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                                                                   EXHIBIT 10.23

                     GENERAL SUBORDINATED SECURITY AGREEMENT

      SECURITY AGREEMENT, dated as of May 18, 2004, between STEELBANK, INC.,
with offices at 5349 Maingate Drive, Mississauga, Ontario, Canada L4W 1G6 (the
"Debtor"), and JOSEPH GUNNAR & CO., LLC, with offices at 30 Broad Street, New
York, NY 10004 as representative of the Note Holders (the "Secured Party
Representative");

                              W I T N E S S E T H:

      WHEREAS, the Debtor is a subsidiary of Tarpon Industries, Inc. a Michigan
corporation ("Tarpon"); and

      WHEREAS, Tarpon and certain investors (the "Note Holders") are parties to
8.0% promissory notes issued by the Tarpon in the aggregate principal amount
of up to $2,000,000 (herein, as at any time amended, extended, restated, renewed
or modified, the "Notes"); and

      WHEREAS, it is a condition to the willingness of the Note Holders to
accept the Notes and make the loan evidenced thereby that Debtor execute a
guaranty of even date guaranteeing Tarpon's performance under the Notes; and

      WHEREAS, Debtor's performance under the guarantee is secured by a lien on
Debtor's assets, subordinate only to the liens of Debtor's senior lenders; and

      WHEREAS, Debtor enter into this Agreement and grants to the Secured Party
Representative the security interest provided for herein for the benefit of
the Note Holders;

      NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:

      Section 1. Terms. Unless otherwise defined herein, capitalized terms used
in this Agreement shall have the meaning specified therefor in the Guaranty. As
used herein the following terms shall have the meanings specified and shall
include in the singular number the plural and in the plural number the singular:

      "Assigned Agreements" shall mean all contracts and agreements of the
Debtor.

      "Collateral" means all of the Debtor's right, title and interest in and
under or arising out of each and all of the following:

         All personal property and fixtures of the Debtor of any type or
      description, wherever located and now existing or hereafter arising or
      acquired, including but not limited to the following:

            (i) all of the Debtor's goods including, without limitation:

                  (A) all inventory, including without limitation, equipment
            held for lease, whether raw materials, in process or finished, all
            material or equipment usable in processing the same and all
            documents of title covering any inventory (all of the foregoing,
            "Inventory"), including without limitation that located at the
            locations listed on Schedule 1 annexed hereto;

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                  (B) all equipment (the "Equipment") employed in connection
            with the Debtor's business, together with all present and future
            additions, attachments and accessions thereto and all substitutions
            therefor and replacements thereof, including without limitation
            that located at the locations listed on Schedule 1 annexed hereto;

            (ii) all of the Debtor's present and future accounts, accounts
      receivable, general intangibles, contracts and contract rights (herein
      sometimes referred to as "Receivables"), including but not limited to the
      Debtor's rights (including rights to payment) under all Assigned
      Agreements, together with

                  (A) all claims, rights, powers or privileges and remedies of
            the Debtor relating thereto or arising in connection therewith
            including, without limitation, all rights of the Debtor to make
            determinations, to exercise any election (including, but not limited
            to, election of remedies) or option or to give or receive any
            notice, consent, waiver or approval, together with full power and
            authority to demand, receive, enforce, collect or receipt for any of
            the foregoing or any property which is the subject of the Assigned
            Agreements, to enforce or execute any checks, or other instruments
            or orders, to file any claims and to take any action which (in the
            reasonable opinion of the Secured Party Representative) may be
            necessary or advisable in connection with any of the foregoing,

                  (B) all liens, security, guaranties, endorsements, warranties
            and indemnities and all insurance and claims for insurance relating
            thereto or arising in connection therewith,

                  (C) all rights to property forming the subject matter of the
            Receivables including, without limitation, rights to stoppage in
            transit and rights to returned or repossessed property,

                  (D) all writings relating thereto or arising in connection
            therewith including without limitation, all notes, contracts,
            security agreements, guaranties, chattel paper and other evidence of
            indebtedness or security, all powers-of-attorney, all books,
            records, ledger cards and invoices, all credit information, reports
            or memoranda and all evidence of filings or registrations relating
            thereto,

                  (E) all catalogs, computer and automatic machinery software
            and programs, and the like pertaining to operations by the Debtor
            in, on or about any of its plants or warehouses, all sales data and
            other information relating to sales or service of products now or
            hereafter manufactured on or about any of its plants, and all
            accounting information pertaining to operations in, on or about any
            of its plants, and all media in which or on which any of the
            information or knowledge or data is stored or contained, and all
            computer programs used for the compilation or printout of such
            information, knowledge, records or data, and

                  (F) all accounts, contract rights, general intangibles and
            other property rights of any nature whatsoever arising out of or in
            connection

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                  with the foregoing, including without limitation, payments due
                  and to become due, whether as repayments, reimbursements,
                  contractual obligations, indemnities, damages or otherwise;

                  (iii) patents, patent applications, copyrights and
            intellectual property of all description;

                  (iv) all other personal property of the Debtor of any nature
            whatsoever, including, without limitation, all accounts, bank
            accounts, deposits, credit balances, contract rights, inventory,
            general intangibles, goods, equipment, instruments, chattel paper,
            machinery, furniture, furnishings, fixtures, tools, supplies,
            appliances, plans and drawings, together with all customer and
            supplier lists and records of the business, and all property from
            time to time described in any financing statement (UCC-1) signed by
            the Debtor naming the Secured Party Representative as secured party;
            and

                  (v) all additions, accessions, replacements, substitutions or
            improvements and all products and proceeds including, without
            limitation, proceeds of insurance, of any and all of the Collateral
            described in clauses (i) through (iii) above.

