**Exhibit 4.17**

 

**GENERAL SECURITY AGREEMENT**

 

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

 

**STONESTREET LIMITED PARTNERSHIP**

 

**FOR GOOD AND VALUABLE CONSIDERATION**, the receipt and adequacy of whichare acknowledged by the Company, the Company agrees with the Investor asfollows:

 

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

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# 2.             **Grantof Security**.  As general and continuingcollateral 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 theCollateral, in favour of the Investor.

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

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# 4.             **Limitationson Grant of Security**.  The SecurityInterests created by this Agreement do not extend to any ExcludedCollateral.  All Excluded Collateralshall be held by the Company in trust for the Investor and, on the exercise bythe 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 theInvestor.

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# 5.             **Representationsand Warranties.**  The Companyrepresents and warrants to the Investor that:

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

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

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## (c)           Title; No Other Security Interests.  The Company owns (or, with respect to any leased or licensedproperty forming part of the Collateral, holds a valid leasehold or licensedinterest in) the Collateral free and clear of any Security Interests, otherthan Permitted Security Interests.

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

 

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

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

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## (f)            Ownership of Collateral.  The Company is, or is to become, the owner of the Collateral andhas, or will have when the Collateral is acquired, the right to create asecurity interest in the Collateral in favour of the Investor.

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# 6.             **Covenants. **The Company covenants and agrees with theInvestor that:

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## (a)           Delivery of Information RegardingCollateral.  The Company shall forthwithon request, furnish to the Investor in writing all information requested by theInvestor, 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 materialCollateral acquired after this Agreement is executed, and the Investor shall beentitled from time to time, upon reasonable notice, to inspect the Collateraland to take temporary custody of and make copies of all documents relating tothe Collateral and for such purposes the Investor shall, upon reasonablenotice, have access to all premises occupied by the Company or where theCollateral or any of it may be found.

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

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

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## (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 ofany part of the Collateral by means of execution, garnishment or other legalprocess.

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

 

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## paid, mayresult in an encumbrance against the Collateral and will provide to theInvestor such information requested by it from time to time to evidence thatsuch payments have been made.

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

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## (g)           Limitations on Dispositions of Collateral.  The Company will not, without the Investor’s prior writtenconsent, which consent shall not be unreasonably withheld or delayed, sell,lease or otherwise dispose of any of the Collateral, except in the ordinary courseof business.  Following Default, allProceeds of the Collateral (including all amounts received in respect ofAccounts), whether or not arising in the ordinary course of the Company’sbusiness, 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 andwill be immediately paid to the Investor upon request by the Investor.

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## (h)           Maintenance of Collateral. The Company will maintainall tangible Collateral in good operating condition, ordinary wear and tearexcepted, and the Company will provide all maintenance, service and repairsnecessary for such purpose.  Further,the Company shall take all action as necessary, desirable or reasonably requestedby the Investor to preserve the Excluded Collateral and all benefits derivingtherefrom for the benefit of the Investor.

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## (i)            Payment of Taxes.  The Company will from time to time pay or cause to be paid alltaxes, assessments, levies and similar impositions of every nature and kindwhatsoever (“Taxes”) which may be levied, assessed or imposed on the Collateralor any part thereof.  The Company willfrom time to time pay or cause to be paid all Taxes, general and special,ordinary or extraordinary, of every nature and kind whatsoever, including localimprovement taxes, which shall be levied, assessed or imposed upon theCollateral or any part thereof, or upon the Company or any other person onaccount thereof, save and except when and so long as the validity of any suchTaxes, is in good faith contested by the Company, and, if applicable, the sameremain Permitted Security Interests. The Investor may, at any time and from time to time, at the Company’sexpense, obtain from the municipality pertaining to the lands, a taxcertificate confirming the status of property taxes in respect of such lands.

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## (j)            Insurance. The Company will keep the Collateral insured with financially sound andreputable companies against loss or damage by fire, explosion, theft and suchother risks in such amounts and upon such terms as would a reasonably prudentowner of similar property.  The Companywill, from time to time at the Investor’s reasonable request, deliver theapplicable insurance policies (or satisfactory evidence of such policies) tothe Investor.  If the Company does notobtain or maintain such insurance,

 

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## the Investormay, but need not, do so, in which event the Company will immediately on demandreimburse the Investor for all payments made by the Investor in connection withobtaining and maintaining such insurance, and until reimbursed any such paymentwill form part of the Indebtedness and will be secured by the SecurityInterests created by this Agreement.

