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                                                                   EXHIBIT 10.76

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                                 LOAN AGREEMENT

                                 BY AND BETWEEN

                            FUTURELINK EUROPE LIMITED

                             AS SUBSIDIARY BORROWER,

                                       AND

                          FOOTHILL CAPITAL CORPORATION

                                    AS LENDER

                          DATED AS OF DECEMBER 13, 2000

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                                      TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>     <C>                                                                       <C>
1.      DEFINITIONS AND CONSTRUCTION............................................   1
        1.1    Definitions......................................................   1
        1.2    Accounting Terms.................................................  22
        1.3    Code.............................................................  22
        1.4    Construction.....................................................  22
        1.5    Schedules and Exhibits...........................................  23

2.      LOAN AND TERMS OF PAYMENT...............................................  23
        2.1    Revolver Advances................................................  23
        2.2    [intentionally omitted]..........................................  24
        2.3    Borrowing Procedures and Settlements.............................  24
        2.4    Payments.........................................................  25
        2.5    Overadvances.....................................................  26
        2.6    Interest Rates and Letter of Credit Fee:  Rates, Payments, and
               Calculations.....................................................  26
        2.7    Cash Management..................................................  28
        2.8    Crediting Payments; Float Charge.................................  29
        2.9    Designated Account...............................................  29
        2.10   Maintenance of Loan Account; Statements of Obligations...........  30
        2.11   Fees.............................................................  30
        2.12   Letters of Credit................................................  30
        2.13   [intentionally omitted]..........................................  33
        2.14   Capital Requirements.............................................  33

3.      CONDITIONS; TERM OF AGREEMENT...........................................  34
        3.1    Conditions Precedent to the Initial Extension of Credit..........  34
        3.2    Conditions Subsequent to the Initial Extension of Credit.........  36
        3.3    Conditions Precedent to all Extensions of Credit.................  37
        3.4    Term.............................................................  37
        3.5    Effect of Termination............................................  37
        3.6    Early Termination by Subsidiary Borrower.........................  38

4.      CREATION OF SECURITY INTEREST...........................................  38
        4.1    Grant of Security Interest.......................................  38
        4.2    Negotiable Collateral................ERROR! BOOKMARK NOT DEFINED.
        4.3    Collection of Accounts, General Intangibles, and Negotiable
               Collateral.......................... ERROR! BOOKMARK NOT DEFINED.
        4.4    Delivery of Additional Documentation Required....................  38
        4.5    Power of Attorney................................................  39
        4.6    Right to Inspect.................................................  39
        4.7    Control Agreements...............................................  39

5.      REPRESENTATIONS AND WARRANTIES..........................................  40
</TABLE>

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<TABLE>
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<S>     <C>                                                                       <C>
        5.1    No Encumbrances..................................................  40
        5.2    Eligible Accounts................................................  40
        5.3    [intentionally omitted]..........................................  41
        5.4    Equipment........................................................  41
        5.5    Location of Inventory and Equipment..............................  41
        5.6    Inventory Records................................................  41
        5.7    Location of Chief Executive Office; FEIN.........................  41
        5.8    Due Organization and Qualification; Subsidiaries.................  41
        5.9    Due Authorization; No Conflict...................................  42
        5.10   Litigation.......................................................  43
        5.11   No Material Adverse Change.......................................  43
        5.12   Fraudulent Transfer..............................................  44
        5.13   Employee Benefits................................................  44
        5.14   Environmental Condition..........................................  44
        5.15   Brokerage Fees...................................................  44
        5.16   Intellectual Property............................................  44
        5.17   Leases...........................................................  44
        5.18   DDAs.............................................................  45
        5.19   Complete Disclosure..............................................  45
        5.20   Indebtedness.....................................................  45
        5.21   Review and Approval of Parent Loan Agreement.....................  45

6.      AFFIRMATIVE COVENANTS...................................................  45
        6.1    Accounting System................................................  45
        6.2    Collateral Reporting.............................................  45
        6.3    Financial Statements, Reports, Certificates......................  47
        6.4    [Intentionally Omitted]..........................................  49
        6.5    Return...........................................................  49
        6.6    Maintenance of Properties........................................  50
        6.7    Taxes............................................................  50
        6.8    Insurance........................................................  50
        6.9    Location of Inventory and Equipment..............................  51
        6.10   Compliance with Laws.............................................  51
        6.11   Leases...........................................................  51
        6.12   Brokerage Commissions............................................  51
        6.13   Existence........................................................  52
        6.14   Environmental....................................................  52
        6.15   Disclosure Updates...............................................  52
        6.16   Compliance with Covenants of Parent Loan Agreement...............  52

7.      NEGATIVE COVENANTS......................................................  52
        7.1    Indebtedness.....................................................  52
        7.2    Liens............................................................  53
        7.3    Restrictions on Fundamental Changes..............................  53
        7.4    Disposal of Assets...............................................  53
</TABLE>

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<TABLE>
<CAPTION>
<S>     <C>                                                                       <C>
        7.5    Change Name......................................................  54
        7.6    Guarantee........................................................  54
        7.7    Nature of Business...............................................  54
        7.8    Prepayments and Amendments.......................................  54
        7.9    Change of Control................................................  54
        7.10   Consignments.....................................................  54
        7.11   Distributions....................................................  54
        7.12   Accounting Methods...............................................  54
        7.13   Investments......................................................  55
        7.14   Transactions with Affiliates.....................................  55
        7.15   Suspension.......................................................  55
        7.16   [Intentionally Omitted]..........................................  55
        7.17   Use of Proceeds..................................................  55
        7.18   Change in Location of Chief Executive Office; Inventory and
               Equipment with Bailees...........................................  55
        7.19   Securities Accounts..............................................  56
        7.20   Compliance with Covenants of Parent Loan Agreement...............  56

8.      EVENTS OF DEFAULT.......................................................  56

9.      THE LENDER'S RIGHTS AND REMEDIES........................................  58
        9.1    Rights and Remedies..............................................  58
        9.2    Remedies Cumulative..............................................  59

10.     TAXES AND EXPENSES......................................................  59

11.     WAIVERS; INDEMNIFICATION................................................  60
        11.1   Demand; Protest..................................................  60
        11.2   Lender's Liability for Collateral................................  60
        11.3   Indemnification..................................................  60

12.     NOTICES.................................................................  61

13.     CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER..............................  62

14.     ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS..............................  63
        14.1   Assignments and Participations...................................  63
        14.2   Successors.......................................................  65

15.     AMENDMENTS; WAIVERS.....................................................  65
        15.1   Amendments and Waivers...........................................  65
        15.2   No Waivers; Cumulative Remedies..................................  65

16.     GENERAL PROVISIONS......................................................  65
        16.1   Effectiveness....................................................  65
        16.2   Section Headings.................................................  65
</TABLE>

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<TABLE>
<CAPTION>
<S>     <C>                                                                       <C>
        16.3   Interpretation...................................................  66
        16.4   Severability of Provisions.......................................  66
        16.5   Withholding Taxes................................................  66
        16.6   Amendments in Writing............................................  67
        16.7   Counterparts; Telefacsimile Execution............................  67
        16.8   Revival and Reinstatement of Obligations.........................  67
        16.9   Integration......................................................  67
</TABLE>

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                             EXHIBITS AND SCHEDULES

Exhibit S-1              Form of Subsidiary Borrower Borrowing Base Certificate

Schedule P-1             Permitted Liens
Schedule 2.7(a)          Cash Management Banks
Schedule 5.5             Locations of Inventory and Equipment
Schedule 5.7             Chief Executive Office; FEIN
Schedule 5.8(b)          Capitalization of Subsidiary Borrower
Schedule 5.8(c)          Capitalization of Subsidiary Borrower's Subsidiaries
Schedule 5.14            Environmental Matters
Schedule 5.16            Intellectual Property
Schedule 5.18            Demand Deposit Accounts
Schedule 5.20            Permitted Indebtedness

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                                 LOAN AGREEMENT

            THIS LOAN AGREEMENT (this "Agreement"), is entered into as of
December 13, 2000, by and between FOOTHILL CAPITAL CORPORATION, a California
corporation ("Lender") and FUTURELINK EUROPE LIMITED, a company organized under
the laws of England and Wales ("Subsidiary Borrower") and is the "UK Loan
Agreement" as that term is used in the below referenced Parent Loan Agreement.

        The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

        1.1 Definitions. As used in this Agreement, the following terms shall
have the following definitions:

            "Account Debtor" means any Person who is or who may become obligated
under, with respect to, or on account of, an Account, chattel paper, or a
General Intangible.

            "Accounts" means all of Subsidiary Borrower's now owned or hereafter
acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.

            "Acquisition" means any purchase or other acquisition by Parent or
its Subsidiaries of the Stock of any other Person or all or substantially all of
the assets of any other Person.

            "Additional Documents" has the meaning set forth in Section 4.4.

            "Affiliate" means, as applied to any Person, any other Person who,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, in any event: (a) any Person which owns
directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person; and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person.

            "Agreement" has the meaning set forth in the preamble hereto.

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            "ASP Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 365 days, that is the result
of dividing (a) the Dollar amount of bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts arising from the Subsidiary Borrower's provision of services as an
application services provider during such period, by (b) the Dollar amount of
Subsidiary Borrower's Collections with respect to Accounts arising from the
Subsidiary Borrower's provision of services as an application services provider
during such period (excluding extraordinary items) plus the Dollar amount of
clause (a).

            "ASP Dilution Reserve" means, as of any date of determination, an
amount sufficient to reduce the advance rate against Eligible ASP Accounts by
one percentage point for each percentage point by which ASP Dilution is in
excess of 5.0%.

            "Assignee" has the meaning set forth in Section 14.1(a).

            "Authorized Person" means any officer or other employee of
Subsidiary Borrower.

            "Availability" means, as of any date of determination, if such date
is a Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount that Subsidiary Borrower is entitled to borrow as Subsidiary Borrower
Advances under Section 2.1 (after giving effect to all then outstanding
Obligations and all sublimits and reserves applicable hereunder).

            "Bankruptcy Code" means the United States Bankruptcy Code, as in
effect from time to time, or any foreign equivalent thereof, including the
English Insolvency Act of 1986 as in effect from time to time in the United
Kingdom.

            "Base Rate" means, the rate of interest announced within Wells Fargo
at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Wells Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Wells Fargo may designate.

            "Base Rate Margin" means, as of any date of determination, the
following margin, to be effective as of the first day of the calendar month
immediately following the date of determination, with such determination to be
made based on the most recent report submitted to Lender pursuant to Section
6.2(g):

            (a) if the average of the Qualified Cash Amount for each of the days
in a month is greater than $10,000,000 and the Qualified Cash Amount is greater
than $10,000,000 on the last Business Day of such month, zero, and

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            (b) if the average Qualified Cash Amount for each of the days in a
month is equal to or less than $10,000,000 or the Qualified Cash Amount is equal
to or less than $10,000,000 on the last Business Day of such month, 1.50
percentage points;

            provided, however, the failure of the Borrowers to deliver the
report of the Qualified Cash Amount by the date required hereunder (after giving
effect to any applicable grace period) automatically shall cause the Base Rate
Margin to be the highest rate set forth above, effective as of the first day of
the calendar month immediately following the date on which the delivery of the
report was otherwise required; and provided further, however, that for the
period from the Closing Date through the last day of the calendar month during
which the Closing Date occurs the Base Rate Margin shall be zero.

            "Benefit Plan" means a "defined benefit plan" (as defined in Section
3(35) of ERISA) for which Subsidiary Borrower or an ERISA Affiliate of
Subsidiary Borrower has been an "employer" (as defined in Section 3(5) of ERISA)
within the past six years, or the retirement, pension or health benefit plans
(or schemes) maintained or contributed to or required to be contributed to by
Subsidiary Borrower and established in the United Kingdom, including, without
limitation, the Kerridge Computer Company Pension Scheme and the FutureLink
Europe Limited Personal Pension Scheme.

            "Board of Directors" means the board of directors of Subsidiary
Borrower or any committee thereof duly authorized to act on behalf thereof.

            "Books" means all of Subsidiary Borrower's now owned or hereafter
acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).

            "Borrowers" means Parent and each of its Subsidiaries signatory to
the Parent Loan Agreement, and "Borrower" means any one of them.

            "Borrowing" means a borrowing hereunder of a Subsidiary Borrower
Advance.

            "Business Day" means any day that is not a Saturday, Sunday, or
other day on which national banks are authorized or required to close.

            "Canadian Obligors" means 3045207 Nova Scotia Company, a company
organized under the laws of Nova Scotia, 1423280 Ontario Inc., a company
organized under the laws of Ontario, and FutureLink Canada Corp., a company
organized under the laws of Ontario.

            "Canadian Security Documents" is defined in the Parent Loan
Agreement.

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            "Capital Lease" means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.

            "Capitalized Lease Obligation" means any Indebtedness represented by
obligations under a Capital Lease.

            "Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Moody's,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Moody's, and (d) certificates of deposit or bankers'
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
Moody's, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.

            "Cash Management Bank" has the meaning set forth in Section 2.7(a).

            "Cash Management Account" has the meaning set forth in Section
2.7(a).

            "Cash Management Agreements" means those certain cash management
service agreements, in form and substance satisfactory to Lender, each of which
is among Subsidiary Borrower, Lender, and one of the Cash Management Banks.

            "CFC" means a controlled foreign corporation (as that term is
defined in the IRC) organized in connection with the consummation of a Permitted
Acquisition.

            "Change of Control" means (a) Parent ceases to directly own and
control 51% of the outstanding capital Stock of UK Holding Company, (b) a
majority of the members of the Board of Directors do not constitute Continuing
Directors, (c) UK Holding Company ceases to directly own and control 100% of the
outstanding capital Stock of Subsidiary Borrower, or (d) the occurrence of a
Change of Control (as defined in the Parent Loan Agreement).

            "Closing Date" means the date of the making of the initial
Subsidiary Borrower Advance (or other extension of credit) hereunder or the date
on which Lender sends Subsidiary Borrower a written notice that each of the
conditions precedent set forth in Section 3.1 either have been satisfied or have
been waived.

            "Code" means the California Uniform Commercial Code, as in effect
from time to time.

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            "Collateral" means all of Subsidiary Borrower's now owned or
hereafter acquired right, title, and interest in and to each of the following:

                (a) Accounts,

                (b) Books,

                (c) Equipment,

                (d) General Intangibles,

                (e) Inventory,

                (f) Investment Property,

                (g) Negotiable Collateral,

                (h) Real Property,

                (i) money or other assets of Subsidiary Borrower that now or
hereafter come into the possession, custody, or control of Lender, and

                (j) the proceeds and products, whether tangible or intangible,
of any of the foregoing, including proceeds of insurance covering any or all of
the foregoing, and any and all Accounts, Books, Equipment, General Intangibles,
Inventory, Investment Property, Negotiable Collateral, Real Property, money,
deposit accounts, or other tangible or intangible property resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.

            "Collateral Access Agreement" means a landlord waiver, bailee
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory, in each case, in form and
substance satisfactory to Lender.

            "Collections" means all cash, checks, notes, instruments, and other
items of payment (including insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) of Subsidiary Borrower.

            "Companies Act" means the Companies Act of 1985 of England and
Wales, as amended.

            "Continuing Director" means (a) any member of the Board of Directors
who was a director (or comparable manager) of Subsidiary Borrower on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual

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or threatened election contest relating to the election of the directors (or
comparable managers) of Subsidiary Borrower (as such terms are used in Rule
14a-11 under the Exchange Act) and whose initial assumption of office resulted
from such contest or the settlement thereof.

            "Control Agreement" means a control agreement, in form and substance
satisfactory to Lender, executed and delivered by Subsidiary Borrower, Lender,
and the applicable securities intermediary with respect to a Securities Account
or a bank with respect to a deposit account.

            "copyright" shall have the meaning ascribed to such term in the
United States Copyright Act of 1976, as amended, and includes unregistered
copyrights.

            "Customer Deposit Reserve" means, as of any date of determination, a
reserve for deposits received by Subsidiary Borrower from its customers from
time to time for services to be rendered or goods to be delivered in an amount
as shall be determined by Lender in its Permitted Discretion from time to time
on or after the Closing Date.

            "Daily Balance" means, with respect to each day during the term of
this Agreement, the amount of an Obligation owed at the end of such day.

            "DDA" means any checking or other demand deposit account maintained
by Subsidiary Borrower.

            "Default" means an event, condition, or default that, with the
giving of notice, the passage of time, or both, would be an Event of Default.

            "Designated Account" means account number 0635259 sort code 60-00-04
of Subsidiary Borrower maintained with the Designated Account Bank, or such
other Dollar deposit account of Subsidiary Borrower that has been designated as
such, in writing, by Subsidiary Borrower to Lender.

            "Designated Account Bank" means National Westminster Bank, Plc of
West Berkshire CBC, P.O. Box 5651, Market Place, Newbury, RG14 5GP.

            "Dilution" means, as of any date of determination, a percentage,
based upon the experience of the immediately prior 365 days, that is the result
of dividing (a) the Dollar amount of bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts (other than such Accounts arising from Subsidiary Borrower's provision
of services as an application services provider) during such period, by (b) the
Dollar amount of Subsidiary Borrower's Collections with respect to Accounts
(other than such Accounts arising from Subsidiary Borrower's provision of
services as an application services provider) during such period (excluding
extraordinary items) plus the Dollar amount of clause (a).

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            "Dilution Reserve" means, as of any date of determination, an amount
sufficient to reduce the advance rate against Eligible UK Accounts by one
percentage point for each percentage point by which Dilution is in excess of
5.0%.

            "Disbursement Letter" means an instructional letter executed and
delivered by Subsidiary Borrower to Lender regarding the extensions of credit to
be made on the Closing Date, the form and substance of which is satisfactory to
Lender.

            "Dollars" or "$" means United States dollars.

            "Domestic Excess Availability" means "Excess Availability" (as
defined in the Parent Loan Agreement.

            "Domestic Maximum Revolver Amount" means the "Maximum Revolver
Amount" (as defined in the Parent Loan Agreement).

            "Domestic Revolver Usage" means, as of any date of determination,
the "Revolver Usage" (as defined in the Parent Loan Agreement).

            "Eligible Accounts" means Eligible ASP Accounts and Eligible UK
Accounts.

            "Eligible ASP Accounts" means any Account created by Subsidiary
Borrower as to which each of the following is applicable (a) such Account does
not qualify as an Eligible UK Account solely because the services giving rise to
such Account have not been performed by Subsidiary Borrower as of the original
invoice date, (b) Lender has a perfected first priority security interest in
such Account, (c) such Account arose from Subsidiary Borrower's anticipated
provision of services as an application service provider, wherein Subsidiary
Borrower hosts the applicable Account Debtor's applications from Subsidiary
Borrower's data center, and (d) the period during which such Account shall
become an Eligible ASP Account shall commence on the first Business Day of the
month immediately following the original invoice date and shall no longer be
deemed an Eligible ASP Account on the date that is 60 days immediately following
the date that the relevant Account became an Eligible ASP Account.

            "Eligible UK Accounts" means those Accounts created by Subsidiary
Borrower in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Subsidiary Borrowers under the
Subsidiary Loan Documents, and that are not excluded as ineligible by virtue of
one or more of the criteria set forth below; provided, however, that such
criteria may be fixed and revised from time to time by Lender in Lender's
Permitted Discretion to address the results of any audit performed by Lender
from time to time after the Closing Date. Eligible UK Accounts shall not include
the following:

                (a) Accounts that the Account Debtor has failed to pay within 90
days of original invoice date or Accounts with selling terms of more than 30
days; provided, however, upon written request from Subsidiary Borrower to extend
the foregoing 90 day

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<PAGE>   14

period to up to 120 days in the case of highly creditworthy Account Debtors,
Lender agrees to consider such request and approve or deny such request based
upon its Permitted Discretion,

                (b) Accounts owed by an Account Debtor (or its Affiliates) where
50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are
deemed ineligible under clause (a) above,

                (c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of Subsidiary Borrower,

                (d) Accounts arising in a transaction wherein goods are placed
on consignment or are sold pursuant to a guaranteed sale, a sale or return, a
sale on approval, a bill and hold, or any other terms by reason of which the
payment by the Account Debtor may be conditional,

                (e) Accounts that are not payable in a Specified Currency,

                (f) Accounts with respect to which the Account Debtor either (i)
does not maintain its chief executive office in a Specified Country, or (ii) is
not organized under the laws of a Specified Country or any political subdivision
thereof, or (iii) is the government of any country or sovereign state (other
than that of the United Kingdom), or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Lender (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
Lender and is directly drawable by Lender, or (z) the Account is covered by
credit insurance in form, substance, and amount, and by an insurer, satisfactory
to Lender,

                (g) [intentionally omitted],

                (h) Accounts with respect to which the Account Debtor is a
creditor of Subsidiary Borrower, has or has asserted a right of setoff, has
disputed its liability, or has made any claim with respect to its obligation to
pay the Account, to the extent of such claim, right of setoff, or dispute,

                (i) Accounts with respect to an Account Debtor whose total
obligations owing to Subsidiary Borrower exceed 10% of all Eligible Accounts, to
the extent of the obligations owing by such Account Debtor in excess of such
percentage; provided, however, that, in the case of Computacenter, the foregoing
percentage shall be 20% before the excess would be deemed ineligible,

                (j) Accounts with respect to which the Account Debtor is subject
to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to
which Subsidiary Borrower has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such Account
Debtor,

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<PAGE>   15

                (k) [intentionally omitted],

                (l) Accounts, the collection of which, Lender, in its Permitted
Discretion, believes to be doubtful by reason of the Account Debtor's financial
condition,

                (m) Accounts that are not subject to a valid and perfected first
priority Lender's Lien,

                (n) Accounts with respect to which (i) the goods giving rise to
such Account have not been shipped and billed to the Account Debtor, or (ii) the
services giving rise to such Account have not been performed and billed to the
Account Debtor, or

                (o) Accounts that represent the right to receive progress
payments or other advance billings that are due prior to the completion of
performance by Subsidiary Borrower of the subject contract for goods or services
(including any service or maintenance Accounts that are billed in advance of the
completion of the rendition of the subject services; provided, however, that
solely with respect to a maintenance Account that otherwise fully complies with
the criteria for eligibility as an Eligible UK Account and as to which
Subsidiary Borrower has completed performance for the period set forth on the
relevant invoice, any such Account shall be deemed an Eligible UK Account).

            "Environmental Actions" means any complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of Subsidiary Borrower or any predecessor in interest, (b) from
adjoining properties or businesses, or (c) from or onto any facilities which
received Hazardous Materials generated by Subsidiary Borrower or any predecessor
in interest.

            "Environmental Law" means any applicable federal, state, provincial,
foreign or local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy or rule of common
law now or hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, to the extent binding on Subsidiary Borrower,
relating to the environment, employee health and safety, or Hazardous Materials,
including CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC Section
1251 et seq; the Toxic Substances Control Act, 15 USC, Section 2601 et seq; the
Clean Air Act, 42 USC Section 7401 et seq.; the Safe Drinking Water Act, 42 USC.
Section 3803 et seq.; the Oil Pollution Act of 1990, 33 USC. Section 2701 et
seq.; the Emergency Planning and the Community Right-to-Know Act of 1986, 42
USC. Section 11001 et seq.; the Hazardous Material Transportation Act, 49 USC
Section 1801 et seq.; and the Occupational Safety and Health Act, 29 USC.
Section 651 et seq. (to the extent it regulates occupational exposure to
Hazardous Materials); any state and local or foreign counterparts or
equivalents, in each case as amended from time to time.

                                      -9-
<PAGE>   16

            "Environmental Liabilities and Costs" means all liabilities,
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.

            "Environmental Lien" means any Lien in favor of any Governmental
Authority for Environmental Liabilities and Costs.

            "Equipment" means all of Subsidiary Borrower's now owned or
hereafter acquired right, title, and interest with respect to equipment,
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), tools, parts, goods (other than consumer goods, farm
products, or Inventory), wherever located, including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto.

            "ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same employer as the employees of a
Subsidiary Borrower under IRC Section 414(b), (b) any trade or business subject
to ERISA whose employees are treated as employed by the same employer as the
employees of a Subsidiary Borrower under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any organization
subject to ERISA that is a member of an affiliated service group of which a
Subsidiary Borrower is a member under IRC Section 414(m), or (d) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any Person subject
to ERISA that is a party to an arrangement with a Subsidiary Borrower and whose
employees are aggregated with the employees of a Subsidiary Borrower under IRC
Section 414(o).

            "Event of Default" has the meaning set forth in Section 8.

            "Excess Availability" means the amount, as of the date any
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Subsidiary Borrower aged in excess of
their historical levels with respect thereto and all book overdrafts in excess
of their historical practices with respect thereto, in each case as determined
by Lender in its Permitted Discretion.

            "Exchange Act" means the Securities Exchange Act of 1934, as in
effect from time to time.

            "Exchange Rate" means and refers to the nominal rate of exchange
(vis-a-vis Dollars) for a currency other than Dollars published in the Wall
Street Journal (Western Edition) on the date of determination (which shall be a
Business Day on which the Wall

                                      -10-
<PAGE>   17

Street Journal (Western Edition) is published), expressed as the number of units
of such other currency per one Dollar.

            "Existing Lender" means National Westminster Bank, Plc.

            "FEIN" means Federal Employer Identification Number.

            "Foreign Exchange Reserve" means, as of any date of determination, a
reserve for foreign currency exchange rate risk with respect to the Eligible
Accounts in such amount as shall be determined by Lender in its Permitted
Discretion from time to time on or after the Closing Date.

            "Funding Date" means the date on which a Borrowing occurs.

            "GAAP" means generally accepted accounting principles as in effect
from time to time in the United States, consistently applied.

            "General Intangibles" means all of Subsidiary Borrower's now owned
or hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or recoverable
from pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature, reports,
catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and
tax refund claims), and any and all supporting obligations in respect thereof,
and any other personal property other than goods, Accounts, Investment Property,
and Negotiable Collateral.

            "Governing Documents" means, with respect to any Person, the
memorandum and articles of association, the certificate or articles of
incorporation, by-laws, or other organizational documents of such Person.

            "Governmental Authority" means any federal, state, local, or other
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute-resolving panel or body.

            "Guarantors" means, collectively, each of the Borrowers, Canadian
Obligors, and the UK Holding Company, and "Guarantor" means any one of them.

            "Hazardous Materials" means (a) substances that are defined or
listed in, or otherwise classified pursuant to, any applicable laws or
regulations as "hazardous substances," "hazardous materials," "hazardous
wastes," "toxic substances," or any other formulation intended to define, list,
or classify substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP

                                      -11-
<PAGE>   18

toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

            "Indebtedness" means (a) all obligations of Subsidiary Borrower for
borrowed money, (b) all obligations of Subsidiary Borrower evidenced by bonds,
debentures, notes, or other similar instruments and all reimbursement or other
obligations of Subsidiary Borrower in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations of Subsidiary Borrower under Capital Leases, (d) all obligations or
liabilities of others secured by a Lien on any asset of Subsidiary Borrower,
irrespective of whether such obligation or liability is assumed, (e) all
obligations of Subsidiary Borrower for the deferred purchase price of assets
(other than trade debt incurred in the ordinary course of Subsidiary Borrower's
business and repayable in accordance with Subsidiary Borrower's customary trade
practices), and (f) any obligation of Subsidiary Borrower guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse to Subsidiary Borrower) any
obligation of any other Person.

            "Indemnified Liabilities" has the meaning set forth in Section 11.3.

            "Indemnified Person" has the meaning set forth in Section 11.3.

            "Insolvency Proceeding" means any proceeding commenced by or against
any Person under any provision of the Bankruptcy Code or under any other state,
federal, or foreign bankruptcy or insolvency law, or the appointment of a
receiver, administrative receiver or liquidator with respect to a Person or any
of its assets, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.

            "Intangible Assets" means, with respect to any Person, that portion
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.

            "Intellectual Property" means all patents, patent applications,
trademarks, trademark applications, tradenames, tradedress, copyrights,
copyright registrations, technology, know-how and processes used in or necessary
for the conduct of the business of any Person as currently conducted that are
material to the condition (financial or otherwise), business, or operations of
such Person.

            "Inventory" means all of Subsidiary Borrower's now owned or
hereafter acquired right, title, and interest with respect to inventory,
including goods held for sale or lease or to be furnished under a contract of
service, goods that are leased by Subsidiary Borrower as lessor, goods that are
furnished by Subsidiary Borrower under a contract of

                                      -12-
<PAGE>   19

service, and raw materials, work in process, or materials used or consumed in
Subsidiary Borrower's business.

            "Investment" means, with respect to any Person, any investment by
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

            "Investment Property" means all of Subsidiary Borrower's now owned
or hereafter acquired right, title, and interest with respect to "investment
property" as that term is defined in the Code, and any and all supporting
obligations in respect thereof.

            "IRC" means the Internal Revenue Code of 1986, as in effect from
time to time.

            "L/C" has the meaning set forth in Section 2.12(a).