      "Instrument" shall have the meaning specified in Article 3 of the Uniform
Commercial Code, as in effect from time to time in the State of New York and
shall also include any other writing which evidences a right to the payment of
money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary
endorsement or assignment.

      "Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance (including any easement, right of
way, zoning restriction and the like), lien (statutory or other) or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other title retention
agreement, any financing lease involving substantially the same economic effect
as any of the foregoing and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).

      "Permitted Liens" means:

            (a) Liens for taxes, assessments or other governmental charges or
      levies not at the time delinquent or thereafter payable without penalty or
      being contested in good faith by appropriate proceedings and for which
      adequate reserves in accordance with generally accepted accounting
      principles shall have been set aside on its books;

            (b) Liens of carriers, warehousemen, mechanics, materialmen and
      landlords incurred in the ordinary course of business for sums not overdue
      or being contested in good faith by appropriate proceedings and for which
      adequate reserves shall have been set aside on its books;

            (c) Liens (other than Liens arising under the Employee Retirement
      Income Security Act of 1974, as amended, or Section 412(n) of the Internal
      Revenue Code of 1986, as amended) incurred in the ordinary course of
      business in connection with

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      workers' compensation, unemployment insurance or other forms of
      governmental insurance or benefits, or to secure performance of tenders,
      statutory obligations, leases and contracts (other than for borrowed
      money) entered into in the ordinary course of business or to secure
      obligations on surety or appeal bonds;

            (d) judgment Liens in existence less than 60 days after the entry
      thereof or with respect to which execution has been stayed;

            (e) ground leases in respect of real property on which facilities
      owned or leased by the Debtor or any of its subsidiaries are located;

            (f) easements, rights-of-way, restrictions, minor defects or
      irregularities in title and other similar charges or encumbrances not
      interfering in any material respect with the business of the Debtor and
      its subsidiaries taken as a whole;

            (g) any interest or title of a lessor secured by a lessor's interest
      under any lease of real property on which facilities owned or leased by
      the Debtor or any of its subsidiaries are located;

            (h) a Lien ("Purchase Lien") on any asset securing indebtedness
      (including capitalized lease obligations) incurred or assumed for the
      purpose of financing the purchase price (including capitalized lease
      payments in the nature thereof) of such asset, provided that such Purchase
      Lien attaches only to the asset acquired with the proceeds of such
      indebtedness and attaches concurrently with or within ten (10) days
      following the acquisition thereof (but not including the matters referred
      to in (j) below).

            (i) the existing Liens ("Existing Liens") described on Schedule 2
      annexed hereto.

            (j) liens (the "Acquisition Liens") related to future acquisition
      that have been approved, prior to such acquisitions, but the Secured Party
      Representative.

      "Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint-stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary
or other capacity.

      "Receivables" has the meaning specified therefor in clause (ii) of the
definition of Collateral.

      "Secured Obligations" means all obligations of the Debtor, whether for
fees, expenses or otherwise, now existing or hereafter arising under this
Agreement and the Guaranty.

      "Senior Indebtedness" shall mean all obligations and liabilities of and
any renewal, extension, refunding, amendment or modification of any such
indebtedness of Debtor, Debtor to Greenfield Commercial Credit (Canada), Inc.,
whether direct or indirect, absolute or contingent, joint or several, secured or
unsecured, due or to become due, no existing or later arising and whatever the
amount and however evidenced.

      Section 2. Security Interests. As security for the payment and performance
of all Secured Obligations the Debtor does hereby grant and assign to the
Secured Party Representative

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for the benefit of the Note Holders, a continuing perfected security interest in
all of the Collateral, whether now existing or hereafter arising or acquired
and wherever located, subject to the priority, if any, of Existing Liens and
pari passu with any Purchase Liens and Acquisition Lien.

      Section 3. Subordination. The security interest granted in this Agreement
is expressly subordinated to the security interest(s) granted to any holder of
Senior Indebtedness (as defined above) in accordance with the terms of the
Subordination Agreement among Secured party Representative and Greenfield
Commercial Credit (Canada), Inc. dated May 17, 2004.

      Section 4. General Representations, Warranties and Covenants. The Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:

            (a) This Agreement is made with full recourse to the Debtor and
      pursuant to and upon all the warranties, representations, covenants, and
      agreements on the part of the Debtor contained herein, in the Guaranty and
      otherwise made in writing in connection herewith or therewith.

            (b) Except for the security interest of the Secured Party
      Representative therein, the Debtor is, and as to Collateral acquired
      from time to time after the date hereof the Debtor will be, the owner of
      all the Collateral free from any lien, security interest, encumbrance or
      other right, title or interest of any Person (other than Permitted Liens)
      and the Debtor shall defend the Collateral against all claims and demands
      of all Persons at any time claiming the same or any interest therein
      adverse to the Secured Party Representative.

            (c) There is no financing statement (or similar statement or
      instrument of registration under the law of any jurisdiction) now on file
      or registered in any public office covering any interest of any kind in
      the Collateral, or intended to cover any such interest, which has not been
      terminated or released by the secured party named therein and so long as
      the Guaranty remains outstanding or any of the Secured Obligations of the
      Debtor remain unpaid, the Debtor will not execute and there will not be on
      file in any public office any financing statement (or similar statement or
      instrument of registration under the law of any jurisdiction) or
      statements relating to the Collateral, except (i) financing statements
      filed or to be filed in respect of and covering the security interest of
      the Secured Party Representative hereby granted and provided for and (ii)
      with respect to Permitted Liens.