 

# 7.             **Survivalof Representations, Warranties and Covenants.** All agreements, representations, warranties and covenants made by theCompany in the Security Documents (except as may be otherwise specifiedtherein) will survive the execution and delivery of this Agreement or anyinvestigation made at any time by or on behalf of the Investor and anydisposition or payment of the Indebtedness until repayment and performance infull of the Indebtedness.

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

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

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## (b)           Default under Agreements.

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

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

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

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

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## (e)           Failure to Pay Taxes, etc.  If the Company fails to pay taxes, rates, levies, duties, publicutility charges and assessments, which shall be levied, assessed or imposedupon 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 faithcontested

 

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

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## (f)            Appointment of Receiver.  If a receiver or receiver and manager or a liquidator or atrustee in bankruptcy of the Company for all or substantially all of the assetsof the Company shall be appointed and the Company fails to seek to set asidesuch appointment within 30 days after such appointment or if the Companyacquiesces to such appointment.

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

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

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# 9.             **Rightson Default.**  On Default and so long as suchDefault is continuing, the security constituted by this Agreement will beenforceable, and the Investor may, personally or by agent do any one or more ofthe following:

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

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

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

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## (d)           Use of Collateral.  Hold, store and keep idle, or operate, lease or otherwise use orpermit the use of any or all of the Collateral for such time and on such termsas the Investor acting reasonably, may determine, and demand, collect andretain all earnings and other sums due or to become due from any Person inrespect of any of the Collateral.

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## (e)           Carry on Business.  Carry on, or concur in the carrying on of, any or all of thebusiness or undertaking of the Company and enter on, occupy and use (withoutcharge by the Company) any of the premises, buildings, plant and undertakingof, 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, onsuch terms and conditions and at such times as the Investor deems advisable.

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## (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 theCollateral (or contract to do any of the above), in one or more parcels at anypublic or private sale, at any exchange, broker’s board or office of theInvestor or elsewhere, on such terms and conditions as the Investor may deemadvisable and at such prices as it may deem best, for cash or on credit or forfuture delivery.

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

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

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

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## (k)           Payment of Indebtedness.  Pay any liability secured by any Security Interest against anyCollateral.  The Company will uponrequest reimburse the Investor for all such payments, such payments will formpart of the Indebtedness and will be secured by the Security Interests createdby this Agreement.

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## (l)            Appointment of Receiver Pursuant toAgreement.  Appoint by instrument in writing one or moreReceivers 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 authorityof the Investor under this Agreement) as may be provided for in the instrumentof appointment or any supplemental instrument, and remove and replace any suchReceiver from time to time.  To theextent 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 theReceiver’s remuneration and the Company will be obliged to pay to the Investor,acting reasonably, the amount of such remuneration.

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

 

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# 10.           **Enforcementof Security**.  Notwithstanding any otherprovision in this Agreement, the Investor agrees that in enforcing the securityconstituted by this Agreement, the Investor shall exercise the remediesavailable to it in the following order:

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

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## (b)           secondly, against other Collateral.

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# 11.           **Applicationof Proceeds.**  All Proceeds of Collateralreceived by the Investor or by a Receiver may be applied to discharge orsatisfy expenses (including the Receiver’s remuneration and other reasonableexpenses of enforcing the Investor’s rights under the Security Documents)including but not limited to borrowings, taxes and other outgoings affectingthe Collateral or which are considered advisable by the Investor or theReceiver to protect, preserve, repair, process, maintain or enhance theCollateral or prepare it for sale, lease or other disposition, or to keep ingood standing any Security Interests on the Collateral ranking in priority toany of the Security Interests created by this Agreement, or to sell, lease orotherwise dispose of the Collateral. The balance of such Proceeds may be held as collateral security for theIndebtedness or be applied to such of the Indebtedness (whether or not the sameare due and payable) in such manner and at such times as the Investor considersappropriate and thereafter will be accounted for as required by law.

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# 12.           **ContinuingLiability of Company.**  The Companywill remain liable for any Indebtedness that are outstanding followingrealization of all or any part of the Collateral and the application of theProceeds thereof.

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# 13.           **Investor’s****Appointment as Attorney-in-Fact.**  The Company constitutes and appoints theInvestor, and any officer or agent of the Investor, with full power ofsubstitution, as the Company’s true and lawful attorney-in-fact with full powerand authority in the place of the Company and in the name of the Company or inits own name, from time to time in the Investor’s discretion after a Defaultand only for so long as such Default is continuing, to take any and allappropriate action and to execute any and all documents and instruments as, inthe opinion of such attorney acting reasonably, may be necessary or desirableto accomplish the purposes of this Agreement. These powers are coupled with an interest and are irrevocable until thisAgreement is terminated and the Security Interests created by this Agreementare released.  Nothing in this sectionaffects the right of the Investor or any other Person, to sign and file ordeliver (as applicable) all such financing statements, financing changestatements, notices, verification agreements and other documents relating tothe Collateral and this Agreement as the Investor or such other Personconsiders appropriate, acting reasonably.