            "L/C Disbursement" means a payment made by Lender pursuant to a
Letter of Credit.

            "L/C Undertaking" has the meaning set forth in Section 2.12(a).

            "Lender" has the meaning set forth in the preamble to this
Agreement.

            "Lender's Account" means an account at a bank designated by Lender
from time to time as the account into which Subsidiary Borrower shall make all
payments to Lender under this Agreement and the other Subsidiary Loan Documents;
unless and until Lender notifies Subsidiary Borrower, Lender's Account shall be
that certain deposit account bearing account number 323-266193 and maintained by
Lender with The Chase Manhattan Bank, 4 New York Plaza, 15th Floor, New York,
New York 10004, ABA #021000021.

            "Lender's Liens" means the Liens granted by Subsidiary Borrower to
Lender under this Agreement or the other Subsidiary Loan Documents.

            "Lender Expenses" means all (a) costs or expenses (including taxes,
and insurance premiums) required to be paid by Subsidiary Borrower under any of
the Subsidiary Loan Documents that are paid or incurred by Lender, (b)
reasonable fees or charges paid or incurred by Lender in connection with
Lender's transactions with Subsidiary Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC searches and including
searches with the patent and trademark office, the copyright office, the
department of motor vehicles, or any foreign equivalent thereof), filing,
recording,

                                      -13-
<PAGE>   20

publication, appraisal (including periodic Collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Lender in the disbursement of funds to or for the account of
Subsidiary Borrower (by wire transfer or otherwise), (d) charges paid or
incurred by Lender resulting from the dishonor of checks, (e) reasonable costs
and expenses paid or incurred by Lender to correct any default or enforce any
provision of the Subsidiary Loan Documents, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) audit fees and expenses of
Lender related to audit examinations of the Books to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
(g) reasonable costs and expenses of third party claims or any other suit paid
or incurred by Lender in enforcing or defending the Subsidiary Loan Documents or
in connection with the transactions contemplated by the Subsidiary Loan
Documents or Lender's relationship with Subsidiary Borrower or any guarantor of
the Obligations, (h) Lender's reasonable fees and expenses (including attorneys
fees) incurred (i) in advising, structuring, drafting, reviewing, administering,
or amending the Subsidiary Loan Documents, or (ii) in obtaining any tax
clearances, reports, certifications, or other documentation from the Internal
Revenue Service, Inland Revenue, or any other relevant taxing authority in
connection with the transactions and undertakings contemplated by this
Agreement, and (i) Lender's reasonable fees and expenses (including attorneys
fees) incurred in terminating, enforcing (including attorneys fees and expenses
incurred in connection with a "workout," a "restructuring," or an Insolvency
Proceeding concerning Subsidiary Borrower or in exercising rights or remedies
under the Subsidiary Loan Documents), or defending the Subsidiary Loan
Documents, irrespective of whether suit is brought, or in taking any Remedial
Action concerning the Collateral.

            "Lender-Related Person" means Lender, Lender's Affiliates, and the
officers, directors, employees, and agents of Lender.

            "Letter of Credit" means an L/C or an L/C Undertaking, as the
context requires.

            "Letter of Credit Usage" means, as of any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit.

            "Lien" means any interest in an asset securing an obligation owed
to, or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, debenture,
fixed or floating charge, assignment by way of security, conditional sale or
trust receipt, or from a lease, consignment, or bailment for security purposes
and also including reservations, exceptions, encroachments,

                                      -14-
<PAGE>   21

easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Real Property.

            "Loan Account" has the meaning set forth in Section 2.10.

            "Loan Documents" is defined in the Parent Loan Agreement.

            "Material Adverse Change" means (a) a material adverse change in the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Subsidiary Borrower, (b) a material
impairment of Subsidiary Borrower's ability to perform its obligations under the
Subsidiary Loan Documents to which it is a party or of Lender's ability to
enforce the Obligations or realize upon the Collateral, (c) a material
impairment of the enforceability or priority of the Lender's Liens with respect
to the Collateral as a result of an action or failure to act on the part of
Subsidiary Borrower, or (d) a Material Adverse Change (as defined in the Parent
Loan Agreement).

            "Maximum Subsidiary Revolver Amount" means the result of (a)
$5,000,000, minus (b) the amount by which the Domestic Revolver Usage exceeds
$20,000,000 (or, if clause (a) of the definition of Domestic Maximum Revolver
Amount has been increased to $30,000,000, the amount by which the Domestic
Revolver Usage exceeds $25,000,000).

            "Negotiable Collateral" means all of Subsidiary Borrower's now owned
and hereafter acquired right, title, and interest with respect to letters of
credit, letter of credit rights, instruments, promissory notes, drafts,
documents, and chattel paper (including electronic chattel paper and tangible
chattel paper), and any and all supporting obligations in respect thereof.

            "Obligations" means all loans, Subsidiary Borrower Advances, debts,
principal, interest (including any interest that, but for the provisions of the
Bankruptcy Code, would have accrued), contingent reimbursement obligations with
respect to outstanding Letters of Credit, premiums, liabilities (including all
amounts charged to Subsidiary Borrower's Loan Account pursuant hereto),
obligations, fees, charges, costs, Lender Expenses (including any fees or
expenses that, but for the provisions of the Bankruptcy Code, would have
accrued), lease payments, guaranties, covenants, and duties of any kind and
description owing by Subsidiary Borrower to Lender pursuant to or evidenced by
the Subsidiary Loan Documents and irrespective of whether for the payment of
money, whether direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, and including all interest not paid when due
and all Lender Expenses that Subsidiary Borrower is required to pay or reimburse
by the Subsidiary Loan Documents, by law, or otherwise. Any reference in this
Agreement or in the Subsidiary Loan Documents to the Obligations shall include
all amendments, changes, extensions, modifications, renewals replacements,
substitutions, and supplements, thereto and thereof, as applicable, both prior
and subsequent to any Insolvency Proceeding.

            "Originating Lender" has the meaning set forth in Section 14.1(d).

                                      -15-
<PAGE>   22

            "Overadvance" has the meaning set forth in Section 2.5.

            "Parent" means FutureLink Corp., a Delaware corporation.

            "Parent Loan Agreement" means that certain Loan and Security
Agreement, dated as of November 16, 2000, among Parent, certain of Parent's
Subsidiaries identified on the signature pages thereof, and Lender.

            "Participant" has the meaning set forth in Section 14.1(d).

            "Payoff Letter" means a letter, in form and substance satisfactory
to Lender, from Existing Lender to Lender respecting the amount necessary to
repay in full all of the obligations of Subsidiary Borrower owing to Existing
Lender and obtain a release of all of the Liens existing in favor of Existing
Lender in and to the assets of Subsidiary Borrower.

            "Permitted Acquisition" means a Permitted Cash Acquisition or a
Permitted Non-Cash Acquisition, as the context requires.

            "Permitted Cash Acquisition" means any Acquisition as to which each
of the following is applicable (a) such Acquisition does not qualify as an
Permitted Non-Cash Acquisition solely because the consideration payable in
respect of the proposed Acquisition includes some form of consideration other
than solely the common Stock of Parent or other Stock of Parent that does not
require any current cash payment during the term of this Agreement, (b) after
giving effect to the proposed Acquisition, the Borrowers have Domestic Excess
Availability and unrestricted cash and Cash Equivalents of not less than
$20,000,000, (c) the total value of the cash consideration payable by the
Borrowers in connection with the proposed Acquisition does not exceed
$2,500,000, and (d) the total value of the cash consideration payable by
Borrowers in connection with all Permitted Cash Acquisitions shall not exceed
$10,000,000 in any consecutive 12 month period.

            "Permitted Discretion" means a determination made in good faith and
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.

            "Permitted Dispositions" means (a) sales or other dispositions by
Subsidiary Borrower of Equipment that is substantially worn, damaged, or
obsolete in the ordinary course of Subsidiary Borrower's business, (b) sales by
Subsidiary Borrower of Inventory to buyers in the ordinary course of business,
(c) the use or transfer of money or Cash Equivalents by Subsidiary Borrower in a
manner that is not prohibited by the terms of this Agreement or the other
Subsidiary Loan Documents, and (d) the licensing by Subsidiary Borrower, on a
non-exclusive basis, of patents, trademarks, and other intellectual property
rights in the ordinary course of Subsidiary Borrower's business.

            "Permitted Investments" means (a) Investments in Cash Equivalents,
(b) Investments in negotiable instruments for collection, and (c) advances made
in connection with purchases of goods or services in the ordinary course of
business.

                                      -16-
<PAGE>   23

            "Permitted Liens" means (a) Liens held by Lender, (b) Liens for
unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute
an Event of Default hereunder and are the subject of Permitted Protests, (c)
Liens set forth on Schedule P-1, (d) the interests of lessors under operating
leases, (e) purchase money Liens or the interests of lessors under Capital
Leases to the extent that such Liens or interests secure Permitted Purchase
Money Indebtedness and so long as such Lien attaches only to the asset purchased
or acquired and the proceeds thereof, (f) Liens arising by operation of law in
favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, incurred in the ordinary course of Subsidiary Borrower's business and
not in connection with the borrowing of money, and which Liens either (i) are
for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g)
Liens arising from deposits made in connection with obtaining worker's
compensation or other unemployment insurance, (h) Liens or deposits to secure
performance of bids, tenders, or leases incurred in the ordinary course of
Subsidiary Borrower's business and not in connection with the borrowing of
money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of Subsidiary Borrower's
business, (j) Liens resulting from any judgment or award that is not an Event of
Default hereunder, and (k) with respect to any Real Property, easements, rights
of way, and zoning restrictions that do not materially interfere with or impair
the use or operation thereof by Subsidiary Borrower.

            "Permitted Non-Cash Acquisition" means an Acquisition so long as:

            (a) no Default or Event of Default shall have occurred and be
continuing or would result from the consummation of the proposed Acquisition,

            (b) the assets being acquired, or the Person whose Stock is being
acquired, are useful in or engaged in, as applicable, the business of Parent and
its Subsidiaries or a business reasonably related thereto,

            (c) the consideration payable in respect of the proposed Acquisition
shall be composed solely of common Stock of Parent or other Stock of Parent that
does not require any current cash payment during the term of this Agreement
(other than a permitted cash payment made pursuant to clause (e) of the
definition of Permitted Investments set forth in the Parent Loan Agreement),

            (d) in the case of (i) a Stock Acquisition of a Person that will not
be a CFC or (ii) an asset Acquisition by Parent or any of its Subsidiaries,
Parent has provided Lender with written confirmation, supported by reasonably
detailed calculations, that on a pro forma basis, created by adding the
historical combined financial statements of Parent (including the combined
financial statements of any other Person or assets that were the subject of a
prior Permitted Acquisition during the relevant period) to the historical
consolidated financial statements of the Person to be acquired (or the
historical financial statements related to the assets to be acquired) pursuant
to the proposed Acquisition (adjusted to eliminate expense items that would not
have been incurred and include income items that would have been recognized, in
each case, if the combination had been accomplished at the beginning of the

                                      -17-
<PAGE>   24

relevant period; such eliminations and inclusions to be mutually agreed upon by
Parent and Lender), Borrowers would have been in compliance with each of the
financial covenants in Section 7.20 hereof for the 12 months ending as of the
fiscal quarter ended immediately prior to the proposed date of consummation of
such proposed Acquisition for which there are available financial statements,

            (e) in the case of (i) a Stock Acquisition of a Person that will not
be a CFC, or (ii) an asset Acquisition by Parent or any of its Subsidiaries,
Lender has completed its audit, appraisal, and standard due diligence with
respect to the assets or Person that is to be the subject of the proposed
Acquisition and the results thereof are reasonably satisfactory to Lender,

            (f) in the case of (i) a Stock Acquisition of a Person that will be
a CFC, or (ii) an asset Acquisition by a CFC, Parent has provided to Lender
prior written notice thereof not less than 30 days prior to the anticipated
closing date of the subject Acquisition together with such documentation that
Lender may require demonstrating that after giving effect to the subject
Acquisition, the Borrowers and their Subsidiaries (taken as a whole) would not
suffer a Material Adverse Change as a result of such proposed Acquisition (and
Lender shall have 10 Business Days from and after the receipt by Lender of such
documentation to notify Parent of its consent to the consummation of the
proposed Acquisition and the failure to provide such notification within such
period shall be deemed to reflect Lender's consent thereto),

            (g) in the case of an asset Acquisition by a Person that will not be
a CFC, the subject assets are being acquired by one or more of the Borrowers,

            (h) in the case of a Acquisition of a Person that will not be a CFC,
the subject Stock is being acquired in such Acquisition directly by Parent (or
NewCo after the Reorganization Transactions),

            (i) in the case of an asset Acquisition by a Person that will not be
a CFC, the relevant Borrower shall have executed and delivered any and all
security agreements, UCC-1 financing statements, fixture filings, and other
documentation reasonably requested by Lender in order to include the newly
acquired assets within the Collateral,

            (j) in the case of a Stock Acquisition of a Person that will not be
a CFC, the Borrowers shall have executed and delivered a supplement to the Stock
Pledge Agreement in order to include the Stock being acquired thereunder and
shall have delivered to Lender possession of the original Stock certificates
respecting all of the issued and outstanding shares of Stock of such acquired
Person, together with stock powers with respect thereto endorsed in blank,

            (k) in the case of a Stock Acquisition of a Person that will not be
a CFC, the Borrowers shall have caused such acquired Person to execute and
deliver a joinder to this Agreement in order to make such Person a party hereto,
together with any and all security agreements, UCC-1 financing statements,
fixture filings, and other documentation reasonably

                                      -18-
<PAGE>   25

requested by Lender in order to cause such cause acquired Person to be obligated
with respect to the Obligations and to include the assets of the acquired Person
within the Collateral, and

            (l) in the case of (i) a Stock Acquisition of a Person that will not
be a CFC, or (ii) an asset Acquisition by Parent or any of its Subsidiaries, the
agreements, instruments, and other documents executed in connection with the
proposed Acquisition provide that (A) neither any Borrower nor any of their
respective Subsidiaries shall, in connection with the proposed Acquisition,
assume or remain liable in respect of any Indebtedness of the sellers, or other
obligations of the sellers (except for obligations incurred in the ordinary
course of business in operating the property so acquired and necessary and
desirable to the continued operation of such property), and (B) all property so
acquired in connection with the proposed Acquisition shall be free and clear of
any and all Liens, except for Permitted Liens (and, if any such property is
subject to any Lien not permitted by this clause (B) then, concurrently with the
proposed Acquisition such Lien is released).

            "Permitted Protest" means the right of Subsidiary Borrower to
protest any Lien (other than any such Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the Books in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Subsidiary Borrower in good faith, and (c) Lender is satisfied
that, while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Lender's Liens.

            "Permitted Purchase Money Indebtedness" means, so long as no Event
of Default has occurred and is continuing or would result therefrom, Purchase
Money Indebtedness incurred by Subsidiary Borrower in an amount not to exceed
$250,000 during any fiscal year.

            "Person" means natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.

            "Personal Property Collateral" means all Collateral other than Real
Property.

            "Purchase Money Indebtedness" means Indebtedness (other than the
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.

            "Qualified Cash Amount" means, as of any date of determination, the
amount of cash and Cash Equivalents of Parent and its Subsidiaries that is on
deposit with banks, or in Securities Accounts with securities intermediaries, or
any combination thereof and which such deposit account or Securities Account, in
the case of any deposit account or Securities

                                      -19-
<PAGE>   26

Account maintained by a branch office located within the United States of any
bank or securities intermediary, is subject to a Control Agreement.

            "Real Property" means any estates or interests in real property now
owned or hereafter acquired by Subsidiary Borrower and the improvements thereto.

            "Record" means information that is inscribed on a tangible medium or
which is stored in an electronic or other medium and is retrievable in
perceivable form.

            "Remedial Action" means all actions taken to (a) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC Section 9601 or any equivalent
foreign legislation.

            "Renewal Date" has the meaning set forth in Section 3.4.

            "SEC" means the United States Securities and Exchange Commission and
any successor thereto.

            "Securities Account" means a "securities account" as that term is
defined in the Code.

            "Security Agreement" means a security agreement executed and
delivered by the Borrowers in favor of Lender, in form and substance
satisfactory to Lender.

            "Specified Country" means the United States of America, the United
Kingdom, the Republic of Ireland, or such other countries as Lender may
determine from time to time.

            "Specified Currency" means Dollars or the lawful money of the United
Kingdom.

            "Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including ordinary shares, preference
shares, common stock, preferred stock, or any other "equity security" (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).

            "Stock Acquisition" means an Acquisition by Parent or its
Subsidiaries of all of the Stock of any Person.

            "Stock Pledge Agreement" means that certain Stock Pledge Agreement,
dated as of November 16, 2000, among the Borrowers and Lender.

                                      -20-
<PAGE>   27

            "Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity;
provided, however, that references herein to Parent and its Subsidiaries, to
Borrowers and their Subsidiaries, or other similar expressions shall not include
any CFCs acquired, directly or indirectly, by Parent after the Closing Date; it
being understood that UK Holding Company, Subsidiary Borrower, and each of the
Canadian Obligors shall be included in such references.

            "Subsidiary Borrower" has the meaning set forth in the preamble to
this Agreement.

            "Subsidiary Borrower Advances" has the meaning set forth in Section
2.1.

            "Subsidiary Borrower Borrowing Base" has the meaning set forth in
Section 2.1.

            "Subsidiary Borrower Borrowing Base Certificate" means a certificate
in the form of Exhibit S-1.

            "Subsidiary Loan Documents" means this Agreement, the Payoff Letter,
the Cash Management Agreements, the Control Agreements, the Security Agreement,
the Canadian Security Documents, the UK Debenture, the UK Guaranty, the UK Stock
Pledge Agreement (Parent), any other UK Security Documents, any note or notes
executed by Subsidiary Borrower in connection with this Agreement and payable to
Lender, and any other agreement entered into, now or in the future, by
Subsidiary Borrower and Lender in connection with this Agreement.

            "Subsidiary Borrower Revolver Usage" means, as of any date of
determination, the sum of (a) the then extant amount of outstanding Subsidiary
Borrower Advances, plus (b) the then extant amount of the Letter of Credit
Usage.

            "Taxes" has the meaning set forth in Section 16.5.

            "Triggering Event" means either (a) the occurrence and continuation
of an Event of Default, or (b) the failure of Parent and its Subsidiaries to
maintain (i) an average Qualified Cash Amount for each of the days in any month
greater than $10,000,000, or (ii) a Qualified Cash Amount greater than
$10,000,000 on the last Business Day of any month.

            "UK Debenture" means the fixed and floating charge debenture,
executed and delivered by Subsidiary Borrower and UK Holding Company in favor of
Lender, in form and substance satisfactory to Lender.

                                      -21-
<PAGE>   28

            "UK Guaranty" means a Guaranty executed and delivered by UK Holding
Company and the Borrowers of the Indebtedness of Subsidiary Borrower owing under
the Subsidiary Loan Documents, in form and substance satisfactory to Lender.

            "UK Holding Company" means KNS Holdings Limited, a company organized
under the laws of England and Wales.

            "UK Stock Pledge Agreement (Parent)" means a share charge, in form
and substance satisfactory to Lender, executed and delivered by Parent with
respect to 65% of the shares of UK Holding Company.

            Underlying Issuer" means a third Person which is the beneficiary of
an L/C Undertaking and which has issued a letter of credit at the request of
Lender for the benefit of Borrowers.

            "Underlying Letter of Credit" means a letter of credit that has been
issued by an Underlying Issuer.

            "Voidable Transfer" has the meaning set forth in Section 16.8.

            "Wells Fargo" means Wells Fargo Bank, National Association, a
national banking association.

        1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto.

        1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein.

        1.4 CONSTRUCTION. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Subsidiary Loan Document refer to this Agreement or such other Subsidiary
Loan Document, as the case may be, as a whole and not to any particular
provision of this Agreement or such other Subsidiary Loan Document, as the case
may be. Section, subsection, clause, schedule, and exhibit references herein are
to this Agreement unless otherwise specified. Any reference in this Agreement or
in the other Subsidiary Loan Documents to any agreement, instrument, or document
shall include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
to any Person shall be construed to include such Person's successors and
assigns. Any requirement

                                      -22-
<PAGE>   29

of a writing contained herein or in the other Subsidiary Loan Documents shall be
satisfied by the transmission of a Record and any Record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.

        1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached
to this Agreement shall be deemed incorporated herein by reference.

2. LOAN AND TERMS OF PAYMENT.

        2.1 REVOLVER ADVANCES.

                (a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, Lender agrees to make advances ("Subsidiary
Borrower Advances") to Subsidiary Borrower in an amount at any one time
outstanding not to exceed an amount equal to the lesser of (i) the then extant
Maximum Subsidiary Revolver Amount less the Letter of Credit Usage, or (ii) the
Subsidiary Borrower Borrowing Base less the Letter of Credit Usage. For purposes
of this Agreement, "Subsidiary Borrower Borrowing Base," as of any date of
determination, shall mean the result of:

                (y) the lesser of

                    (i) the sum of

                        (A) 85% of the amount of Eligible UK Accounts; provided,
                    however, that the amount of Eligible UK Accounts owing by
                    all Account Debtors located in the Republic of Ireland shall
                    not exceed $250,000, less the amount, if any, of the
                    Dilution Reserve, plus

                        (B) the lesser of

                            (1) 85% of the amount
                        of Eligible ASP Accounts, less the amount, if any, of
                        the ASP Dilution Reserve, and,

                            (2) $500,000, and

                    (ii) an amount equal to Subsidiary Borrower's Collections
                with respect to Accounts for the immediately preceding 45 day
                period, minus

                (z) the aggregate amount of reserves, if any, established by
                Lender under Section 2.1(b).

                (b) Anything to the contrary in this Section 2.1
notwithstanding, Lender shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lender in its Permitted Discretion
shall deem necessary or appropriate, against the

                                      -23-
<PAGE>   30

Subsidiary Borrower Borrowing Base, including reserves with respect to (i) sums
that Subsidiary Borrower is required to pay (such as taxes, assessments,
insurance premiums, or, in the case of leased assets, rents or other amounts
payable under such leases) and has failed to pay under any Section of this
Agreement or any other Subsidiary Loan Document, (ii) amounts owing by
Subsidiary Borrower to any Person to the extent secured by a Lien on, or trust
over, any of the Collateral (other than any existing Permitted Lien set forth on
Schedule P-1 which is specifically identified thereon as entitled to have
priority over the Lender's Liens), which Lien or trust, in the Permitted
Discretion of Lender likely would have a priority superior to the Lender's Liens
(such as Liens or trusts in favor of landlords, warehousemen, carriers,
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral, (iii) one (1) months rent for each
leased location of Subsidiary Borrower for which an acceptable Collateral Access
Agreement has not been received by Lender (irrespective of whether any rent is
currently due), (iv) the Foreign Exchange Reserve, (v) the Customer Deposit
Reserve, and (vi) interest that has accrued on the Obligations during the
Interim Period (as defined in Section 2.6(d) hereof) but has not yet been paid.

                (c) Lender shall have no obligation to make additional
Subsidiary Borrower Advances hereunder to the extent such additional Subsidiary
Borrower Advances would cause the Subsidiary Borrower Revolver Usage to exceed
the then extant Maximum Subsidiary Revolver Amount.

                (d) Amounts borrowed pursuant to this Section may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement.

        2.2 [INTENTIONALLY OMITTED]

        2.3 BORROWING PROCEDURES AND SETTLEMENTS.

                (a) PROCEDURE FOR BORROWING. Each Borrowing shall be made by a
written request by an Authorized Person delivered to Lender (which notice must
be received by Lender no later than 10:00 a.m. (California time) on the Business
Day that is the requested Funding Date specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day.
At Lender's election, in lieu of delivering the above-described request in
writing, any Authorized Person may give Lender telephonic notice of such request
by the required time, with such telephonic notice to be confirmed in writing
within 24 hours of the giving of such notice.

                (b) MAKING OF SUBSIDIARY BORROWER ADVANCES. If Lender has
received a timely request for a Borrowing in accordance with the provisions
hereof, and subject to the satisfaction of the applicable terms and conditions
set forth herein, Lender shall make the proceeds of such Subsidiary Borrower
Advance available to Subsidiary Borrower

                                      -24-
<PAGE>   31

on the applicable Funding Date by transferring available funds equal to such
proceeds to Subsidiary Borrower's Designated Account.

        2.4 PAYMENTS.

                   (a) PAYMENTS BY SUBSIDIARY BORROWER. (i) Except as otherwise
               expressly provided herein, all payments by Subsidiary Borrower
               shall be made to Lender's Account and shall be made in Dollars
               and in immediately available funds, no later than 11:00 a.m.
               (California time) on the date specified herein. Any payment
               received by Lender later than 11:00 a.m. (California time), shall
               be deemed to have been received on the following Business Day and
               any applicable interest or fee shall continue to accrue until
               such following Business Day.

                   (b) APPLICATION, AND REVERSAL OF PAYMENTS.

                   (i) All payments shall be remitted to Lender and all such
               payments (other than payments received while no Default or Event
               of Default has occurred and is continuing and which relate to the
               payment of principal or interest of specific Obligations or which
               relate to the payment of specific fees), and all proceeds of
               Accounts or other Collateral received by Lender, shall be applied
               as follows:

                             A. first, to pay any Lender Expenses then due to
                      Lender under the Subsidiary Loan Documents, until paid in
                      full,

                             B. second, to pay any fees then due to Lender under
                      the Subsidiary Loan Documents until paid in full,

                             C. third, ratably to pay interest due in respect of
                      Subsidiary Borrower Advances until paid in full,

                             D. fourth, to pay the principal of all Subsidiary
                      Borrower Advances until paid in full,

                             E. fifth, if an Event of Default has occurred and
                      is continuing, to be held by Lender as cash collateral in
                      an amount up to 105% of the then extant Letter of Credit
                      Usage until paid in full,

                             F. sixth, to pay any other Obligations until paid
                      in full, and

                             G. seventh, to Subsidiary Borrower (to be wired to
                      the Designated Account) or such other Person entitled
                      thereto under applicable law.

                   (ii) In each instance, so long as no Default or Event of
               Default has occurred and is continuing, Section 2.4(b) shall not
               be deemed to apply to any

                                      -25-
<PAGE>   32

               payment by Subsidiary Borrower specified by Subsidiary Borrower
               to be for the payment of specific Obligations then due and
               payable (or prepayable) under any provision of this Agreement.

                   (iii) For purposes of the foregoing, "paid in full" means
               payment of all amounts owing under the Subsidiary Loan Documents
               according to the terms thereof, including loan fees, service
               fees, professional fees, interest (and specifically including
               interest accrued after the commencement of any Insolvency
               Proceeding), default interest, interest on interest, and expense
               reimbursements, whether or not the same would be or is allowed or
               disallowed in whole or in part in any Insolvency Proceeding.

                   (iv) In the event of a direct conflict between the priority
               provisions of this Section 2.4 and other provisions contained in
               any other Subsidiary Loan Document, it is the intention of the
               parties hereto that such priority provisions in such documents
               shall be read together and construed, to the fullest extent
               possible, to be in concert with each other. In the event of any
               actual, irreconcilable conflict that cannot be resolved as
               aforesaid, the terms and provisions of this Section 2.4 shall
               control and govern.

        2.5 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Subsidiary Borrower to Lender pursuant to Sections 2.1 and
2.12 is greater than either the Dollar or percentage limitations set forth in
Sections 2.1 or 2.12, (an "Overadvance"), Subsidiary Borrower immediately shall
pay to Lender, in cash, the amount of such excess, which amount shall be used by
Lender to reduce the Obligations in accordance with the priorities set forth in
Section 2.4(b). In addition, Subsidiary Borrower hereby promises to pay the
Obligations (including principal, interest, fees, costs, and expenses) in
Dollars in full to Lender as and when due and payable under the terms of this
Agreement and the other Subsidiary Loan Documents.

        2.6 INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
CALCULATIONS.

                (a) INTEREST RATES. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit) that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to the Base Rate plus the Base Rate
Margin.

            The foregoing notwithstanding, at no time shall any portion of the
Obligations bear interest on the Daily Balance thereof at a per annum rate less
than 8%. To the extent that interest accrued hereunder at the rate set forth
herein would be less than the foregoing minimum daily rate, the interest rate
chargeable hereunder for such day automatically shall be deemed increased to the
minimum rate.

                (b) LETTER OF CREDIT FEE. Subsidiary Borrower shall pay Lender a
Letter of Credit fee (in addition to the charges, commissions, fees, and costs
set forth in

                                      -26-
<PAGE>   33

Section 2.12(e)) which shall accrue at a rate equal to 1.25% per annum times the
Daily Balance of the undrawn amount of all outstanding Letters of Credit.

