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

 

DATED

JUNE 24, 2004

 

VIEWSONIC EUROPE LIMITED

and others as Chargors

 

and

 

BURDALE FINANCIAL LIMITED

 

 

DEED OF DEBENTURE

 

 

Nabarro Nathanson

Lacon House

Theobald’s Road

London  WC1X 8RW

 

Tel:  020 7524 6000

 

CONTENTS

 

Clause		Subject matter
1.		DEFINITIONS AND INTERPRETATION	1
2.		FIXED SECURITY	7
3.		FLOATING CHARGE	9
4.		REPRESENTATIONS AND WARRANTIES	9
5.		UNDERTAKINGS	12
6.		WHEN SECURITY BECOMES ENFORCEABLE	19
7.		ENFORCEMENT OF SECURITY	19
8.		RECEIVER	21
9.		POWERS OF RECEIVER	22
10.		APPLICATION OF PROCEEDS	25
11.		EXPENSES AND INDEMNITY	26
12.		DELEGATION	26
13.		FURTHER ASSURANCES	26
14.		POWER OF ATTORNEY	27
15.		CONTINUING SECURITY	27
16.		MISCELLANEOUS	29
17.		RELEASE	30
18.		RIGHTS AND REMEDIES	30
19.		NOTICES	31
20.		GOVERNING LAW AND JURISDICTION	31

 

SCHEDULE 1	The Chargors	32
SCHEDULE 2	Mortgaged Property	33
SCHEDULE 3	Forms of Notice to Banks and Acknowledgement	34
	Part I - Blocked Accounts	34
	Part II - Other Accounts Other Accounts Notice	34
SCHEDULE 4	Group Shares	41
SCHEDULE 5	Other Accounts	42
SCHEDULE 6	Deed of Accession	43
SCHEDULE 7	Specified Intellectual Property	47
SCHEDULE 8	Specified Equipment	48

 

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DEED OF DEBENTURE

 

DATE	JUNE  2004

 

 

PARTIES

 

(1)                       VIEWSONIC EUROPE LIMITED (registered in England and Wales under company registration number 03131161) (the “Company”);

 

(2)                       THE COMPANIES (if any) identified in Schedule 1 (together with the Company and each person which becomes a party to this Deed by executing a Deed of Accession, each a “Chargor” and together the “Chargors”); and

 

(3)                       BURDALE FINANCIAL LIMITED (registered in England and Wales under company registration number 2656007) (“Burdale”).

 

RECITALS

 

(A)                   The Chargors enter into this Deed to secure the repayment and satisfaction of the Secured Liabilities.

 

(B)                     The Chargors and Burdale intend that this document take effect as a deed notwithstanding that it may be executed under hand.

 

IT IS AGREED AS FOLLOWS:

 

1.                           DEFINITIONS AND INTERPRETATION

 

1.1                                          In this Deed:

 

“Blocked Accounts”

 

means the bank accounts of the Chargors specified in Part I of schedule 5 and/or in the schedule to any Deed of Accession and/or such other bank accounts of the Chargors as Burdale may approve;

 

“Book Debts”

 

means:

 

(a)                        all book and other debts in existence from time to time (including, without limitation, any sums whatsoever owed by banks or similar institutions) both present and future, actual or contingent, due, owing to or which may become due, owing to or purchased or otherwise acquired by any Chargor; and

 

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(b)                       the benefit of all rights whatsoever relating to the debts referred to above including, without limitation, any related agreements, documents, rights and remedies (including, without limitation, negotiable or non-negotiable instruments, guarantees, indemnities, legal and equitable charges, reservation of proprietary rights, rights of tracing, unpaid vendor’s liens and all similar connected or related rights and assets);

 

“Charged Accounts”

 

means the Blocked Accounts and the Other Accounts;

 

“Dangerous Substance”

 

means any substance of whatever kind and form and in whatever combination capable of causing harm to any lifeform or the environment;

 

“Deed of Accession”

 

means a deed of accession substantially in the form set out in Schedule 6;