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# 14.           **Performanceby Investor of Company’s Obligations.**  Ifthe Company fails to perform or comply with any of its obligations under thisAgreement, the Investor may, but need not, perform or otherwise cause theperformance or compliance of such obligation, provided that such performance orcompliance will not constitute a waiver, remedy or satisfaction of suchfailure.  The reasonable expenses of theInvestor incurred in connection with any such performance or compliance will bepayable by the Company to the Investor, any such reasonable expenses will formpart of the Indebtedness and will be secured by the Security Interests createdby this Agreement.

 

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# 15.           **Rightof Set-Off.**  The Investor may at any timeand from time to time after the occurrence of a Default, upon notice to theCompany or any other Person, set-off, appropriate and apply any and allindebtedness and liabilities of the Investor****to the Company, liquidated,unliquidated, contingent, matured or unmatured, against and on account of anyIndebtedness of any kind whatsoever, including for greater certaintyliquidated, unliquidated, contingent, matured or unmatured, in such order ofapplication as the Investor shall from time to time determine.

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# 16.           **Rightsof Investor and Limitations on Investor’s Obligations.**

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## (a)           Limitations on Investor’s Liability.  The Investor will not be liable to the Company or any otherPerson for any failure or delay in exercising any of its rights under thisAgreement (including any failure to take possession of, collect, sell, lease orotherwise dispose of any Collateral, or to preserve rights against priorparties). Neither the Investor nor a Receiver (including, in Alberta, anysheriff) is required to take, or will have any liability for any failure totake or delay in taking, any steps necessary or advisable to preserve rightsagainst other Persons under any Collateral in its possession.  Neither the Investor nor any Receiver willbe liable for any, and the Company will bear the full risk of all, loss ordamage to any and all of the Collateral (including any Collateral in thepossession of the Investor or any Receiver) caused for any reason other thanthe gross negligence or wilful misconduct of the Investor or such Receiver.

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## (b)           Company Remains Liable under Accounts andContracts.  Notwithstanding any provision of thisAgreement, the Company will remain liable under each of the Accounts andContracts to observe and perform all the conditions and obligations to beobserved and performed by the Company thereunder, all in accordance with theterms of any agreement giving rise to each such Account or in accordance withand pursuant to the terms and provisions of each such Contract.  Neither the Investor nor any Receiver haveany obligation or liability under any Account (or any agreement giving risethereto) or Contact by reason of or arising out of this Agreement or thereceipt by the Investor of any payment relating to such Account or Contractpursuant hereto, and in particular (but without limitation), the Investor willnot be obligated in any manner to perform any of the obligations of the Companyunder or pursuant to any Account (or any agreement giving rise thereto) orunder or pursuant to any Contract, to make any payment, to make any inquiry asto the nature or the sufficiency of any payment received by it or as to thesufficiency of any performance by any party under any Account (or any agreementgiving rise thereto) or under any Contract, to present or file any claim, totake any action to enforce any performance or to collect the payment of anyamounts which may have been assigned to it or to which it may be entitled atany time.

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## (c)           Collections on Accounts and Contracts.  The Investor hereby authorizes the Company to collect theAccounts and payments under the Contracts in the normal course of its businessand for the purpose of carrying on the same. All such amounts while held by the Investor and all income in respectthereof will continue to be collateral security for the Indebtedness and willnot constitute payment thereof until applied as hereinafter provided.  At such intervals as may be agreed upon bythe Company and

 

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## the Investor,or, if a Default will have occurred and be continuing at any time or from timeto time, the Investor will apply all or any part of the accounts and paymentscollected under the contracts on account of the Indebtedness in such order asthe Investor may elect.  At the Investor’srequest, the Company will deliver to the Investor any documents evidencing andrelating to the agreements and transactions which gave rise to the Accounts andContracts, including all original orders, invoices and shipping receipts.

 

# 17.           **Dealingsby Investor.**  The Investor will not beobliged to exhaust its recourse against any other Person or against any otherSecurity Interests it may hold in respect of the Indebtedness before realizingupon or otherwise dealing with the Collateral in such manner as the Investormay consider desirable.  The Investormay grant extensions of time and other indulgences, take and give up security,accept compositions, grant releases and discharges and otherwise deal with anyother Person, and with any or all of the Collateral, and with other securityand sureties, as the Investor may see fit, all without prejudice to theIndebtedness or to the rights and remedies of the Investor under thisAgreement.  The powers conferred on theInvestor under this Agreement are solely to protect the respective interests ofthe Investor in the Collateral and will not impose any duty upon the Investorto exercise any such powers.

