**Exhibit 4.18**

** **

**SUBSCRIPTION AGREEMENT**

 

(for Ontario,Alberta and British Columbia and Non-Canadian/Non-U.S. Subscribers)

 

**A completed and originally executed copy ofthis subscription agreement must be delivered or transmitted by facsimile((416) 869-9151) by no later than 12:00 noon (Toronto time) on June 3,2004 to First Associates Investments Inc. (Attention:********Jennifer Li)**.

 
| **TO:**  | ADB Systems  International Ltd. (the “**Corporation**”)                                                                                                                                                                                                      |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                   |
| **AND:** | First  Associates Investments Inc.                                                                                                                                                                                                                                     |
|     |                                                                                                                                                                                                                                                                   |
| **RE:**  | Sale of  Convertible Notes of the Corporation entitling the holders to acquire units  of securities of the Corporation upon conversion, each unit comprised of one  common share in the capital of the Corporation and one-half of one Common  Share purchase warrant. |

** **

**Details of Subscription**

 

Theundersigned (the “**Subscriber**”) hereby irrevocably subscribes, subject to theterms and conditions set forth in this subscription agreement, for convertiblenotes (“**ConvertibleNotes**”) of the Corporation with the following specific purchaseinstructions.  The particulars of theConvertible Notes and the securities issuable upon conversion of theConvertible Notes (together with certain other material covenants andacknowledgements) are set out in Schedules “A” and “B” to this subscriptionagreement and certain representations and warranties to be made by theSubscriber so that the Corporation can ensure compliance with applicablesecurities laws are set out in Schedule “C” to this subscription agreement, allof which forms part of and is hereby incorporated as part of this subscriptionagreement.

 

**All Subscribers**:

 

Complete andsign Schedule “D” to this agreement, being the form of questionnaire andundertaking required by the Toronto Stock Exchange

 

**Ontario Subscribers**:

 

Complete andsign both the Ontario Resident Exemption Certificate and the Ontario AccreditedInvestor Certificate – Schedule “E”.

 

**Alberta and British ColumbiaSubscribers**:

 

If you are an“accredited investor”, complete and sign the Accredited Investor Certificate –Schedule “F”.**OR**If you are relying on the “family, friends and business associates”exemption, complete and sign the Family, Friends and Business AssociatesCertificate – Schedule “F”.

 

**Non Canadian and Non U.S.Subscribers**:

 

Complete andsign the Offshore Subscriber Certificate – Schedule “G”.

 

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*Please print all information(other than signatures), as applicable, in the spaces provided below.*

 
| ***Principal Amount  of Convertible Notes Subscribed for (to be issued at par):*** |   |   |
|------------------------------------------------------------------------------------|--------|--------|

 
| ***Subscriber Details***                                           |                |   | ***Registration  Instructions******(if  different from name of***       |   |
|--------------------------------------------------------------------|---------------------|--------|-------------------------------------------------------------------------|--------|
|                                                               |                |   | ***Subscriber and  address set out in the box to the left):***          |   |
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| *Name of  Subscriber*                                              |                |   |                                                                    |   |
|                                                               |                |   | *Name*                                                                  |   |
| *By:*                                                              |                |   |                                                                    |   |   |
| *Authorized Signature*                                             |                |   |                                                                    |   |
|                                                               |                |   | *In Trust  For, if applicable  Account Reference, if applicable*        |   |
| *Official  Capacity or Title (if Subscriber is not an individual)* |                |   |                                                                    |   |
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| *Name of individual whose  signature appears above if*             |                |   |                                                                    |   |
| *different from name of  Subscriber printed above*                 |                |   |                                                                    |   |
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|                                                               |                |   | *Address,  including postal code*                                       |   |
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|                                                               |                |   | ***Delivery  Instructions******(if different  from name of Purchaser*** |   |
| *Address of  Subscriber, including province and postal code*       |                |   | ***and address set  out in the box to the left):***                     |   |
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| *Telephone  Number:*                                               |                |   |                                                                    | *Name* |   |
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| *Fax Number:*                                                      |                |   |                                                                    |   |   |
|                                                               |                |   | *Account  Reference, if applicable*                                     |   |
| *E-mail  Address:*                                                 |                |   |                                                                    |   |   |
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|                                                               |                |   | *Address,  including province and postal code*                          |   |
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| *Disclosed  Principal (please complete if purchasing as agent*     |                |   |                                                                    |   |
| *or trustee  for a disclosed principal*                            |                |   |                                                                    |   |
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| Name of Principal:                                                 |                |   |                                                                    |   |   |
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| Principal’s Address:                                          |                |   |                                                                    |   |   |
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The Subscriberacknowledges its consent and request that this subscription agreement(including all schedules hereto) and all other documents evidencing or relatingin any way to its purchase of Convertible Notes be drawn up in the Englishlanguage only.  **Nous reconnaissonspar les présentes avoir consenti et demandé à ce que la présente convention desouscription (et les annexes s’y rapportant) et tous les autres documentsfaisant foi ou se rapportant de quelque manière à notre souscription soientrédigés en anglais seulement.**

 

**IN WITNESS WHEREOF** the Subscriber has executed, or caused its duly authorizedrepresentative to execute, this subscription agreement on this            day of                                , 2004.