 

“Environmental Law”

 

means all laws, regulations, directives, statutes and any guidance, circular or regulations issued thereunder, subordinate legislation, common law, equity, all other international, national and local laws and all judgments, orders, instructions or awards of any court or competent authority concerning the protection of or compensation for damage to human health, the environment, or the condition, of any work place or the generation, dealing with, or disposal of any Dangerous Substance;

 

“Environmental Licence”

 

means any consent, approval, authorisation, exemption, licence, order, permission, condition, recording, registration, variation, modification or transfer required by any Environmental Law;

 

“Environmental Proceedings”

 

means any written claim or demand or any criminal, civil, judicial, regulatory or administrative proceedings, suit or action or other enforcement process brought or taken under any Environmental Laws (including without limitation any written claim or demand etc in respect of any Remedial Works) or any matter which would be the subject of any such written claim or demand etc but where liability has been admitted or otherwise settled or agreed;

 

“Equipment”

 

means (save to the extent that any such items form part of such Chargor’s stock in trade) all present and future plant, equipment, machinery, computers and computer hardware and software (whether owned or licensed), vehicles, tools, furniture and fixtures and all attachments, accessories owned by any Chargor and property

 

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(other than Fixtures) now or in future relating to it or used in connection with it and replacements and substitutions for it wherever located;

 

“Event of Default”

 

is defined in the Facility Agreement;

 

“Facility Agreement”

 

means the facility agreement dated on or about today’s date between the Company and others as Facility Companies and/or Guarantors and Burdale;

 

“Facility Company”

 

is defined in the Facility Agreement;

 

“Finance Documents”

 

is defined in the Facility Agreement;

 

“Fixtures”

 

means all fixtures and fittings (including, without limitation, those of trade) and fixed plant and machinery on the Mortgaged Property;

 

“Group Shares”

 

means all shares specified in Schedule 4 or in the Schedule to any Deed of Accession or, when used in relation to a particular Chargor, such of those shares as are specified against its name in Schedule 4 or in the Schedule to any Deed of Accession, together in each case with all other stocks, shares, debentures, bonds, warrants, coupons or other securities and investments now or in the future owned by any or (when used in relation to a particular Chargor) that Chargor from time to time;

 

“Insurances”

 

means all contracts and policies of insurance taken out by or for a Chargor or in which any Chargor has an interest (to the extent of that interest);

 

“Intellectual Property”

 

means all subsisting patents and subsisting rights of a similar nature held in any part of the world, applications for patents and such rights, divisions and continuations of such applications for patents, registered and unregistered trade marks, registered designs, utility models (in each case for their full period and all extensions and renewals of them), applications for any of them and the right to apply for any of them in any part of the world, inventions, confidential information, Know-how, business names, trade names, brand names, copyright and rights in the nature of copyright, design rights and get-up and any similar rights existing in any country; and the benefit (subject to the burden) of any and all

 

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agreements, arrangements and licences in connection with any of the foregoing including but not limited to the Specified Intellectual Property;

 

“Know-how”

 

means all the body of knowledge, technical experience, expertise and skills, technical processes, secret processes, formulae and technical information held by any Chargor and relating to its business, which is not in the public domain;

 

“Local Accounts”

 

means the bank accounts of the Chargors specified in Part III of Schedule 5;

 

“Mortgaged Property”

 

means any freehold or leasehold property (including the Premises) the subject of the security created by this Deed;

 

“Obligors”

 

is defined in the Facility Agreement;

 

“Other Accounts”

 

includes (i)  the bank accounts of the Chargors specified in Part II of Schedule 5 and/or in the Schedule to any Deed of Accession and/or such other bank accounts of the Chargors as Burdale may permit and (ii) the Local Accounts;

 

“Permitted Security Interest”

 

means any Security Interest which any Chargor is permitted to create or maintain under the terms of the Facility Agreement;

 

“Premises”

 

means any building or other edifice on the Mortgaged Property or other Security Asset;

 

“receiver”