            (d) The chief executive office and chief place of business of the
      Debtor is located at the address of the Debtor listed on the signature
      page hereof, and the Debtor will not move its chief executive office and
      chief place of business except to such new location as the Debtor may
      establish in accordance with the last sentence of this Section 4(d). The
      originals of all Assigned Agreements and all documents (as well as all
      duplicates thereof) evidencing all Receivables and all other contract
      rights or accounts and other property of the Debtor and the only original
      books of account and records of the Debtor relating thereto are, and will
      continue to be, kept at such chief executive office or at such new
      location as the Debtor may establish in accordance with the last sentence
      of this Section 4(d). The Debtor shall establish no such new location
      until (i) it shall have given to the Secured Party Representative not less
      than 30 days' prior written notice of its intention to do so, clearly
      describing such new location and providing such other in-

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      formation in connection therewith as the Secured Party Representative may
      reasonably request, and (ii) with respect to such new location, it shall
      have taken such action, satisfactory to the Secured Party Representative
      (including, without limitation, all action required by Section 8 hereof),
      to maintain the security interest of the Secured Party Representative in
      the Receivables intended to be granted at all times fully perfected and in
      full force and effect.

            (e) Debtor has no Collateral located outside of the Province of
      Ontario on the date hereof.

            (f) The name of the Debtor is as set forth on the signature page
      hereto and the Debtor shall not change such name, conduct its business in
      any other name or take title to the Collateral in any other name while
      this Agreement remains in effect without the consent of the Secured
      Party Representative. The Debtor has never had any name, or conducted
      business under any name in any jurisdiction, other than its name set forth
      on the signature page hereto, during the past six years other than as set
      forth in Schedule 3 annexed hereto.

            (g) At the Debtor's own expense, the Debtor will: (i) keep the
      Collateral fully insured at all times with financially sound and
      responsible insurance carriers against loss or damage by fire and other
      risks, casualties and contingencies and in such manner and to the same
      extent that like properties are customarily so insured by other entities
      engaged in the same or similar businesses similarly situated and keep
      adequate insurance at all times against liability on account of damage to
      persons and properties and under all applicable workers' compensation
      laws, by insurers and in reasonable amounts approved by the Secured Party
      Representative, for the benefit of the Debtor and the Secured Party
      Representative, (ii) upon request by the Secured Party Representative,
      promptly deliver the insurance policies or certificates thereof to the
      Secured Party Representative, and (iii) keep the Collateral in good
      condition at all times (normal wear and tear excepted) and maintain same
      in accordance with all manufacturer's specifications and requirements.
      Upon any failure of the Debtor to comply with its obligations pursuant to
      this Section 4(g), the Secured Party Representative may at its option, and
      without affecting any of its other rights or remedies provided herein or
      as a secured party under the Uniform Commercial Code, procure the
      insurance protection it deems necessary and/or cause repairs or
      modifications to be made to the Collateral and the cost of either or both
      of which shall be a lien against the Collateral added to the amount of the
      indebtedness secured hereby and payable on demand with interest at a rate
      per annum equal to 15%.

            (h) Subject to the rights of the holders of the Senior Indebtedness,
      the Debtor hereby assigns to the Secured Party Representative all of
      Debtor's right, title and interest in and to any and all monies which may
      become due and payable with respect to the Collateral under any policy
      insuring the Collateral (except proceeds relating to tangible personal
      property which are applied to restoration or replacement), including
      return of unearned premium, and shall cause any such insurance company
      to make payment directly to the Secured Party Representative for
      application to amounts outstanding under the Note in accordance with the
      terms of the Note and, to the extent not provided therein, in such order
      as the Secured Party Representative shall determine.

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            (i) The Debtor will not use the Collateral in violation of any
      statute or ordinance or applicable insurance policy and will promptly
      pay all taxes and assessments levied against the Collateral.

            (j) The Debtor will not sell, transfer, change the registration, if
      any, dispose of, attempt to dispose of, substantially modify or abandon
      the Collateral or any part thereof other than sales of Inventory in the
      ordinary course of business and the disposition of obsolete or worn-out
      Equipment in the ordinary course of business.

            (k) The Debtor will not assert against the Secured Party
      Representative or the Note Holders any claim or defense which the Debtor
      may have against any seller of the Collateral or any part thereof or
      against any other Person with respect to the Collateral or any part
      thereof.

            (l) The Debtor will indemnify and hold the Secured Party
      Representative and the Note Holders harmless from and against any loss,
      liability, damage, costs and expenses whatsoever arising from the
      Debtor's use, operation, ownership or possession of the Collateral or any
      part thereof.

            (m) The Debtor will maintain the confidentiality of all customer
      lists and not sell or otherwise dispose of such lists except that the
      Debtor shall deliver copies thereof to the Secured Party Representative
      upon its request, which may be made at any time and from time to time
      after an Event of Default.

            (n) The Debtor will not enter into any agreement that is
      inconsistent with the Debtor's obligations under this Agreement, without
      the prior written consent of the Secured Party Representative.

      Section 5. Special Provisions Concerning Assigned Agreements. The Debtor
represents, warrants and agrees as follows:

            (a) The Assigned Agreements constitute the legal, valid and binding
      obligations of the Debtor and, to the best of its knowledge, the other
      parties thereto, enforceable in accordance with their respective terms.