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# 18.           **AdditionalSecurity**.  The Security Interests created by thisAgreement are in addition and without prejudice to any other Security Interestsnow or later held by the Investor.  NoSecurity Interests held by the Investor will be exclusive of or dependent uponor merge in any other Security Interests, and the Investor may exercise itsrights under such Security Interests independently or in combination.

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# 19.           **Releaseof Information.**  The Companyauthorizes the Investor to provide a copy of this Agreement and such otherinformation as may be requested of the Investor by Persons entitled theretopursuant to any applicable legislation.

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

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# 21.           **GoverningLaw.**  This Agreement will be governed by andconstrued in accordance with the laws of the Province of Ontario and the lawsof Canada applicable in such Province and will be treated, in all respects, asa contract of such Province.

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# 22.           **Conflict.** To the extent that any term,condition, representation, covenant or other provision contained in thisAgreement conflicts with, any term, condition, representation, covenant orother provision contained in the Secured Convertible Note, then the relevantterm, condition, representation, covenant or other provision of this Agreementshall govern.

 

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# 23.           **Interpretation.** The division of this Agreement into sectionsand paragraphs, and the insertion of headings, is for convenience of referenceonly and will not affect the construction or interpretation of thisAgreement.  Unless the context otherwiserequires, words importing the singular include the plural and vice versa, andwords importing gender include all genders and neuter.  When used in this Agreement, the word “**including**”(or “**includes**”)means “**including**(or “**includes**”)**withoutlimitation**”.  Any referencein this Agreement to a “**Section**” or a “**Schedule**” means the relevantsection or schedule of this Agreement unless the context specifically providesotherwise.

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# 24.           **Successorsand Assigns.**  This Agreement will enure tothe 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 itssuccessors and assigns.  The Company maynot assign this Agreement, or any of its rights or obligations under thisAgreement, without the prior written consent of the Investor, which consentshall not be unreasonably withheld. However, the Investor in its sole discretion, may withhold its consentto a proposed assignment by the Company which is reasonably considered anarbitrary assignment by the Company.

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# 25.           **Acknowledgementof Receipt/Waiver.**  The Companyacknowledges receipt of an executed copy of this Agreement and, to the extentpermitted by applicable law, waives the right to receive a copy of anyfinancing statement, financing change statement or verification statement inrespect of any registered financing statement or financing change statementprepared, registered or issued in connection with this Agreement.

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# 26.           **Severability.**  Any provision of this Agreement that is invalid or unenforceablein any jurisdiction will, as to that jurisdiction, be ineffective to the extentof such invalidity or unenforceability and will be severed from the balance ofthis Agreement, all without affecting the remaining provisions of thisAgreement or affecting the validity or enforceability of such provision in anyother jurisdiction.

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# 27.           **Listingsof Collateral.**  Any schedules, documents orlistings provided to the Investor which summarize or describe any afteracquired 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**”,“**Ac****count**”, “**Chattel Paper**”, “**ConsumerGoods**”, “**Document of Title**”, “**Equipment**”, “**Goods**”,“**Instrument**”,“**Intangible**”,“**Inventory**”,“**Money**”,“**MotorVehicles**”, “**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;

 

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

 

“**BusinessDay**” means any day other than a Saturday, Sunday, statutory holidayin Ontario or day on which the main branch of the Company’s banking institutionin Toronto is closed for business;

 

“**Collateral**”means all of the present and future undertaking, Personal Property (includingany Personal Property that may be described in any Schedule to this Agreementor any schedules, documents or listings that the Company may from time to timeprovide 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 hasany interest or to which the Company is or may at any time become entitled),Contracts, Intellectual Property Rights, and all Proceeds thereof, in any suchcase wherever located;

 

“**Company**”means ADB Systems International Ltd;

 

“**Contracts**” means all existing and futurecontracts, licenses and agreements to which the Company is at any time a partyor pursuant to which the Company has at any time acquired rights, as suchcontracts, licenses and agreements may from time to time be amended or restatedand includes (i) all rights of the Company to receive money due and tobecome due to it in connection with a contract licence or agreement; (ii) allrights of the Company to damages arising out of, or for breach or default inrespect of, a contract, licence or agreement; and (iii) all rights of theCompany 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;

 

“**EDCPolicy**” means the Company’s receivable insurance policy with ExportDevelopment Canada, which insures 90% of the Company’s worldwide accountsreceivable;

 