                (c) DEFAULT RATE. Upon the occurrence and during the
continuation of an Event of Default,

                   (i) all Obligations (except for undrawn Letters of Credit)
               that have been charged to the Loan Account pursuant to the terms
               hereof shall bear interest on the Daily Balance thereof at a per
               annum rate equal to 4 percentage points above the per annum rate
               otherwise applicable hereunder, and

                   (ii) the Letter of Credit fee provided for above shall be
               increased to 4 percentage points above the per annum rate
               otherwise applicable hereunder.

                (d) PAYMENT. Interest, Letter of Credit fees, and all other fees
payable hereunder shall be due and payable, in arrears, on the first day of each
month at any time that Obligations or obligation to extend credit hereunder are
outstanding. Subsidiary Borrower hereby authorizes Lender, from time to time,
without prior notice to Subsidiary Borrower, to charge such interest and fees,
all Lender Expenses (as and when incurred), the charges, commissions, fees, and
costs provided for in Section 2.12(e) (as and when accrued or incurred), the
fees and costs provided for in Section 2.11 (as and when accrued or incurred),
and all other payments as and when due and payable under any Subsidiary Loan
Document to Subsidiary Borrower's Loan Account, which amounts thereafter
constitute Subsidiary Borrower Advances hereunder and shall accrue interest at
the rate then applicable to Subsidiary Borrower Advances hereunder. Any interest
not paid when due shall be compounded by being charged to Subsidiary Borrower's
Loan Account and shall thereafter constitute Subsidiary Borrower Advances
hereunder and shall accrue interest at the rate then applicable to Subsidiary
Borrower Advances hereunder. Anything contained in this Section 2.6(d) to the
contrary notwithstanding, interest accruing on the Obligations solely for the
period (the "Interim Period") commencing on the Closing Date through May 1, 2001
(the "First Interest Payment Date") shall be paid on the First Interest Payment
Date; provided, however, that nothing herein shall be deemed to mean that
interest shall not accrue on the Obligations during the Interim Period. All
interest accruing on the Obligations from and after the First Interest Payment
Date shall be due and payable in accordance with the first sentence of this
Section 2.6(d).

                (e) COMPUTATION. All interest and fees chargeable under the
Subsidiary Loan Documents shall be computed on the basis of a 360 day year for
the actual number of days elapsed. In the event the Base Rate is changed from
time to time hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.

                (f) INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in

                                      -27-
<PAGE>   34

connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Subsidiary Borrower and Lender, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Subsidiary Borrower is and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Subsidiary Borrower in excess of such legal maximum, whenever received, shall be
applied to reduce the principal balance of the Obligations to the extent of such
excess.

        2.7 CASH MANAGEMENT.

                (a) Subsidiary Borrower shall (i) continue to maintain cash
management services of a type and on terms satisfactory to Lender at one or more
of the banks set forth on Schedule 2.7(a) (each, a "Cash Management Bank"), and
shall request in writing and otherwise take such reasonable steps to ensure that
all of its Account Debtors forward payment of the amounts owed by them directly
to such Cash Management Bank, and (ii) deposit or cause to be deposited
promptly, and in any event no later than the first Business Day after the date
of receipt thereof, all Collections (including those sent directly by Account
Debtors to a Cash Management Bank) into a bank account in Lender's name (a "Cash
Management Account") at one of the Cash Management Banks.

                (b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Lender and Subsidiary Borrower, in form and substance
acceptable to Lender. Each such Cash Management Agreement shall provide, among
other things, that (i) all items of payment deposited in such Cash Management
Account and proceeds thereof are held by such Cash Management Bank on behalf of
Lender or bailee-in-possession for Lender, (ii) the Cash Management Bank has no
rights of setoff or recoupment or any other claim against the applicable Cash
Management Account, other than for payment of its service fees and other charges
directly related to the administration of such Cash Management Account and for
returned checks or other items of payment, and (iii) from and after the receipt
by the applicable Cash Management Bank of a notice that a Triggering Event has
occurred, it immediately will forward in Dollars by daily sweep all amounts in
the applicable Cash Management Account to the Lender's Account.

                (c) So long as no Default or Event of Default has occurred and
is continuing, Subsidiary Borrower may amend Schedule 2.7(a) to add or replace a
Cash Management Bank or Cash Management Account; provided, however, that (i)
such prospective Cash Management Bank shall be satisfactory to Lender and Lender
shall have consented in writing in advance to the opening of such Cash
Management Account with the prospective Cash Management Bank, and (ii) prior to
the time of the opening of such Cash Management Account, Subsidiary Borrower and
such prospective Cash Management Bank shall have executed and delivered to
Lender a Cash Management Agreement. Subsidiary Borrower shall close any of its
Cash Management Accounts (and establish replacement cash

                                      -28-
<PAGE>   35

management accounts in accordance with the foregoing sentence) promptly and in
any event within 30 days of notice from Lender that the creditworthiness of any
Cash Management Bank is no longer acceptable in Lender's reasonable judgment, or
as promptly as practicable and in any event within 60 days of notice from Lender
that the operating performance, funds transfer, or availability procedures or
performance of the Cash Management Bank with respect to Cash Management Accounts
or Lender's liability under any Cash Management Agreement with such Cash
Management Bank is no longer acceptable in Lender's reasonable judgment.

                (d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations.

        2.8 CREDITING PAYMENTS; FLOAT CHARGE. The receipt of any payment item by
Lender (whether from transfers to Lender by the Cash Management Banks pursuant
to the Cash Management Agreements or otherwise) shall not be considered a
payment on account unless such payment item is a wire transfer of immediately
available federal funds made to the Lender's Account or unless and until such
payment item is honored when presented for payment. Should any payment item not
be honored when presented for payment, then Subsidiary Borrower shall be deemed
not to have made such payment and interest shall be calculated accordingly.
Anything to the contrary contained herein notwithstanding, any payment item
shall be deemed received by Lender only if it is received into the Lender's
Account on a Business Day on or before 11:00 a.m. (California time). If any
payment item is received into the Lender's Account on a non-Business Day or
after 11:00 a.m. (California time) on a Business Day, it shall be deemed to have
been received by Lender as of the opening of business on the immediately
following Business Day. From and after the Closing Date, Lender shall be
entitled to charge Subsidiary Borrower for 1 Business Day of `clearance' or
`float' at the rate applicable to Subsidiary Borrower Advances under Section 2.6
on all Collections that are received by Subsidiary Borrower (regardless of
whether forwarded by the Cash Management Banks to Lender). This across-the-board
1 Business Day clearance or float charge on all Collections is acknowledged by
the parties to constitute an integral aspect of the pricing of the financing of
Subsidiary Borrower and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging 1 Business Day of interest on such Collections.

        2.9 DESIGNATED ACCOUNT. Lender is authorized to make the Subsidiary
Borrower Advances and Lender is authorized to issue the Letters of Credit under
this Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person, or without instructions if pursuant to
Section 2.6(d). Subsidiary Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Subsidiary Borrower Advances requested by Subsidiary
Borrower and made by Lender hereunder. Unless otherwise agreed by Lender and
Subsidiary Borrower, any Subsidiary Borrower Advance requested by Subsidiary
Borrower and made by Lender hereunder shall be made to the Designated Account.

                                      -29-
<PAGE>   36

        2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Lender
shall maintain an account on its books in the name of Subsidiary Borrower (the
"Loan Account") on which Subsidiary Borrower will be charged with all Subsidiary
Borrower Advances made by Lender to Subsidiary Borrower or for Subsidiary
Borrower's account, the Letters of Credit issued by Lender for Subsidiary
Borrower's account, and with all other payment Obligations hereunder or under
the other Subsidiary Loan Documents, including, accrued interest, fees and
expenses, and Lender Expenses. In accordance with Section 2.8, the Loan Account
will be credited with all payments received by Lender from Subsidiary Borrower
or for Subsidiary Borrower's account, including all amounts received in the
Lender's Account from any Cash Management Bank. Lender shall render statements
regarding the Loan Account to Subsidiary Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Expenses owing, and such statements shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Subsidiary Borrower and Lender unless, within 30 days after receipt thereof by
Subsidiary Borrower, Subsidiary Borrower shall deliver to Lender written
objection thereto describing the error or errors contained in any such
statements.

        2.11 FEES. Subsidiary Borrower shall pay to Lender the following fees
and charges, which fees and charges shall be non-refundable when paid
(irrespective of whether this Agreement is terminated thereafter):

                (a) UNUSED LINE FEE. On the first day of each month during the
term of this Agreement, an unused line fee in the amount equal to .375% per
annum times the result of (a) the then extant Maximum Subsidiary Revolver
Amount, less (b) the sum of (i) the average Daily Balance of Subsidiary Borrower
Advances that were outstanding during the immediately preceding month, plus (ii)
the average Daily Balance of the Letter of Credit Usage during the immediately
preceding month, and

                (b) AUDIT, APPRAISAL, AND VALUATION CHARGES. Audit, appraisal,
and valuation fees and charges as follows, (i) a fee of $750 pay day, per
auditor, plus out-of-pocket expenses for each financial audit of Subsidiary
Borrower performed by personnel employed by Lender, (ii) if implemented, a one
time charge of $3,000 plus out-of-pocket expenses for expenses for the
establishment of electronic collateral reporting systems, and (iii) the actual
charges paid or incurred by Lender if it elects to employ the services of one or
more third Persons to perform financial audits of Subsidiary Borrower, to
appraise the Collateral, or any portion thereof, or to assess Subsidiary
Borrower's business valuation.

        2.12 LETTERS OF CREDIT

                (a) Subject to the terms and conditions of this Agreement,
Lender agrees to issue letters of credit for the account of Subsidiary Borrower
(each, an "L/C") or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of
Subsidiary Borrower. To request the issuance of an L/C or an L/C Undertaking

                                      -30-
<PAGE>   37

(or the amendment, renewal, or extension of an outstanding L/C or L/C
Undertaking), Subsidiary Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by
Lender) to Lender and Lender (reasonably in advance of the requested date of
issuance, amendment, renewal, or extension) a notice requesting the issuance of
an L/C or L/C Undertaking, or identifying the L/C or L/C Undertaking to be
amended, renewed, or extended, the date of issuance, amendment, renewal, or
extension, the date on which such L/C or L/C Undertaking is to expire, the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or of the Underlying Letter of Credit, as applicable), and such other
information as shall be necessary to prepare, amend, renew, or extend such L/C
or L/C Undertaking. If requested by Lender, Subsidiary Borrower also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C Undertaking. Lender shall have no obligation
to issue a Letter of Credit if any of the following would result after giving
effect to the requested Letter of Credit:

                   (i) the Letter of Credit Usage would exceed the Subsidiary
               Borrower Borrowing Base less the amount of outstanding Subsidiary
               Borrower Advances, or

                   (ii) the Letter of Credit Usage would exceed $500,000, or

                   (iii) the Letter of Credit Usage would exceed the then extant
               Maximum Subsidiary Revolver Amount less the then extant amount of
               outstanding Subsidiary Borrower Advances.

                (b) Subsidiary Borrower and Lender acknowledge and agree that
certain Underlying Letters of Credit may be issued to support letters of credit
that already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 30 days prior to the date on which this Agreement is scheduled to terminate
under Section 3.4 (without regard to any potential renewal term)and all such
Letters of Credit (and corresponding Underlying Letter of Credit) shall be in
form and substance acceptable to Lender (in the exercise of its Permitted
Discretion), including the requirement that the amounts payable thereunder must
be payable in Dollars. If Lender is obligated to advance funds under a Letter of
Credit, Subsidiary Borrower immediately shall reimburse such L/C Disbursement to
Lender by paying to Lender an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Subsidiary Borrower shall have received written or telephonic notice of
such L/C Disbursement prior to 10:00 a.m., California time, on such date, or, if
such notice has not been received by Subsidiary Borrower prior to such time on
such date, then not later than 11:00 a.m., California time, on (i) the Business
Day that Subsidiary Borrower receives such notice, if such notice is received
prior to 10:00 a.m., California time, on the date of receipt, and, in the
absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be a Subsidiary Borrower Advance hereunder and,
thereafter, shall bear interest at the rate then applicable to Subsidiary
Borrower Advances under Section 2.6. To the extent an L/C Disbursement is

                                      -31-
<PAGE>   38

deemed to be a Subsidiary Borrower Advance hereunder, Subsidiary Borrower's
obligation to reimburse such L/C Disbursement shall be discharged and replaced
by the resulting Subsidiary Borrower Advance.

                (c) Subsidiary Borrower hereby agrees to indemnify, save,
defend, and hold Lender harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by Lender arising out of or in connection
with any Letter of Credit; provided, however, that Subsidiary Borrower shall be
obligated hereunder to indemnify for any loss, cost, expense, or liability that
is caused by the gross negligence or willful misconduct of Lender. Subsidiary
Borrower agrees to be bound by the Underlying Issuer's regulations and
interpretations of any Underlying Letter of Credit or by Lender's
interpretations of any L/C issued by Lender to or for Subsidiary Borrower's
account, even though this interpretation may be different from Subsidiary
Borrower's own, and Subsidiary Borrower understands and agrees that Lender shall
not be liable for any error, negligence, or mistake, whether of omission or
commission, in following Subsidiary Borrower's instructions or those contained
in the Letter of Credit or any modifications, amendments, or supplements
thereto; provided, however, that Subsidiary Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of Lender. Subsidiary Borrower
understands that the L/C Undertakings may require Lender to indemnify the
Underlying Issuer for certain costs or liabilities arising out of claims by
Subsidiary Borrower against such Underlying Issuer. Subsidiary Borrower hereby
agrees to indemnify, save, defend, and hold Lender harmless with respect to any
loss, cost, expense (including reasonable attorneys fees), or liability incurred
by Lender under any L/C Undertaking as a result of Lender's indemnification of
any Underlying Issuer; provided, however, that Subsidiary Borrower shall not be
obligated hereunder to indemnify for any loss, cost, expense, or liability that
is caused by the gross negligence or willful misconduct of Lender.

                (d) Subsidiary Borrower hereby authorizes and directs any
Underlying Issuer to deliver to Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon Lender's instructions
with respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.

                (e) Any and all charges, commissions, fees, and costs incurred
by Lender relating to Underlying Letters of Credit shall be Lender Expenses for
purposes of this Agreement and immediately shall be reimbursable by Subsidiary
Borrower to Lender for the account of Lender; it being acknowledged and agreed
by Subsidiary Borrower that, as of the Closing Date, the issuance charge imposed
by the prospective Underlying Issuer is .35% per annum times the face amount of
each Underlying Letter of Credit, that such issuance charge may be changed from
time to time, and that the Underlying Issuer also imposes a schedule of charges
for amendments, extensions, drawings, and renewals.

                (f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental

                                      -32-
<PAGE>   39

Authority, or (ii) compliance by the Underlying Issuer or Lender with any
direction, request, or requirement (irrespective of whether having the force of
law) of any Governmental Authority or monetary authority including, Regulation D
of the Federal Reserve Board as from time to time in effect (and any successor
thereto):

                   (i) any reserve, deposit, or similar requirement is or shall
               be imposed or modified in respect of any Letter of Credit issued
               hereunder, or

                   (ii) there shall be imposed on the Underlying Issuer or
               Lender any other condition regarding any Underlying Letter of
               Credit or any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to Lender of issuing, making, guaranteeing, or maintaining any Letter of Credit
or to reduce the amount receivable in respect thereof by Lender, then, and in
any such case, Lender may, at any time within a reasonable period after the
additional cost is incurred or the amount received is reduced, notify Subsidiary
Borrower, and Subsidiary Borrower shall pay on demand such amounts as Lender may
specify to be necessary to compensate Lender for such additional cost or reduced
receipt, together with interest on such amount from the date of such demand
until payment in full thereof at the rate then applicable to Subsidiary Borrower
Advances hereunder. The determination by Lender of any amount due pursuant to
this Section, as set forth in a certificate setting forth the calculation
thereof in reasonable detail, shall, in the absence of manifest or demonstrable
error, be final and conclusive and binding on all of the parties hereto.

        2.13 [INTENTIONALLY OMITTED].

        2.14 CAPITAL REQUIREMENTS. If, after the date hereof, Lender determines
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by Lender
or its parent bank holding company with any guideline, request or directive of
any such entity regarding capital adequacy (whether or not having the force of
law), the effect of reducing the return on Lender's or such holding company's
capital as a consequence of Lender's obligations hereunder to a level below that
which Lender or such holding company could have achieved but for such adoption,
change, or compliance (taking into consideration Lender's or such holding
company's then existing policies with respect to capital adequacy and assuming
the full utilization of such entity's capital) by any amount deemed by Lender to
be material, then Lender may notify Subsidiary Borrower thereof. Following
receipt of such notice, Subsidiary Borrower agrees to pay Lender on demand the
amount of such reduction of return of capital as and when such reduction is
determined, payable within 90 days after presentation by Lender of a statement
in the amount and setting forth in reasonable detail Lender's calculation
thereof and the assumptions upon which such calculation was based (which
statement shall be deemed true and correct absent manifest

                                      -33-
<PAGE>   40

error). In determining such amount, Lender will use any reasonable averaging and
attribution method.

3. CONDITIONS; TERM OF AGREEMENT.

        3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to make the initial Subsidiary Borrower Advance (or
otherwise to extend any credit provided for hereunder), is subject to the
fulfillment, to the satisfaction of Lender, of each of the conditions precedent
set forth below:

                (a) the Closing Date shall occur on or before December 31, 2000;

                (b) Lender shall have received all financing statements required
by Lender, duly executed by Subsidiary Borrower, and Lender shall have received
searches reflecting the filing of all such financing statements;

                (c) Lender shall have received each of the following documents,
in form and substance satisfactory to Lender, duly executed, and each such
document shall be in full force and effect:

                   (i) [intentionally omitted],

                   (ii) the Disbursement Letter,

                   (iii) the Cash Management Agreements,

                   (iv) the Payoff Letter,

                   (v) the UK Debenture, together with all certificates
               representing the shares of Subsidiary Borrower pledged
               thereunder, as well as Stock powers with respect thereto endorsed
               in blank, and other deeds and documents of title required to be
               deposited thereunder,

                   (vi) the UK Guaranty,

                   (vii) the UK Stock Pledge Agreement (Parent), together with
               all certificates representing the shares of Stock pledged
               thereunder, as well as Stock powers with respect thereto endorsed
               in blank,

                   (viii) the Canadian Security Documents, and

                   (ix) the Security Agreement;

                (d) [intentionally omitted];

                (e) Lender shall have received a certificate from the Secretary
of each of Subsidiary Borrower and UK Holding Company attesting to the
resolutions of the Board

                                      -34-
<PAGE>   41

of Directors of each of Subsidiary Borrower and UK Holding Company authorizing
their respective execution, delivery, and performance of this Agreement and the
other Subsidiary Loan Documents to which each is a party and authorizing
specific officers of each to execute the same, and amending their respective
articles of association to disapply any rights of lien, pre-emption rights, or
any rights of veto on the transfer of any shares which are the subject of any
security granted pursuant to any of the Loan Documents or Subsidiary Loan
Documents or enforcement of such security or where the transfer is made at the
direction of Lender or a receiver;

                (f) Lender shall have received copies of Subsidiary Borrower's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of Subsidiary Borrower;

                (g) Lender shall have received a certificate of status with
respect to Subsidiary Borrower, dated within 30 days of the Closing Date, such
certificate to be issued by the registrar of companies, which certificate shall
indicate that Subsidiary Borrower is in good standing in such jurisdiction;

                (h) Lender shall have received certificates of status with
respect to Subsidiary Borrower, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of Subsidiary Borrower) in which
its failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that Subsidiary Borrower is in good
standing in such jurisdictions;

                (i) Lender shall have received copies of UK Holding Company's
Governing Documents, as amended, modified, or supplemented to the Closing Date,
certified by the Secretary of UK Holding Company;

                (j) Lender shall have received a certificate of status with
respect to UK Holding Company, dated within 30 days of the Closing Date, such
certificate to be issued by the registrar of companies, which certificate shall
indicate that UK Holding Company is in good standing in such jurisdiction;

                (k) Lender shall have received certificates of status with
respect to UK Holding Company, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of UK Holding Company) in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that UK Holding Company is in good
standing in such jurisdictions;

                (l) Lender shall have received a certificate from the Secretary
of each Guarantor attesting to the resolutions of such Guarantor's Board of
Directors authorizing its execution, delivery, and performance of each of the
Subsidiary Loan Documents to which such Guarantor is a party and authorizing
specific officers of such Guarantor to execute the same;

                                      -35-
<PAGE>   42

                (m) Lender shall have received a certificate from the Secretary
of Parent certifying that there have been no amendments, restatements,
supplements, or modifications to the Governing Documents of any of the Borrowers
since the "Closing Date" (as defined in the Parent Loan Agreement);

                (n) Lender shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
and substance of which shall be satisfactory to Lender;

                (o) Lender shall have received such Collateral Access Agreements
with respect to such of Subsidiary Borrower's facilities as Lender may require;

                (p) Lender shall have received opinions of Subsidiary Borrower's
counsel (and, in Lender's sole discretion, Lender's foreign counsel) in form and
substance satisfactory to Lender;

                (q) Lender shall have received satisfactory evidence (including
a certificate of a director of Subsidiary Borrower) that all tax returns
required to be filed by Subsidiary Borrower have been timely filed and all taxes
upon Subsidiary Borrower or its properties, assets, income, and franchises
(including Real Property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a Permitted Protest;

                (r) Lender shall have completed its business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Subsidiary Borrower's books and records and verification of Subsidiary
Borrower's representations and warranties to Lender, the results of which shall
be satisfactory to Lender, and (ii) an inspection of each of the locations where
Inventory is located, the results of which shall be satisfactory to Lender;

                (s) Subsidiary Borrower shall pay all Lender Expenses incurred
in connection with the transactions evidenced by this Agreement;

                (t) Subsidiary Borrower shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Subsidiary Borrower of this
Agreement or any other Subsidiary Loan Document or with the consummation of the
transactions contemplated hereby and thereby; and

                (u) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered, executed,
or recorded and shall be in form and substance satisfactory to Lender.

               3.2 CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
obligation of Lender to continue to make Subsidiary Borrower Advances (or
otherwise extend credit hereunder) is subject to the fulfillment, on or before
the date applicable thereto, of each of

                                      -36-
<PAGE>   43

the conditions subsequent set forth below (the failure by Subsidiary Borrower to
so perform or cause to be performed constituting an Event of Default):

                (a) within 30 days of the Closing Date, deliver to Lender
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
be satisfactory to Lender and its counsel.

        3.3 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The obligation of
Lender to make all Subsidiary Borrower Advances (or to extend any other credit
hereunder) shall be subject to the following conditions precedent:

                (a) the representations and warranties contained in this
Agreement and the other Subsidiary Loan Documents shall be true and correct in
all material respects on and as of the date of such extension of credit, as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date);

                (b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof, except to the extent such Default or Event of Default has
been waived in writing by Lender;

                (c) no injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
Subsidiary Borrower, Lender, or any of their Affiliates; and

                (d) no Material Adverse Change shall have occurred.

        3.4 TERM. This Agreement shall become effective upon the execution and
delivery hereof by Subsidiary Borrower and Lender and shall continue in full
force and effect for a term ending on November 16, 2003 (the "Renewal Date") and
automatically shall be renewed for successive 1 year periods thereafter, unless
sooner terminated pursuant to the terms hereof. Either Subsidiary Borrower or
Lender may terminate this Agreement effective on the Renewal Date or on any
anniversary of the Renewal Date by giving the other party at least 90 days prior
written notice thereof. The foregoing notwithstanding, Lender shall have the
right to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.

        3.5 EFFECT OF TERMINATION. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Subsidiary
Borrower with respect to any outstanding Letters of Credit) immediately shall
become due and payable without notice or demand. No termination of this
Agreement, however, shall relieve or discharge Subsidiary Borrower of its
duties, Obligations, or covenants hereunder and the Lender's Liens in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and Lender's obligations to provide additional credit
hereunder have been terminated. When this Agreement has been terminated and all
of the Obligations have

                                      -37-
<PAGE>   44

been fully and finally discharged and Lender's obligations to provide additional
credit under the Subsidiary Loan Documents have been terminated irrevocably,
Lender will, at Subsidiary Borrower's sole expense, execute and deliver any UCC
termination statements, lien releases, mortgage releases, re-assignments of
trademarks, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, the Lender's Liens and all notices of
security interests and liens previously filed by Lender with respect to the
Obligations.

        3.6 EARLY TERMINATION BY SUBSIDIARY BORROWER. Subsidiary Borrower has
the option, at any time upon 90 days prior written notice by Subsidiary Borrower
to Lender, to terminate this Agreement by paying to Lender, in cash, the
Obligations (including either (i) providing cash collateral to be held by Lender
in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to Lender). If Subsidiary
Borrower has sent a notice of termination pursuant to the provisions of this
Section, then Lender's obligations to extend credit hereunder shall terminate
and Subsidiary Borrower shall be obligated to repay the Obligations (including
either (i) providing cash collateral to be held by Lender in an amount equal to
105% of the then extant Letter of Credit Usage, or (ii) causing the original
Letters of Credit to be returned to Lender), on the date set forth as the date
of termination of this Agreement in such notice.

4. CREATION OF SECURITY INTEREST.

        4.1 [INTENTIONALLY OMITTED].

        4.2 [INTENTIONALLY OMITTED].

        4.3 [INTENTIONALLY OMITTED].

        4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Lender, Subsidiary Borrower shall execute and deliver to Lender, any
and all financing statements, original financing statements in lieu of
continuation statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title, and all other documents (the
"Additional Documents") that Lender may request in its Permitted Discretion, in
form and substance satisfactory to Lender, to perfect and continue perfected or
better perfect the Lender's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Lender
in any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other
Subsidiary Loan Documents. To the maximum extent permitted by applicable law,
Subsidiary Borrower authorizes Lender to execute any such Additional Documents
in Subsidiary Borrower's name and authorize Lender to file such executed
Additional Documents in any appropriate filing office. In addition, on such
periodic basis as Lender shall require, Subsidiary Borrower shall (a) provide
Lender with a report of all new patentable, copyrightable, or trademarkable
materials acquired or generated by Subsidiary Borrower during the prior period,
(b) cause all patents, copyrights, and trademarks acquired or generated by
Subsidiary Borrower that are not already the subject of a registration with the

                                      -38-
<PAGE>   45

appropriate filing office (or an application therefor diligently prosecuted) to
be registered with such appropriate filing office in a manner sufficient to
impart constructive notice of Subsidiary Borrower's ownership thereof, and (c)
cause to be prepared, executed, and delivered to Lender supplemental schedules
to the applicable Subsidiary Loan Documents to identify such patents,
copyrights, and trademarks as being subject to the security interests created
thereunder.

        4.5 POWER OF ATTORNEY. Subsidiary Borrower hereby irrevocably makes,
constitutes, and appoints Lender (and any of Lender's officers, employees, or
Lenders designated by Lender) as Subsidiary Borrower's true and lawful attorney,
with power to (a) if Subsidiary Borrower refuses to, or fails timely to execute
and deliver any of the documents described in Section 4.4, sign the name of
Subsidiary Borrower on any of the documents described in Section 4.4, (b) at any
time that an Event of Default has occurred and is continuing, sign Subsidiary
Borrower's name on any invoice or bill of lading relating to the Collateral,
drafts against Account Debtors, or notices to Account Debtors, (c) send requests
for verification of Accounts, (d) endorse Subsidiary Borrower's name on any
Collection item that may come into Lender's possession, (e) at any time that an
Event of Default has occurred and is continuing, make, settle, and adjust all
claims under Subsidiary Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and (f)
at any time that an Event of Default has occurred and is continuing, settle and
adjust disputes and claims respecting the Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that
Lender determines to be reasonable, and Lender may cause to be executed and
delivered any documents and releases that Lender determines to be necessary. The
appointment of Lender as Subsidiary Borrower's attorney, and each and every one
of its rights and powers, being coupled with an interest, is irrevocable until
all of the Obligations have been fully and finally repaid and performed and
Lender's obligations to extend credit hereunder are terminated.

        4.6 RIGHT TO INSPECT. Lender (through any of its respective officers,
employees, or agents) shall have the right, from time to time hereafter to
inspect the Books and to check, test, and appraise the Collateral in order to
verify Subsidiary Borrower's financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral.

        4.7 CONTROL AGREEMENTS. Subsidiary Borrower agrees that it will not
transfer assets out of any Securities Accounts other than as permitted under
Section 7.19 and, if to another securities intermediary, unless each of
Subsidiary Borrower, Lender, and the substitute securities intermediary have
entered into a Control Agreement. No arrangement contemplated hereby or by any
Control Agreement in respect of any Securities Accounts or other Investment
Property shall be modified by Subsidiary Borrower without the prior written
consent of Lender. Upon the occurrence and during the continuance of a Default
or Event of Default, Lender may notify any securities intermediary to liquidate
the applicable Securities Account or any related Investment Property maintained
or held thereby and remit the proceeds thereof to the Lender's Account.

