Exhibit 4.17


 


GENERAL SECURITY AGREEMENT


 


THIS GENERAL SECURITY AGREEMENT is made as of May 19, 2004 by ADB SYSTEMS
INTERNATIONAL LTD., an Ontario corporation, in favour of:


 


STONESTREET LIMITED PARTNERSHIP


 


FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are acknowledged by the Company, the Company agrees with the Investor as
follows:


 


1.             Definitions.  In this Agreement, unless defined elsewhere in this Agreement,
capitalized terms shall bear the meanings set out in Schedule “A”.


 


2.             Grant
of Security.  As general and continuing
collateral security for the due payment and performance of the Indebtedness,
the Company grants to the Investor a security interest in the Collateral,
mortgages and charges the Collateral in favour of the Investor, and assigns the
Collateral, in favour of the Investor.


 


3.             Attachment.  The Security Interests created in this Agreement are intended to
attach: (i) to existing Collateral when the Company signs this Agreement; and
(ii) to Collateral subsequently acquired by the Company immediately upon the
Company acquiring any rights in such Collateral.


 


4.             Limitations
on Grant of Security.  The Security
Interests created by this Agreement do not extend to any Excluded
Collateral.  All Excluded Collateral
shall be held by the Company in trust for the Investor and, on the exercise by
the Investor of any of its rights under this Agreement following a Default,
will be assigned and otherwise dealt with by the Company as directed by the
Investor.


 


5.             Representations
and Warranties.  The Company
represents and warrants to the Investor that:


 


(a)           Legal Name of Company.  The name of the Company set out on the first page of this
agreement is the full legal name of the Company set out in the Company’s
constating documents, as amended and in effect on the date hereof.


 


(b)           Place of Business and Location of Records.  The Company’s chief executive office, the location of the office
where it keeps its records respecting its accounts receivable, and all other
places of Business of the Company are listed on Schedule “B” hereto.


 


(c)           Title; No Other Security Interests.  The Company owns (or, with respect to any leased or licensed
property forming part of the Collateral, holds a valid leasehold or licensed
interest in) the Collateral free and clear of any Security Interests, other
than Permitted Security Interests.


 


(d)           No Contravention of Other Obligations.  The Company is duly incorporated and has the power and authority
to grant to the Investor the Security Interests created by this Agreement and
to execute and deliver and perform its obligations under this


 

















 


Agreement and
such execution, delivery and performance does not contravene any of the
Company’s constating documents or by-laws or to the best of its knowledge, any
material agreements or instruments to which the Company is a party.


 


(e)           Enforceability.  This agreement is a legal, valid and binding obligation of the
Company, enforceable against it in accordance with its terms, subject only by
bankruptcy, insolvency and any other laws of general application affecting
creditors’ rights and by rules of equity.


 


(f)            Ownership of Collateral.  The Company is, or is to become, the owner of the Collateral and
has, or will have when the Collateral is acquired, the right to create a
security interest in the Collateral in favour of the Investor.


 


6.             Covenants.  The Company covenants and agrees with the
Investor that:


 


(a)           Delivery of Information Regarding
Collateral.  The Company shall forthwith
on request, furnish to the Investor in writing all information requested by the
Investor, acting reasonably, relating to the Collateral (including reports,
statements and schedules further identifying and describing the Collateral),
forthwith on request, furnish to the Investor descriptions of any material
Collateral acquired after this Agreement is executed, and the Investor shall be
entitled from time to time, upon reasonable notice, to inspect the Collateral
and to take temporary custody of and make copies of all documents relating to
the Collateral and for such purposes the Investor shall, upon reasonable
notice, have access to all premises occupied by the Company or where the
Collateral or any of it may be found.


 


(b)           Further Documentation.  The Company shall from time to time forthwith on the Investor’s
request do, make and execute all such financing statements, further assignments
or agreements, documents, schedules to this Agreement, acts, matters and things
as may be required by the Investor, acting reasonably, of or with respect to
the Collateral or any part thereof or as may be required to give effect to
these presents.


 


(c)           No Change in Location of Collateral etc.  The Company will not change its chief executive office or the
location of the Collateral, (other than Inventory enroute from suppliers or
enroute to the Company or on lease or on consignment) or the location of the
office where it keeps its records respecting the Accounts, without providing to
the Investor such additional security and priority agreements, if any, as the
Investor may reasonably require and without obtaining the prior written
approval of the Investor, which approval shall not be unreasonably withheld.


 


(d)           Notices. 
The Company agrees to immediately notify the Investor, if any person,
firm or corporation has the right to go into, collect or seize possession of
any part of the Collateral by means of execution, garnishment or other legal
process.