            (b) The Debtor will faithfully abide by, perform and discharge each
      and every material obligation, covenant and agreement to be performed by
      the Debtor under the Assigned Agreements.

            (c) At the request of the Secured Party Representative, and at the
      sole cost and expense of the Debtor, the Debtor will enforce or secure the
      performance of each and every material obligation, covenant, condition and
      agreement contained in the Assigned Agreements to be performed by the
      other parties thereto.

            (d) The Debtor will not modify, amend or agree to vary any of the
      Assigned Agreements in any material respect other than in the ordinary
      course of business, or otherwise act or fail to act in a manner likely
      (directly or indirectly) to entitle any party thereto to claim that the
      Debtor is in default under the terms thereof.

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            (e) The Debtor will not terminate or permit the termination of any
      Assigned Agreement, except in accordance with its terms, other than in the
      ordinary course of business.

            (f) Without the prior written consent of the Secured Party
      Representative, the Debtor will not, other than in the ordinary course of
      business, waive or in any manner release or discharge any party to any
      Assigned Agreement from any of the material obligations, covenants,
      conditions and agreements to be performed by it under such Assigned
      Agreement including, without limitation, the obligation to make all
      payments in the manner and at the time and places specified.

            (g) Subject to the rights of the holder of the Secured Indebtedness,
      if the Secured Party Representative so requests after the occurrence of an
      Event of Default and unless and until it is cured, the Debtor will hold
      any payments received by it which are assigned and set over to the Secured
      Party Representative by this Agreement for and on behalf of the Secured
      Party Representative and turn them promptly over to the Secured Party
      Representative forthwith in the same form in which they are received
      (together with any necessary endorsement) for application to amounts
      outstanding under the Note in accordance with the terms of the Note and,
      to the extent not provided therein, in such order as the Secured Party
      Representative shall determine.

            (h) The Debtor will appear in and defend every action or proceeding
      arising under, growing out of or in any manner connected with the Assigned
      Agreements or the obligations, duties or liabilities of the Debtor and any
      assignee thereunder.

            (i) Should the Debtor fail to make any payment or to do any act as
      herein provided after 15 day's notice by the Secured Party Representative,
      the Secured Party Representative may (but without obligation on the
      Secured Party Representative's part to do so and without notice to or
      demand on the Debtor and without releasing the Debtor from any obligation
      hereunder) make or do the same in such manner and to such extent as the
      Secured Party Representative may deem reasonably necessary to protect the
      security interests provided hereby, including specifically, without
      limiting the general powers, the right to appear in and defend any action
      or proceeding purporting to affect the security interests provided hereby
      and the Debtor, and the Secured Party Representative may also perform and
      discharge each and every obligation, covenant and agreement of the Debtor
      contained in any Assigned Agreement and, in exercising any such powers,
      pay necessary costs and expenses, employ counsel and incur and pay
      reasonable attorneys' fees.

            (j) Upon the request of the Secured Party Representative, the Debtor
      will send to the Secured Party Representative copies of all notices,
      documents and other papers furnished or received by it with respect to any
      of the Assigned Agreements.

      Section 6. Special Provisions Concerning Receivables.

            (a) As of the time when each Receivable arises, the Debtor shall be
      deemed to have warranted as to each such Receivable that such Receivable
      and all papers and documents relating thereto are genuine and in all
      respects what they purport to be, and that all papers and documents
      relating thereto:

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                  (i) will be signed by the account debtor named therein (or
            such account debtor's duly authorized agent) or otherwise be binding
            on the account debtor;

                  (ii) will represent the genuine, legal, valid and binding
            obligation of the account debtor evidencing indebtedness unpaid and
            owed by such account debtor arising out of the performance of labor
            or services or the sale and delivery of merchandise or both;

                  (iii) to the extent evidenced by writings, will be the only
            original writings evidencing and embodying such obligation of the
            account debtor named therein; and

                  (iv) will be in compliance and will conform with all
            applicable federal, state and local laws (including applicable usury
            laws) and applicable laws of any relevant foreign jurisdiction.

            (b) The Debtor will keep and maintain at the Debtor's own cost and
      expense satisfactory and complete records of the Receivables, including,
      but not limited to, records of all payments received, all credits granted
      thereon, all merchandise returned and all other dealings therewith, and
      the Debtor will make the same available to the Secured Party
      Representative, at the Debtor's own cost and expense, at any and all
      reasonable times upon notice from the Secured Party Representative. The
      Debtor shall, at the Debtor's own cost and expense, deliver the
      Receivables (including, without limitation, all documents evidencing the
      Receivables) and such books and records to the Secured Party
      Representative or to its representatives upon its demand at any time after
      the occurrence of an Event of Default unless and until it is cured and, if
      prior to the Maturity Date, Acceleration. If the Secured Party
      Representative shall so request, the Debtor shall legend, in form and
      manner satisfactory to the Secured Party Representative, the Receivables
      and other books, records and documents of the Debtor evidencing or
      pertaining to the Receivables with an appropriate reference to the fact
      that the Receivables have been assigned to the Secured Party
      Representative and that the Secured Party Representative has a security
      interest therein.

            (c) Except in the ordinary course of business prior to an Event of
      Default and, if prior to the Maturity Date, Acceleration, the Debtor will
      not rescind or cancel any indebtedness evidenced by any Receivable or
      modify any material term thereof or make any adjustment with respect
      thereto, or extend or renew the same, or compromise or settle any dispute,
      claim, suit or legal proceeding relating thereto, or sell any Receivable
      or interest therein, without the prior written consent of the Secured
      Party Representative, except that the Debtor may grant discounts in
      connection with the prepayment of any Receivable in an amount which is
      customary in the line of business in which the Debtor is engaged and
      consistent with the Debtor's past practices.