                                      -39-
<PAGE>   46

5. REPRESENTATIONS AND WARRANTIES.

            In order to induce Lender to enter into this Agreement, Subsidiary
Borrower makes the following representations and warranties to Lender which
shall be true, correct, and complete, in all material respects, as of the date
hereof, and shall be true, correct, and complete, in all material respects, as
of the Closing Date, and at and as of the date of the making of each Subsidiary
Borrower Advance (or other extension of credit) made thereafter, as though made
on and as of the date of such Subsidiary Borrower Advance (or other extension of
credit) (except to the extent that such representations and warranties relate
solely to an earlier date) and such representations and warranties shall survive
the execution and delivery of this Agreement:

        5.1 NO ENCUMBRANCES. Subsidiary Borrower has good and indefeasible title
to its Collateral and the Real Property, free and clear of Liens except for
Permitted Liens.

        5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide existing
payment obligations of Account Debtors created by the sale and delivery of
Inventory or the rendition of services to such Account Debtors in the ordinary
course of Subsidiary Borrower's business, owed to Subsidiary Borrower without
known defenses, disputes, offsets, counterclaims, or rights of return or
cancellation. As to each Eligible Account, such Account is not:

                (a) owed by an employee, Affiliate, or agent of Subsidiary
Borrower,

                (b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a bill and hold, or on any other terms by reason of which the
payment by the Account Debtor may be conditional,

                (c) payable in a currency other than a Specified Currency,

                (d) owed by an Account Debtor that has or has asserted a right
of setoff, has disputed its liability, or has made any claim with respect to its
obligation to pay the account,

                (e) owed by an Account Debtor that is subject to any Insolvency
Proceeding or is not Solvent or as to which Subsidiary Borrower has received
notice of an imminent Insolvency Proceeding or a material impairment of the
financial condition of such Account Debtor,

                (f) on account of a transaction as to which the goods giving
rise to such Account have not been shipped and billed to the Account Debtor or
the services giving rise to such Account have not been performed and accepted by
the Account Debtor,

                                      -40-
<PAGE>   47

                (g) a right to receive progress payments or other advance
billings that are due prior to the completion of performance by Subsidiary
Borrower of the subject contract for goods or services, and

                (h) an Account that has not been billed to the customer.

        5.3 [INTENTIONALLY OMITTED]

        5.4 EQUIPMENT. All of the Equipment is used or held for use in
Subsidiary Borrower's business and is fit for such purposes.

        5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment are
not stored with a bailee, warehouseman, or similar party and, other than
Inventory and Equipment in transit, are located only at the locations identified
on Schedule 5.5.

        5.6 INVENTORY RECORDS. Subsidiary Borrower keeps correct and accurate
records itemizing and describing the type, quality, and quantity of its
Inventory and the book value thereof.

        5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive office
of Subsidiary Borrower is located at the address indicated in Schedule 5.7 and
the tax payer identification number of Subsidiary Borrower is identified in
Schedule 5.7.

        5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES

                (a) Subsidiary Borrower is duly organized and existing and in
good standing under the laws of the jurisdiction of its organization and
qualified to do business in any state where the failure to be so qualified
reasonably could be expected to have a Material Adverse Change.

                (b) Set forth on Schedule 5.8(b), is a complete and accurate
description of the authorized capital Stock of Subsidiary Borrower, by class,
and, as of the Closing Date, a description of the number of shares of each such
class that are issued and outstanding. Other than as described on Schedule
5.8(b), there are no subscriptions, options, warrants, or calls relating to any
shares of Subsidiary Borrower's capital Stock, including any right of conversion
or exchange under any outstanding security or other instrument. Subsidiary
Borrower is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital Stock or any
security convertible into or exchangeable for any of its capital Stock.

                (c) Set forth on Schedule 5.8(c), is a complete and accurate
list of Subsidiary Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock or ordinary and preferred shares authorized for each
of such Subsidiaries; and (iii) the number and the percentage of the outstanding
shares of each such class owned directly or indirectly

                                      -41-
<PAGE>   48

by Subsidiary Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.

                (d) Except as set forth on Schedule 5.8(c), there are no
subscriptions, options, warrants, or calls relating to any shares of the capital
Stock of any Subsidiary of Subsidiary Borrower, including any right of
conversion or exchange under any outstanding security or other instrument.
Neither Subsidiary Borrower nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of any Subsidiary Borrower's Subsidiaries' capital Stock or
any security convertible into or exchangeable for any such capital Stock.

        5.9 Due Authorization; No Conflict.

                (a) The execution, delivery, and performance by Subsidiary
Borrower of this Agreement and the Subsidiary Loan Documents to which it is a
party have been duly authorized by all necessary action on the part of
Subsidiary Borrower.

                (b) The execution, delivery, and performance by Subsidiary
Borrower of this Agreement and the Subsidiary Loan Documents to which it is a
party do not and will not (i) violate any provision of law or regulation
applicable to Subsidiary Borrower, the Governing Documents of Subsidiary
Borrower, or any order, judgment, or decree of any court or other Governmental
Authority binding on Subsidiary Borrower, (ii) conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of Subsidiary Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature whatsoever upon any
properties or assets of Subsidiary Borrower, other than Permitted Liens, or (iv)
require any approval of Subsidiary Borrower's interestholders or any approval or
consent of any Person under any material contractual obligation of Subsidiary
Borrower.

                (c) Other than the filing of financing statements and fixture
filings, certain of the Subsidiary Loan Documents with the SEC, filings with the
registrar of Companies House in the United Kingdom, the execution, delivery, and
performance by Subsidiary Borrower of this Agreement and the Subsidiary Loan
Documents to which Subsidiary Borrower is a party do not and will not require
any registration with, consent, or approval of, or notice to, or other action
with or by, any Governmental Authority or other Person.

                (d) This Agreement and the other Subsidiary Loan Documents to
which Subsidiary Borrower is a party, and all other documents contemplated
hereby and thereby, when executed and delivered by Subsidiary Borrower will be
the legally valid and binding obligations of Subsidiary Borrower, enforceable
against Subsidiary Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.

                                      -42-
<PAGE>   49

                (e) The Lender's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens

                (f) As to each Guarantor, the execution, delivery, and
performance by such Guarantor of the Subsidiary Loan Documents to which it is a
party have been duly authorized by all necessary action on the part of such
Guarantor.

                (g) As to each Guarantor, the execution, delivery, and
performance by such Guarantor of the Subsidiary Loan Documents to which it is a
party do not and will not (i) violate any provision of law or regulation
applicable to such Guarantor, the Governing Documents of such Guarantor, or any
order, judgment, or decree of any court or other Governmental Authority binding
on such Guarantor, (ii) conflict with, result in a breach of, or constitute
(with due notice or lapse of time or both) a default under any material
contractual obligation of such Guarantor, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of such Guarantor, other than Permitted Liens, or (iv) require any
approval of such Guarantor's interestholders or any approval or consent of any
Person under any material contractual obligation of such Guarantor.

                (h) As to each Guarantor, the execution, delivery, and
performance by such Guarantor of the Subsidiary Loan Documents to which such
Guarantor is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any Governmental
Authority or other Person.

            As to each Guarantor, the Subsidiary Loan Documents to which such
Guarantor is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by such Guarantor will be legally valid and binding
obligations of such Guarantor, enforceable against such Guarantor in accordance
with their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors' rights generally.

        5.10 Litigation. Other than those matters disclosed on Schedule 5.10,
there are no actions, suits, or proceedings pending or, to the best knowledge of
Subsidiary Borrower, threatened against Subsidiary Borrower, except for (a)
matters that are fully covered by insurance (subject to customary deductibles),
and (b) matters arising after the Closing Date that, if decided adversely to
Subsidiary Borrower reasonably could not be expected to result in a Material
Adverse Change.

        5.11 No Material Adverse Change. All financial statements relating to
Subsidiary Borrower that have been delivered by Subsidiary Borrower to Lender
have been prepared in accordance with GAAP (except, in the case of unaudited
financial statements, for the lack of footnotes and being subject to year-end
audit adjustments) and present fairly in all material respects, Subsidiary
Borrower's financial condition as of the date thereof and results of operations
for the period then ended. There has not been a Material Adverse Change with

                                      -43-
<PAGE>   50

respect to Subsidiary Borrower since the date of the latest financial statements
submitted to Lender on or before the Closing Date.

        5.12 Fraudulent Transfer.

                (a) Subsidiary Borrower is Solvent.

                (b) No transfer of property is being made by Subsidiary Borrower
and no obligation is being incurred by Subsidiary Borrower in connection with
the transactions contemplated by this Agreement or the other Subsidiary Loan
Documents with the intent to hinder, delay, or defraud either present or future
creditors of Subsidiary Borrower.

        5.13 Employee Benefits. Except for mandatory Benefit Plans, none of
Subsidiary Borrower or any of its ERISA Affiliates maintains or contributes to
any Benefit Plan. Each mandatory Benefit Plan has been operated and administered
and complies in all material respects with applicable laws.

        5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a)
to Subsidiary Borrower's knowledge, none of Subsidiary Borrower's properties or
assets has ever been used by Subsidiary Borrower or by previous owners or
operators in the disposal of, or to produce, store, handle, treat, release, or
transport, any Hazardous Materials, where such production, storage, handling,
treatment, release or transport was in violation, in any material respect, of
applicable Environmental Law, (b) to Subsidiary Borrower's knowledge, none of
Subsidiary Borrower's properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
Hazardous Materials disposal site, (c) Subsidiary Borrower has not received
notice that a Lien arising under any Environmental Law has attached to any
revenues or to any Real Property owned or operated by Subsidiary Borrower, and
(d) Subsidiary Borrower has not received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Subsidiary Borrower
resulting in the releasing or disposing of Hazardous Materials into the
environment.

        5.15 Brokerage Fees. Subsidiary Borrower has not utilized the services
of any broker or finder in connection with Subsidiary Borrower obtaining
financing from Lender under this Agreement and no brokerage commission or
finders fee is payable by Subsidiary Borrower in connection herewith.

        5.16 Intellectual Property. Subsidiary Borrower owns, or holds licenses
in, all Intellectual Property that is necessary to the conduct of its business
as currently conducted. Attached hereto as Schedule 5.16 is a true, correct, and
complete listing of all Intellectual Property as to which Subsidiary Borrower is
the owner or is an exclusive licensee. Subsidiary Borrower holds no copyrights
or exclusive licenses relative to copyrights.

        5.17 Leases. Subsidiary Borrower enjoys peaceful and undisturbed
possession under all leases material to the business of Subsidiary Borrower and
to which Subsidiary Borrower is a party or under which Subsidiary Borrower is
operating. All of such leases are

                                      -44-
<PAGE>   51

valid and subsisting and no material default by Subsidiary Borrower exists under
any of them.

        5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of Subsidiary
Borrower, including, with respect to each depository (i) the name and address of
such depository, and (ii) the account numbers of the accounts maintained with
such depository.

        5.19 Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of Subsidiary Borrower in writing to Lender (including
all information contained in the Schedules hereto or in the other Subsidiary
Loan Documents) for purposes of or in connection with this Agreement, the other
Subsidiary Loan Documents or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Subsidiary Borrower in writing to the Lender will be, true and
accurate, in all material respects, on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided.

        5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete
list of all Indebtedness of Subsidiary Borrower outstanding immediately prior to
the Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.

        5.21 Review and Approval of Parent Loan Agreement. Subsidiary Borrower
has reviewed the Parent Loan Agreement and all Exhibits and Schedules referred
to therein and has approved all terms and conditions relating to or affecting
Subsidiary Borrower contained therein. Subsidiary Borrower acknowledges and
agrees that the credit facility evidenced hereby shall terminate automatically
and be of no further force and effect in the event that the Parent Loan
Agreement shall terminate for any reason.

6. AFFIRMATIVE COVENANTS.

            Subsidiary Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Subsidiary Borrower shall do and shall cause each of its
Subsidiaries to do all of the following:

        6.1 Accounting System. Maintain a system of accounting that enables
Subsidiary Borrower to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Lender. Subsidiary Borrower also
shall keep an inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to the Inventory.

        6.2 Collateral Reporting. Provide Lender with the following documents at
the following times in form satisfactory to Lender:

                                      -45-
<PAGE>   52

--------------------------------------------------------------------------------
Weekly

                      (a) a sales journal, collection journal, and credit
                      register since the last such schedule (each such journal
                      and register shall identify separately all Accounts
                      arising from Subsidiary Borrower's provision of services
                      as an application services provider) and a calculation of
                      the Subsidiary Borrower Borrowing Base as of such date,
                      and

                      (b) notice of all returns, disputes, or claims.
--------------------------------------------------------------------------------

Monthly (not later    (c) Inventory reports specifying Subsidiary Borrower's
than the 15th day     cost of its Inventory, by category,
of each month)

                      (d) a detailed calculation of the Subsidiary Borrower
                      Borrowing Base (including detail regarding those Accounts
                      that are not Eligible Accounts and detail identifying
                      separately all Accounts arising from Subsidiary Borrower's
                      provision of services as an application services
                      provider),

                      (e) a detailed aging, by total, of the Accounts of
                      Subsidiary Borrower (each such aging shall identify
                      separately all Accounts arising from Subsidiary Borrower's
                      provision of services as an application services
                      provider), together with a reconciliation to the detailed
                      calculation of the Subsidiary Borrower Borrowing Base
                      previously provided to Lender,

                      (f) a summary aging, by vendor, of Subsidiary Borrower's
                      accounts payable and any book overdraft,

                      (g) a report calculating the Qualified Cash Amount for
                      each day of the prior month,

                      (h) a calculation of Dilution and ASP Dilution for the
                      prior month, and

                      (i) a detailed calculation of Subsidiary Borrower's
                      Collections for the immediately preceding month.
--------------------------------------------------------------------------------
Quarterly             (j) a detailed list of Subsidiary Borrower's customers,

                      (k) a report regarding Subsidiary Borrower's accrued, but
                      unpaid, ad valorem taxes,

--------------------------------------------------------------------------------
Upon request by       (l) copies of invoices in connection with the accounts,
Lender                credit memos, remittance advices, deposit slips, shipping
                      and delivery documents in connection with the Accounts
                      and, for Inventory and Equipment acquired by Subsidiary
                      Borrower, purchase orders and invoices, and

                      (m) such other reports as to the Collateral or the
                      financial condition of Subsidiary Borrower as Lender may
                      request.
--------------------------------------------------------------------------------

                                      -46-
<PAGE>   53

            In addition, Subsidiary Borrower agrees to cooperate fully with
Lender to facilitate and implement a system of electronic collateral reporting
in order to provide electronic reporting of each of the items set forth above.

        6.3 Financial Statements, Reports, Certificates. Deliver to Lender:

                (a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year) after the end of each month during each of Parent's
fiscal years,

                   (i) a company prepared consolidated balance sheet, income
               statement, and statement of cash flow covering Parent's and its
               Subsidiaries' operations during such period,

                   (ii) a certificate signed by the chief financial officer of
               Parent to the effect that:

                             A. the financial statements delivered hereunder
                      have been prepared in accordance with GAAP (except for the
                      lack of footnotes and being subject to year-end audit
                      adjustments) and fairly present in all material respects
                      the financial condition of Parent and its Subsidiaries,

                             B. the representations and warranties of Borrowers
                      contained in this Agreement and the other Loan Documents
                      are true and correct in all material respects on and as of
                      the date of such certificate, as though made on and as of
                      such date (except to the extent that such representations
                      and warranties relate solely to an earlier date), and

                             C. there does not exist any condition or event that
                      constitutes a Default or Event of Default (or, to the
                      extent of any non-compliance, describing such
                      non-compliance as to which he or she may have knowledge
                      and what action Borrowers have taken, are taking, or
                      propose to take with respect thereto), and

                   (iii) for each month that is the date on which a financial
               covenant in Section 7.20 of the Parent Loan Agreement is to be
               tested, a compliance certificate in the form attached to the
               Parent Loan Agreement demonstrating, in reasonable detail,
               compliance at the end of such period with the applicable
               financial covenants contained in Section 7.20 of the Parent Loan
               Agreement,

                   (iv) a certificate signed by the chief financial officer of
               Subsidiary Borrower to the effect that:

                             A. the representations and warranties of Subsidiary
                      Borrower contained in this Agreement and the other
                      Subsidiary Loan Documents

                                      -47-
<PAGE>   54

                      are true and correct in all material respects on and as of
                      the date of such certificate, as though made on and as of
                      such date (except to the extent that such representations
                      and warranties relate solely to an earlier date), and

                             B. there does not exist any condition or event that
                      constitutes a Default or Event of Default (or, to the
                      extent of any non-compliance, describing such
                      non-compliance as to which he or she may have knowledge
                      and what action Subsidiary Borrower has taken, is taking,
                      or proposes to take with respect thereto), and

                (b) as soon as available, but in any event within 90 days after
the end of each of Parent's fiscal years,

                   (i) financial statements of Parent and its Subsidiaries for
               each such fiscal year, audited by independent certified public
               accountants reasonably acceptable to Lender and certified,
               without any qualifications, by such accountants to have been
               prepared in accordance with GAAP (such audited financial
               statements to include a balance sheet, income statement, and
               statement of cash flow and, if prepared, such accountants' letter
               to management),

                   (ii) a certificate of such accountants addressed to Lender
               stating that such accountants do not have knowledge of the
               existence of any Default or Event of Default under Section 7.20
               of the Parent Loan Agreement,

                (c) as soon as available, but in any event within 30 days prior
to the start of each of Parent's fiscal years,

                   (i) copies of Borrowers' Projections, in form and substance
               (including as to scope and underlying assumptions) satisfactory
               to Lender, in its sole discretion, for the forthcoming 2 years,
               year by year, and for the forthcoming fiscal year, month by
               month, certified by the chief financial officer of Parent as
               being such officer's good faith best estimate of the financial
               performance of Parent and its Subsidiaries during the period
               covered thereby,

                   (d) if and when filed by any Borrower or Subsidiary Borrower,

                   (i) 10-Q quarterly reports, Form 10-K annual reports, Form
               8-K current reports, or any filings with the registrar of
               companies at Companies House,

                   (ii) any other filings made by any Borrower or Subsidiary
               Borrower with the SEC,

                                      -48-
<PAGE>   55

                   (iii) copies of (A) Borrowers' federal income tax returns,
               and any amendments thereto, filed with the Internal Revenue
               Service, and (B) Subsidiary Borrower's income tax returns filed
               with the Inland Revenue authorities in the United Kingdom, and

                   (iv) any other information that is provided by Parent to its
               shareholders generally,

                (e) if and when filed by any Borrower, Canadian Obligor, or
Subsidiary Borrower and as requested by Lender, satisfactory evidence of payment
of applicable excise taxes in each jurisdiction in which (i) any Borrower,
Canadian Obligor, or Subsidiary Borrower conducts business or is required to pay
any such excise tax, (ii) where any Borrower's, Canadian Obligor's, or
Subsidiary Borrower's failure to pay any such applicable excise tax would result
in a Lien on the properties or assets of any Borrower, Canadian Obligor, or
Subsidiary Borrower, as applicable, or (iii) where any Borrower's, Canadian
Obligor's, or Subsidiary Borrower's failure to pay any such applicable excise
tax reasonably could be expected to result in a Material Adverse Change,

                (f) as soon as Subsidiary Borrower has knowledge of any event or
condition that constitutes a Default or an Event of Default, notice thereof and
a statement of the curative action that Subsidiary Borrower proposes to take
with respect thereto, and

                (g) upon the request of Lender, any other report reasonably
requested relating to the financial condition of Subsidiary Borrower.

            In addition to the financial statements referred to above,
Subsidiary Borrower agrees to deliver financial statements prepared on both a
consolidated and consolidating basis and agrees that Subsidiary Borrower, or any
Subsidiary of Subsidiary Borrower, will not have a fiscal year different from
that of Parent. Subsidiary Borrower agrees that their independent certified
public accountants are authorized to communicate with Lender and to release to
Lender whatever financial information concerning Subsidiary Borrower that Lender
reasonably may request. Subsidiary Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Lender pursuant
to or in accordance with this Agreement, and agrees that Lender may contact
directly any such accounting firm or service bureau in order to obtain such
information.

        6.4 [Intentionally Omitted].

        6.5 Return. Cause returns and allowances as between Subsidiary Borrower
and its Account Debtors to be on the same basis and in accordance with the usual
customary practices of Subsidiary Borrower as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to
Subsidiary Borrower, Subsidiary Borrower promptly shall determine the reason for
such return and, if Subsidiary Borrower accepts such return, issue a credit
memorandum (with a copy to be sent to Lender) in the appropriate

                                      -49-
<PAGE>   56

amount to such Account Debtor. If, at a time when an Event of Default has
occurred and is continuing, any Account Debtor returns any Inventory to
Subsidiary Borrower, Subsidiary Borrower promptly shall determine the reason for
such return and, if Lender consents (which consent shall not be unreasonably
withheld), issue a credit memorandum (with a copy to be sent to Lender) in the
appropriate amount to such Account Debtor.

        6.6 Maintenance of Properties. Maintain and preserve all of its
properties which are necessary or useful in the proper conduct of its business
in good working order and condition, ordinary wear and tear excepted, and comply
at all times with the provisions of all leases to which it is a party as lessee,
so as to prevent any loss or forfeiture thereof or thereunder.

        6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Subsidiary
Borrower or any of its assets to be paid in full, before delinquency or before
the expiration of any extension period, except to the extent that the validity
of such assessment or tax shall be the subject of a Permitted Protest.
Subsidiary Borrower will make timely payment or deposit of all tax payments and
withholding taxes required of it by applicable laws, including those laws
concerning PAYE, National Insurance, and other social security payments, VAT,
and UK, and foreign income and corporation taxes, and will, upon request,
furnish Lender with proof satisfactory to Lender indicating that Subsidiary
Borrower has made such payments or deposits. Subsidiary Borrower shall deliver
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which Subsidiary Borrower is required to pay any such excise
tax.

        6.8 Insurance.

                (a) At Subsidiary Borrower's expense, maintain insurance
respecting its property and assets wherever located, covering loss or damage by
fire, theft, explosion, and all other hazards and risks as ordinarily are
insured against by other Persons engaged in the same or similar businesses.
Subsidiary Borrower also shall maintain business interruption, public liability,
and product liability insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation. All such policies of insurance
shall be in such amounts and with such insurance companies as are reasonably
satisfactory to Lender. Subsidiary Borrower shall deliver copies of all such
policies to Lender with a satisfactory lender's loss payable endorsement naming
Lender as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Lender in the event of
cancellation of the policy for any reason whatsoever.

                (b) Subsidiary Borrower shall give Lender prompt notice of any
loss covered by such insurance. Lender shall have the exclusive right to adjust
any losses payable under any such insurance policies in excess of $50,000,
without any liability to Subsidiary Borrower whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy mentioned above (other than liability insurance policies)

                                      -50-
<PAGE>   57

or as payment of any award or compensation for condemnation or taking by eminent
domain, shall be paid over to Lender to be applied at the option of Lender
either to the prepayment of the Obligations or shall be disbursed to Subsidiary
Borrower under staged payment terms reasonably satisfactory to Lender for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction.

                (c) Subsidiary Borrower shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required to be
maintained under this Section 6.8, unless Lender is included thereon as named
insured with the loss payable to Lender under a lender's loss payable
endorsement or its equivalent. Subsidiary Borrower immediately shall notify
Lender whenever such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the same, and
copies of such policies promptly shall be provided to Lender.

        6.9 Location of Inventory and Equipment. Keep the Inventory and
Equipment, other than Inventory and Equipment in transit, of Subsidiary Borrower
only at the locations identified on Schedule 5.5; provided, however, that
Subsidiary Borrower may amend Schedule 5.5 so long as such amendment occurs by
written notice to Lender not less than 30 days prior to the date on which such
inventory or equipment is moved to such new location, so long as such new
location is within the United Kingdom, and so long as, at the time of such
written notification, Subsidiary Borrower provides any filings necessary to
perfect and continue perfected the Lender's Liens, and also provides to Lender a
Collateral Access Agreement.

        6.10 Compliance with Laws. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any Governmental Authority,
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not result in and reasonably could not
be expected to result in a Material Adverse Change.

        6.11 Leases. Pay when due all rents and other amounts payable under any
leases to which Subsidiary Borrower is a party or by which any properties and
assets of Subsidiary Borrower is bound, unless such payments are the subject of
a Permitted Protest.

        6.12 Brokerage Commissions. Pay any and all brokerage commission or
finders fees incurred in connection with or as a result of Subsidiary Borrower
obtaining financing from Lender under this Agreement. Subsidiary Borrower agrees
and acknowledges that payment of all such brokerage commissions or finders fees
shall be the sole responsibility of Subsidiary Borrower, and Subsidiary Borrower
agrees to indemnify, defend, and hold Lender harmless from and against any claim
of any broker or finder arising out of Subsidiary Borrower obtaining financing
from Lender under this Agreement.

                                      -51-
<PAGE>   58

        6.13 Existence. At all times preserve and keep in full force and effect
Subsidiary Borrower's and each Canadian Obligor's valid existence and good
standing and any rights and franchises material to Subsidiary Borrower's
businesses.

        6.14 Environmental.

                (a) Keep any property either owned or operated by Subsidiary
Borrower free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, (b) comply, in all material respects, with Environmental
Laws and provide to Lender documentation of such compliance which Lender
reasonably requests, (c) promptly notify Lender of any release of a Hazardous
Material of any reportable quantity from or onto property owned or operated by
Subsidiary Borrower and take any Remedial Actions required to abate said release
or otherwise to come into compliance with applicable Environmental Law, and (d)
promptly provide Lender with written notice within 10 days of the receipt of any
of the following: (i) notice that an Environmental Lien has been filed against
any of the real or personal property of Subsidiary Borrower, (ii) commencement
of any Environmental Action or notice that an Environmental Action will be filed
against Subsidiary Borrower, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.

        6.15 Disclosure Updates. Promptly and in no event later than 5 Business
Days after obtaining knowledge thereof, (a) notify Lender if any written
information, exhibit, or report furnished to Lender contained any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Subsidiary Loan Document or in the execution,
acknowledgement, filing, or recordation thereof.

        6.16 Compliance with Covenants of Parent Loan Agreement. Promptly take
all such actions as are necessary to assure that as a Subsidiary of Parent it is
in compliance with all requirements applicable to Subsidiaries of Parent
pursuant to the Parent Loan Agreement.

7. NEGATIVE COVENANTS.

            Subsidiary Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Subsidiary Borrower will not and will not permit any of its
Subsidiaries to do any of the following:

        7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

                (a) Indebtedness evidenced by this Agreement and the other Loan
Documents, together with Indebtedness owed to Underlying Issuers with respect to
Underlying Letters of Credit;

                                      -52-
<PAGE>   59

                (b) Indebtedness set forth on Schedule 5.20;

                (c) Permitted Purchase Money Indebtedness;

                (d) refinancings, renewals, or extensions of Indebtedness
permitted under clauses (b) and (c) of this Section 7.1 (and continuance or
renewal of any Permitted Liens associated therewith) so long as: (i) the terms
and conditions of such refinancings, renewals, or extensions do not, in Lender's
judgment, materially impair the prospects of repayment of the Obligations by
Subsidiary Borrower or materially impair Subsidiary Borrower's creditworthiness,
(ii) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended, (iii) such refinancings, renewals, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, nor are they on terms or
conditions, that, taken as a whole, are materially more burdensome or
restrictive to Subsidiary Borrower, and (iv) if the Indebtedness that is
refinanced, renewed, or extended was subordinated in right of payment to the
Obligations, then the terms and conditions of the refinancing, renewal, or
extension Indebtedness must include subordination terms and conditions that are
at least as favorable to Lender as those that were applicable to the refinanced,
renewed, or extended Indebtedness; and

                (e) Indebtedness composing Permitted Investments.

        7.2 Liens. Create, incur, assume, or permit to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(d) and so long as the replacement Liens only encumber
those assets that secured the refinanced, renewed, or extended Indebtedness).

        7.3 Restrictions on Fundamental Changes.

                (a) Except in connection with the consummation of a Permitted
Acquisition (provided, however, that in any such Permitted Acquisition,
Subsidiary Borrower shall be the surviving entity of any merger, consolidation,
reorganization, or recapitalization), enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its Stock;

                (b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution); and

                (c) Convey, sell, lease, license, assign, transfer, or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.

        7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell,
lease, license, assign, transfer, or otherwise dispose of Subsidiary Borrower's
assets.

                                      -53-
<PAGE>   60

        7.5 Change Name. Change Subsidiary Borrower's name, FEIN (or foreign
equivalent), corporate structure or identity, or add any new fictitious name;
provided, however, that Subsidiary Borrower may change its name upon at least 30
days prior written notice by Subsidiary Borrower to Lender of such change and so
long as, at the time of such written notification, Subsidiary Borrower provides
any filings necessary to perfect and continue perfected Lender's Liens.

        7.6 Guarantee. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Subsidiary
Borrower or which are transmitted or turned over to Lender.