 


(e)           Payments Relating to Collateral.  The Company agrees to make all payments and keep current all
accounts which the Company is obliged to pay and which, if not


 


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paid, may
result in an encumbrance against the Collateral and will provide to the
Investor such information requested by it from time to time to evidence that
such payments have been made.


 


(f)            Limitations on Other Security Interests.  The Company will not create, incur or permit to exist, and will
defend the Collateral against, and will take such other action as is necessary
to remove, any and all Security Interests on and claims in respect of the
Collateral other than the Permitted Security Interests and the Company will
defend the right, title and interest of the Investor in and to the Collateral
against the claims and demands of all Persons.


 


(g)           Limitations on Dispositions of Collateral.  The Company will not, without the Investor’s prior written
consent, which consent shall not be unreasonably withheld or delayed, sell,
lease or otherwise dispose of any of the Collateral, except in the ordinary course
of business.  Following Default, all
Proceeds of the Collateral (including all amounts received in respect of
Accounts), whether or not arising in the ordinary course of the Company’s
business, will be held (if received prior to the Default) or received and held
(if received after the Default) by the Company as trustee for the Investor and
will be immediately paid to the Investor upon request by the Investor.


 


(h)           Maintenance of Collateral. The Company will maintain
all tangible Collateral in good operating condition, ordinary wear and tear
excepted, and the Company will provide all maintenance, service and repairs
necessary for such purpose.  Further,
the Company shall take all action as necessary, desirable or reasonably requested
by the Investor to preserve the Excluded Collateral and all benefits deriving
therefrom for the benefit of the Investor.


 


(i)            Payment of Taxes.  The Company will from time to time pay or cause to be paid all
taxes, assessments, levies and similar impositions of every nature and kind
whatsoever (“Taxes”) which may be levied, assessed or imposed on the Collateral
or any part thereof.  The Company will
from time to time pay or cause to be paid all Taxes, general and special,
ordinary or extraordinary, of every nature and kind whatsoever, including local
improvement taxes, which shall be levied, assessed or imposed upon the
Collateral or any part thereof, or upon the Company or any other person on
account thereof, save and except when and so long as the validity of any such
Taxes, is in good faith contested by the Company, and, if applicable, the same
remain Permitted Security Interests. 
The Investor may, at any time and from time to time, at the Company’s
expense, obtain from the municipality pertaining to the lands, a tax
certificate confirming the status of property taxes in respect of such lands.


 


(j)            Insurance. 
The Company will keep the Collateral insured with financially sound and
reputable companies against loss or damage by fire, explosion, theft and such
other risks in such amounts and upon such terms as would a reasonably prudent
owner of similar property.  The Company
will, from time to time at the Investor’s reasonable request, deliver the
applicable insurance policies (or satisfactory evidence of such policies) to
the Investor.  If the Company does not
obtain or maintain such insurance,


 


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the Investor
may, but need not, do so, in which event the Company will immediately on demand
reimburse the Investor for all payments made by the Investor in connection with
obtaining and maintaining such insurance, and until reimbursed any such payment
will form part of the Indebtedness and will be secured by the Security
Interests created by this Agreement.


 


7.             Survival
of Representations, Warranties and Covenants. 
All agreements, representations, warranties and covenants made by the
Company in the Security Documents (except as may be otherwise specified
therein) will survive the execution and delivery of this Agreement or any
investigation made at any time by or on behalf of the Investor and any
disposition or payment of the Indebtedness until repayment and performance in
full of the Indebtedness.


 


8.             Default.  Any one or more of the following events shall constitute a
“Default” pursuant to this Agreement:


 


(a)           Failure to Pay.  If the Company fails to make payment of any principal or interest
on account of the Indebtedness when the same shall become due and such Default
shall continue for a period of two (2) Business Days after a notice in writing
of such default has been given by the Investor to the Company.


 


(b)           Default under Agreements.


 


(i)            If the Company defaults under the Secured
Covertible Note, the subscription agreement under which the Secured Covertible
Note is subscribed, or any agreement which are schedules to the foregoing; or


 


(ii)           if the Company defaults under any secured
debt obligations of the Company other than the Secured Covertible Note.


 


(c)           Failure to Comply with Covenants.  If the Company defaults in observing or performing any other covenant
or condition of the Security Documents in its part to be observed or performed
and if such default shall continue for a period of 10 Business Days after a
notice in writing has been given by the Investor to the Company specifying such
default, provided that in the case of a Default which cannot be remedied simply
by payment of money such Default shall be deemed not to have occurred if, and
so long as, the Company shall have within such 10 Business Day period commenced
to remedy such Default and diligently pursued the remedying thereof.