            (d) The Debtor will duly fulfill all obligations on its part to be
      fulfilled under or in connection with the Receivables and will do nothing
      to impair the rights of the Secured Party Representative in the
      Receivables.

            (e) The Debtor shall endeavor to collect or cause to be collected
      from the account debtor named in each Receivable, as and when due
      (including, without limita-

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      tion, Receivables which are delinquent, such Receivables to be collected
      in accordance with generally accepted lawful collection procedures) any
      and all amounts owing under or on account of such Receivable, and credit
      forthwith (on a daily basis) upon receipt thereof all such amounts as are
      so collected to the outstanding balance of such Receivable. The costs and
      expenses (including reasonable attorney's fees) of collection, whether
      incurred by the Debtor or the Secured Party Representative, shall be borne
      by the Debtor.

            (f) If any of the Receivables becomes evidenced by an Instrument
      (other than a check received in payment of a Receivable and deposited in
      the ordinary course of business), the Debtor will notify the Secured Party
      Representative thereof, and, upon request by the Secured Party
      Representative, promptly deliver such Instrument to the Secured Party
      Representative appropriately endorsed to the order of the Secured Party
      Representative as further security for the satisfaction in full of the
      Secured Obligations.

            (g) Upon request of the Secured Party Representative, at any time
      when an Event of Default and, if prior to the Maturity Date, Acceleration
      shall exist, the Debtor shall promptly notify (in manner, form and
      substance satisfactory to the Secured Party Representative) all Persons
      who are at any time obligated under any Receivable that the Secured Party
      Representative possesses a security interest in such Receivable and that
      all payments in respect thereof are to be made to such account as the
      Secured Party Representative directs.

      Section 7. Special Provisions Concerning Equipment. The Debtor will do
nothing to impair the rights of the Secured Party Representative in the
Equipment. The Debtor shall cause the Equipment to at all times constitute and
remain personal property. The Debtor will at all times keep all Equipment
insured with financially responsible insurance companies in favor of the Secured
Party Representative, at the expense of the Debtor, against such perils and in
such amounts as are customary for Persons in the same general line of business
as the Debtor and operating in similar geographic locations and markets. If the
Debtor shall fail to insure the Equipment to the Secured Party Representative's
satisfaction, or if the Debtor shall fail so to endorse and deposit all policies
or certificates with respect thereto, the Secured Party Representative shall
have the right (but shall be under no obligation) to procure such insurance and
the Debtor agrees to reimburse the Secured Party Representative for all costs
and expenses of procuring such insurance, together with interest at a rate per
annum equal to 15%. The Secured Party Representative may apply any proceeds of
such insurance when received by it pursuant to the terms of this Section 7 or
Section 4(h) hereof toward the payment of any of the Secured Obligations,
whether or not the same shall then be due. The Debtor retains all liability and
responsibility in connection with the Equipment and the liability of the
Debtor to pay the Secured Obligations shall in no way be affected or diminished
by reason of the fact that such Equipment may be lost, destroyed, stolen,
damaged or for any reason whatsoever unavailable to the Debtor.

      Section 8. Financing Statements; Documentary Stamp Taxes.

            (a) The Debtor will, at its own expense, make, execute, endorse,
      acknowledge, file and/or deliver to the Secured Party Representative
      from time to time such lists, descriptions and designations of Inventory,
      warehouse receipts, bills of lading, documents of title, vouchers,
      invoices, schedules, confirmatory assignments, conveyances, financing
      statements, transfer endorsements, powers of attorney, certificates,
      reports and other assurances or instruments and take such further steps
      relating to the Collateral and

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      other property or rights covered by the security interest hereby granted,
      which the Secured Party Representative deems appropriate or advisable to
      perfect, preserve or protect its security interest in the Collateral. The
      Debtor hereby constitutes the Secured Party Representative its
      attorney-in-fact to execute and file in the name and on behalf of the
      Debtor such additional financing statements and other documents as the
      Secured Party Representative may request, such acts of such attorney being
      hereby ratified and confirmed; such power, being coupled with an interest,
      is irrevocable until the Secured Obligations are paid in full. Further, to
      the extent permitted by applicable law, the Debtor authorizes the Secured
      Party Representative to file any such financing statements and other
      documents without the signature of the Debtor or to execute the same on
      behalf of the Debtor. The Debtor will pay all applicable filing fees and
      related expenses in connection with any such financing statements.

            (b) The Debtor agrees to procure, pay for, affix to any and all
      documents and cancel any documentary tax stamps required by and in
      accordance with, applicable law and the Debtor will indemnify and hold the
      Secured Party Representative harmless against any liability (including
      interest and penalties) in respect of such documentary stamp taxes.