        7.7 Nature of Business. Make any change in the principal nature of
Subsidiary Borrower's business.

        7.8 Prepayments and Amendments.

                (a) Except in connection with a refinancing permitted by Section
7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness
of Subsidiary Borrower, any Borrower, Canadian Obligor, or UK Holding Company,
other than the Obligations in accordance with this Agreement or the Indebtedness
under the Parent Loan Agreement in accordance with its terms, and

                (b) Except in connection with a refinancing permitted by Section
7.1(d), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b) or (c).

        7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.

        7.10 Consignments. Consign any Inventory or sell any Inventory on bill
and hold, sale or return, sale on approval, or other conditional terms of sale.

        7.11 Distributions. Make any distribution or declare or pay any
dividends (in cash or other property other than by way of a rights or bonus
issue of ordinary shares) on, or purchase, acquire, redeem, or retire any of
Subsidiary Borrower's Stock, of any class, whether now or hereafter outstanding;
provided, however, that Subsidiary Borrower may declare and pay dividends to UK
Holding Company so long as (i) after the receipt by UK Holding Company of the
proposed dividend, Parent continues to own and control 100% of the outstanding
capital Stock of UK Holding Company, and (ii) immediately upon receipt thereof,
UK Holding Company declares and pays a dividend to Parent of all amounts
received pursuant to clause (i) above.

        7.12 Accounting Methods. Modify or change its method of accounting
(other than as may be required to conform to GAAP) or enter into, modify, or
terminate any agreement

                                      -54-
<PAGE>   61

currently existing, or at any time hereafter entered into with any third party
accounting firm or service bureau for the preparation or storage of Subsidiary
Borrower's accounting records without said accounting firm or service bureau
agreeing to provide Lender information regarding the Collateral or the financial
condition of Subsidiary Borrower.

        7.13 Investments. Except for Permitted Investments and Permitted
Acquisitions, directly or indirectly, make or acquire any Investment, or incur
any liabilities (including contingent obligations) for or in connection with any
Investment; provided, however, that Subsidiary Borrower shall not have Permitted
Investments (other than in the Cash Management Accounts) in excess of $50,000
outstanding at any one time unless Subsidiary Borrower and the applicable
securities intermediary or bank have entered into Control Agreements or similar
arrangements governing such Permitted Investments, as Lender shall determine in
its Permitted Discretion, to perfect (and further establish) the Lender's Liens
in such Permitted Investments. Anything in this Section 7.13, this Agreement, or
any of the other Subsidiary Loan Documents to the contrary notwithstanding,
Subsidiary Borrower shall not permit a CFC to consummate an Acquisition of
another CFC unless any such Acquisition is a Permitted Cash Acquisition or
Permitted Non-Cash Acquisition.

        7.14 Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Subsidiary Borrower except
for transactions that are in the ordinary course of Subsidiary Borrower's
business, upon fair and reasonable terms, that are fully disclosed to Lender,
and that are no less favorable to Subsidiary Borrower than would be obtained in
an arm's length transaction with a non-Affiliate.

        7.15 Suspension. Suspend or go out of a substantial portion of its
business.

        7.16 [Intentionally Omitted].

        7.17 Use of Proceeds. Use the proceeds of the Subsidiary Borrower
Advances for any purpose other than (a) on the Closing Date, (i) to repay in
full the outstanding principal, accrued interest, and accrued fees and expenses
owing to Existing Lender, and (ii) to pay transactional fees, costs, and
expenses incurred in connection with this Agreement, the other Subsidiary Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes; provided, however, that Subsidiary Borrower shall not use
the proceeds of the Subsidiary Borrower Advances to acquire shares in UK Holding
Company or Subsidiary Borrower, any company (as defined by the Companies Act)
which is a holding company of the UK Holding Company, Subsidiary Borrower, or
any company (as defined in the Companies Act) which is a subsidiary company of
the UK Holding Company or Subsidiary Borrower.

        7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. Relocate its registered office to a new location without
Subsidiary Borrower providing 30 days prior written notification thereof to
Lender and so long as, at the time of such written notification, Subsidiary
Borrower provides any filings necessary to perfect and

                                      -55-
<PAGE>   62

continue perfected the Lender's Liens and also provides to Lender a Collateral
Access Agreement with respect to such new location. Other than in transit
Inventory and Equipment of Subsidiary Borrower, the Inventory and Equipment of
Subsidiary Borrower shall not at any time now or hereafter be stored with a
bailee, warehouseman, or similar party without Lender's prior written consent.

        7.19 Securities Accounts. Establish or maintain any Securities Account
unless Lender shall have received a Control Agreement in respect of such
Securities Account. Subsidiary Borrower agrees to not transfer assets out of any
Securities Account; provided, however, that, so long as no Event of Default has
occurred and is continuing or would result therefrom, Subsidiary Borrower may
use such assets (and the proceeds thereof) to the extent not prohibited by this
Agreement.

        7.20 Compliance with Covenants of Parent Loan Agreement. Take any action
which would cause Parent or the other Borrowers to be in violation of any
material term or provision of the Parent Loan Agreement or any other Loan
Document to which such Borrower may be a party.

8. EVENTS OF DEFAULT.

            Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:

        8.1 If Subsidiary Borrower fails to pay when due and payable or when
declared due and payable, all or any portion of the Obligations (whether of
principal, interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due
Lender, reimbursement of Lender Expenses, or other amounts constituting
Obligations);

        8.2 If Subsidiary Borrower fails to perform, keep, or observe (a) any
term, provision, condition, covenant, or agreement (i) contained in Sections 6.2
or 6.3 hereof and such failure or neglect continues for a period of 5 days after
the date on which such failure or neglect first occurs, (ii) contained in
Sections 6.6 or 6.10 hereof and such failure or neglect continues for a period
of 15 days after the date on which such failure or neglect first occurs, or (b)
any other term, provision, condition, covenant, or agreement contained in this
Agreement or in any of the other Subsidiary Borrower Loan Documents (giving
effect to any grace period, cure periods, or required notices, if any, expressly
provided for in such other Subsidiary Borrower Loan Documents, in each case,
other than any term, provision, condition, covenant, or agreement that is the
subject of another provision of this Section 8, in which event such other
provision of this Section 8 shall govern); provided, that, during any period of
time that any such failure or neglect of the Borrowers referred to in this
Section 8.2 exists, even if such failure or neglect is not yet an Event of
Default by virtue of the existence of a grace or cure period or the precondition
of the giving of a notice, Lender shall not be required to make further
Subsidiary Borrower Advances or issue any Letters of Credit;

                                      -56-
<PAGE>   63

        8.3 If any material portion of Subsidiary Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;

        8.4 If an Insolvency Proceeding is commenced by Subsidiary Borrower or
any of its Subsidiaries;

        8.5 If an Insolvency Proceeding is commenced against Subsidiary
Borrower, or any of its Subsidiaries, and any of the following events occur: (a)
Subsidiary Borrower or the Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Lender shall be relieved of its obligation to extend credit hereunder, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Subsidiary Borrower or any of its Subsidiaries, or
(e) an order for relief shall have been entered therein;

        8.6 If Subsidiary Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;

        8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to Subsidiary Borrower's or any of its Subsidiaries' assets by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether choate or otherwise, upon Subsidiary Borrower's or any of its
Subsidiaries' assets and the same is not paid before such payment is delinquent;

        8.8 If a judgment or other claim becomes a Lien or encumbrance upon any
material portion of Subsidiary Borrower's or any of its Subsidiaries' assets;

        8.9 If there is a default in any material agreement, including any
agreement with any purchase money financier or equipment lessor to which
Subsidiary Borrower or any of its Subsidiaries is a party and such default (a)
occurs at the final maturity of the obligations thereunder, or (b) results in a
right by the other party thereto, irrespective of whether exercised, to
accelerate the maturity of Subsidiary Borrower's or its Subsidiaries'
obligations thereunder, to terminate such agreement, or to refuse to renew such
agreement pursuant to an automatic renewal right therein;

        8.10 If any software licensor of Subsidiary Borrower gives notice of its
election to terminate any agreement between such Person and Subsidiary Borrower
and Subsidiary Borrower does not have a suitable substitute for the licensed
software;

        8.11 If Subsidiary Borrower or any of its Subsidiaries makes any payment
on account of Indebtedness that has been contractually subordinated in right of
payment to the

                                      -57-
<PAGE>   64

payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;

        8.12 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to Lender
by Subsidiary Borrower, its Subsidiaries, or any officer, employee, agent, or
director of Subsidiary Borrower or any of its Subsidiaries;

        8.13 If the obligation of any Guarantor under its guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;

        8.14 If this Agreement or any other Subsidiary Loan Document that
purports to create a Lien, shall, for any reason, fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral covered
hereby or thereby;

        8.15 Any provision of any Subsidiary Loan Document shall at any time for
any reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by Subsidiary Borrower, or a proceeding shall be
commenced by Subsidiary Borrower, or by any Governmental Authority having
jurisdiction over Subsidiary Borrower, seeking to establish the invalidity or
unenforceability thereof, or Subsidiary Borrower shall deny that any Borrower
has any liability or obligation purported to be created under any Loan Document;
or

        8.16 If there is a default in any Loan Document and such default (a)
occurs at the final maturity of the obligations thereunder, or (b) results in a
right by Lender, irrespective of whether exercised, to accelerate the maturity
of the Borrowers' obligations thereunder, to terminate such agreement, or to
refuse to renew such agreement pursuant to an automatic renewal right therein.

9. THE LENDER'S RIGHTS AND REMEDIES.

        9.1 Rights and Remedies. Upon the occurrence, and during the
continuation, of an Event of Default, Lender (at its election but without notice
of its election and without demand) may do any one or more of the following, all
of which are authorized by Subsidiary Borrower:

                (a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Subsidiary Loan Documents, or otherwise,
immediately due and payable;

                (b) Cease advancing money or extending credit to or for the
benefit of Subsidiary Borrower under this Agreement, under any of the Subsidiary
Loan Documents, or under any other agreement between Subsidiary Borrower and
Lender;

                                      -58-
<PAGE>   65

                (c) Terminate this Agreement and any of the other Subsidiary
Loan Documents as to any future liability or obligation of Lender, but without
affecting any of the Lender's Liens in the Collateral and without affecting the
Obligations;

                (d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Lender considers advisable, and in such
cases, Lender will credit the Loan Account with only the net amounts received by
Lender in payment of such disputed Accounts after deducting all Lender Expenses
incurred or expended in connection therewith;

                (e) Hold, as cash collateral, any and all balances and deposits
of Subsidiary Borrower held by Lender, and any amounts received in the Cash
Management Accounts, to secure the full and final repayment of all of the
Obligations;

                (f) With respect to any of Subsidiary Borrower's owned or leased
premises, Subsidiary Borrower hereby grants Lender a license to enter into
possession of such premises and to occupy the same, in accordance with the terms
of the relevant signed waiver and consent of real property owners, if any, in
favor of Lender, without charge, in order to exercise any of Lender's rights or
remedies provided herein, at law, in equity, or otherwise;

                (g) Lender shall have all other rights and remedies available to
it at law or in equity pursuant to any other Subsidiary Loan Documents; and

                (h) Any deficiency that exists after disposition of the Personal
Property Collateral as provided above will be paid immediately by Subsidiary
Borrower. Any excess will be returned, without interest and subject to the
rights of third Persons, by Lender to Subsidiary Borrower.

        9.2 Remedies Cumulative. The rights and remedies of Lender under this
Agreement, the other Subsidiary Loan Documents, and all other agreements shall
be cumulative. Lender shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No exercise by Lender
of one right or remedy shall be deemed an election, and no waiver by Lender of
any Event of Default shall be deemed a continuing waiver. No delay by Lender
shall constitute a waiver, election, or acquiescence by it.

10. TAXES AND EXPENSES.

            If Subsidiary Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Lender, in its sole discretion
and without prior notice to Subsidiary Borrower, may do any or all of the
following: (a) make payment of the same or any part thereof, (b) set up such
reserves in Subsidiary Borrower's Loan Account as Lender deems necessary to
protect Lender from the exposure created by such failure, or (c) in the case of
the failure to comply

                                      -59-
<PAGE>   66

with Section 6.8 hereof, obtain and maintain insurance policies of the type
described in Section 6.8 and take any action with respect to such policies as
Lender deems prudent. Any such amounts paid by Lender shall constitute Lender
Expenses and any such payments shall not constitute an agreement by Lender to
make similar payments in the future or a waiver by Lender of any Event of
Default under this Agreement. Lender need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.

11. WAIVERS; INDEMNIFICATION.

        11.1 Demand; Protest. Subsidiary Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by
Lender on which Subsidiary Borrower may in any way be liable.

        11.2 Lender's Liability for Collateral. Subsidiary Borrower hereby
agrees that: (a) so long as Lender complies with its obligations, if any, under
the Code, Lender shall not in any way or manner be liable or responsible for:
(i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring
or arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Subsidiary Borrower.

        11.3 Indemnification. Subsidiary Borrower shall pay, indemnify, defend,
and hold the Lender-Related Persons, each Participant, and each of their
respective officers, directors, employees, agents, and attorneys-in-fact (each,
an "Indemnified Person") harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Subsidiary
Loan Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Subsidiary Loan Document, or the use of the proceeds of the
credit provided hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event, or circumstance in any manner
related thereto (all the foregoing, collectively, the "Indemnified
Liabilities"). The foregoing to the contrary notwithstanding, Subsidiary
Borrower shall have no obligation to any Indemnified Person under this Section
11.3 with respect to any Indemnified Liability that a court of competent
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any

                                      -60-
<PAGE>   67

payment to any other Indemnified Person with respect to an Indemnified Liability
as to which Subsidiary Borrower was required to indemnify the Indemnified Person
receiving such payment, the Indemnified Person making such payment is entitled
to be indemnified and reimbursed by Subsidiary Borrower with respect thereto.
WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH ARE IN WHOLE OR IN PART
CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED
PERSON OR OF ANY OTHER PERSON.

12. NOTICES.

                Unless otherwise provided in this Agreement, all notices or
demands by Subsidiary Borrower or Lender to the other relating to this Agreement
or any other Subsidiary Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as Subsidiary
Borrower or Lender, as applicable, may designate to each other in accordance
herewith), or telefacsimile to Subsidiary Borrower or to Lender, as the case may
be, at its address set forth below:

               If to Subsidiary
               Borrower:            c/o FUTURELINK CORP.
                                    2 South Point Drive
                                    Lake Forest, California 92630
                                    Attn:   Ross Vincenti, Esq.
                                    Fax No. 949.672.3117

               with copies to:      PAUL HASTINGS JANOFSKY & WALKER, LLP
                                    399 Park Avenue, 31st Floor
                                    New York, New York 10022
                                    Attn:  Tom Pollock, Esq.
                                    Fax No. 212.319.4090

               If to Lender:        FOOTHILL CAPITAL CORPORATION
                                    2450 Colorado Avenue
                                    Suite 3000 West
                                    Santa Monica, California  90404
                                    Attn: Business Finance Division Manager
                                    Fax No. 310.453.7413

               with copies to:      BROBECK, PHLEGER & HARRISON LLP
                                    550 South Hope Street, Suite 2100
                                    Los Angeles, CA 90071
                                    Attn:  John Francis Hilson, Esq.

                                      -61-
<PAGE>   68

                                    Fax No. 213.745.3345

            Lender and Subsidiary Borrower may change the address at which they
are to receive notices hereunder, by notice in writing in the foregoing manner
given to the other party. All notices or demands sent in accordance with this
Section 12, other than notices by Lender in connection with enforcement rights
against the Collateral under the provisions of the Code, shall be deemed
received on the earlier of the date of actual receipt or 3 Business Days after
the deposit thereof in the mail. Subsidiary Borrower acknowledges and agrees
that notices sent by Lender in connection with the exercise of enforcement
rights against Collateral under the provisions of the Code shall be deemed sent
when deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

            (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER SUBSIDIARY LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER SUBSIDIARY LOAN
DOCUMENT IN RESPECT OF SUCH OTHER SUBSIDIARY LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

            (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER SUBSIDIARY LOAN DOCUMENTS SHALL BE
TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE LENDER ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. SUBSIDIARY
BORROWER AND LENDER WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13(b).

            SUBSIDIARY BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY
OF THE SUBSIDIARY LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN,

                                      -62-
<PAGE>   69

INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. SUBSIDIARY BORROWER AND LENDER REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

14.  ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

        14.1 Assignments and Participations.

                (a) Lender may assign and delegate to one or more assignees
(each an "Assignee") all, or any ratable part of all, of the Obligations and the
other rights and obligations of Lender hereunder and under the other Subsidiary
Loan Documents; and, if required by Lender, Subsidiary Borrower will join with,
and shall cause each of the Guarantors to join with, Lender and any Assignee in
novating the Obligations under this Agreement and the other Subsidiary Loan
Documents provided, however, that Subsidiary Borrower may continue to deal
solely and directly with Lender in connection with the interest so assigned to
an Assignee until (i) written notice of such assignment, together with payment
instructions, addresses, and related information with respect to the Assignee,
have been given to Subsidiary Borrower by Lender and the Assignee an appropriate
assignment and acceptance agreement.

                (b) From and after the date that Lender provides Subsidiary
Borrower with such written notice and executed assignment and acceptance
agreement, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such assignment and acceptance agreement, shall have the assigned and
delegated rights and obligations of Lender under the Subsidiary Loan Documents,
and (ii) Lender shall, to the extent that rights and obligations (subject to any
novation required under applicable law) hereunder and under the other Subsidiary
Loan Documents have been assigned and delegated by it pursuant to such
assignment and acceptance agreement, relinquish its rights (except with respect
to Section 11.3 hereof) and be released from its obligations under this
Agreement (and in the case of an assignment and acceptance agreement covering
all or the remaining portion of Lender's rights and obligations under this
Agreement and the other Subsidiary Loan Documents, Lender shall cease to be a
party hereto and thereto), and such assignment shall affect a novation between
Subsidiary Borrower and the Assignee.

                (c) Immediately upon Subsidiary Borrower's receipt of such fully
executed assignment and acceptance agreement, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the rights and duties
of Lender arising therefrom.

                                      -63-
<PAGE>   70

                (d) Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons not Affiliates of Lender (a
"Participant") participating interests in Obligations and the other rights and
interests of Lender hereunder and under the other Subsidiary Loan Documents;
provided, however, that (i) Lender shall remain the "Lender" for all purposes of
this Agreement and the other Subsidiary Loan Documents and the Participant
receiving the participating interest in the Obligations and the other rights and
interests of Lender hereunder shall not constitute a "Lender" hereunder or under
the other Subsidiary Loan Documents and Lender's obligations under this
Agreement shall remain unchanged, (ii) Lender shall remain solely responsible
for the performance of such obligations, (iii) Subsidiary Borrower and Lender
shall continue to deal solely and directly with each other in connection with
Lender's rights and obligations under this Agreement and the other Subsidiary
Loan Documents, (iv) Lender shall not transfer or grant any participating
interest under which the Participant has the right to approve any amendment to,
or any consent or waiver with respect to, this Agreement or any other Subsidiary
Loan Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Subsidiary Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Subsidiary Loan Documents) supporting
the Obligations hereunder in which such Participant is participating, (D)
postpone the payment of, or reduce the amount of, the interest or fees payable
to such Participant through Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all amounts
payable by Subsidiary Borrower hereunder shall be determined as if Lender had
not sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
Lender and no Participant shall have any rights under this Agreement or the
other Subsidiary Loan Documents or any direct rights as to Subsidiary Borrower,
the Collections, the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the making of
decisions by Lender.

                (e) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Subsidiary Borrower
or Subsidiary Borrower's business.

                (f) Any other provision in this Agreement notwithstanding,
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR Section 203.14, and

                                      -64-
<PAGE>   71

such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.

                (g) Subsidiary Borrower shall be under no obligation to pay any
greater amount under this Agreement following an assignment or participation by
the Lender of any of its rights or obligations pursuant to Section 14.1 if, in
the circumstances existing at the time of such assignment or participation, such
greater amount would not have been payable but for the assignment or
participation.

        14.2 Successors. This Agreement shall bind and inure to the benefit of
the respective successors and assigns of each of the parties; provided, however,
that Subsidiary Borrower may not assign this Agreement or any rights or duties
hereunder without Lender's prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by Lender shall
release Subsidiary Borrower from its Obligations. Lender may assign this
Agreement and the other Subsidiary Loan Documents and its rights and duties
hereunder and thereunder pursuant to Section 14.1 hereof and, except as
expressly required pursuant to Section 14.1 hereof, no consent or approval by
Subsidiary Borrower is required in connection with any such assignment.

15. AMENDMENTS; WAIVERS.

        15.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Subsidiary Loan Document, and no consent with
respect to any departure by Subsidiary Borrower therefrom, shall be effective
unless the same shall be in writing and signed by Lender and Subsidiary Borrower
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given

        15.2 No Waivers; Cumulative Remedies. No failure by Lender to exercise
any right, remedy, or option under this Agreement or, any other Subsidiary Loan
Document, or delay by Lender in exercising the same, will operate as a waiver
thereof. No waiver by Lender will be effective unless it is in writing, and then
only to the extent specifically stated. No waiver by Lender on any occasion
shall affect or diminish Lender's rights thereafter to require strict
performance by Subsidiary Borrower of any provision of this Agreement. Lender's
rights under this Agreement and the other Subsidiary Loan Documents will be
cumulative and not exclusive of any other right or remedy that Lender may have.

16. GENERAL PROVISIONS.

        16.1 Effectiveness. This Agreement shall be binding and deemed effective
when executed by Subsidiary Borrower and Lender.

        16.2 Section Headings. Headings and numbers have been set forth herein
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.

                                      -65-
<PAGE>   72

        16.3 Interpretation. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed against Lender or Subsidiary Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

        16.4 Severability of Provisions. Each provision of this Agreement shall
be severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

        16.5 Withholding Taxes.

                (a) All payments made by Subsidiary Borrower hereunder or under
any note will be made without setoff, counterclaim, or other defense, except as
required by applicable law other than for Taxes (as defined below). All such
payments will be made free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any jurisdiction
(other than the United States), except as required by applicable law, or by any
political subdivision or taxing authority thereof or therein (other than of the
United States) with respect to such payments (but excluding, any tax imposed by
any jurisdiction or by any political subdivision or taxing authority thereof or
therein (i) measured by or based on the net income or net profits of Lender, or
(ii) to the extent that such tax results from a change in the circumstances of
Lender, including a change in the residence, place of organization, or principal
place of business of Lender, or a change in the branch or lending office of
Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges (including,
without limitation, any withholding taxes on any payments made pursuant to this
Agreement) being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, Subsidiary Borrower agrees to pay the full amount of such
Taxes, and such additional amounts (the "Gross Up Amount") as may be necessary
so that every payment of all amounts due under this Agreement or under any note,
including any amount paid pursuant to this Section 16.5 after withholding or
deduction for or on account of any Taxes, will not be less than the amount
provided for herein; provided, however, that Subsidiary Borrower shall not be
required to increase any such amounts payable to Lender if the increase in such
amount payable results from Lender's own willful misconduct or gross negligence.
Subsidiary Borrower will furnish to Lender as promptly as possible after the
date the payment of any Taxes is due pursuant to applicable law certified copies
of tax receipts evidencing such payment by Subsidiary Borrower.

                (b) Lender and Subsidiary Borrower shall cooperate in completing
any procedural formalities necessary for Subsidiary Borrower to obtain
authorization to make its payments to Lender without deduction or withholding
for or on account of applicable Taxes due on account of the making of a payment
hereunder. If (i) Subsidiary Borrower makes a payment to Lender pursuant to the
provisions of this Agreement, (ii) such payment includes an amount attributable
to a Gross Up Amount (the "Applicable Gross Up Amount"), and (iii)

                                      -66-
<PAGE>   73

Lender subsequently receives a tax credit against, relief or remission for, or
repayment of 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") that
Lender determines corresponds to the Applicable Gross Up Amount then Lender
shall pay an amount to Subsidiary Borrower equal to the Tax Credit actually
received by Lender.

        16.6 Amendments in Writing. This Agreement only can be amended in
writing signed by Lender and Subsidiary Borrower.

        16.7 Counterparts; Telefacsimile Execution. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Subsidiary Loan Document
mutatis mutandis.

        16.8 Revival and Reinstatement of Obligations. If the incurrence or
payment of the Obligations by Subsidiary Borrower or the transfer to Lender of
any property should for any reason subsequently be declared to be void or
voidable under any state or federal law relating to creditors' rights, including
provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, transfers at an undervalue, or other voidable or recoverable
payments of money or transfers of property (collectively, a "Voidable
Transfer"), and if Lender is required to repay or restore, in whole or in part,
any such Voidable Transfer, or elects to do so upon the reasonable advice of its
counsel, then, as to any such Voidable Transfer, or the amount thereof that
Lender is required or elects to repay or restore, and as to all reasonable
costs, expenses, and attorneys fees of Lender related thereto, the liability of
Subsidiary Borrower automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.

        16.9 Integration. This Agreement, together with the other Subsidiary
Loan Documents, reflects the entire understanding of the parties with respect to
the transactions contemplated hereby and shall not be contradicted or qualified
by any other agreement, oral or written, before the date hereof.

                           [Signature page to follow.]

                                      -67-
<PAGE>   74

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.

                                 FUTURELINK EUROPE LIMITED, a company organized
                                 under the laws of England and Wales

                                 By:    /s/ NIGEL HAWLEY
                                        ----------------------------------------
                                 Title: Director

                                 By:    /s/ YURI PASEA
                                        ----------------------------------------
                                 Title: Director

                                 FOOTHILL CAPITAL CORPORATION,
                                 a California corporation

                                 By:    /s/ WILLIAM SHIAO
                                        ----------------------------------------
                                 Title: Vice President

                                      -68-
<PAGE>   75

                                   EXHIBIT S-1
            (Form of Subsidiary Borrower Borrowing Base Certificate)

                      [on Subsidiary Borrower's Letterhead]

Foothill Capital Corporation
2450 Colorado Avenue, Suite 3000 West
Santa Monica, California 90404

                The undersigned, the [chief financial officer] of FutureLink
Europe Limited, a corporation organized under the laws of the United Kingdom
("Subsidiary Borrower"), pursuant to Section 6.2 of that certain Loan and
Security Agreement, dated as of December 13, 2000 (the "Loan Agreement"),
entered into between Subsidiary Borrower and Foothill Capital Corporation, a
California corporation ("Lender"), hereby certifies to Lender that the following
items, calculated in accordance with the terms and definitions set forth in the
Loan Agreement for such items are true and correct, and that Subsidiary Borrower
is in compliance with and, after giving effect to any currently requested loans,
will be in compliance with the terms, conditions, and provisions of the Loan
Agreement.

                All initially capitalized terms used in this Subsidiary Borrower
Borrowing Base Certificate have the meanings set forth in the Loan Agreement
unless specifically defined herein.

Effective Date of Calculation: ______________________

I. BORROWING BASE CALCULATION

(a)     Eligible UK Accounts:

<TABLE>
<CAPTION>
<S>         <C>                                           <C>               <C>
            (1) Amount of Eligible UK Accounts
            (as detailed on Schedule A.1
            attached hereto and incorporated
            herein by this reference):                    $
                                                           -------------

            (2) Advance rate against Eligible
            UK Accounts:                                   85%

            (3) Item a(1) times Item a(2):                $
                                                           -------------

            (4) Amount, if any, of the Dilution
            Reserve:                                      $
                                                           -------------
</TABLE>

                                      -1-
<PAGE>   76

<TABLE>
<CAPTION>
<S>         <C>                                           <C>               <C>
            (5) Net Eligible UK Accounts (Item
            a(3) minus Item a(4)):                        $
                                                           -------------

(b)         Eligible ASP Accounts

            (1) Amount of Eligible ASP
            Accounts (as detailed on Schedule
            A-1 attached hereto and
            incorporated herein by this
            reference):                                   $
                                                           --------------

            (2) Advance rate against Eligible
            ASP Accounts:                                               85%

            (3) Item b(1) times Item b(2):                $
                                                           --------------

            (4) Amount, if any, of the ASP
            Dilution Reserve:                             $
                                                           --------------

            (5) Net Eligible ASP Accounts
            (Item b(3) minus Item b(4)):                  $
                                                           --------------

(c)         Eligible Accounts (Item a(5)
            plus Item b(5))                               $
                                                           --------------

(d)         Amount of Subsidiary Borrower's
            Collections with $ respect to
            Accounts for the immediately
            preceding 45 day period:                      $
                                                           --------------

(e)         The lesser of Items c and d =                                       $
                                                                                 --------------

(f)         Aggregate amount of reserves, if any,
            established by Lender under Section 2.1(b) of
            the Loan Agreement:                                                 $
                                                                                 --------------
                                   Item e minus Item f =                        $
                                                                                 --------------

16.10 II. AVAILABILITY CALCULATION

(a)         Maximum Permitted Advances

        (i) Maximum Revolver Amount                       $5,000,000, less
                                                             the amount by
                                                            which Domestic
                                                            Revolver Usage
                                                                   exceeds
                                                               $25,000,000
</TABLE>

                                      -2-
<PAGE>   77

<TABLE>
<CAPTION>
<S>         <C>                                           <C>               <C>
        (ii)   Letter of Credit Usage                     $
                                                           --------------

               Item a(i) minus Item a(ii) =                                     $
                                                                                 --------------

(b)     Advances permitted under Borrowing Base

        (i) Borrowing Base (from Section I)               $
                                                           --------------

        (ii)Letter of Credit Usage:                       $
                                                           --------------

                                 Item b(i) minus Item b(ii) =                   $
                                                                                 --------------

(c)      Availability

               (i)    Permitted Advances
               (the lesser of item a and item b):         $
                                                           --------------

               (ii)   Aggregate amount of outstanding
               Advances:                                  $
                                                           --------------

                                 Item c(i) minus Item c(ii) =                   $
                                                                                 --------------
</TABLE>

                  [Remainder of page intentionally left blank.]