 


(d)           False Representations.  If any representation or warranty of the Company made hereto in
any certificate or other instrument or document furnished by the Company to the
Investor shall have been false or misleading in any material respect when made.


 


(e)           Failure to Pay Taxes, etc.  If the Company fails to pay taxes, rates, levies, duties, public
utility charges and assessments, which shall be levied, assessed or imposed
upon the Collateral or any part thereof, or upon the Company on account thereof
(save and except when and so long as the validity thereof is in good faith
contested


 


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by the Company
and the same remain Permitted Security Interests) and any such Default as
aforesaid shall continue either for a period of 30 days after written notice to
the Company from the Investor.


 


(f)            Appointment of Receiver.  If a receiver or receiver and manager or a liquidator or a
trustee in bankruptcy of the Company for all or substantially all of the assets
of the Company shall be appointed and the Company fails to seek to set aside
such appointment within 30 days after such appointment or if the Company
acquiesces to such appointment.


 


(g)           Inability of Pay Debts Generally.  If the Company shall admit its inability to pay its debts
generally as they become due or otherwise acknowledge its insolvency or an
effective resolution passed for the winding-up of the Company or if the Company
shall make an assignment for the benefit of its creditors or if the Company
shall make a proposal to its respective creditors under a bankruptcy act.


 


(h)           Declaration of Bankruptcy or Insolvency
Under the Law.  If the Company declares
bankruptcy or insolvency under any law relating to bankruptcy, insolvency,
winding-up or adjustment of debts and does not commence a challenge, appeal or
seek to set aside such decision within 15 days after receipt of notice of such
decision and proceed vigorously thereafter with such challenge.


 


9.             Rights
on Default.  On Default and so long as such
Default is continuing, the security constituted by this Agreement will be
enforceable, and the Investor may, personally or by agent do any one or more of
the following:


 


(a)           Rights under PPSA, etc.  Exercise all of the rights and remedies granted to secured
parties under the PPSA and any other applicable statute, or otherwise available
to the Investor at law or in equity.


 


(b)           Take Possession.  Take possession of any or all of the Collateral in which event
the Company will, at the expense of the Investor, cause the Collateral
designated by the Investor to be assembled and made available and/or delivered
to the Investor at any place designated in writing by the Investor.


 


(c)           Take Possession.  Enter on any premises where any Collateral is located and take
possession of, disable or remove such Collateral by any method permitted by
law.


 


(d)           Use of Collateral.  Hold, store and keep idle, or operate, lease or otherwise use or
permit the use of any or all of the Collateral for such time and on such terms
as the Investor acting reasonably, may determine, and demand, collect and
retain all earnings and other sums due or to become due from any Person in
respect of any of the Collateral.


 


(e)           Carry on Business.  Carry on, or concur in the carrying on of, any or all of the
business or undertaking of the Company and enter on, occupy and use (without
charge by the Company) any of the premises, buildings, plant and undertaking
of, or occupied or used by, the Company.


 


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(f)            Deal with Collateral.  Seize, collect, receive, enforce, repair, process, modify,
complete or otherwise deal with any Collateral in such reasonable manner, on
such terms and conditions and at such times as the Investor deems advisable.


 


(g)           Dispose of Collateral.  Realize on any or all of the Collateral and sell, lease, assign,
give options to purchase, or otherwise dispose of and deliver any or all of the
Collateral (or contract to do any of the above), in one or more parcels at any
public or private sale, at any exchange, broker’s board or office of the
Investor or elsewhere, on such terms and conditions as the Investor may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery.


 


(h)           Court-Approved Disposition of Collateral.  Apply to a court of competent jurisdiction for the sale or
foreclosure of any or all of the Collateral.


 


(i)            File Claims. 
File such proofs of claim or other documents as may be necessary or
desirable to have the Investor’s claim lodged in any bankruptcy, winding-up,
liquidation, dissolution or other proceedings (voluntary or otherwise relating
to the Company).


 


(j)            Purchase by Investor.  At any public sale, and to the extent permitted by law on any
private sale, bid for and purchase any or all of the Collateral offered for
sale and, upon compliance with the terms of such sale, hold, retain and dispose
of such Collateral without any further accountability to the Company or any
other Person with respect to such holding, retention or disposition, except as
required by law.


 


(k)           Payment of Indebtedness.  Pay any liability secured by any Security Interest against any
Collateral.  The Company will upon
request reimburse the Investor for all such payments, such payments will form
part of the Indebtedness and will be secured by the Security Interests created
by this Agreement.