      Section 9. Special Provisions Concerning Remedies and Sale. In addition to
any rights and remedies now or hereafter granted under applicable law and not by
way of limitation of any such rights and remedies, upon the occurrence of an
Event of Default the Secured Party Representative shall have all of the rights
and remedies of a secured party under the Uniform Commercial Code as enacted in
any applicable jurisdiction in addition to the rights and remedies provided
herein, in the Note and in any other agreement executed in connection with the
Note whereby the Debtor has granted any Lien to the Secured Party
Representative. Without in any way limiting the foregoing, upon the giving of
notice to the Debtor of Secured Party Representative's intent to pursue any one
or all of the following or any other remedies:

            (a) Upon the occurrence of an Event of Default, and unless and until
      it is cured, the Secured Party Representative shall have all of the rights
      and remedies of a secured party under the Uniform Commercial Code as
      enacted in any applicable jurisdiction in addition to the rights and
      remedies provided herein, in the Note and any other document whereby the
      Debtor has granted any Lien to the Secured Party Representative. The
      Secured Party Representative shall have the right, without further notice
      to, or assent by, the Debtor, in the name of the Debtor or in the name of
      the Secured Party Representative or otherwise:

                  (i) to ask for, demand, collect, receive, compound and give
            acquittance for the Receivables or any part thereof;

                  (ii) to extend the time of payment of, compromise or settle
            for cash, credit or otherwise, and upon any terms and conditions,
            any of the Receivables;

                  (iii) to endorse the name of the Debtor on any checks, drafts
            or other orders or instruments for the payment of moneys payable to
            the Debtor which shall be issued in respect of any Receivable;

                  (iv) to file any claims, commence, maintain or discontinue any
            actions, suits or other proceedings deemed by the Secured Party
            Representative necessary

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<PAGE>

            or advisable for the purpose of collecting or enforcing payment of
            any Receivable;

                  (v) to make test verifications of the Receivables or any
            portion thereof;

                  (vi) to notify any or all account debtors under any or all of
            the Receivables to make payment thereof directly to the Secured
            Party Representative for the account of the Secured Party
            Representative and to require the Debtor to forthwith give similar
            notice to the account debtors;

                  (vii) to require the Debtor forthwith to account for and
            transmit to the Secured Party Representative in the same form as
            received all proceeds (other than physical property) of collection
            of Receivables received by the Debtor and, until so transmitted, to
            hold the same in trust for the Secured Party Representative and not
            commingle such proceeds with any other funds of the Debtor;

                  (viii) to take possession of any or all of the Collateral and,
            for that purpose, to enter, with the aid and assistance of any
            Person or Persons and with or without legal process, any premises
            where the Collateral, or any part thereof, are, or may be, placed or
            assembled, and to remove any of such Collateral;

                  (ix) to execute any instrument and do all other things
            necessary and proper to protect and preserve and realize upon the
            Collateral and the other rights contemplated hereby;

                  (x) upon notice to such effect, to require the Debtor to
            deliver, at the Debtor's expense, any or all Collateral to the
            Secured Party Representative at a place designated by the Secured
            Party Representative; and

                  (xi) without obligation to resort to other security, at any
            time and from time to time, to sell, re-sell, assign and deliver all
            or any of the Collateral, in one or more parcels at the same or
            different times, and all right, title and interest, claim and demand
            therein and right of redemption thereof, at public or private sale,
            for cash, upon credit or for future delivery, and at such price or
            prices and on such terms as the Secured Party Representative may
            determine, with the amounts realized from any such sale to be
            applied to the Secured Obligations in the manner determined by the
            Secured Party Representative.

      The Debtor hereby agrees that all of the foregoing may be effected without
      demand, advertisement or notice (except as otherwise provided herein or as
      may be required by law), all of which (except as otherwise provided) are
      hereby expressly waived, to the extent permitted by law. The Secured Party
      Representative shall not be obligated to do any of the acts hereinabove
      authorized, but in the event that the Secured Party Representative elects
      to do any such act, the Secured Party Representative shall not be
      responsible to the Debtor except for its gross negligence or willful
      misconduct.

            (b) The Secured Party Representative may take legal proceedings for
      the appointment of a receiver or receivers (to which the Secured Party
      Representative shall be entitled as a matter of right) to take possession
      of the Collateral pending the sale thereof pursuant either to the powers
      of sale granted by this Agreement or to a judgment,

                                       12
<PAGE>

      order or decree made in any judicial proceeding for the foreclosure or
      involving the enforcement of this Agreement. If, after the exercise of any
      or all of such rights and remedies, any of the Secured Obligations shall
      remain unpaid, the Debtor shall remain liable for any deficiency. After
      the indefeasible payment in full of the Secured Obligations, any proceeds
      of the Collateral received or held by the Secured Party Representative
      shall be turned over to the Debtor and the Collateral shall be promptly
      reassigned to the Debtor by the Secured Party Representative without
      recourse to the Secured Party Representative and without any
      representations, warranties or agreements of any kind.

            (c) Upon any sale of any of the Collateral, whether made under the
      power of sale hereby given or under judgment, order or decree in any
      judicial proceeding for the foreclosure or involving the enforcement of
      this Agreement:

                  (i) the Secured Party Representative may, to the extent
            permitted by law, bid for and purchase the property being sold, and
            upon compliance with the terms of sale may hold, retain and possess
            and dispose of such property in its own absolute right without
            further accountability, and may, in paying the purchase money
            therefor, deliver any Note or claims for interest thereon and any
            other instruments evidencing the Secured Obligations or agree to the
            satisfaction of all or a portion of the Secured Obligations in lieu
            of cash in payment of the amount which shall be payable thereon, and
            the Note and such instruments, in case the amounts so payable
            thereon shall be less than the amount due thereon, shall be returned
            to the Secured Party Representative after being appropriately
            stamped to show partial payment;

                  (ii) the Secured Party Representative may make and deliver to
            the purchaser or purchasers a good and sufficient deed, bill of sale
            and instrument of assignment and transfer of the property sold;

