Franey

  
	
  Address:

  	
  ViewSonic House,

  	
   

  	
  )

  	
   

  
	
   

  	
  Fleming Way,

  	
   

  	
  )

  	
   

  
	
   

  	
  Crawley,

  	
   

  	
  )

  	
   

  
	
   

  	
  RH10 2GA

  	
   

  	
  )

  	
   

  
	
  Fax No.:

  	
  01293 643915

  	
   

  	
  )

  	
   

  
	
  Attention:

  	
  European Legal Counsel

  	
   

  	
  )

  	
  President

  

 

THE ORIGINAL GUARANTORS

	
  Signed for and on behalf of

  	
   

  	
  )

  	
   

  
	
  VIEWSONIC SARL

  	
   

  	
  )

  	
  /s/ Christopher Franey

  
	
  Address:

  	
  ViewSonic House,

  	
   

  	
  )

  	
   

  
	
   

  	
  Fleming Way,

  	
   

  	
  )

  	
   

  
	
   

  	
  Crawley,

  	
   

  	
  )

  	
   

  
	
   

  	
  RH10 2GA

  	
   

  	
  )

  	
   

  
	
  Fax No.:

  	
  01293 643915

  	
   

  	
  )

  	
   

  
	
  Attention:

  	
  European Legal Counsel

  	
   

  	
  )

  	
  Director

  

 

	
  Signed for and on behalf of

  	
   

  	
  )

  	
   

  
	
  VIEWSONIC TECHNOLOGY GMBH

  	
   

  	
  )

  	
  /s/ Christopher Franey

  
	
  Address:

  	
  ViewSonic House,

  	
   

  	
  )

  	
   

  
	
   

  	
  Fleming Way,

  	
   

  	
  )

  	
   

  
	
   

  	
  Crawley,

  	
   

  	
  )

  	
   

  
	
   

  	
  RH10 2GA

  	
   

  	
  )

  	
   

  
	
  Fax No.:

  	
  01293 643915

  	
   

  	
  )

  	
   

  
	
  Attention:

  	
  European Legal Counsel

  	
   

  	
  )

  	
  Director

  

 

THE LENDER

	
  Signed
  for and on behalf of

  	
   

  	
  )

  	
   

  
	
  BURDALE FINANCIAL LIMITED

  	
   

  	
  )

  	
  /s/ Nigel B. Hogg

  
	
  Address:

  	
  53 Queen Anne Street, London, WIG 9HP,

  	
   

  	
  )

  	
   

  
	
  Fax No.:

  	
  020 7935 5445

  	
   

  	
  )

  	
  Director

  
	
  Attention:

  	
  Company Secretary

  	
   

  	
  )

  	
   

  

 

[*] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 49

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