                                      -3-
<PAGE>   78

            The undersigned hereby certifies that all of the foregoing is true
and correct as of the effective date of the calculations set forth above and
that such calculations have been made in accordance with the requirements of the
Loan Agreement.

                                       FUTURELINK EUROPE LIMITED,
                                       a corporation organized under the laws of
                                       the England and Wales,
                                       as Subsidiary Borrower

                                       By:
                                           -------------------------------------
                                       Title:
                                             -----------------------------------

                                      -4-
<PAGE>   79

                                  SCHEDULE A.1

                             (ELIGIBLE UK ACCOUNTS)

                                       [ ]

                             (ELIGIBLE ASP ACCOUNTS)

                                       [ ]

<PAGE>   80

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule P-1

                                 PERMITTED LIENS

None.

                                       1
<PAGE>   81

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                 Schedule 2.7(a)

                              CASH MANAGEMENT BANK

National Westminster Bank plc
P.O. Box 5651
Newbury
Berkshire
RG14 5GP
United Kingdom

                                       2
<PAGE>   82

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule 5.5

                      LOCATIONS OF INVENTORY AND EQUIPMENT

FutureLink Europe Limited
2 Old Bath Road
Newbury
Berkshire
RG14 1QL
United Kingdom

                                       3
<PAGE>   83

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule 5.7

                          CHIEF EXECUTIVE OFFICE; FEIN

FutureLink Europe Limited.
The Chestnuts
2 Old Bath Road
Newbury, Berkshire England
RG14 1QL

VAT: 724 5381 37
Company Number: 3159433

                                       4
<PAGE>   84

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                Schedule 5.8 (b)

                      CAPITALIZATION OF SUBSIDIARY BORROWER

KNS Holdings Limited has 500,002 ordinary shares of Pound Sterling1 each issued
and outstanding, all of which are held by KNS Holdings Limited.

                                       5
<PAGE>   85

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                Schedule 5.8 (c)

               CAPITALIZATION OF SUBSIDIARY BORROWERS' SUBSIDIARY

None.

                                       6
<PAGE>   86

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule 5.10

                                   LITIGATION

In March 2000, a former employee filed a claim against FutureLink Europe Limited
with the Employment Tribunal, alleging unfair dismissal and sexual
discrimination. The claim is expected to be heard by the Tribunal before June
2001. No fixed amount has been claimed by the claimant however the claimant has
offered to withdraw the claim in consideration of a payment of Pound
Sterling40,000 by FutureLink Europe Limited which offer has been rejected by
FutureLink Europe Limited. The claim is not covered by insurance.

                                       7
<PAGE>   87

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule 5.14

                              ENVIRONMENTAL MATTERS

None.

                                       8
<PAGE>   88

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule 5.16

                              INTELLECTUAL PROPERTY

None.

                                       9
<PAGE>   89

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule 5.18

                             DEMAND DEPOSIT ACCOUNTS

National Westminster Bank plc

Current Account       Number
                      Branch Sort Code

Business Account      Number
                      Branch Sort Code

US Dollar Account     Number
                      Branch Sort Code

Receivables Account   Number
                      Branch Code

Receivables Account   Number
US Dollar             Branch Code

Point to Point        Number
                      Branch Code

Account               Number
                      Branch Code

                                       10
<PAGE>   90

           Disclosure Schedules to Loan and Security Agreement between
           FutureLink Europe Limited. and Foothill Capital Corporation

                                  Schedule 5.20

                             PERMITTED INDEBTEDNESS

Capital Leases        Compaq Financial Services
                      6 Blackrock Business Par
                      Carysfort Avenue
                      Blackrock
                      Co Dublin
                      Ireland

Obligation as of October 31, 2000

Short Term            129,726 GBP
Long Term             242,779 GBP
                      -----------
Total                 372,505 GBP

                                       11<PAGE>   1

                                                                   EXHIBIT 10.77

                             DATED 14 DECEMBER 2000

                            FUTURELINK EUROPE LIMITED

                                       AND

                              KNS HOLDINGS LIMITED

                           (as the Charging Companies)

                                       and

                          FOOTHILL CAPITAL CORPORATION

                                   (as Lender)

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

                                    DEBENTURE

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

                              BROBECK HALE AND DORR

                                    Park Gate
                                 25 Milton Park
                                 Oxford OX14 4SH
                             Tel: +44 (0)1235 823000
                             Fax: +44 (0)1235 823030

<PAGE>   2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Clause Page
<S>                                                                    <C>
1.   DEFINITIONS AND INTERPRETATION                                     1

2.   COVENANT TO PAY                                                    7

3.   CHARGING CLAUSE                                                    8

4.   TITLE DOCUMENTS AND SECURITIES                                    12

5.   COLLECTION OF RECEIVABLES                                         14

6.   NEGATIVE PLEDGE AND OTHER RESTRICTIONS                            14

7.   FURTHER ASSURANCE                                                 15

8.   CONTINUING SECURITY                                               16

9.   GENERAL COVENANTS                                                 16

10.  INSURANCE COVENANTS                                               17

11.  COVENANTS RELATING TO INTELLECTUAL PROPERTY                       18

12.  PROPERTY COVENANTS AND CONSOLIDATION OF MORTGAGES                 19

13.  POWERS OF SALE, LEASING AND ACCEPTING SURRENDERS                  19

14.  OPENING OF NEW ACCOUNTS                                           20

15.  APPOINTMENT AND POWERS OF A RECEIVER                              20

16.  POWER OF ATTORNEY                                                 24

17.  OTHER POWERS EXERCISABLE BY THE LENDER                            25

18.  APPLICATION OF MONEY RECEIVED BY THE LENDER OR A RECEIVER         25

19.  COSTS AND INTEREST ON OVERDUE AMOUNTS                             26

20.  SET OFF                                                           27

21.  TRANSFER                                                          27

22.  DISCLOSURE                                                        27

23.  PERPETUITY PERIODS                                                28

24.  FORBEARANCE AND SEVERABILITY                                      28

25.  VARIATIONS AND CONSENTS                                           28
</TABLE>

<PAGE>   3

<TABLE>
<S>                                                                    <C>
26.  SERVICE OF DEMANDS AND NOTICES                                    29

27.  COUNTERPARTS                                                      29

28.  ADJUSTMENT OF ACCOUNT                                             29

29.  PROVISO FOR REDEMPTION AND RELEASES                               30

30.  SECURITY TRUSTEESHIP                                              30

31.  GOVERNING LAW AND SUBMISSION TO JURISDICTION                      30

THE FIRST SCHEDULE

         The Charging Companies                                        32

THE SECOND SCHEDULE

         The Properties                                                33

THE THIRD SCHEDULE

         Collection Account Side Letters                               34

THE FOURTH SCHEDULE

         The Patents and Trade Marks                                   39
</TABLE>

<PAGE>   4

THIS DEBENTURE made the fourteenth day of December 2000

BETWEEN:

(1)     FUTURELINK EUROPE LIMITED a company incorporated under the laws of
        England and Wales with registered number 03159433, whose registered
        office is at 19th Floor, Tower 42, International Financial Centre, 25
        Old Broad Street, London EC2N 1HQ ("FUTURELINK");

(2)     KNS HOLDINGS LIMITED a company incorporated under the laws of England
        and Wales with registered number 03471603 whose registered office is at
        19th Floor, Tower 42, International Financial Centre, 25 Old Broad
        Street, London EC2N 1HQ ("KNS") (Details of KNS and FutureLink are set
        out in the First Schedule. They are together referred to as the
        "CHARGING COMPANIES" and each individually as a "CHARGING COMPANY");

(3)     FOOTHILL CAPITAL CORPORATION, a Californian corporation with its
        principal place of business at 2450 Colorado Avenue, Suite 3000 West,
        Santa Monica, California 90404 (the "LENDER");

WITNESSES AS FOLLOWS:

1.      DEFINITIONS AND INTERPRETATION

1.1     DEFINITIONS: In this Debenture, words or expressions defined in the Loan
        Agreement (as defined below) shall, unless otherwise defined below, bear
        the same meaning in this Debenture and, in addition, in this Debenture
        (unless the context otherwise requires) the following expressions have
        the following meanings:

        "ACCOUNT DEBTORS" bears the meaning set out in the Loan Agreement;

        "ASSETS" means all the undertakings, property, assets, rights and
        revenues of the Charging Companies whatsoever, present or future,
        wherever situated in the world and includes each or any of them;

        "BUSINESS DAY" means any day that is not a Saturday, Sunday or other day
        on which banks are generally open for business (other than a day on
        which banks are only open for business in Euros) in California];

        "CHARGED PROPERTY" means any assets charged, secured or assigned,
        whether in law or in equity, to the Lender pursuant to this Debenture;

        "COLLECTION ACCOUNT" has the meaning given to it by clause 5.1
        (Treatment of Receivables);

        "THIS DEBENTURE" means this Guarantee and Debenture;

        "DEFAULT RATE" means the rate specified in Clause 2.6(c)(i) of the Loan
        Agreement;

        "DEFAULT" has the meaning given to it in the Loan Agreement;

        "EMPLOYEE LIFE ASSURANCE POLICIES" means all assurance policies relating
        to accident or permanent health taken out for the purpose of benefiting
        any employee or his dependents to

<PAGE>   5

        the extent that either Charging Company is legally obliged to pay out
        the benefit of such policies to the relevant employees or their
        dependents;

        "EVENT OF DEFAULT" has the meaning given to it in the Loan Agreement;

        "FLOATING CHARGE ASSETS" means Assets for the time being comprised
        within a floating charge created under Clause 3.2(xiii);

        "GROUP" means together the Principal Borrower and its Subsidiaries and
        "GROUP COMPANY" means any one or more of them;

        "HOLDING COMPANY" means a parent undertaking within the meaning of
        Section 258 of the Companies Act 1985;

        "INDEBTEDNESS" includes any obligation in any currency, whether incurred
        as principal of borrower, debtor or surety, for the payment or repayment
        of money, whether present or future, actual or contingent;

        "INTELLECTUAL PROPERTY RIGHTS" means, in relation to each Charging
        Company, all patents and trade marks (including but not limited to the
        Patents and Trade Marks), service marks (and all goodwill associated
        with them), all rights in passing off, all brand and trade names, all
        copyrights (including copyrights in computer software) and rights in the
        nature of copyright, semiconductor topography rights, design rights and
        registered designs, utility models, all documented trade secrets and
        know-how and all other intellectual property rights now or in the future
        owned or enjoyed by each Charging Company, including the right to apply
        for and all applications for the protection of any such rights in any
        part of the world and the benefit of all agreements, licences and
        permissions now or in the future entered into or enjoyed by the Charging
        Company relating to the use or exploitation of any such rights and
        includes each or any of them and "INTELLECTUAL PROPERTY RIGHT" shall be
        construed accordingly;

        "LAND" includes freehold and leasehold land in England and Wales and
        immovable property in Scotland and in each case all buildings and
        structures upon and all things affixed or annexed to Land (including
        trade and tenants' fixtures);

        "LIEN" has the meaning given to it in the Loan Agreement;

        "LOAN AGREEMENT" means the loan agreement to be made between, amongst
        others, FutureLink as Subsidiary Borrower (as defined therein) and
        Foothill Capital Corporation (as lender) (as amended, supplemented
        and/or restated from time to time, including in relation to an increase
        in the facilities provided thereunder);

        "SUBSIDIARY LOAN DOCUMENTS" has the meaning given to it in the Loan
        Agreement;

        "PATENTS" means the patents and trade marks listed in the Fourth
        Schedule;

        "PERMITTED LIEN" has the meaning given to it in the Loan Agreement;

        "PRINCIPAL" means any Group Company insofar only as it owes money or has
        incurred liabilities to the Lender;

        "PRINCIPAL BORROWER" means FutureLink Corp., a Delaware corporation;

<PAGE>   6

        "PROPERTIES" means the freehold, leasehold or immovable properties
        listed in the Second Schedule

        "RECEIVABLES" means all sums of money receivable by either Charging
        Company now or in the future consisting of or payable under or derived
        from any of its Assets;

        "RECEIVER" means any receiver and manager or receivers and managers
        appointed under clause 16.1 (Appointment of Receiver) and (where the
        context requires or permits) includes any substituted receiver and
        manager or receivers and managers;

        "SECURED SUMS" means all money and liabilities covenanted and/or
        guaranteed to be paid or discharged or indemnified by the Charging
        Companies to the Lender under clause 2.1 (Covenant to Pay) or 2.2
        (Indemnity);

        "SECURITIES" means all stocks, shares, debentures and loan stocks issued
        by any company or person and all other investments (whether or not
        marketable) now or in the future owned at law or in equity by either
        Charging Company, including all interests in investment funds and all
        rights and benefits arising and all money payable in respect of any of
        them, whether by way of conversion, redemption, bonus, option, dividend,
        interest or otherwise, and including all Securities owned by a Charging
        Company in any other company and including in particular the 500,002
        Ordinary Shares of Foothill owned by KNS representing 100% of the share
        capital of Foothill;

        "SUBSIDIARY" means a subsidiary undertaking within the meaning of
        Section 258 of the Companies Act 1985;

        "TRADEMARKS" means the trademarks listed in the Fourth Schedule;

        "UK GUARANTY" bears the meaning given to it in the Loan Agreement;

        "WRITING" includes telex, facsimile transmission and any other mode of
        representing or reproducing words in a legible and non-transitory form,
        except in relation to any certificate, notice or other document which is
        expressly required by this Debenture to be signed, and "WRITTEN" has a
        corresponding meaning.

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

        (a)     words denoting the singular number only shall also include the
                plural number and vice versa; words denoting the masculine
                gender only shall also include the feminine gender; words
                denoting persons only shall include corporations, partnerships
                and unincorporated associations;

        (b)     references to clauses, paragraphs and Schedules are to be
                construed as references to clauses, paragraphs and Schedules of
                this Debenture;

        (c)     references to any party shall, where relevant, be deemed to be
                references to or to include, as appropriate, their respective
                successors or permitted assigns;

        (d)     references in this Debenture to this Debenture or any other
                document include references to this Debenture or such other
                document as varied, supplemented, restated and/or replaced in
                any manner from time to time and/or any document which varies,
                supplements, restates and/or replaces it;

<PAGE>   7

        (e)     references to "INCLUDING" shall not be construed restrictively
                but shall be construed as meaning "including, without prejudice
                to the generality of the foregoing";

        (f)     references to moneys, obligations and liabilities due, owing or
                incurred under the Subsidiary Loan Documents shall include
                moneys, obligations and liabilities due, owing or incurred in
                respect of any extensions or increases in the amount of the
                facilities provided for therein or the obligations and
                liabilities imposed thereunder;

        (g)     expressions defined in the Companies Act 1985 shall have the
                same meanings in this Debenture, except that the expression
                "company" shall include a body corporate established outside
                Great Britain and except where expressions are defined in this
                Debenture or the context otherwise requires;

        (h)     any reference to any statute or any section of any statute shall
                be deemed to include reference to any statutory modification or
                re-enactment of it for the time being in force;

        (i)     references to trade marks, patents, service marks or
                applications therefor or to brand names and trade names or any
                intellectual property rights shall include, where the context
                permits, the equivalent in other jurisdictions; and

        (j)     the limitation on liability conferred by section 6(2) of the Law
                of Property (Miscellaneous Provisions) Act 1994 shall not apply
                to the covenants for title implied on the part of the Charging
                Companies.

1.3     HEADINGS: Headings in this Debenture are inserted for convenience and
        shall not affect its interpretation.

2.      COVENANT TO PAY

2.1     COVENANT TO PAY: Each Charging Company hereby covenants that it will on
        demand in writing made to it by the Lender pay or discharge to the
        Lender all money and liabilities now or in the future due, owing or
        incurred to the Lender by that Charging Company under or pursuant to the
        Subsidiary Loan Documents as and when the same fall due for payment,
        whether on or after such demand, whether actually or contingently,
        whether solely or jointly with any other person, and whether as
        principal, guarantor, surety and whether on any current or other account
        or in any manner whatsoever including all interest, commission, fees,
        charges, costs and expenses which the Lender may in the course of its
        business properly charge or incur in respect of the Charging Company or
        its affairs and so that interest shall be computed and compounded to the
        date of payment or discharge in accordance with the Subsidiary Loan
        Documents or other document under which the liability arises or was
        incurred or, if no such rate or rates are specified, at the Default Rate
        (after as well as before any demand or judgement).

2.2     INDEMNITY: Each Charging Company further agrees as a separate and
        independent primary obligation to indemnify the Lender on demand in
        writing made to it by the Lender for and against any loss, cost,
        expenses or liability of any kind incurred as a result of any of the
        obligations hereby guaranteed by such Charging Company being or becoming
        void, unenforceable or ineffective against a Principal for any reason
        whatsoever whether known to the Lender or not and for all other amounts
        expressed to be guaranteed but which are not recovered from a Charging
        Company on the footing of a guarantee for any reason whatsoever.

<PAGE>   8

2.3     If so directed by the Lender but not otherwise KNS shall claim or prove
        in FutureLink's liquidation for the whole or any part of the money due
        or owing to KNS from FutureLink under a right to reclaim any sum claimed
        against KNS under the UK Guaranty or any other sum due in any manner
        whatever and the benefit of such proof and of all money received by KNS
        in respect of it shall be held on trust for the Lender and applied in
        reduction of the Secured Sums.

2.4     DEMANDS FROM THE LENDER: The making of one demand under this Debenture
        will not preclude the Lender from making any further demands. The Lender
        may only make a demand under this Debenture for repayment of the Secured
        Sums following the occurrence and during the continuance of a Default or
        an Event of Default or if otherwise entitled to do so under the Loan
        Agreement

2.5     THIRD PARTIES: No demand may be made under this Debenture in respect of
        sums due, owing or incurred under the Subsidiary Loan Documents except
        to the extent that the Lender has become entitled to make such demand
        under the relevant Loan Document, but any third party dealing with the
        Lender or any Receiver appointed under this Debenture shall not be
        concerned to see or enquire as to the validity of any demand under this
        Debenture.

2.6     Subject to any provision to the contrary in the Subsidiary Loan
        Documents all sums payable by the Charging Companies under this
        Debenture shall be paid without any set off, counterclaim, withholding
        or deduction whatsoever unless required by law in which event the
        Charging Company making the payment will simultaneously with making the
        relevant payment under this Debenture pay to the Lender such additional
        amount as will result in the receipt by the Lender of the full amount
        which would otherwise have been receivable and will supply the Lender
        promptly with evidence satisfactory to the Lender that the Charging
        Company has accounted to the relevant authority for the sum withheld or
        deducted.

3.      CHARGING CLAUSE

3.1     CHARGING CLAUSE: Each Charging Company with full title guarantee (but
        subject to any Permitted Liens) hereby charges to the Lender as security
        for the payment or discharge of all Secured Sums:

        (a)     By way of legal mortgage all rights, title, estate and other
                interests of such Charging Company in each of the Properties
                referred to in the Second Schedule;

        (b)

                (i)     By way of first fixed charge all right title estate and
                        other interests of such Charging Company in the
                        Properties not effectively mortgaged under clause
                        3.1(a);

                (ii)    by way of first fixed charge, all plant and machinery of
                        such Charging Company and all related spare parts,
                        fuels, equipment and tools now or in the future vested
                        in or held by or on behalf of the Charging Company and
                        not charged in paragraph (a) and all rights and
                        interests of such Charging Company under all present and
                        future agreements for the purchase, maintenance or use
                        of plant and machinery;

<PAGE>   9

                (iii)   by way of first fixed charge, all rental and other
                        income and all debts and claims now or in the future due
                        or owing to such Charging Company under or in connection
                        with any lease, agreement or licence relating to Land;

                (iv)    by way of first fixed charge, all Securities relating to
                        any Subsidiary which such Charging Company may from time
                        to time have and all other Securities belonging to such
                        Charging Company;

                (v)     by way of first fixed charge, all contracts and policies
                        of insurance and assurance (or any interest therein) now
                        or in the future held by such Charging Company and all
                        rights and interests of the Charging Company in every
                        such contract and policy (including the benefit of all
                        claims arising and all money payable under such
                        contracts and policies) (but excluding Employee Life
                        Assurance Policies);

                (vi)    by way of first fixed charge, all the present and future
                        goodwill and uncalled capital from time to time of such
                        Charging Company;

                (vii)   by way of first fixed charge, all Intellectual Property
                        Rights of such Charging Company capable of being validly
                        charged by way of fixed charge and the benefit of any
                        present or future agreement or licence relating to such
                        rights;

                (viii)  by way of first fixed charge, all book and other debts
                        now or in the future owing to such Charging Company and
                        all rights and claims of such Charging Company against
                        third parties, present and future, capable of being
                        satisfied by the payment of money (except rights and
                        claims effectively charged under the preceding
                        provisions of this clause 3.1) with the benefit of any
                        security or guarantees of any nature whatsoever now or
                        at any time enjoyed, held or owned by such Charging
                        Company;

                (ix)    by way of first fixed charge, the benefit of all
                        negotiable instruments, guarantees, bonds, debentures,
                        legal or equitable charges and all other security,
                        reservation of proprietary rights, rights of tracing,
                        unpaid vendor's liens and all other rights and remedies
                        now or in the future available to such Charging Company
                        whether as security for any Receivable or for the
                        performance by any third party of any obligation now or
                        in the future owed to such Charging Company or
                        otherwise;

                (x)     by way of first fixed charge, all money at any time
                        standing to the credit of any Collection Account
                        relating to such Charging Company, including the
                        proceeds of all its Receivables, which proceeds shall,
                        for the avoidance of doubt, on payment into such
                        Collection Account, cease to be subject to the charges
                        contained in the preceding provisions of this clause 3.1
                        but shall be subject to the fixed charge contained in
                        this paragraph (x);

                (xi)    by way of first fixed charge, all money at any time
                        standing to the credit of any realisation account
                        relating to such Charging Company;

                (xii)   by way of first fixed charge, all money at any time
                        standing to the credit of any other bank account
                        relating to such Charging Company; and

                (xiii)  by way of first floating charge, all Assets now or in
                        the future owned by such Charging Company except to the
                        extent that such Assets are for the time

<PAGE>   10

                        being effectively charged by any fixed charge contained
                        in the preceding provisions of this clause 3.1 or
                        validly assigned under clause 3.2, including any Assets
                        comprised within a charge which is reconverted under
                        clause 3.7 (Decrystallisation of Floating Charge); but
                        in each case so that such Charging Company shall not
                        (save if and to the extent permitted by the Loan
                        Agreement) create any Lien over any Floating Charge
                        Asset (whether having priority over, or ranking pari
                        passu with or subject to, this floating charge) or take
                        any other step referred to in clause 6(a) (Negative
                        Pledge and other Restrictions) with respect to any
                        Floating Charge Asset and such Charging Company shall
                        not, without the prior written consent of the Lender,
                        sell, transfer, part with or dispose of any Floating
                        Charge Asset except by way of sale in the ordinary
                        course of its business or as permitted under the Loan
                        Agreement.

3.2     ASSIGNMENT OF RIGHTS: Each Charging Company with full title guarantee
        hereby assigns by way of security (but subject to any Permitted Liens)
        in favour of the Lender (but subject to the right of the Charging
        Company to redeem such assignment upon the full payment or discharge of
        all Secured Sums):

        (a)     the benefit to each Charging Company of all rights and claims to
                which such Charging Company is now or may in the future become
                entitled in relation to the Properties including (but without
                limitation) all rights and claims of such Charging Company
                against all persons who now are or who at any time have been or
                may become lessees, sub-lessees, licensees or occupiers of the
                whole or any part or parts of the Properties and all guarantors
                and sureties for the obligations of any such person;

        (b)     the benefit to each Charging Company of all guarantees,
                warranties and representations given or made by, and any rights
                or remedies to which such Charging Company is now or may in the
                future be entitled against, all or any professional advisers and
                contractors in relation to any of their Properties and the
                manufacturers, suppliers or installers of all plant, machinery,
                fixtures, fittings or other items now or from time to time in
                the buildings erected or to be erected on any of the Properties
                and any other person now or from time to time under contract
                with or under a duty to the Charging Company;

        (c)     the benefit of all rights and claims to which the Charging
                Company is now or in the future entitled under or in respect of
                any joint venture, partnership or similar arrangement or
                agreement insofar as they are capable of being assigned by way
                of security and such assignment does not breach the terms of
                such agreement or arrangement; and

        (d)     the benefit of all rights and claims to which such Charging
                Company is now or in the future entitled under or in respect of
                any joint venture, partnership or similar arrangement or
                agreement insofar as they are capable of being assigned by way
                of security and such assignment does not breach the terms of
                such agreement or arrangement.

        The Charging Companies covenant to join with the Lender in giving notice
        of the assignments contained in clause 3.2 to all other relevant parties
        and to procure an acknowledgement of such notice from them.

        If for any reason the assignment of any of the Assets or bank accounts
        under clause 3.2 is found to be ineffective and/or if any sums payable
        in respect of such Assets are received by a Charging

<PAGE>   11

        Company, the Charging Company shall hold the benefit of such Assets or
        bank accounts with any such sums received by it or held on such bank
        account in trust for the Lender and shall account to the Lender for or
        otherwise apply all such sums as the Lender may direct and shall
        otherwise at its own cost take such action and execute such documents as
        the Lender may require.

3.3     CRYSTALLISATION OF FLOATING CHARGE: The floating charge created by each
        Charging Company in clause 3.1 (b) (Charging Clause) may be crystallised
        into a fixed charge by notice in writing given at any time as regards
        any Asset which the Lender may consider to be in jeopardy or which is in
        danger of seizure by the Lender to such Charging Company and (whether or
        not a Default or on Event of Default has occurred) may at any time
        appoint a Receiver thereof.

        Such crystallisation shall take effect over such Floating Charge Assets
        or class or classes of Floating Charge Assets as shall be specified in
        the notice. If no Floating Charge Assets are so specified, it shall take
        effect over all Floating Charge Assets of such Charging Company.

3.4     AUTOMATIC CRYSTALLISATION:

        (a)     Without prejudice to any rule of law which may have a similar
                effect, if either Charging Company, without the Lender's prior
                written consent, resolves to take or takes any step to charge
                (whether by way of fixed or floating charge) or otherwise
                creates any Lien (other than any Permitted Lien) over (or to
                create a trust over) any of its Floating Charge Assets or to
                dispose of any such Floating Charge Assets except by way of sale
                or other disposition in the ordinary course of such Charging
                Company's business (or as permitted by the Loan Agreement); or

        (b)     if any person resolves to take or takes any step to levy any
                distress, execution, sequestration or other process against any
                Floating Charge Asset relating to a liability of such Charging
                Company; or

        (c)     if a Default or Event of Default takes place or if any of the
                Secured Sums become due and outstanding prior to their stated
                maturity;

        then the floating charge created by clause 3.1 (b) (Charging Clause)
        shall be automatically crystallised (without the necessity of notice)
        into a fixed charge over such Floating Charge Assets instantly on the
        occurrence of such event.

3.5     FLOATING CHARGE ASSETS ACQUIRED AFTER CRYSTALLISATION: Except as
        otherwise stated in any notice given under clause 3.3 (Crystallisation
        of Floating Charge) or unless such notice relates to all Floating Charge
        Assets, Floating Charge Assets acquired by either Charging Company after
        crystallisation has occurred under clause 3.3 (Crystallisation of
        Floating Charge) or 3.4 (Automatic Crystallisation) shall continue to be
        subject to the floating charge created by clause 3.1(b) (Charging
        Clause), so that the crystallisation shall be effective only as to its
        Floating Charge Assets in existence at the date of crystallisation.

3.6     DECRYSTALLISATION OF FLOATING CHARGE: Any charge by either Charging
        Company which has crystallised under clause 3.3 (Crystallisation of
        Floating Charge) or 3.4 (Automatic Crystallisation) may, by notice in
        writing given at any time by the Lender to such Charging Company, be
        reconverted into a floating charge in relation to the Assets or class or
        classes of Assets specified in such notice.

3.7     PRIORITY OF FIXED SECURITY: Any mortgage, fixed charge or other fixed
        security whenever and however created by the Charging Companies and
        subsisting in favour of the Lender shall

<PAGE>   12

        (save as the Lender may otherwise declare at or after the time of its
        creation) have priority over the floating charge created by clause 3.1
        (b)(xiii) (Charging Clause).