 


(l)            Appointment of Receiver Pursuant to
Agreement.  Appoint by instrument in writing one or more
Receivers over the Company or any or all of the Collateral with such rights,
powers and authority (including any or all of the rights, powers and authority
of the Investor under this Agreement) as may be provided for in the instrument
of appointment or any supplemental instrument, and remove and replace any such
Receiver from time to time.  To the
extent permitted by applicable law, any Receiver appointed by the Investor will
(for purposes relating to responsibility for the Receiver’s acts or omissions)
be considered to be the agent of the Company and not of the Investor.  The Investor may from time to time fix the
Receiver’s remuneration and the Company will be obliged to pay to the Investor,
acting reasonably, the amount of such remuneration.


 


(m)          Court-Appointed Receiver.  Apply to a court of competent jurisdiction for the appointment of
a Receiver of the Company or of any or all of the Collateral.


 


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10.           Enforcement
of Security.  Notwithstanding any other
provision in this Agreement, the Investor agrees that in enforcing the security
constituted by this Agreement, the Investor shall exercise the remedies
available to it in the following order:


 


(a)           firstly, against the EDC Policy proceeds
for up to $350,000 of amounts owing to the Investor under the Note; and


 


(b)           secondly, against other Collateral.


 


11.           Application
of Proceeds.  All Proceeds of Collateral
received by the Investor or by a Receiver may be applied to discharge or
satisfy expenses (including the Receiver’s remuneration and other reasonable
expenses of enforcing the Investor’s rights under the Security Documents)
including but not limited to borrowings, taxes and other outgoings affecting
the Collateral or which are considered advisable by the Investor or the
Receiver to protect, preserve, repair, process, maintain or enhance the
Collateral or prepare it for sale, lease or other disposition, or to keep in
good standing any Security Interests on the Collateral ranking in priority to
any of the Security Interests created by this Agreement, or to sell, lease or
otherwise dispose of the Collateral. 
The balance of such Proceeds may be held as collateral security for the
Indebtedness or be applied to such of the Indebtedness (whether or not the same
are due and payable) in such manner and at such times as the Investor considers
appropriate and thereafter will be accounted for as required by law.


 


12.           Continuing
Liability of Company.  The Company
will remain liable for any Indebtedness that are outstanding following
realization of all or any part of the Collateral and the application of the
Proceeds thereof.


 


13.           Investor’s  Appointment as Attorney-in-Fact.  The Company constitutes and appoints the
Investor, and any officer or agent of the Investor, with full power of
substitution, as the Company’s true and lawful attorney-in-fact with full power
and authority in the place of the Company and in the name of the Company or in
its own name, from time to time in the Investor’s discretion after a Default
and only for so long as such Default is continuing, to take any and all
appropriate action and to execute any and all documents and instruments as, in
the opinion of such attorney acting reasonably, may be necessary or desirable
to accomplish the purposes of this Agreement. 
These powers are coupled with an interest and are irrevocable until this
Agreement is terminated and the Security Interests created by this Agreement
are released.  Nothing in this section
affects the right of the Investor or any other Person, to sign and file or
deliver (as applicable) all such financing statements, financing change
statements, notices, verification agreements and other documents relating to
the Collateral and this Agreement as the Investor or such other Person
considers appropriate, acting reasonably.


 


14.           Performance
by Investor of Company’s Obligations.  If
the Company fails to perform or comply with any of its obligations under this
Agreement, the Investor may, but need not, perform or otherwise cause the
performance or compliance of such obligation, provided that such performance or
compliance will not constitute a waiver, remedy or satisfaction of such
failure.  The reasonable expenses of the
Investor incurred in connection with any such performance or compliance will be
payable by the Company to the Investor, any such reasonable expenses will form
part of the Indebtedness and will be secured by the Security Interests created
by this Agreement.


 


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15.           Right
of Set-Off.  The Investor may at any time
and from time to time after the occurrence of a Default, upon notice to the
Company or any other Person, set-off, appropriate and apply any and all
indebtedness and liabilities of the Investor  to the Company, liquidated,
unliquidated, contingent, matured or unmatured, against and on account of any
Indebtedness of any kind whatsoever, including for greater certainty
liquidated, unliquidated, contingent, matured or unmatured, in such order of
application as the Investor shall from time to time determine.