                  (iii) the Secured Party Representative is hereby irrevocably
            appointed the true and lawful attorney-in-fact of the Debtor in its
            name and stead, to make all necessary deeds, bills of sale and
            instruments of assignment and transfer of the property thus sold and
            for such other purposes as are necessary or desirable to effectuate
            the provisions (including, without limitation, this Section 9) of
            this Agreement, and for that purpose it may execute and deliver all
            necessary deeds, bills of sale and instruments of assignment and
            transfer, and may substitute one or more Persons with like power,
            the Debtor hereby ratifying and confirming all that its said
            attorney, or such substitute or substitutes, shall lawfully do by
            virtue hereof; but if so requested by the Secured Party
            Representative or by any purchaser, the Debtor shall ratify and
            confirm any such sale or transfer by executing and delivering to the
            Secured Party Representative or to such purchaser all property,
            deeds, bills of sale, instruments or assignment and transfer and
            releases as may be designated in any such request;

                  (iv) all right, title, interest, claim and demand whatsoever,
            either at law or in equity or otherwise, of the Debtor of, in and to
            the property so sold shall be divested; such sale shall be a
            perpetual bar both at law and in equity against the Debtor, its
            successors and assigns, and against any and all Persons claiming or

                                       13
<PAGE>

            who may claim the property sold or any part thereof from, through or
            under the Debtor, its successors or assigns;

                  (v) the receipt of the Secured Party Representative or of the
            officer thereof making such sale shall be a sufficient discharge to
            the purchaser or purchasers at such sale for his or their purchase
            money, and such purchaser or purchasers, and his or their assigns or
            personal representatives, shall not, after paying such purchase
            money and receiving such receipt of the Secured Party Representative
            or of such officer therefor, be obliged to see to the application of
            such purchase money or be in any way answerable for any loss,
            misapplication or non-application thereof; and

                  (vi) to the extent that it may lawfully do so, and subject to
            any legal requirement that the Secured Party Representative act in a
            commercially reasonable manner, the Debtor agrees that it will not
            at any time insist upon, or plead, or in any manner whatsoever claim
            or take the benefit or advantage of, any appraisement, valuation,
            stay, extension or redemption laws, or any law permitting it to
            direct the order in which the Collateral or any part thereof shall
            be sold, now or at any time hereafter in force, which may delay,
            prevent or otherwise affect the performance or enforcement of this
            Agreement, the Note or any other agreement executed in connection
            with the Note whereby the Debtor has granted any Lien to the Secured
            Party Representative, and the Debtor hereby expressly waives all
            benefit or advantage of any such laws and covenants that it will not
            hinder, delay or impede the execution of any power granted or
            delegated to the Secured Party Representative in this Agreement, but
            will suffer and permit the execution of every such power as though
            no such laws were in force. In the event of any sale of Collateral
            pursuant to this Section, the Secured Party Representative shall,
            at least 10 days before such sale, give the Debtor written,
            telecopied or telex notice of its intention to sell.

      Section 10. Application of Moneys.

            (a) Except as otherwise provided herein or in the Note or Guaranty,
      all moneys which the Secured Party Representative shall receive, in
      accordance with the provisions hereof, shall be applied (to the extent
      thereof) in the following manner: First, to the payment of all costs and
      expenses reasonably incurred in connection with the administration and
      enforcement of, or the preservation of any rights under, this Agreement or
      any of the reasonable expenses and disbursements of the Secured Party
      Representative (including, without limitation, the reasonable fees and
      disbursements of its counsel and agents); Second, to the payment of all
      Secured Obligations arising out of the Note in accordance with the terms
      of the Note and, if not therein provided, in such order as the Secured
      Party Representative may determine; and Third, to the payment of all other
      Secured Obligations in such order as the Secured Party Representative may
      determine.

            (b) If after applying any amounts which the Secured Party
      Representative has received in respect of the Collateral any of the
      Secured Obligations remain unpaid, the Debtor shall continue to be liable
      for any deficiency, together with interest.

      Section 11. Fees and Expenses, etc. Any and all fees, costs and expenses
of whatever kind or nature, including but not limited to the reasonable
attorneys' fees and legal expenses

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<PAGE>

incurred by the Secured Party Representative in connection with this Agreement,
the filing or recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, counsel
fees, maintenance fees, fees and other costs relating to the encumbrances or
otherwise protecting, maintaining, preserving the Collateral, or in defending or
prosecuting any actions or proceedings arising out of or related to the
Collateral, shall be borne and paid by the Debtor on written demand by the
Secured Party Representative setting forth in reasonable detail the nature of
such expenses and until so paid shall be added to the principal amount of the
Secured Obligations and shall bear interest at a rate per annum equal to 15%. In
addition, the Debtor will pay, and indemnify and hold the Secured Party
Representative harmless from and against, any and all liabilities, obligations,
losses, damages penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the Collateral,
including (without limitation) claims of patent or trademark infringement and
any claim of unfair competition or anti-trust violation.

      Section 12. Miscellaneous.

            (a) All notices, communications and distributions hereunder shall be
      in writing (including telecopied communication) and telecopied, personally
      delivered or delivered by Federal Express or other reputable overnight
      courier service, if to the Debtor addressed to it at its address set forth
      opposite its signature below, if to the Secured Party Representative,
      addressed to it at its address set forth opposite its signature below, or
      as to either party at such other address as shall be designated by such
      party in a written notice to such other party complying as to delivery
      with the terms of this Section. All such notices and other communications
      shall be effective (i) if telecopied, upon receipt by the addressee, (ii)
      if personally delivered, upon such delivery and (iii) if delivered by
      overnight courier service, on the business day following delivery thereof
      to such courier service in time for next-business-day delivery.