3.8     DEBENTURE TO HAVE PRIORITY: Any debentures, mortgages or charges (fixed
        or floating) created in the future by either Charging Company (except
        those in favour of the Lender) shall be expressed to be subject to this
        Debenture and shall rank in order of priority behind the charges created
        by this Debenture.

3.9     CONSENTS REQUIRED FOR CHARGES OVER INTELLECTUAL PROPERTY RIGHTS: The
        Charging Companies shall use all reasonable endeavours promptly to
        obtain any consent required for:

        (a)     the creation of a fixed charge over any interest in Intellectual
                Property Rights material to the business operated by any Group
                Company otherwise excluded under clause 3.1 (Charging Clause)
                and to produce to the Lender a copy of each consent forthwith
                upon receipt thereof; and

        (a)     the creation of an assignment of its rights and claims under any
                joint venture, partnership or similar arrangement or agreement
                otherwise excluded under Clause 3.2 (Assignment of Rights).

3.10    CHARGES OVER RECEIVABLES TO INCLUDE INTRA-GROUP RECEIVABLES: It is
        hereby agreed, for the avoidance of doubt, that the fixed charges given
        by the Charging Companies over their Receivables under clause 3.1
        (Charging Clause) shall apply to all Receivables owing to such Charging
        Company by any other Group Company.

4       TITLE DOCUMENTS AND SECURITIES

4.1     DEPOSIT OF TITLE DEEDS AND OTHER DOCUMENTS: Except as otherwise
        expressly agreed in writing by the Lender, the Charging Companies shall:

        (a)     deposit with the Lender, and the Lender shall be entitled to
                retain, all deeds and documents of title relating to all its
                Assets charged by way of fixed charge under clause 3.1 (Charging
                Clause) (including policies of insurance and assurance); and

        (a)     execute and deliver to the Lender such documents and transfers
                and give such instructions and perform such other acts as the
                Lender may reasonably require at any time to constitute or
                perfect an equitable or legal charge (at the Lender's option)
                over its registered Securities or a pledge over its bearer
                Securities.

4.2     SECURITIES:

                (a)     Unless and until the occurrence of a Default or an Event
                        of Default and for so long as it is continuing or the
                        Lender otherwise directs in any case:

                        (1)     all voting and other rights attaching to
                                Securities charged under this Debenture shall
                                continue to be exercised by the Charging
                                Companies for so long as they remain their
                                registered owner and each Charging Company shall
                                not permit any person other than such Charging
                                Company, the Lender or the Lender's nominee to
                                be registered as holder of any Securities or any
                                part thereof; and

                        (2)     if Securities of the Charging Company charged
                                under this Debenture are registered in the name
                                of the Lender or the Lender's nominee, all

<PAGE>   13

                                voting and other rights attaching to them shall
                                be exercised by the Lender or the Lender's
                                nominee in accordance with instructions in
                                writing from time to time received from such
                                Charging Company,

                provided that such Charging Company undertakes not to give any
                instructions to exercise any voting or other rights in a way
                which might reasonably be expected to prejudice the value of the
                Securities or otherwise jeopardise the security created by this
                Debenture, and in the absence of any such instructions, the
                nominee shall refrain from exercising any such rights.

                (b)     The Charging Companies shall be entitled to receive and
                        retain all dividends, distributions and other monies
                        paid on or derived from the Securities to the extent
                        permitted by the Loan Agreement.

                (c)     After a Default or an Event of Default occurs and for so
                        long as such Default or Event of Default is continuing,
                        the Lender shall be entitled to:

                        (1)     receive and retain all dividends, distributions
                                and other monies paid on the Securities to the
                                extent permitted by the Subsidiary Loan
                                Documents; and

                        (2)     exercise or direct the exercise of the voting
                                rights attached to any Securities which comprise
                                part of the Charged Property in such manner as
                                it considers fit.

                The Charging Companies shall after such time:

                        (aa)    comply, or procure the compliance, with any
                                directions of the Lender in respect of the
                                exercise of the voting rights attached to such
                                Securities; and

                        (bb)    if the Lender so requires by notice to a
                                Charging Company, immediately deliver to the
                                Lender a form of proxy or other authority (in
                                each case, in such form as the Lender shall
                                reasonably require) appointing such person as
                                the Lender shall select as proxy of such
                                Charging Company or, as the case may be, its
                                nominee or otherwise enabling such person as the
                                Lender shall select to exercise such voting
                                rights as shall be specified (whether generally
                                or specifically) in the relevant notice.

4.3     PAYMENT OF COSTS ON SECURITIES: Unless the Lender otherwise agrees, the
        Charging Companies shall duly and promptly pay all costs, calls,
        instalments or other payments which from time to time become due in
        respect of any Securities.

5.      COLLECTION OF RECEIVABLES

5.1     TREATMENT OF RECEIVABLES: The Charging Companies shall collect and
        realise all Receivables in the ordinary and usual course of its business
        on behalf of the Lender and shall request in writing and shall otherwise
        take all reasonable steps to ensure that Receivables are paid into such
        account or accounts as the Lender may direct from time to time
        (together, the "COLLECTION ACCOUNT") all money which they may receive in
        respect of the Receivables immediately on receipt. The Charging
        Companies shall, pending such payment, hold all money so received upon
        trust for the Lender and in accordance with the Lender's instructions

<PAGE>   14

        from time to time. The Charging Companies shall procure that any bank
        which maintains a Collection Account shall hold all credit balances
        thereon to the order of the Lender. The Charging Companies shall procure
        that the authorised signatories of the Collection Account shall at all
        times be such persons as Lender shall direct and no other persons shall
        have authority to operate the Collection Account.

5.2     PRESERVATION OF CHARGES: The Charging Companies shall procure that each
        bank which holds a Collection Account into which it is required to pay
        its Receivables shall enter into such collection account agreements as
        the Lender may require under the terms of the Loan Agreement and shall
        not modify such arrangements without the Lender's prior written consent.
        In the event that the Lender does not require a Charging Company to
        enter into any specific form of collection account agreement, such
        Charging Company shall instead promptly give notice to any bank or
        financial institution (other than Lender) with which it holds a
        Collection Account in the form set out in the Third Schedule and use all
        reasonable endeavours to ensure that the relevant bank or financial
        institution acknowledges such notice in the prescribed form.

5.3     PRESERVATION OF CHARGES UPON FACTORING: If Lender releases, waives or
        postpones its rights in respect of any Receivables for the purpose of
        enabling either Charging Company to factor or discount them to a third
        party, the charges created by this Debenture shall in all other respects
        remain in full force and effect. In particular, all amounts becoming due
        to a Charging Company from the third party and any Receivables
        re-assigned, or due to be re-assigned, by the third party to the
        relevant Charging Company shall be subject to the relevant fixed charge
        created by clause 3.1 (Charging Clause), subject only to any defences or
        rights of set-off which the third party may have against such Charging
        Company.

5.4     DELIVERY OF PARTICULARS OF RECEIVABLES: The Charging Company shall
        deliver to Lender such particulars as to the amount and nature of its
        Receivables as Lender may from time to time reasonably require taking
        into account the requirements of the Loan Agreement.

6       NEGATIVE PLEDGE AND OTHER RESTRICTIONS

        Neither Charging Company shall, without the prior written consent of the
        Lender or save as otherwise permitted under the Subsidiary Loan
        Documents (and, for the avoidance of doubt, with the exception of any
        Permitted Liens):

        (a)     create, or agree or attempt to create, or permit to subsist, any
                Lien of any kind (including any security conferring power to
                convert a floating charge into a fixed charge in relation to any
                Asset) or any trust over any of its Assets or permit any lien
                (other than a lien arising by operation of law in the ordinary
                course of its business) to arise or subsist over any such
                Assets;

        (b)     sell, or agree to sell, assign, lease, license or sub-license,
                or grant any interest in, or otherwise part with possession of,
                dispose of, or cease to control, any of its Charged Property, or
                the right to receive or be paid the proceeds arising on disposal
                of the same or purport to do any such act (save that, unless
                otherwise prohibited by the Loan Agreement, it may deal with its
                Floating Charge Assets in the ordinary course of its business)
                or allow any third party to do any such thing;

        (c)     do or cause or permit to be done anything which may in any way
                materially depreciate, jeopardise or otherwise prejudice the
                market value or collateral value of Securities or the rights of
                Lender hereunder in respect of such Securities; or

<PAGE>   15

        (d)     dispose of the equity of redemption in respect of any Charged
                Property.

7.      FURTHER ASSURANCE

        To the extent required to comply with the Loan Agreement or any of the
        other Subsidiary Loan Documents, the Charging Companies shall, and shall
        procure that their Subsidiaries shall, on demand by Lender in writing,
        execute and deliver to Lender at the cost of such Charging Company and
        in such form as Lender may reasonably require:

        (a)     a fixed charge over any interest, not capable of being charged
                by way of legal mortgage, in any Land now or in the future
                belonging to such Charging Company;

        (b)     a legal assignment or other fixed security over all or any of
                its Intellectual Property Rights and a fixed charge over its
                Receivables or claims or the accounts into which Receivables
                have or are to be paid and, following the occurrence of a
                Default or Event of Default which is continuing, unless Lender
                otherwise agrees, shall give a legal assignment of its
                Receivables and/or give notice to the relevant debtor or account
                holding bank in such form as Lender has previously approved;

        (c)     without prejudice to clause 4.2 (Voting Rights), a legal charge
                over all or any of its Securities;

        (d)     a chattel mortgage over such of its chattels, plant, machinery,
                computers and/or other equipment of such Charging Company as
                Lender may reasonably specify;

        (e)     at any time whilst a Default or Event of Default is continuing
                or the security over such Floating Charge Assets is in jeopardy
                or such Floating Charge Assets are in danger of seizure, a fixed
                charge or other fixed security over any of its Floating Charge
                Assets;

        (f)     where any of its Assets (other than land) are situated outside
                England and Wales, such fixed security under the law of the
                place where the Asset is situated as the Lender may reasonably
                require;

        (g)     a notice to any third party of any of the charges or assignments
                contained in this Debenture; and

        (h)     such other documents as Lender may reasonably require further to
                secure the payment of the Secured Sums, or to perfect or protect
                this Debenture or facilitate its realisation on the exercise of
                the Lender's rights thereunder, or to vest title to any Asset in
                itself or its nominee or any purchaser and to register such
                security or title in any applicable register, in each case
                consistent with the jurisdiction in which such asset is situate
                with such legal opinions (if any) as the Lender may reasonably
                require from lawyers acceptable to it in relation to such new or
                additional charge or other security.

8.      CONTINUING SECURITY

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

<PAGE>   16

9.      GENERAL COVENANTS

9.1     FutureLink will request in writing and otherwise take reasonable steps
        to ensure that all of its Account Debtors forward payment of the amounts
        owed by them directly to a Cash Management Bank and will comply with its
        other obligations set out in clause 2.7 of the Loan Agreement.

9.2     NOTIFICATION OF ACQUISITION OF ASSETS: The Charging Companies shall at
        all times immediately notify the Lender in writing of any acquisition by
        either of them of any interest or right in or to any Land or any
        Intellectual Property Rights material to the operation of any Group
        Company's business.

9.3     NEGATIVE COVENANTS REGARDING RECEIVABLES: Save as permitted by the Loan
        Agreement, neither Charging Company shall, without the prior written
        consent of the Lender (and other than to offer trade credit in the
        ordinary course of its business, charge, factor, assign, postpone,
        subordinate, set off, release, compound, settle, cease to collect or
        waive its rights of action in connection with any of its Receivables, do
        or omit to do anything which is likely materially to delay or prejudice
        the full recovery of its Receivables or otherwise deal with its
        Receivables save than by collecting in and realising the same (to the
        extent required to do so under clause 5.1 (Treatment of Receivables) and
        paying the proceeds into the Collection Account.

9.4     NOTIFICATION OF ACQUISITION OF LAND: The Charging Companies covenant
        with the Lender to notify the Lender of any agreement proposed or made
        by it (whether now subsisting or made hereafter) for the acquisition by
        it or any person on its behalf of any Land, or any estate or interest in
        any Land;

10.     INSURANCE COVENANTS

10.1    COVENANT TO INSURE: FutureLink shall ensure, that its insurance is such
        that the insurance covenants contained in clause 6.8 of the Loan
        Agreement are complied with.

10.2    INSURANCE POLICIES: Foothill shall effect such insurances in the joint
        names of the Lender and the Group Company concerned (or, if that is not
        possible or required under the terms of the Loan Agreement, shall cause
        the interest of the Lender to be noted on such insurance policies) and
        use all reasonable endeavours to ensure that each such insurance policy
        contains a mortgagee's protection payee clause in such form as the
        Lender (acting reasonably) may require and a loss payee clause (which
        shall provide that all moneys payable under such insurance policies
        shall be paid to the Lender which shall alone be entitled to give good
        discharge or shall otherwise be in such form as the Lender shall
        reasonably require).

10.3    PAYMENT OF PREMIUMS: The Charging Companies shall ensure that all
        premium and other payments necessary for effecting or maintaining such
        insurances are made punctually and promptly after demand (and in any
        event within 7 days) produce to the Lender details of the policies and
        the receipts for such payments and, if default shall at any time be made
        by a Charging Company or Group Company in effecting or maintaining the
        insurance required to be maintained under this clause 10 or producing
        any such receipt to the Lender promptly after demand or depositing any
        policy with the Lender pursuant to clause 4.1 (Deposit of Title Deeds
        and other Documents), the Lender may take out or renew such insurances
        in such sums and on such terms as the Lender may think expedient and all
        money so expended by the Lender shall be recoverable by the Lender under
        clause 19 (Costs and Interest on Overdue Amounts).

<PAGE>   17

10.4    PERMITTED USES AND ACTS: Neither Charging Company shall do or omit or
        permit to be done anything which may render any policy of insurance to
        be rendered void or voidable.

10.5    INSURANCE BROKER'S UNDERTAKING: The Charging Companies shall use all
        reasonable endeavours to procure that each relevant insurer or, at the
        Lender option, such Charging Company's or Group Company's insurance
        broker, undertakes in writing to the Lender:

        (a)     that if a Charging Company or Group Company defaults in the
                payment of any premium or fails to renew any such insurance, as
                soon as such default or non-renewal comes to the insurer's
                knowledge, to advise the Lender and (pending receipt of
                instructions from the Lender) to keep the Lender's interest in
                such insurance in force up to the full sum insured and for the
                same risks (subject to the premium for any such period of
                extended cover being payable);

        (b)     to advise the Lender of any proposed termination, expiry,
                cancellation or material alteration of any insurance policy at
                least 30 days before such cancellation is due to take effect;

        (c)     that if the insurance cover is to be reduced or any insured
                risks are to be restricted, to advise the Lender at least 30
                days before such reduction or restriction is due to take effect;

        (d)     to advise the Lender of any act or omission or any event which
                comes to the knowledge of the insurer or the broker (as the case
                may be) and which would be reasonably likely to invalidate or
                render unenforceable the insurance in whole or in part and to
                agree that no breach of any terms of any such insurance or
                failure to give notice of an event giving rise to a claim by
                such Charging Company or Group Company will invalidate any such
                insurance in whole or in part as regards the Lender and the
                Lender shall not be liable for any relevant premium (which shall
                be for the account of the Charging Company or Group Company
                concerned).

10.6    APPLICATION OF INSURANCE PROCEEDS: All moneys received by a Charging
        Company, Group Company or the Lender on any policies of insurance
        relating to any Charged Property shall be applied in the manner
        specified in clause 6.8 of the Loan Agreement and, if any moneys payable
        under any policies of insurance are paid to a Charging Company or Group
        Company, Charging Company shall procure that such moneys will be held on
        trust pending their application for such purposes.

11.     COVENANTS RELATING TO INTELLECTUAL PROPERTY

11.1    INTELLECTUAL PROPERTY COVENANTS: The Charging Companies shall, during
        the continuance of this security, unless the Lender otherwise agrees in
        writing, ensure, so far as it is able, that the covenants in relation to
        Intellectual Property Rights contained in the Subsidiary Loan Documents
        are complied with and in addition shall:

        (a)     not assign, transfer, license or agree to licence (other than
                any non-exclusive licence granted in the ordinary course of its
                business and consistent with its past practice) any Intellectual
                Property Right material to the operation of the business of any
                Group Company (a "MATERIAL INTELLECTUAL PROPERTY RIGHT") or any
                interest therein or permit any third party to use any Material
                Intellectual Property Rights except for any licences which are
                in existence at the date of this Debenture and have been
                assigned to the Lender;

<PAGE>   18

        (b)     not alter any specification for which any Material Intellectual
                Property Right has been registered or give its consent to the
                registration by any third party of any trade mark the same as or
                confusingly similar to any Material Intellectual Property Right
                charged under this Debenture;

        (c)     where reasonably practicable to do so, diligently commence and
                prosecute all proceedings as may be necessary to prevent
                infringement or as applicable the continued infringement of all
                Material Intellectual Property Rights belonging to such Charging
                Company; and

        (d)     not without the Lender's consent use the Lender's name or join
                the Lender to any proceedings relating to the infringement of
                any Material Intellectual Property Rights.

11.2    THE LENDER AS AUTHORISED AGENT: The Charging Companies hereby appoint
        the Lender as their authorised agent and hereby irrevocably authorises
        the Lender:

        (a)     if such Charging Company shall during the continuance of this
                Debenture make default in carrying out any of its obligations
                under clause 11.1 (Intellectual Property Covenants), to effect
                such filings, registrations, renewals, payments and
                notifications at the Trade Marks Registry or Patent Registry or
                otherwise as shall be necessary to give effect to clause 11.1
                (Intellectual Property Covenants) or carry out such acts or
                things at the expense of such Charging Company as shall be
                necessary to protect the Lender's interest hereunder or to
                protect or maintain the Intellectual Property Rights in question
                or any of them; and

        (b)     to apply for the particulars of this Deed and of the Lender's
                interest in the Intellectual Property Rights and any other or
                future trade marks or patents or trade mark applications or
                patent applications or similar Intellectual Property Rights
                registered or to be registered in the United Kingdom in the name
                of such Charging Company to be made on the Register of Trade
                Marks or the Register of Patents or any similar register and
                hereby agrees to execute all documents and forms required to
                enable such particulars to be entered on such registers.

12.     PROPERTY COVENANTS AND CONSOLIDATION OF MORTGAGES

12.1    The Secured Sums shall be deemed for the purpose of all powers implied
        by statute to have become due and payable within the meaning of Section
        101 of the Law of Property Act 1925 immediately on the execution of this
        Debenture and Sections 109 (restricting the power to appoint a receiver)
        and 93 of the Law of Property Act (restricting the right of
        consolidation) shall not apply to this Debenture.

12.2    PARTING WITH POSSESSION: NEITHER Charging Company shall part with
        possession (except on the determination of any lease, tenancy or licence
        granted to the Charging Company) of any Properties or share the
        occupation of them with any other person, or agree to do so, without the
        prior written consent of the Lender.

13.     POWERS OF SALE, LEASING AND ACCEPTING SURRENDERS

13.1    STATUTORY POWER OF SALE TO ARISE ON ENFORCEMENT: Section 103 of the Law
        of Property Act 1925 shall not apply to this Debenture, but the
        statutory power of sale (as varied or extended by this Debenture) shall
        (as between the Lender and a purchaser from the Lender) arise on, and be
        exercisable at any time after, the execution of this Debenture. However,
        the Lender shall not exercise such power of sale until the payment of
        all or part of the Secured Sums has

<PAGE>   19

        been demanded, or a Receiver has been appointed, but this provision
        shall not affect a purchaser or require him to ask whether a demand or
        appointment has been made.

13.2    The Charging Companies shall neither exercise the powers of leasing or
        accepting surrenders or leases conferred upon a mortgagor in possession
        by Sections 99 and 100 of the Law of Property Act 1925 nor any other
        powers of leasing, surrendering or accepting surrenders of leases vested
        in a Charging Company nor shall a Charging Company confer on any person
        any contractual licence to occupy or any other right or interest in any
        of the Properties or grant any licence or consent to assign, underlet or
        part with possession or occupation of the whole or any part of them
        without the prior written consent of the Lender. In granting its consent
        the Lender shall be entitled to require that an order be obtained under
        Section 38(4) of the Landlord and Tenant Act 1954 (as amended) excluding
        the security of tenure provisions of the act as a pre-condition to the
        granting of any lease.

13.3    POWER OF THE LENDER TO GRANT LEASES: The statutory powers of sale,
        leasing and accepting surrenders under the Law of Property Act 1925
        exercisable by the Lender by virtue of this Debenture are extended so as
        to authorise the Lender (whether in its own name or that of a Charging
        Company) to accept any surrenders of any lease or vary the terms of any
        lease as the Lender may see fit or to grant a lease or leases of or any
        options in respect of any Charged Property vested in a Charging Company
        or in which it has an interest, with such rights relating to other such
        Charged Property, and containing such covenants on the part of such
        Charging Company, and generally on such terms and conditions, as the
        Lender shall think fit.

13.4    THE LENDER MAY SEVER FIXTURES: The statutory power of sale exercisable
        by the Lender is extended so as to authorise the Lender to sever any
        fixtures from the Properties or Land and sell them separately.

13.5    THIRD PARTIES NOT TO BE CONCERNED WITH VALIDITY OF DEMAND: No person
        dealing in good faith and for value with the Lender or any Receiver, its
        agents or brokers, shall be concerned to enquire whether this Debenture
        has become enforceable, or whether any power exercised or purported to
        be exercised has become exercisable, or whether any Secured Sums remain
        due upon this Debenture, or as to the necessity or expediency of any
        stipulations and conditions subject to which the sale of any Assets
        shall be made, or otherwise as to the propriety or regularity of the
        sale of any Asset, or to see to the application of any money paid to the
        Lender or such Receiver, or its agents or brokers, and each such dealing
        shall be deemed to be within the powers hereby conferred and to be valid
        and effective accordingly.

14.     OPENING OF NEW ACCOUNTS

14.1    RULING OFF OF ACCOUNTS: On receiving notice that a Charging Company has
        encumbered or disposed of any of its Assets (other than as permitted
        under the Loan Agreement), the Lender may rule off such Charging
        Company's account or accounts and open a new account or accounts with
        such Charging Company.

14.2    CREDITS NOT TO REDUCE INDEBTEDNESS OF CHARGING COMPANY: If the Lender
        does not open a new account or accounts immediately on receipt of such
        notice, it shall nevertheless be treated as if it had done so at the
        time when it received such notice and as from that time all payments
        made by such Charging Company to the Lender shall be treated as having
        been credited to such new account or accounts and shall not operate to
        reduce the amount owing from such Charging Company to the Lender at the
        time when it received such notice.

15.     APPOINTMENT AND POWERS OF A RECEIVER

<PAGE>   20

15.1    APPOINTMENT OF RECEIVER: At any time:

        (a)     after the security constituted by this Debenture has become
                enforceable; or

        (b)     if Charging Company so requests in writing at any time; or

        (c)     after failure by a Charging Company to pay any Secured Sum due
                from it on the due date for payment; or

        (d)     following the occurrence and during the continuance of a Default
                or an Event of Default; or (notwithstanding the terms of any
                other agreement between a Charging Company and the Lender),
                after a proposal has been made for a voluntary arrangement or a
                petition has been presented for the compulsory winding up of a
                Charging Company or an administration order in relation to a
                Charging Company pursuant to Part I or II of the Insolvency Act
                1986 or any equivalent event occurs under any applicable law; or

        (e)     if at any time the Lender shall be of the reasonable opinion
                that any material part of the Charged Property is in imminent
                danger of seizure, distress or other legal process;

        the Lender may appoint by writing any person or persons duly qualified
        to be receiver, receiver and manager or administrative receiver of all
        or any part of the Assets of the relevant Charging Company.

15.2    POWERS OF RECEIVERS (JOINT AND SEVERAL OR SEVERAL): Where more than one
        Receiver is appointed, they shall have power to act separately unless
        the Lender shall in the appointment specify to the contrary.

15.3    REMUNERATION OF RECEIVERS: The Lender may from time to time determine
        the remuneration of the Receiver.

15.4    POWER OF THE LENDER TO REMOVE RECEIVER: The Lender may (subject to
        Section 45 of the Insolvency Act 1986) remove the Receiver from all or
        any of the Assets of which he is the Receiver.

15.5    FURTHER APPOINTMENT: Such an appointment shall not preclude:

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

        (b)     a Receiver, while continuing to act, consenting to the
                appointment of an additional Receiver to act with him.

15.6    STATUS OF RECEIVER: The Receiver of a Charging Company shall be the
        agent of that Charging Company (which shall be solely liable for his
        acts, defaults and remuneration) unless and until such Charging Company
        goes into liquidation, after which he shall act as principal, and shall
        not in either case become the agent of the Lender.

15.7    POWERS OF RECEIVER: The Receiver of a Charging Company shall have and be
        entitled to exercise in relation to the relevant Charging Company all
        the powers set out in the Law of

<PAGE>   21

        Property Act 1925 and Schedule 1 to the Insolvency Act 1986 (whether or
        not the Receiver is in fact an administrative receiver) and, if the
        Receiver is an administrative receiver, in addition to all other powers
        exercisable by an administrative receiver by virtue of the Insolvency
        Act 1986 and, in particular, by way of addition and without limiting
        such powers (and without prejudice to the powers of the Lender), the
        Receiver shall have power:

        (a)     to take possession of, collect and get in all or any part of the
                Assets of the Charging Company concerned and to take and defend
                any proceedings (including proceedings for its winding up or
                proceedings by way of arbitration) in its name or otherwise as
                he shall think fit;

        (b)     to comply with and perform all or any of the acts, matters,
                omissions or things covenanted to be done or omitted by the
                Charging Company concerned under this Debenture;

        (c)     to sell by public auction or private contract or let all or any
                part of the Charged Property and to let on hire lease, surrender
                and accept surrenders of leases and tenancies, grant rights,
                licences, options or easements or exchange all or any part of,
                and otherwise deal with or dispose of and exercise all rights,
                powers and discretions incidental to the ownership of, any of
                the Charged Property in the name of and on behalf of the
                Charging Company concerned or otherwise concur in doing any of
                the foregoing in such manner and generally on such terms and
                conditions and for such consideration (whether in cash,
                debentures or other obligations, shares, stocks, securities or
                other valuable consideration and whether payable by a lump sum
                or by instalments) as he may think fit and carry out any such
                sale by conveying by deed or transferring in the name and on
                behalf of the Charging Company concerned or otherwise, and so
                that plant machinery and other fixtures and fittings may be
                severed and sold separately from the premises containing them,
                and the Receiver may apportion any rent and the performance of
                any obligations;

        (d)     to repair, decorate, furnish, maintain, alter, improve, renew or
                add to the Charged Property or any part of it as he shall think
                fit and effect, maintain, renew or increase indemnity insurance
                and other insurances and obtain bonds;

        (e)     to appoint or dismiss managers, agents, officers, employees,
                servants, builders or workmen and employ professional advisers
                and others at such salaries or for such remuneration as he may
                think fit;

        (f)     to perform, repudiate, rescind, vary or enter into any
                arrangement or compromise any contracts or agreements which he
                may consider expedient;

        (g)     to settle, arrange, compromise and submit to arbitration any
                accounts, claims, questions or disputes whatsoever which may
                arise in connection with the business of such Charging Company
                or any of the Charged Property or in any way relating to the
                security constituted by this Debenture and bring, prosecute,
                defend, enforce, compromise, submit to and discontinue any
                actions, suits, arbitrations or proceedings whatsoever whether
                civil or criminal;

        (h)     to use the name of such Charging Company in the exercise of all
                or any of the powers conferred by this Debenture;

        (i)     to exercise or permit such Charging Company or any nominee of
                the Charging Company to exercise any powers or rights incidental
                to the ownership of the Charged

<PAGE>   22

                Property or any part of it in such manner as he may think fit;

        (j)     to give valid receipts for all monies and execute all
                discharges, assurances and things which may be proper or
                desirable for realising the Security Assets or any part of them;

        (k)     to carry on or concur in carrying on the business of the
                Charging Company and raise money or others without security or
                on the security of all or any of its Assets;

        (l)     to sell or concur in selling (where necessary with the leave of
                a court), lease or concur in leasing, licence or concur in
                licensing, grant options over and, without the need to observe
                any of the provisions of Section 99 and 100 of the Law of
                Property Act 1925, let or concur in letting and to terminate or
                to accept surrenders of leases, licences or tenancies of all or
                any of the Assets of such Charging Company in such manner and
                generally on such terms and conditions as he shall think fit in
                his absolute and unfettered discretion and any such sale or
                disposition may be for cash, debentures, securities or other
                valuable consideration (in each case payable in a lump sum or by
                instalments) and to carry any such transactions into effect in
                the name of and on behalf of such Charging Company;

        (m)     to promote the formation of a Subsidiary or Subsidiaries of such
                Charging Company with a view to such Subsidiary or Subsidiaries
                purchasing, leasing, licensing or otherwise acquiring interests
                in all or any of the Assets of such Charging Company on such
                terms as the Receiver thinks fit;

        (n)     to arrange for the purchase, lease, licence or acquisition of
                all or any Assets of such Charging Company by any such
                Subsidiary on a basis whereby the consideration may be for cash,
                shares, debentures, loan stock, convertible loan stock or other
                securities, shares of profits or sums calculated by reference to
                profits or turnover or royalties or licence fees or otherwise,
                whether or not secured on the assets of such Subsidiary and
                whether or not such consideration is payable or receivable in a
                lump sum or by instalments over such period as the Receiver may
                think fit;

        (o)     to arrange for such Subsidiary or Subsidiaries to trade or cease
                to trade as the Receiver may think fit from time to time;

        (p)     to sever any fixtures from the Properties or Land of which they
                form part;

        (q)     to exercise all voting and other rights attaching to Securities
                owned by such Charging Company;

        (r)     to make any arrangement or compromise with the Lender as he
                shall think fit;

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

        (t)     to appoint managers, officers and agents for the above purposes
                at such salaries as the Receiver may determine;

        (u)     to call up all or any portion of the uncalled capital of such
                Charging Company;

        (v)     to redeem any prior Lien and to settle and pass the accounts of
                the Lien, and any

<PAGE>   23

                accounts so settled and passed shall (subject to any manifest
                error) be conclusive and binding on such Charging Company and
                the money so paid shall be deemed an expense properly incurred
                by the Receiver;

        (w)     to pay the proper administrative charges of the Lender in
                respect of time spent by their agents and employees in dealing
                with matters raised by the Receiver or relating to the
                receivership of such Charging Company;

        (x)     to commence and/or complete any building operations upon any
                Land or Properties of such Charging Company and to apply for and
                obtain any planning permissions, building regulation consents or
                licences in each case as he may in his absolute discretion think
                fit;

        (y)     to vary the terms of the leases of any Land or Properties;

        (z)     to take all steps necessary to effect all registrations,
                renewals, applications and notifications as the Receiver in his
                discretion thinks prudent to maintain in force or protect any of
                such Charging Company's Intellectual Property Rights; and

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

15.8    THIRD PARTIES: Neither the Lender nor the Receiver shall be liable to
        account as mortgagee in possession or otherwise for any money not
        actually received by it or him respectively.