 


16.           Rights
of Investor and Limitations on Investor’s Obligations.


 


(a)           Limitations on Investor’s Liability.  The Investor will not be liable to the Company or any other
Person for any failure or delay in exercising any of its rights under this
Agreement (including any failure to take possession of, collect, sell, lease or
otherwise dispose of any Collateral, or to preserve rights against prior
parties). Neither the Investor nor a Receiver (including, in Alberta, any
sheriff) is required to take, or will have any liability for any failure to
take or delay in taking, any steps necessary or advisable to preserve rights
against other Persons under any Collateral in its possession.  Neither the Investor nor any Receiver will
be liable for any, and the Company will bear the full risk of all, loss or
damage to any and all of the Collateral (including any Collateral in the
possession of the Investor or any Receiver) caused for any reason other than
the gross negligence or wilful misconduct of the Investor or such Receiver.


 


(b)           Company Remains Liable under Accounts and
Contracts.  Notwithstanding any provision of this
Agreement, the Company will remain liable under each of the Accounts and
Contracts to observe and perform all the conditions and obligations to be
observed and performed by the Company thereunder, all in accordance with the
terms of any agreement giving rise to each such Account or in accordance with
and pursuant to the terms and provisions of each such Contract.  Neither the Investor nor any Receiver have
any obligation or liability under any Account (or any agreement giving rise
thereto) or Contact by reason of or arising out of this Agreement or the
receipt by the Investor of any payment relating to such Account or Contract
pursuant hereto, and in particular (but without limitation), the Investor will
not be obligated in any manner to perform any of the obligations of the Company
under or pursuant to any Account (or any agreement giving rise thereto) or
under or pursuant to any Contract, to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto) or under any Contract, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at
any time.


 


(c)           Collections on Accounts and Contracts.  The Investor hereby authorizes the Company to collect the
Accounts and payments under the Contracts in the normal course of its business
and for the purpose of carrying on the same. 
All such amounts while held by the Investor and all income in respect
thereof will continue to be collateral security for the Indebtedness and will
not constitute payment thereof until applied as hereinafter provided.  At such intervals as may be agreed upon by
the Company and


 


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the Investor,
or, if a Default will have occurred and be continuing at any time or from time
to time, the Investor will apply all or any part of the accounts and payments
collected under the contracts on account of the Indebtedness in such order as
the Investor may elect.  At the Investor’s
request, the Company will deliver to the Investor any documents evidencing and
relating to the agreements and transactions which gave rise to the Accounts and
Contracts, including all original orders, invoices and shipping receipts.


 


17.           Dealings
by Investor.  The Investor will not be
obliged to exhaust its recourse against any other Person or against any other
Security Interests it may hold in respect of the Indebtedness before realizing
upon or otherwise dealing with the Collateral in such manner as the Investor
may consider desirable.  The Investor
may grant extensions of time and other indulgences, take and give up security,
accept compositions, grant releases and discharges and otherwise deal with any
other Person, and with any or all of the Collateral, and with other security
and sureties, as the Investor may see fit, all without prejudice to the
Indebtedness or to the rights and remedies of the Investor under this
Agreement.  The powers conferred on the
Investor under this Agreement are solely to protect the respective interests of
the Investor in the Collateral and will not impose any duty upon the Investor
to exercise any such powers.


 


18.           Additional
Security.  The Security Interests created by this
Agreement are in addition and without prejudice to any other Security Interests
now or later held by the Investor.  No
Security Interests held by the Investor will be exclusive of or dependent upon
or merge in any other Security Interests, and the Investor may exercise its
rights under such Security Interests independently or in combination.


 


19.           Release
of Information.  The Company
authorizes the Investor to provide a copy of this Agreement and such other
information as may be requested of the Investor by Persons entitled thereto
pursuant to any applicable legislation.


 


20.           Waivers.  The Investor may, in whole or in part, waive any breach of any of
the provisions of this agreement by the Company, any default by the Company in
the payment or performance of any of the Indebtedness or any of its rights and
remedies whether provided for hereunder or otherwise provided that no such
waiver shall be considered to have been given unless given expressly by the
Investor to the Company in writing.  No
waiver given in accordance with this section shall be a waiver of any other or
subsequent breach by the Company of any of the provisions of this Agreement, of
any other or subsequent default by the Company in the payment or performance of
any of the Indebtedness or any of the other rights and remedies of the Investor
whether provided for herein or otherwise.


 


21.           Governing
Law.  This Agreement will be governed by and
construed in accordance with the laws of the Province of Ontario and the laws
of Canada applicable in such Province and will be treated, in all respects, as
a contract of such Province.


 


22.           Conflict. To the extent that any term,
condition, representation, covenant or other provision contained in this
Agreement conflicts with, any term, condition, representation, covenant or
other provision contained in the Secured Convertible Note, then the relevant
term, condition, representation, covenant or other provision of this Agreement
shall govern.