            (b) No delay on the part of the Secured Party Representative in
      exercising any of its rights, remedies, powers and privileges hereunder or
      partial or single exercise thereof, shall constitute a waiver thereof.
      None of the terms and conditions of this Agreement may be changed, waived,
      modified or varied in any manner whatsoever unless in writing duly signed
      by the Debtor and the Secured Party Representative. No notice to or demand
      on the Debtor in any case shall entitle the Debtor to any other or further
      notice or demand in similar or other circumstances or constitute a waiver
      of any of the rights of the Secured Party Representative to any other or
      further action in any circumstances without notice or demand.

            (c) The obligations of the Debtor hereunder shall remain in full
      force and effect without regard to, and shall not be impaired by, (i) any
      bankruptcy, insolvency, reorganization, arrangement, readjustment,
      composition, liquidation or the like of the Debtor; (ii) any exercise or
      non-exercise, or any waiver of, any right, remedy, power or privilege
      under or in respect of the Note, this Agreement or any other agreement
      executed in connection with the Note whereby the Debtor has granted any
      Lien to the Secured Party Representative or any other agreement executed
      in connection with any of the foregoing, the Secured Obligations or any
      security for any of the Secured Obligations; or (iii) any amendment to or
      modification of any of the foregoing; whether or not the Debtor shall have
      notice or knowledge of any of the foregoing. The rights and remedies of
      the Secured Party Representative herein provided are cumulative and not
      exclusive of any rights or remedies which the Secured Party Representative
      would otherwise have.

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<PAGE>

            (d) This Agreement shall be binding upon the Debtor and its
      successors and assigns and shall inure to the benefit of the Secured Party
      Representative and its successors and assigns, except that the Debtor may
      not transfer or assign any of its obligations, rights or interest
      hereunder without the prior written consent of the Secured Party
      Representative and any such purported assignment by the Debtor shall be
      void. All agreements, representations and warranties made herein shall
      survive the execution and delivery of this Agreement.

            (e) If Debtor has, forms or acquires any subsidiary, such subsidiary
      shall thereupon guaranty the Secured Obligations and enter into a security
      agreement with the Secured Party Representative substantially identical to
      this Agreement, all in form and substance satisfactory to the Secured
      Party Representative.

            (f) The descriptive headings of the several sections of this
      Agreement are inserted for convenience only and shall not in any way
      affect the meaning or construction of any provision of this Agreement.

            (g) Any provision of this Agreement, which is prohibited or
      unenforceable in any jurisdiction, shall, as to such jurisdiction, be
      ineffective to the extent of such prohibition or unenforceability without
      invalidating the remaining provisions hereof, and any such prohibition or
      unenforceability in any jurisdiction shall not invalidate or render
      unenforceable such provision in any other jurisdiction.

            (h) All rights, remedies and powers provided by this Agreement may
      be exercised only to the extent that the exercise thereof does not
      violate any applicable provision of law, and the provisions hereof are
      intended to be subject to all applicable mandatory provisions of law that
      may be controlling and to be limited to the extent necessary so that they
      will not render this Agreement invalid, unenforceable in whole or in part
      or not entitled to be recorded, registered or filed under the provisions
      of any applicable law.

            (i) This Agreement and the rights and obligations of the parties
      hereunder shall be construed in accordance with and be governed by the
      laws of the State of New York except to the extent that matters of title,
      or creation, perfection and priority of the security interests created
      hereby, or procedural issues of foreclosure are required to be governed by
      the laws of the state in which the Collateral, or part thereof, is
      located. EACH PARTY HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
      ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
      PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION BASED ON, OR ARISING OUT OF,
      UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE NOTE OR ANY FINANCING
      DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
      ORAL OR WRITTEN) OR ACTIONS OF ANY SUCH PARTY. THIS PROVISION IS A
      MATERIAL INDUCEMENT FOR THE SECURED PARTY'S ENTERING INTO THIS AGREEMENT.

            (j) It is expressly agreed, anything herein, in the Note or in any
      other agreement or instrument executed in connection with the Note to
      the contrary notwithstanding, that the Debtor shall remain liable to
      perform all of the obligations, if any, assumed by it with respect to the
      Collateral and the Secured Party Representative shall not have any
      obligations or liabilities with respect to any Collateral by reason of or
      arising out of this Agreement, nor shall the Secured Party Representative
      be required or obligated in any

                                       16
<PAGE>

      manner to perform or fulfill any of the obligations of the Debtor under or
      pursuant to any or in respect of any Collateral.

            (k) This Agreement may be executed in any number of counterparts and
      by the different parties hereto on separate counterparts, each of which
      when so executed and delivered shall be an original, but all of which
      counterparts taken together shall be deemed to constitute one and the same
      instrument.

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

Addresses                                     STEELBANK, INC.
                                              as Debtor
5349 Maingate Drive
Mississauga, Ontario                          By: /s/ Barry Seigel
Canada, L4W 1G6                                   ---------------------------
                                                  Name: Barry Seigel
                                                  Title: President
                                                  (without personal liability
                                                   whatsoever)

                                              JOSEPH GUNNAR & CO., LLC
                                              as Secured Party Representative
30 Broad Street
12th Floor                                    By: ______________________________
New York, NY 10004                                Name: Stephan A. Stein
                                                  Title: Member

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