 

includes any receiver, receiver and manager or administrative receiver;

 

“Receiver”

 

means any individual or individuals (who may be an employee or employees of Burdale) for the time being and from time to time appointed by Burdale to be a receiver or receivers (and, where more than one individual is appointed jointly, they shall have the power to act severally, unless Burdale shall specify to the contrary in their appointment) under this Deed and, where the context shall admit, any individual or individuals for the time being and from time to time so appointed in substitution, provide always that all such individuals shall be qualified under the Insolvency Act 1986 to act as a receiver of the property of any company with

 

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respect to which he is appointed or as an administrative receiver of any such company;

 

“Related Rights”

 

means, in relation to the Group Shares, all dividends and other distributions paid or payable after today’s date on all or any of the Group Shares and all stocks, shares, securities (and the dividends or interest on them), rights, money or property accruing or offered at any time by way of redemption, bonus, preference, option rights or otherwise to or in respect of any of the Group Shares or in substitution or exchange for any of the Group Shares;

 

“Remedial Works”

 

means:

 

(a)                        any investigation, inspection, sampling or monitoring works; or

 

(b)                       any works, steps or measures to treat, abate, remove, remedy, contain, control, manage or ameliorate the presence or actual or potential effect of any Dangerous Substance or any harm to the environment or human health or pollution of the environment;

 

“Secured Liabilities”

 

means all present and future obligations and liabilities, whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever, of each Obligor to Burdale except for any obligation which, if it were so included, would result in a contravention of section 151 of the Companies Act 1985;

 

“Security Assets”

 

means all assets of each Chargor the subject of any security created by this Deed (and includes the Mortgaged Property);

 

“Security Interest”

 

is defined in the Facility Agreement;

 

“Security Period”

 

means the period beginning on the date of this Deed and ending on the date on which the Secured Liabilities have been irrevocably and unconditionally satisfied in full.  If any amount paid by any Chargor and/or in connection with the satisfaction of the Secured Liabilities is capable of being avoided or otherwise set aside on the liquidation or administration of such Chargor or otherwise, then that amount shall not be considered to have been irrevocably paid for the purpose of this Deed;

 

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“Security Shares”

 

means the Group Shares and the Related Rights and, in the case of a particular Chargor, means such of the Group Shares as are held by it at the relevant time, together with all Related Rights in respect of such Group Shares;

 

“Specified Equipment”

 

means the Equipment (if any) specified in Schedule 8 or in the Schedule to any Deed of Accession;

 

“Specified Intellectual Property”

 

means the registered Intellectual Property (if any) specified in Schedule 7 or in the Schedule to any Deed of Accession.

 

1.2                                          Construction

 

1.2.1                                                    Any reference in this Deed to:

 

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

 

(b)                      an “authorisation” means an authorisation, consent, approval, licence, resolution, filing or registration;

 

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

 

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

 

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

 

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

 

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

 

(h)                      words importing the singular shall include the plural and vice versa;

 

(i)                          a charge or mortgage of any freehold or leasehold property includes all Premises and Fixtures on that property, the proceeds of sale of any part of that property, and the benefit of any covenants for title (or any monies paid or payable in respect of them) given or entered into by any predecessor in title in respect of that property;

 

(j)                          any party or person includes any person deriving title from it or any successor, transferee or assignee.

 

1.3                                          Clause and schedule headings are for ease of reference only.

 

1.4                                          An Event of Default is “continuing” if it has not been waived.

 

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1.5                                          Capitalised terms defined in the Facility Agreement have the same meaning when used in this Deed unless the context requires otherwise.

 

1.6                                          If at any time the Company is the only Chargor the references in this Agreement to “Chargors” shall, whilst such circumstance is continuing, be construed accordingly.

 

1.7                                          The terms of the other Finance Documents and of any side letters between the parties to this Deed in relation to the Finance Documents are incorporated in this Deed to the extent required for any purported disposition of the Mortgaged Property in this Deed to be a valid disposition in accordance with section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989.