“**ExcludedCollateral**” means the last day of the term of any real property lease and anyIntellectual Property Right or Permit where the grant of a Security Interesttherein without consent would result in the breach or termination thereof,unless such consent is obtained;

 

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“**Indebtedness**”means all present andfuture indebtedness, liabilities and obligations whether direct or indirect,joint or several, absolute or contingent, matured or unmatured of the Companyto 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 ConvertibleNote and/or the Security Documents;

 

“**IntellectualProperty Rights**” means all industrial and intellectual propertyrights, 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 andcodes associated therewith) and other sources of business identifiers, customerlists, subscriber lists and the goodwill associated therewith, includingregistrations, recordings and applications with the Canadian IntellectualProperty Office and any similar government office or agency in other countries,all copyrights and industrial designs in all works, including all drawings andcomputer programs, all patents, proprietary technology, rights to inventionswhether patentable or otherwise, trade secrets, confidential information andother processes and all registrations, recordings applications for theforegoing, all licenses currently in force or may in the future be in forcewhich authorizes the licensee to make, use, offer for sale, sell or advertisewares or services in connection with issued or pending applications for one ormore patents, trade-marks, industrial designs, or in association with licensedknow-how, trade secrets, confidential information and computer programs, theright to sue parties for past, present and future infringements or dilution ofIntellectual Property Rights and associated goodwill, all Contracts related toany such industrial and intellectual property rights including thosetrade-marks set out in Schedule “D” and all reissues, continuations orextensions of any of the foregoing;

 

“**Investor**”means Stonestreet Limited Partnership;

 

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

 

“**Permits**” means all permits, licenses,authorizations, approvals, franchises, rights-of-way, easements andentitlements 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 ofits business;

 

“**Person**”will be broadlyinterpreted and includes an individual, a corporation, a limited liabilitycompany, a partnership, a trust, a joint venture, an association, anunincorporated organization, the government of a country or any politicalsubdivision thereof, any agency or department of any such government, a regulatoryagency or any other entity and the heirs, executors, administrators or otherlegal representatives of an individual;

 

“**PersonalProperty**” 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 andSecurities, and includes all present and future Accessions to any of theforegoing, but excludes Consumer Goods;

 

A-2

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“**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, amanager, a receiver and manager or an agent of the Investor or any Receiver;

 

“**SecuredConvertible Note**” means the series F 7% secured convertible note inthe principal amount of CDN$500,000 issued by the Company to the Investor onthe date hereof;

 

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

 

“**SecurityDocuments**” means collectively, this Agreement and all other security agreements,guarantees, share pledge agreements, and other agreements, instruments anddocuments from time to time granted in favour of the Investor as security foror in support of the obligations of the Company under the Secured ConvertibleNote and the Subscription Agreement, as amended, modified, supplemented,restated and replaced in writing from time to time;

 

“**SecurityInterest**” means any mortgage, charge, pledge, hypothecation, lien (statutory orotherwise), assignment, finance lease, title retention agreement orarrangement, security interest or other encumbrance or adverse claim of anynature, or any other security agreement or arrangement creating in favour ofany creditor a right in respect of a particular property or asset;

 

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

 

“**SubscriptionAgreement**” means the subscription agreement pursuant to which, theInvestor subscribes for and the Company accepts the subscription for theSecured Convertible Note.

 

A-3

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**SCHEDULE “B”**

 

**Chief ExecutiveOffice**

 

201-6725 Airport Road

Mississauga, Ontario

L4V 1V2

 

**PrincipalPlaces of Business**

 

201-6725 Airport Road

Mississauga, Ontario

L4V 1V2

 

----

 

**SCHEDULE “C”**

 

**ADDITIONAL PERMITTED SECURITY INTERESTS**

 

**“Permitted Security Interests”** means with respect to any propertyor asset of any Person:

 

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

##  

## (b)           the Security Interests of any judgementrendered or claim filed against the Company or its property which it shall becontesting in good faith and in respect of which there shall have beendeposited with an arms-length Person acceptable to the Investor, actingreasonably, cash, security or a surety bond satisfactory to such arms-lengthPerson in an amount sufficient to pay such judgement or claim;

##  

## (c)           defects or irregularities of title which donot in the aggregate materially impair the value of the property to which theyrelated or interfere with the use of the property to which they relate for thepurposes for which it is held by such Person;

##  

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

##  

## (e)           purchase money security interests;

##  

## (f)            Security Interests granted by the Companyduring the one year period following the date of this Agreement to third partycreditors to secure indebtedness which is permitted under Section 7 of theSubscription Agreement;

##  

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

##  

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

 

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**SCHEDULE “D”**

 

**IntellectualProperty 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

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