 


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23.           Interpretation.
 The division of this Agreement into sections
and paragraphs, and the insertion of headings, is for convenience of reference
only and will not affect the construction or interpretation of this
Agreement.  Unless the context otherwise
requires, words importing the singular include the plural and vice versa, and
words importing gender include all genders and neuter.  When used in this Agreement, the word “including”
(or “includes”)
means “including
(or “includes”)
without
limitation”.  Any reference
in this Agreement to a “Section” or a “Schedule” means the relevant
section or schedule of this Agreement unless the context specifically provides
otherwise.


 


24.           Successors
and Assigns.  This Agreement will enure to
the benefit of, and be binding on, the Company and its successors and assigns,
and will enure to the benefit of, and be binding on, the Investor and its
successors and assigns.  The Company may
not assign this Agreement, or any of its rights or obligations under this
Agreement, without the prior written consent of the Investor, which consent
shall not be unreasonably withheld. 
However, the Investor in its sole discretion, may withhold its consent
to a proposed assignment by the Company which is reasonably considered an
arbitrary assignment by the Company.


 


25.           Acknowledgement
of Receipt/Waiver.  The Company
acknowledges receipt of an executed copy of this Agreement and, to the extent
permitted by applicable law, waives the right to receive a copy of any
financing statement, financing change statement or verification statement in
respect of any registered financing statement or financing change statement
prepared, registered or issued in connection with this Agreement.


 


26.           Severability.  Any provision of this Agreement that is invalid or unenforceable
in any jurisdiction will, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability and will be severed from the balance of
this Agreement, all without affecting the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.


 


27.           Listings
of Collateral.  Any schedules, documents or
listings provided to the Investor which summarize or describe any after
acquired Collateral shall form part of this Agreement.


 


SIGNATURE PAGE TO FOLLOW


 


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DATED as of the        day of May,
2004.


 


	
   

  	
  ADB SYSTEMS
  INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


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SCHEDULE “A”


 


Definitions


 


“Accessions”,
“Account”, “Chattel Paper”, “Consumer
Goods”, “Document of Title”, “Equipment”, “Goods”,
“Instrument”,
“Intangible”,
“Inventory”,
“Money”,
“Motor
Vehicles”, “Proceeds”, “Value” and “Securities”
have the meanings given to them in the PPSA;


 


“Agreement”
means this General Security Agreement, as amended, modified, supplemented,
restated and replaced in writing from time to time;


 


“Books
and Records” means all books, records, files, papers, disks, documents and other
repositories of data recording in any form or medium, evidencing or relating to
the Collateral which are at any time owned by the Company or to which the
Company (or any Person on the Company’s behalf) has access;


 


“Business
Day” means any day other than a Saturday, Sunday, statutory holiday
in Ontario or day on which the main branch of the Company’s banking institution
in Toronto is closed for business;


 


“Collateral”
means all of the present and future undertaking, Personal Property (including
any Personal Property that may be described in any Schedule to this Agreement
or any schedules, documents or listings that the Company may from time to time
provide to the Investor in connection with this Agreement) of the Company
(including all such Personal Property at any time owned, leased, licensed,
possessed or acquired by the Company, or in which the Company at any time has
any interest or to which the Company is or may at any time become entitled),
Contracts, Intellectual Property Rights, and all Proceeds thereof, in any such
case wherever located;


 


“Company”
means ADB Systems International Ltd;


 


“Contracts” means all existing and future
contracts, licenses and agreements to which the Company is at any time a party
or pursuant to which the Company has at any time acquired rights, as such
contracts, licenses and agreements may from time to time be amended or restated
and includes (i) all rights of the Company to receive money due and to
become due to it in connection with a contract licence or agreement; (ii) all
rights of the Company to damages arising out of, or for breach or default in
respect of, a contract, licence or agreement; and (iii) all rights of the
Company to perform and exercise all remedies in connection with a contract,
licence or agreement;


 


“Default”
has the meaning ascribed in Section 8 of this Agreement;


 


“EDC
Policy” means the Company’s receivable insurance policy with Export
Development Canada, which insures 90% of the Company’s worldwide accounts
receivable;


 


“Excluded
Collateral” means the last day of the term of any real property lease and any
Intellectual Property Right or Permit where the grant of a Security Interest
therein without consent would result in the breach or termination thereof,
unless such consent is obtained;


 

















 


“Indebtedness”
means all present and
future indebtedness, liabilities and obligations whether direct or indirect,
joint or several, absolute or contingent, matured or unmatured of the Company
to the Investor wherever and however incurred, including principal, interests,
charges, fees, costs and expenses however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, arising under the Secured Convertible
Note and/or the Security Documents;