16.     POWER OF ATTORNEY

16.1    POWER OF ATTORNEY: The Charging Companies by way of security hereby
        irrevocably appoint the Lender (whether or not a Receiver has been
        appointed) and any Receiver separately the attorney of each Charging
        Company (with full power to appoint substitutes and to delegate) for
        such Charging Company, in its name and on its behalf, and as its act and
        deed or otherwise, at any time during the continuance of a Default or
        Event of Default to:

        (a)     execute and deliver and otherwise perfect any agreement,
                assurance, deed, instrument or document; or

        (b)     perform any act;

        which may be required of such Charging Company under this Debenture, or
        may be deemed by such attorney necessary or desirable for any purpose of
        this Debenture or to enhance or perfect the security intended to be
        constituted by it or to convey or transfer legal ownership of any Assets
        or in exercise of all or any powers, authorities and discretions
        conferred by or pursuant to this Debenture or by the Law of Property Act
        1925 on the Lender or any Receiver.

16.2    RATIFICATION: Without prejudice to the generality of the provisions
        contained in clause 16.1 (Power of Attorney), the Charging Companies
        hereby covenant with the Lender and separately with any Receiver that if
        required so to do such Charging Company will ratify and confirm:

<PAGE>   24

        (a)     all transactions entered into by it or (as the case may be) them
                at its or (as the case may be) their instance in the proper
                exercise of its or (as the case may be) their powers in
                accordance with this Debenture; and

        (b)     all transactions entered into by it or (as the case may be) them
                in signing, sealing, delivering and otherwise perfecting any
                assignment, mortgage, charge, security, deed, assurance,
                document or act as aforesaid;

        and the Charging Companies irrevocably acknowledge and agree that such
        power of attorney is (inter alia) given to the Lender, or, as the case
        may be, the Receiver, or both, to secure the performance of the
        obligations owed to him or them by each such Charging Company.

17.     OTHER POWERS EXERCISABLE BY THE LENDER

17.1    THE LENDER MAY EXERCISE RECEIVER'S POWERS: All powers of the Receiver
        conferred by this Debenture may be exercised by the Lender following
        demand by the Lender whether as attorney of a Charging Company or
        otherwise and whether or not the Receiver shall have been appointed and
        so that clause 15.7(v) (Powers of Receiver) shall be read and construed
        as if the words "be charged on the Assets of such Charging Company" were
        substituted for the words "be deemed an expense properly incurred by the
        Receiver".

17.2    THE LENDER EMPOWERED TO RECEIVE BOOK DEBTS: The Lender or any manager or
        officer of the Lender is hereby irrevocably empowered:

        (a)     to receive all book debts and other debts and claims which may
                be assigned to the Lender pursuant to clause 7 (Further
                Assurance); and

        (b)     on payment to give an effectual discharge for them and on
                non-payment (whilst a Default or Event of Default is continuing,
                at its discretion or otherwise in accordance with the
                instructions of the relevant Charging Company) to take and
                institute (if the Lender in its sole discretion so decides) all
                steps and proceedings either in the name of the relevant
                assignor or in the name of the Lender for their recovery and
                also to agree accounts and to make allowances and to give time
                to any surety. The relevant assignor hereby undertakes to ratify
                and confirm whatever the Lender or any manager or officer of the
                Lender shall do or purport to do under this clause 17.

17.3    EXCLUSION OF THE LENDER'S LIABILITY: Neither the Lender, nor any of its
        agents, managers or officers, shall have any liability or responsibility
        to either Charging Company arising out of the exercise or non-exercise
        of the rights conferred on it by this clause 17.

17.4    THE LENDER NOT OBLIGED TO TAKE ACTION RELATING TO BOOK DEBTS: The Lender
        shall not be obliged to make any enquiry as to the sufficiency of any
        sums received by it in respect of any book debts or other debt or claim
        so assigned to it or to make any claim or take any other action to
        collect in or enforce them.

18.     APPLICATION OF MONEY RECEIVED BY THE LENDER OR A RECEIVER

18.1    APPLICATION OF RECOVERIES: Any money received under the powers conferred
        by this Debenture shall, subject to the discharge of any prior-ranking
        claims but without prejudice to

<PAGE>   25

        the rights of the Lender to recover any shortfall from a Charging
        Company, be paid or applied in the following order of priority:

        (a)     in satisfaction of all costs, charges and expenses incurred, and
                payments made, by the Lender and/or the Receiver, and of the
                remuneration of the Receiver;

        (b)     in or towards satisfaction of the Secured Sums in the manner
                applicable under the Loan Agreement; and

        (c)     as to the surplus (if any), to the person or persons entitled to
                it.

18.2    SUSPENSE ACCOUNT: The Lender may, in its absolute discretion on or at
        any time or times after demand and pending the payment to the Lender of
        the whole of the Secured Sums, place and keep to the credit of a
        separate or suspense account bearing interest at a commercial rate any
        money received, recovered or realised by the Lender by virtue of this
        Debenture for so long and in such manner as the Lender may determine
        without any intermediate obligation to apply it in or towards the
        discharge of any Secured Sum.

19.     COSTS AND INTEREST ON OVERDUE AMOUNTS

19.1    INDEMNITY: All costs, charges and liabilities (including all
        professional fees and disbursements and value added tax and/or any
        similar tax) and all other sums paid or incurred by the Lender and/or
        any Receiver under or in connection with this Debenture or the Group
        Companies' affairs shall be recoverable (on a full indemnity basis) as a
        debt payable on demand from both Charging Companies, may be debited
        without notice to any account of either Charging Company, shall bear
        interest accordingly and shall be charged on the Assets of both Charging
        Companies. The Charging Companies shall indemnify the Lender against all
        and any costs, charges and expenses arising:

        (a)     out of any of the property charged or purported to be charged
                pursuant to clause 3 (Charging Clause) or clause 7 (Further
                Assurance) referable to it infringing or allegedly infringing
                any third party rights; and

        (b)     in relation to any proceedings referable to a Charging Company
                brought against the Lender or to which the Lender may be joined
                whether as plaintiff or defendant which relate to any of such
                Charged Property.

19.2    TYPES OF COSTS RECOVERABLE: Without prejudice to the generality of
        clause 19.1 (Indemnity), the costs recoverable by the Lender and/or any
        Receiver under this Debenture shall to the extent the same are
        recoverable under the Loan Agreement include:

        (a)     all costs properly incurred by the Lender in preparing and
                administering this Debenture or perfecting the security created
                by it;

        (b)     all costs (whether or not allowable on a taxation by the court)
                of all proceedings for the enforcement of this Debenture or for
                the recovery or attempted recovery of the Secured Sums;

        (c)     all money properly expended and all costs arising out of the
                exercise of any power, right or discretion conferred by this
                Debenture; and

<PAGE>   26

        (d)     all costs and losses arising from any default by a Charging
                Company in the payment when due of any Secured Sums or the
                performance of its obligations under this Debenture.

19.3    OVERDUE AMOUNTS: Any overdue amounts secured by this Debenture shall
        carry interest at the rate and in accordance with the terms contained in
        the Loan Agreement in relation to overdue sums or such other rate as may
        be agreed between the Charging Companies and the Lender. In each case,
        such interest shall accrue on a day to day basis to the date of
        repayment in full and, if unpaid, shall be compounded on the terms so
        agreed (or in the absence of such agreed terms) with monthly rests on
        the Lender's usual monthly interest days. Interest shall continue to be
        charged and compounded on this basis after, as well as before, any
        demand or judgment.

19.4    CURRENCY INDEMNITY: Moneys received or held by the Lender pursuant to
        this Debenture may from time to time after demand has been made be
        converted into such currency as the Lender considers necessary or
        desirable to discharge the Secured Sums in that currency at such rate of
        exchange as may be applicable under the Loan Agreement or, if none, the
        then prevailing spot rate of exchange of Wells Fargo Bank, N.A or any
        successor thereto (as conclusively determined by the Lender) for
        purchasing the currency to be acquired with the existing currency.

20.     SET-OFF

        (a)     The Lender may apply any money standing to the credit of the
                Charging Companies with the Lender in any currency upon any
                account or otherwise (in any country and whether or not in the
                relevant Charging Company's name) in or towards satisfaction of
                any Secured Sums at any time after a Default or an Event of
                Default has occurred without notice to such Charging Company and
                may set off, combine or consolidate all or any of such money
                with all or such part of the Secured Sums as the Lender may
                select (whether presently payable or not) and the Lender may
                purchase with any such money any other currency required to
                effect such combination.

        (b)     The Charging Companies each irrevocably authorise the Lender in
                its name and at its expense to perform such acts and sign such
                documents as may be required to give effect to any set-off or
                transfer pursuant to clause 20(a), including the purchase with
                the money standing to the credit of any such account of such
                other currencies as may be necessary to effect such set-off or
                transfer.

        (c)     The foregoing provisions of this clause shall be in addition to
                and without prejudice to such rights of set-off, combination,
                consolidation, lien and other rights whatsoever conferred on the
                Lender by law.

21.     TRANSFER

        The Lender may at any time transfer all or any part of its rights in
        relation to this Debenture and the Secured Sums to any person or
        otherwise grant an interest in them to any person.

22.     DISCLOSURE

<PAGE>   27

        The Charging Companies each irrevocably authorise the Lender, at its
        discretion, at any time or from time to time, to disclose any
        information concerning the Charging Companies, this Debenture and the
        Secured Sums:

        (a)     to any Affiliate of the Lender; and

        (b)     to any actual or prospective transferee or grantee referred to
                in clause 21 (Transfer).

        The above authority is without prejudice to any obligation of the Lender
        to make disclosure imposed by law.

23.     PERPETUITY PERIODS

        The perpetuity period applicable to the trusts hereby constituted shall
        be 80 years.

24.     FORBEARANCE AND SEVERABILITY

24.1    NO WAIVERS: All rights, powers and privileges under this Debenture shall
        continue in full force and effect, regardless of the Lender exercising,
        delaying in exercising or omitting to exercise any of them.

24.2    INVALIDITY AND SEVERABILITY:

        (a)     None of the covenants and guarantees given and none of the
                charges created by the Charging Companies under this Debenture
                shall be avoided or invalidated by reason only of any other of
                such covenant or covenants, guarantees or charges being invalid
                or unenforceable.

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

25.     VARIATIONS AND CONSENTS

25.1    VARIATIONS IN WRITING: No variation of this Debenture shall be
        considered valid and as constituting part of this Debenture, unless such
        variation shall have been made in writing and signed by the Lender and
        the Charging Companies.

25.2    VARIATION: The expression "variation" shall include any variation,
        supplement, extension, deletion or replacement however effected.

25.3    CONDITIONAL CONSENTS: Save as otherwise expressly specified in this
        Debenture or the Loan Agreement, any consent of the Lender may be given
        absolutely or on any terms and subject to any conditions as the Lender
        may determine in its entire discretion.

<PAGE>   28

26.     SERVICE OF DEMANDS AND NOTICES

26.1    NOTICES TO COMPANIES: A demand for payment or any other communication to
        be given to a Charging Company under this Debenture may be made or given
        by any manager or officer of the Lender and must be in writing addressed
        to such Charging Company and served on it at the address for service of
        such Charging Company stated in the First Schedule or to the address
        last notified to the Lender by the Charging Company or its existing or
        last known place of business (or, if more than one, any one of such
        places), or by facsimile transmission to the facsimile number stated in
        the First Schedule or to the facsimile number last notified to the
        Lender by the Charging Company or by any other form of electronic
        communication which may be available.

26.2    NOTICES TO LENDER: Any communication to be given to the Lender under
        this Debenture must be given to the Lender in writing served on it at
        2450 Colorado Avenue, Suite 3000 West, Santa Monica, California 90404
        (marked for the attention of the Business Finance Division Manager), or
        by facsimile to facsimile number 001 310 453 7413 or the address last
        notified to either Charging Company by the Lender in writing.

26.3    DEEMED SERVICE: A notice or demand shall be deemed to be duly served on
        a Charging Company:

        (a)     if delivered by hand, at the time of actual delivery;

        (b)     if transmitted by facsimile, at the time the facsimile
                transmission report (or other appropriate evidence) confirming
                that the facsimile has been transmitted to the addressee is
                received by the sender; and/or

        (c)     if sent by first class prepaid post, at noon on the third
                Business Day following the day of posting and shall be effective
                even if it is misdelivered or returned undelivered;

        provided that, where delivery or transmission occurs after 6.00 pm in
        the place of receipt of delivery on a Business Day or on a day which is
        not a Business Day, service shall be deemed to occur at 9.00 am in the
        place of receipt of delivery on the next Business Day.

        In proving such service on the Charging Companies it shall be sufficient
        to prove that personal delivery was made or that the envelope containing
        the communication was correctly addressed and posted or that a facsimile
        transmission report (or other appropriate evidence) was obtained that
        the facsimile had been transmitted to the addressee.

26.4    SERVICE ON LENDER: Any communication to the Lender shall be deemed to
        have been given only on actual receipt by it.

27.     COUNTERPARTS

        This Debenture may be executed by the parties in any number of copies,
        all of which taken together shall constitute a single Debenture.

28.     ADJUSTMENT OF ACCOUNT

<PAGE>   29

        If the state of account between the Lender and a Charging Company by
        reference to which any Secured Sums are calculated for the purposes of
        this Debenture requires adjustment at any time because of any claim made
        against the Lender by an officeholder (within the meaning of Section 234
        of the Insolvency Act 1986) then, notwithstanding any other provision of
        this Debenture:

        (a)     that Charging Company's liability to the Lender will be
                correspondingly adjusted; and

        (b)     the Lender may treat any release or settlement made by it with
                that Charging Company before any such adjustment is required as
                being of no effect; and

        (c)     the Lender may recover from that Charging Company such sum as
                will place the Lender in the same position as if such release or
                settlement had not been made.

        If any claim is made against the Lender under any insolvency law with
        reference to this Debenture, the Lender may agree the claim or settle it
        on any terms it chooses without asking for the Charging Company's
        agreement. If the Lender does agree or settle such claim, the Charging
        Company concerned will be liable under this Debenture as if a court
        order had been made containing the terms which the Lender agreed or
        settled. The relevant Charging Company will be responsible for all costs
        and expenses which the Lender properly incurs in defending such a claim.

29.     PROVISO FOR REDEMPTION AND RELEASES

        Following payment and discharge in full of the Secured Sums to be paid
        or discharged by a Charging Company under this Debenture or if a
        Charging Company wishes to dispose of an Asset charged by way of fixed
        charge under this Debenture where such disposal is permitted under this
        Debenture the Lender will, at the request and cost of the Charging
        Companies, execute a release and reassignment of all or the relevant
        part of the security given by such Charging Company comprised in this
        Debenture in such form as the Charging Company may reasonably require.

30.     SECURITY TRUSTEESHIP

        The Lender shall not have (or be deemed to have) any obligation to, or
        trust or fiduciary relationship with, any person other than any for
        which specific provision is made in any Relevant Document or the Loan
        Agreement.

31.     GOVERNING LAW AND SUBMISSION TO JURISDICTION

31.1    GOVERNING LAW: This Debenture shall be governed by and construed in all
        respects in accordance with English law.

31.2    SUBMISSION TO JURISDICTION:

        (a)     The Charging Companies irrevocably submit for the benefit of the
                Lender to the non-exclusive jurisdiction of the courts of
                England for the purpose of hearing and determining any dispute
                arising out of this Debenture.

        (b)     For the purpose of enforcement of any judgement against its
                assets, without prejudice to any other permitted mode of
                service, the Charging Companies agree that service of any writ,
                notice or other document for the purpose of any proceedings in
                such courts

<PAGE>   30

                shall be duly served upon it if delivered or sent by registered
                post to such Charging Company at the address for notices
                specified in Clause 26 (Service of Demands and Notices) or such
                other address in England or Wales as such Charging Company may
                notify from time to time to the Lender.

        (c)     The Charging Companies irrevocably agree not to claim that any
                such court is not a convenient or appropriate forum and agree
                that a judgment in proceedings brought in such courts shall be
                conclusive and binding upon them and may be enforced in any
                other jurisdiction.

31.3    FREEDOM OF CHOICE: The submission to the jurisdiction of the courts
        referred to in Clause 31.2 (Submission to Jurisdiction) shall not (and
        shall not be construed so as to) limit the right of the Lender to take
        proceedings against either Charging Company in the courts of any country
        in which such Charging Company has assets or in any other court of
        competent jurisdiction nor shall the taking of proceedings in any one or
        more jurisdictions preclude the taking of proceedings in any other
        jurisdiction (whether concurrently or not) if and to the extent
        permitted by applicable law.

THIS DEBENTURE has been executed by each Charging Company as a Deed and signed
by the Lender but shall only be treated as having been executed and delivered to
take effect on the day and year first above written.

<PAGE>   31

CHARGORS

EXECUTED and DELIVERED as a                          )
Deed by KNS HOLDINGS LIMITED                         )
                                                     )
(pursuant to a resolution of its Board               )
of Directors) acting by:                             )

         Director       /s/ NIGEL HAWLEY

         Director       /s/ YURI PASEA

OR BY ITS ATTORNEY

EXECUTED and DELIVERED as a                          )
Deed by FUTURELINK EUROPE LIMITED                    )
(pursuant to a resolution of its Board               )
of Directors) acting by:                             )

         Director       /s/ NIGEL HAWLEY

         Director       /s/ YURI PASEA

OR BY ITS ATTORNEY

LENDER

SIGNED by                                            )
for and on behalf of                                 )
FOOTHILL CAPITAL CORPORATION                         )

         /s/ WILLIAM SHIAO
<PAGE>   32

THE FIRST SCHEDULE
THE CHARGING COMPANIES

<TABLE>
<CAPTION>
NAME OF CHARGING COMPANY      REGISTERED NUMBER     ADDRESS FOR SERVICE AND FAX OR TELEX NUMBER
------------------------      -----------------     -------------------------------------------
<S>                           <C>                   <C>
KNS HOLDINGS LIMITED          03471603              KNS Holdings Limited
                                                    C/o FutureLink Europe Limited
                                                    The Chestnuts
                                                    2 Old Bath Road
                                                    Newbury
                                                    Berkshire RG14 1QL

                                                    Fax: 01635 38578

                                                    Attention:  Company Secretary/Chief
                                                    Financial Officer

                                                    With copies to:

                                                    Paul Hastings Janofsky & Walker
                                                    Tower 42
                                                    25 Old Broad Street
                                                    London EC2N 1HQ

                                                    Fax: 0207 628 4444

                                                    Re: KNS Holdings Limited

FUTURELINK EUROPE LIMITED     03159433              FutureLink Europe Limited
                                                    The Chestnuts
                                                    2 Old Bath Road
                                                    Newbury
                                                    Berkshire RG14 1QL

                                                    Fax: 01635 38578

                                                    Attention:  Company Secretary/Chief
                                                    Financial Officer

                                                    With copies to:

                                                    Paul Hastings Janofsky & Walker
                                                    Tower 42
                                                    25 Old Broad Street
                                                    London EC2N 1HQ

                                                    Fax: 0207 628 4444

                                                    Re: FutureLink Europe Limited
</TABLE>

<PAGE>   33

THE SECOND SCHEDULE

THE PROPERTIES

PREMISES DEMISED BY AND MORE PARTICULARLY DESCRIBED IN AN UNDERLEASE DATED 9
FEBRUARY BETWEEN (1) TARMAC HEAVY BUILDING MATERIALS UK LIMITED, AND (20
KERRIDGE COMPUTER COMPANY LIMITED AND SHORTLY KNOWN AS 2 OLD BATH ROAD, NEWBURY

<PAGE>   34

THE THIRD SCHEDULE
COLLECTION ACCOUNT SIDE LETTERS

[*FORM OF NOTICE TO BE SERVED BY BOTH OF THE CHARGING COMPANIES TO BANK HOLDING
THE COLLECTION ACCOUNT TOGETHER WITH THE FORM OF ACKNOWLEDGEMENT REQUIRED FROM
THAT BANK*]

To:      [ ]
         [*branch address*]

         For the attention of [ ]

[* date *]

We refer to the debenture (the "DEBENTURE") dated on or around the date of this
notice and made between ourselves (1) and Foothill Capital Corporation (as the
Lender as defined in the Debenture) (2).

We each hereby give you notice that pursuant to the Debenture we, with full
title guarantee, have charged by way of first fixed charge to the Lender all our
rights, title and interest in and to all sums which may at any time be standing
to the credit of the accounts listed in the table below, which were opened by us
in your books and any other accounts which we may open in your books (the
"COLLECTION ACCOUNTS" and each one of them a "COLLECTION ACCOUNT").

<TABLE>
<CAPTION>
COMPANY/ACCOUNT DESCRIPTION         COLLECTION ACCOUNT NUMBER     BANK SORT CODE
---------------------------         -------------------------     --------------
<S>                                 <C>                           <C>
</TABLE>

In connection therewith and by way of security for the Secured Sums (as defined
in the Debenture) we hereby irrevocably and unconditionally instruct and
authorise you (notwithstanding any previous instructions whatsoever which we may
have given you to the contrary):

(a)     to disclose to the Lender without any reference to or further authority
        from us and without any enquiry by you as to the justification for such
        disclosure, such information relating to the Collection Accounts or any
        other accounts opened by us in your books (the "ACCOUNTS"), the amount
        from time to time standing to the credit thereof and the debts
        represented thereby as the Lender may, at any time and from time to
        time, request you to disclose to it; and

(b)     unless the Lender so authorises you, not to permit withdrawals from the
        Collection Accounts and to hold all moneys from time to time standing to
        the credit of the Collection Accounts to the order of the Lender and pay
        all or any part of those moneys to the Lender (or as it may direct)
        promptly following receipt of written instructions from the Lender to
        that effect.

<PAGE>   35

The arrangements and authorisations contained in this letter may not be modified
without the Lender's consent.

        [The Lender by countersigning this letter permits you to debit
        outstanding charges due to you by the Charging Company for operation of
        the Collection Accounts from the Collection Account.]

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

Please confirm your acknowledgement of the terms of this Notice by signing the
acknowledgements set out at the foot of the enclosed duplicate hereof and by
returning the same to legal adviser to the Lender, Brobeck Hale and Dorr, and to
Foothill Capital Corporation at 2450 Colorado Avenue, Suite 3000 West, Santa
Monica, California 90404 (marked for the attention of Business Finance Division
Manager).

Signed by:    [CHARGING COMPANY]
acting by:

Signed by:    FOOTHILL CAPITAL CORPORATION

acting by

<PAGE>   36

To:           [ ]

              For the attention of: [ ]

              Foothill Capital Corporation
              2450 Colorado Avenue,
              Suite 3000 West,
              Santa Monica,
              California 90404

              For the attention of: Business Finance Division Manager

We,             , hereby acknowledge receipt of a notice of charge from Foothill
Capital Corporation of which the attached is a copy (the "Notice of Charge").

We confirm that:

        (a)     we accept the instructions and authorisations contained in the
                Notice of Assignment;

        (b)     we have not received notice of any other assignment of or charge
                over or other third party right in the book debts and other
                monetary debts and claims described or any interest therein and
                will notify you if we do receive notice; and

        (c)     we will hold all moneys standing to the credit of the Collection
                Accounts to the order of the Lender and we will not exercise any
                right to combine accounts or any rights of set-off, counterclaim
                or lien or any similar rights in relation to the moneys standing
                to the credit of the Collection Accounts or the other Accounts
                (except for the netting of credit and debt balances pursuant to
                any current account netting arrangements previously approved in
                writing by the Lender).

Signed by

------------------------
for and on behalf of
[name of Account Bank]

<PAGE>   37

[TO BE TYPED ON THE HEADED NOTEPAPER OF THE LENDER]

To:     The Directors
        [Charging Companies]

[Date]

Dear Sirs

COLLECTION ACCOUNT LETTER

We refer to the guarantee and debenture of [date] (the "DEBENTURE") granted by
FutureLink Europe Limited and KNS Holdings Limited (the "CHARGING COMPANIES") to
ourselves as the Lender (as defined in the Debenture).

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

2.      We refer in particular to the following provisions of the Debenture:

        (a)     by sub-clause 3.1(b)(viii) (Charging Clause), the Charging
                Companies created first fixed charges over book and other debts
                and monetary claims (present and future);

        (b)     by sub-clause 3.1(b)(x) and 3.1(b)(xii) (Charging Clause), the
                Charging Companies created first fixed charges over any cash
                balances standing to the credit of any bank account relating to
                each Charging Company, including the proceeds of book debts and
                other debts and claims charged pursuant to sub-clause
                3.1(b)(viii) (Charging Clause) of the Debenture; and

        (c)     by sub-clause 5.1 (Treatment of Receivables), the Charging
                Companies are required to pay into such account as the Lender
                nominates, pursuant to this letter, all debts and claims charged
                by it pursuant to the Debenture.

3.      In accordance with sub-clause 5.1 (Treatment of Receivables) of the
        Debenture, we set out below details of the Charging Companies' operating
        account which is to be their Collection Account for the purposes of the
        Debenture and hereby require that the Charging Company pays into its
        Collection Account all moneys which it may henceforth receive in respect
        of Receivables and other debts and claims charged by the Debenture until
        further instructed by us to the contrary.

<PAGE>   38

<TABLE>
<CAPTION>
COMPANY/ACCOUNT DESCRIPTION         COLLECTION ACCOUNT NUMBER     BANK SORT CODE
---------------------------         -------------------------     --------------
<S>                                 <C>                           <C>
</TABLE>

4.      [We confirm that you may continue to operate all bank accounts in the
        ordinary course of business without seeking any further consent from us
        provided that we shall be entitled to terminate this authority by notice
        in writing to you at any time but it is not our present intention to
        terminate such authority unless and until a Default or an Event of
        Default occurs which is continuing.]

Please sign and return the enclosed copy of this letter to indicate your
agreement to its terms.

Yours faithfully

----------------------------------
For and on behalf of
FOOTHILL CAPITAL CORPORATION

We hereby acknowledge and agree to the foregoing terms of this letter.

----------------------------------
For and on behalf of
FUTURELINK EUROPE LIMITED
Dated:

----------------------------------
For and on behalf of
KNS Holdings Limited
Dated:

<PAGE>   39

THE FOURTH SCHEDULE
THE PATENTS AND TRADE MARKS

PATENTS AND PATENT APPLICATIONS

None

TRADE MARKS AND TRADE MARK APPLICATIONS (IF ANY)

<TABLE>
<CAPTION>
MARK      COUNTRY      APPLICATION NO     REGISTRATION NO     REGISTERED PROPRIETOR
----      -------      --------------     ---------------     ---------------------
<S>       <C>          <C>                <C>                 <C>
KNS       UK                              2202357             FutureLink Europe
                                                              Limited
</TABLE>

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