 

1.8                                          Every disposition effected by this Deed is made with full title guarantee.  The other terms of this Deed do not limit or extend any of the covenants implied by virtue of Part 1 of the Law of Property (Miscellaneous Provisions) Act 1994 but create separate and independent obligations having effect cumulatively with those implied covenants.

 

1.9                                          Each of the charges in clause 2 over each category of the assets, each asset and each sub-category of each asset specified in such clause shall be read and construed separately, as though each such category, asset and sub-category were charged independently and separately of each other.

 

1.10                                    In the event of any conflict between the provisions of this Deed and the provisions of the Facility Agreement the provisions of this Deed shall prevail.

 

2.                            FIXED SECURITY

 

Each Chargor, as security for the payment and performance of the Secured Liabilities and in the manner specified in clause 1.7 of this Deed:

 

2.1                                          charges in favour of Burdale by way of a first legal mortgage all the property (if any) now belonging to it and specified in Schedule 2 and all other interests in any freehold or leasehold property now or in the future belonging to it; and

 

2.2                                          charges in favour of Burdale by way of a first fixed charge:

 

2.2.1                                                    (to the extent that they are not within clause 2.1) all interests in any freehold or leasehold property now or in the future belonging to it;

 

2.2.2                                                    all Equipment (other than any Specified Equipment effectively mortgaged to Burdale by way of a first legal mortgage pursuant to clause 2.5) now or in the future belonging to it and its interest in any such Equipment in its possession now or in the future;

 

2.2.3                                                    all of its benefits, claims and returns of premiums in respect of the Insurances;

 

2.2.4                                                    all of its right, title and interest (if any) in and to the Blocked Accounts and all monies standing to the credit of any the Blocked Accounts and the debts represented by them;

 

2.2.5                                                    its goodwill and its uncalled capital both present and future;

 

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2.2.6                                                    its Book Debts, both uncollected and collected, the proceeds of the same and all monies otherwise due and owing to such Chargor but excluding the Charged Accounts and any amounts standing to the credit of any Charged Account;

 

2.2.7                                                    the benefit of all rights, securities and guarantees of whatsoever nature enjoyed or held by it in relation to anything in sub paragraph 2.1(b)(vii);

 

2.2.8                                                    its rights under any hedging arrangements;

 

2.2.9                                                    any of its beneficial interest, claim or entitlement in any pension fund;

 

2.2.10                                              the benefit of all permissions of whatsoever nature and whether statutory or otherwise, held in connection with its business or the use of any Security Asset and the right to recover and receive all compensation which may be payable to it; and

 

2.2.11                                              its Intellectual Property now or in the future subject to any necessary (as at the date of this Deed) third party’s consent to such charge being obtained. To the extent that such Intellectual Property is not capable of being charged (whether by reason of lack of any such consent or otherwise) the charge purported to be effected by this sub-clause 2.2.11 shall operate as an assignment of any and all damages, compensation, remuneration, profit, rent or income which any Chargor may derive from such Intellectual Property or be awarded or entitled to in respect of such Intellectual Property as continuing security for the payment, discharge and performance of the Secured Liabilities;

 

2.3                                          mortgages and charges and agrees to mortgage and charge to Burdale all Group Shares held now or in the future by it and/or any nominee on its behalf, the same to be a security by way of a first mortgage;

 

2.4                                          mortgages and charges and agrees to mortgage and charge to Burdale all the Related Rights accruing to all or any of the Group Shares held now or in the future by it and/or any nominee on its behalf, the same to be a security by way of a first mortgage or charge;

 

provided that:

 

2.4.1                                                    whilst no Event of Default is continuing, all dividends and other distributions paid or payable as referred to in paragraph (d) above may be paid directly to the relevant Chargor (in which case Burdale or its nominee shall execute any necessary dividend mandate) and, if paid directly to Burdale shall be paid promptly by it to the relevant Chargor; and

 