 


“Intellectual
Property Rights” means all industrial and intellectual property
rights, including all trade-marks, trade names, corporate names, company names,
business names, logos, websites (including, without limitation, all URLs
(uniform resource locators) and any and all copyrights, software, coding and
codes associated therewith) and other sources of business identifiers, customer
lists, subscriber lists and the goodwill associated therewith, including
registrations, recordings and applications with the Canadian Intellectual
Property Office and any similar government office or agency in other countries,
all copyrights and industrial designs in all works, including all drawings and
computer programs, all patents, proprietary technology, rights to inventions
whether patentable or otherwise, trade secrets, confidential information and
other processes and all registrations, recordings applications for the
foregoing, all licenses currently in force or may in the future be in force
which authorizes the licensee to make, use, offer for sale, sell or advertise
wares or services in connection with issued or pending applications for one or
more patents, trade-marks, industrial designs, or in association with licensed
know-how, trade secrets, confidential information and computer programs, the
right to sue parties for past, present and future infringements or dilution of
Intellectual Property Rights and associated goodwill, all Contracts related to
any such industrial and intellectual property rights including those
trade-marks set out in Schedule “D” and all reissues, continuations or
extensions of any of the foregoing;


 


“Investor”
means Stonestreet Limited Partnership;


 


“Permitted
Security Interests” means (i) the Security Interests set out in
Schedule “C” and (ii) the security interests granted by the Company to the
parties listed in Schedule “E”;


 


“Permits” means all permits, licenses,
authorizations, approvals, franchises, rights-of-way, easements and
entitlements that the Company has, requires or is required to have, to own,
possess or operate any of its property or to operate and carry on any part of
its business;


 


“Person”
will be broadly
interpreted and includes an individual, a corporation, a limited liability
company, a partnership, a trust, a joint venture, an association, an
unincorporated organization, the government of a country or any political
subdivision thereof, any agency or department of any such government, a regulatory
agency or any other entity and the heirs, executors, administrators or other
legal representatives of an individual;


 


“Personal
Property” means personal property and includes Accounts, Inventory, Equipment,
Books and Records, Chattel Paper, Goods, Documents of Title, Instruments,
Intangibles (including Intellectual Property Rights and Permits), Money and
Securities, and includes all present and future Accessions to any of the
foregoing, but excludes Consumer Goods;


 


A-2

















 


“PPSA” means the Personal Property Security Act
of the Province of Ontario, as amended, renamed or replaced from time to time
(and includes all regulations from time to time made under such legislation);


 


“Receiver”
means a receiver, a
manager, a receiver and manager or an agent of the Investor or any Receiver;


 


“Secured
Convertible Note” means the series F 7% secured convertible note in
the principal amount of CDN$500,000 issued by the Company to the Investor on
the date hereof;


 


“Securities”
has the meaning given to it in the PPSA, or if there is no such meaning given
in the PPSA, but the PPSA defines “security” instead, it means the plural of
that term;


 


“Security
Documents” means collectively, this Agreement and all other security agreements,
guarantees, share pledge agreements, and other agreements, instruments and
documents from time to time granted in favour of the Investor as security for
or in support of the obligations of the Company under the Secured Convertible
Note and the Subscription Agreement, as amended, modified, supplemented,
restated and replaced in writing from time to time;


 


“Security
Interest” means any mortgage, charge, pledge, hypothecation, lien (statutory or
otherwise), assignment, finance lease, title retention agreement or
arrangement, security interest or other encumbrance or adverse claim of any
nature, or any other security agreement or arrangement creating in favour of
any creditor a right in respect of a particular property or asset;


 


“Series
E Notes” means the series E 11% secured convertible notes in the
original aggregate principal amount of CDN$1,000,000 issued by the Company to
investors, including the Investor, on August 19, 2003; and


 


“Subscription
Agreement” means the subscription agreement pursuant to which, the
Investor subscribes for and the Company accepts the subscription for the
Secured Convertible Note.


 


A-3

















 


SCHEDULE “B”


 


Chief Executive
Office


 


201-6725 Airport Road


Mississauga, Ontario


L4V 1V2


 


Principal
Places of Business


 


201-6725 Airport Road


Mississauga, Ontario


L4V 1V2


 

















 


SCHEDULE “C”


 


ADDITIONAL PERMITTED SECURITY INTERESTS


 


“Permitted Security Interests” means with respect to any property
or asset of any Person:


 


(a)           Security Interests for provincial or
municipal taxes, charges, rates and assessments not yet due or, if due, the
validity of which is being contested in good faith and Security Interests for
the excess of the amount of any past due taxes for which a final assessment has
not been received over the amount of such taxes as estimated and paid by such
Person;


 


(b)           the Security Interests of any judgement
rendered or claim filed against the Company or its property which it shall be
contesting in good faith and in respect of which there shall have been
deposited with an arms-length Person acceptable to the Investor, acting
reasonably, cash, security or a surety bond satisfactory to such arms-length
Person in an amount sufficient to pay such judgement or claim;


 


(c)           defects or irregularities of title which do
not in the aggregate materially impair the value of the property to which they
related or interfere with the use of the property to which they relate for the
purposes for which it is held by such Person;


 


(d)           pledges or deposits to secure payment of
workers’ compensation, good faith deposits in connection with tenders,
contracts (other than contracts for the repayment of moneys borrowed) or
leases, deposits to secure public or statutory obligations, deposits to secure
or in lieu of surety or appeal bonds, and pledges or deposits for similar
purposes in the ordinary course of business;


 


(e)           purchase money security interests;


 


(f)            Security Interests granted by the Company
during the one year period following the date of this Agreement to third party
creditors to secure indebtedness which is permitted under Section 7 of the
Subscription Agreement;


 


(g)           Security Interests granted by the Company
to third party creditors to secure indebtedness which is incurred on or after
the one year anniversary date of this Agreement; and


 


(h)           any other Security Interests accepted from
time to time by the Investor in writing.


 

















 


SCHEDULE “D”


 


Intellectual
Property Rights


 


Owned Intellectual Property (Trade-marks only)


 

















 


SCHEDULE “E”


 


Permitted PPSA Registrations


 


	
  File Number:

  	
   

  	
  084987306

  
	
  Registration
  Number:

  	
   

  	
  20021104151100439461

  
	
   

  	
   

  	
  20021108165217583169

  
	
   

  	
   

  	
  20030826182015316880

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party:

  	
   

  	
  Jeff
  Lymburner

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  888880464

  
	
  Registration
  Number:

  	
   

  	
  20021104144390654204

  
	
   

  	
   

  	
  20021108165217583161

  
	
   

  	
   

  	
  20030826182015316881

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party:

  	
   

  	
  Christopher
  Bulger

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  888880518

  
	
  Registration
  Number:

  	
   

  	
  20021104144390654209

  
	
   

  	
   

  	
  20021108165217583166

  
	
   

  	
   

  	
  20031021145615300346

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party:

  	
   

  	
  Kenneth
  Sparfel, Kelly Sparfel

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  881960004

  
	
  Registration
  Number:

  	
   

  	
  20020510181117159588

  
	
   

  	
   

  	
  20030826092017152348

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Inc.

  
	
  Secured
  Party:

  	
   

  	
  Xerox Canada
  Ltd.

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897234246

  
	
  Registration
  Number:

  	
   

  	
  20030812145215303748

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party

  	
   

  	
  Stonestreet
  Limited Partnership

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897234255

  
	
  Registration
  Number:

  	
   

  	
  20030812145215303749

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party:

  	
   

  	
  Greenwich
  Growth Fund Ltd.

  



 

















 


	
  File Number:

  	
   

  	
  897592122

  
	
  Registration
  Number:

  	
   

  	
  20030825184115313987

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party

  	
   

  	
  Canaccord
  Capital Corp.

  
	
   

  	
   

  	
  ITF Janet
  Harrop A/C 133388S7

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592131

  
	
  Registration
  Number:

  	
   

  	
  20030825184115313988

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party

  	
   

  	
  Canaccord
  Capital Corp.

  
	
   

  	
   

  	
  ITF
  Christopher Harrop A/C 133384S6

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592149

  
	
  Registration
  Number:

  	
   

  	
  20030825184115313989

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party:

  	
   

  	
  Robb,
  Michael

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592158

  
	
  Registration
  Number:

  	
   

  	
  20030825184115313990

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party:

  	
   

  	
  Mokos, James

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592167

  
	
  Registration
  Number:

  	
   

  	
  20030825184115313991

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party

  	
   

  	
  Gundyco ITF
  Paul Godin RRSP A/C 59121001-11

  
	
   

  	
   

  	
   

  
	
  File Number:

  	
   

  	
  897592176

  
	
  Registration
  Number:

  	
   

  	
  20030825184115313992

  
	
  Debtor Name:

  	
   

  	
  ADB Systems
  International Ltd.

  
	
  Secured
  Party

  	
   

  	
  Hellesto,
  Arne

  



 


E-2