2.4.2                                                    subject to sub-clause 5.4.3 whilst no Event of Default is continuing, all voting rights attaching to the relevant Group Shares may be exercised by the relevant Chargor or, where the shares have been registered in the name of Burdale or its nominee, as the relevant Chargor may direct in writing, and Burdale and any nominee of Burdale in whose name such Group Shares are registered shall execute any form of proxy or other document reasonably required in order for the relevant Chargor to do so; and

 

2.5                                          mortgages and charges and agrees to mortgage and charge to Burdale the same to be a security by way of a first mortgage all of its right, title and interest in and to:

 

2.5.1                                                    the Specified Equipment; and

 

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2.5.2                                                    all spare parts and replacements for and all modifications and additions to the Specified Equipment.

 

3.                            FLOATING CHARGE

 

3.1                                          Creation

 

Each Chargor as security for the payment and performance of the Secured Liabilities and in the manner specified in clause 1.7 of this Deed charges in favour of Burdale by way of a floating charge all its assets not otherwise effectively mortgaged or charged by way of fixed mortgage or charge by clause 2.

 

3.2                                          Conversion by notice

 

Burdale may by notice to any Chargor convert the floating charge created by this Deed into a fixed charge in relation to all or any of such Chargor’s assets specified in the notice if:

 

3.2.1                                                    Burdale has reasonable grounds for considering those assets to be in jeopardy, by legal process or otherwise; or

 

3.2.2                                                    an Event of Default has occurred and is continuing; or

 

3.2.3                                                    Burdale becomes aware or has reason to believe that steps have been taken which would, in the reasonable opinion of Burdale, be likely to lead to the presentation of a petition to appoint an administrator in relation to such Chargor (or that such a petition has been presented or such an administrator has been appointed) or to wind up such Chargor (or that such a petition has been presented).

 

3.3                                          No waiver

 

The giving by Burdale of a notice pursuant to clause 3.2 in relation to any class of any Chargor’s assets, rights and property shall not be construed as a waiver or abandonment of Burdale’s rights to give other similar notices in respect of any other class of assets.

 

3.4                                          Insolvency Act 1986

 

Paragraph 14 of Schedule B1 to the Insolvency Act 1986 applies to the floating charge created by clause 3.2.

 

4.                            REPRESENTATIONS AND WARRANTIES

 

4.1                                          Making of representations

 

Each Chargor makes the representations and warranties set out in this clause 4 to Burdale.  The representations and warranties so set out are made on the date of this Deed and are deemed to be repeated by the Chargors throughout the Security Period on those dates on which representations and warranties are to be repeated in accordance with clause 12 of the Facility Agreement with reference to the facts and circumstances then existing.

 

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4.2                                          Capacity

 

Each Chargor has the capacity, power and authority to enter into this Deed and the obligations assumed by it are its legal, valid, binding and enforceable obligations subject to laws affecting creditors’ rights generally.

 

4.3                                          Title

 

The Chargors are the sole legal and beneficial owner of the Security Assets free of any Security Interest or third party interest of any kind (other than pursuant to or as permitted by the Finance Documents).

 

4.4                                          Environmental Matters

 

4.4.1                                                    Save as disclosed in writing by the relevant Chargor to Burdale prior to the date of this Deed, each Chargor has at all times complied with all applicable Environmental Law including the obtaining of and compliance with all requisite Environmental Licences (as varied or modified from time to time).

 

4.4.2                                                    No Chargor is involved in any Environmental Proceedings and no Chargor is aware of any circumstances which are likely to give rise to such Environmental Proceedings.

 

4.4.3                                                    No circumstances exist which will result in any Chargor having any requisite Environmental Licence revoked or modified or varied in a material manner.

 

4.5                                          Mortgaged Property

 

4.5.1                                                    The Chargor named as owner in respect of any Mortgaged Property is the legal and beneficial owner of such Mortgaged Property.

 

4.5.2                                                    Other than as notified in writing to Burdale, the Mortgaged Property is free from any agreement for lease, lease, licence, tenancy, overriding lease or other occupational arrangement or overriding interest.