 

 
|                                        |   |   |                                         |
|---------------------------------------------|--------|--------|----------------------------------------------|
| Signature of  Subscriber (if an individual) |   |   | Name of  Subscriber (if an individual)       |
|                                        |   |   |                                         |
|                                        | Per:   |   |                                         |
| Name of  Subscriber (if an individual)      |   |   | (signature  of authorized representative)    |
|                                        |   |   |                                         |
|                                        |   |   |                                         |
|                                        |   |   | Name and  Title of Authorized Representative |

 

 

**ACCEPTANCE**

 

The foregoingis acknowledged, accepted and agreed to this               day of                                , 2004.

 
|   | **ADB SYSTEMS INTERNATIONAL LTD.** |
|--------|------------------------------------|
|   |                               |
|   | Per:                               |   |

 

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**SCHEDULE “A”**

** **

**This is Schedule “A” to the subscriptionagreement relating to the purchase of Convertible Notes of ADB SystemsInternational Ltd.**

 

**TERMS OF THE OFFERING**

** **

1.             **Offering**.  The Convertible Notes subscribed forhereunder form part of a larger sale by the Corporation (the “**Offering**”)pursuant to an agency agreement (the “**Agency Agreement**”) to be enteredinto between the Corporation and First Associates Investments Inc. (the “**Agent**”)of a maximum of $5,000,000 principal amount of Convertible Notes. In additionto the Offering, on May 19, 2004 the Corporation issued $500,000 of convertiblenotes to one investor, with such convertible notes being substantially the sameas the Convertible Notes to be issued under the Offering, except that they alsoprovided security by way of an express assignment of insurance proceeds rights.

 

TheConvertible Notes will bear interest at an annual rate of 7% of the principalamount of the Convertible Notes outstanding from time to time, payable on theearlier of the conversion of the Convertible Notes or the third anniversary ofthe Closing Date (the “**Maturity****Date**”).  Interestwill continue to accrue until paid.  Atany time up to and including the Maturity Date, all or any portion of theprincipal amount of the Convertible Notes outstanding from time to time will beconvertible, at the option of the holder, provided that the holder complieswith the notice provision therefor, into units of securities of the Corporation(“**Units**”)at a conversion price of $0.31 per Unit (the “**Conversion Price**”), subject toadjustments for stock splits, consolidations, other capital reorganizations,extraordinary dividends or distributions.

 

Each Unit willconsist of one common share in the capital of the Corporation (a “**Common Share**”)and one-half of one Common Share purchase warrant (a “**Warrant**”).  Each whole Warrant will entitle the holderto acquire one Common Share at an exercise price of $0.50 per share, and willbe exercisable at any time prior to the fourth anniversary of the Closing Date.

 

In the eventthat at any time from and after the first anniversary of the Closing Date thevolume weighted average trading price of the Common Shares through itsprincipal trading market for a 20 consecutive trading day period is $0.70 ormore, all then outstanding Convertible Notes, including any accrued interestthereon, will be automatically converted into Units at the Conversion Price.

 

The materialterms of the Offering, the Convertible Notes and the Underlying Securities (ashereinafter defined) are set out in this schedule and in Schedule “B” to thissubscription agreement.

 

The foregoingdescription of the Convertible Notes is a summary only and the Subscriberacknowledges that the definitive terms and conditions of the Convertible Notessold under the Offering will be set forth in the Note Certificates (ashereinafter defined).

 

2.             **Definitions**.  In this subscription agreement and theschedules to this subscription agreement the defined terms set out in the firstpage of this subscription agreement or as set out in Section 1 above shallapply and, unless the context otherwise requires:

 

“**ApplicableSecurities Laws**” means the applicable securities laws of theProvince of Ontario and each other relevant jurisdiction and the regulationsand rules made and forms prescribed thereunder, together with all applicableinstruments, published policy statements, blanket orders, notices, rulings andrules of the Ontario Securities Commission and each other securities regulatoryauthority having competent jurisdiction;

 

“**Business Day**”means a day other than a Saturday, Sunday or statutory or banking holiday inToronto, Ontario;

 

“**Closing Date**”means on or about June 8, 2004, or such other date or dates as the Agent maydesignate;

 

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“**Closing Time**”means 10:00 a.m. (Toronto time) on the Closing Date, or such other time on theClosing Date as the Agent may designate;

 

“**Corporation’sInformation Record**” means any statement contained in any pressrelease, material change report, financial statements or other document of theCorporation which has been or is publicly disseminated, whether pursuant to anyApplicable Securities Laws or otherwise, prior to the Closing Time;

 

“**including**”means including without limitation;

 

“**material**”means material in relation to the Corporation;

 

“**material change**”means any change in the business, operations, assets, liabilities, ownership orcapital of the Corporation, on a consolidated basis, that would reasonably beexpected to have a significant effect on the market price or value of theCommon Shares and includes a decision to implement such a change made by theboard of directors of the Corporation or by senior management of theCorporation who believe that confirmation of the decision by the board ofdirectors is probable;

 

“**material fact**”means any fact that significantly affects or would reasonably be expected tohave a significant effect on the market price or value of the Common Shares;

 

**“**Material Subsidiaries**” means the material director indirect subsidiaries of the Corporation, being, ADB Systemer ASA (Norway),ADB Systems USA, Inc. (Delaware), ADB Systems International Limited (Ireland)and Internet Liquidators USA, Inc.;**

 

“**misrepresentation**”means an untrue statement of material fact, or an omission to state a materialfact that is required to be stated or that is necessary to make a statement notmisleading in the light of the circumstances in which it was made;

 

“**Note Certificates**”means the definitive certificates representing the Convertible Notes;

 

“**Purchasers**”means those persons who subscribe for Convertible Notes under the Offering,including the Subscriber;

 

“**Regulation S**”means Regulation S under the **U.S. Securities Act**;

 

“**TSX**”means the Toronto Stock Exchange;

 

“**UnderlyingSecurities**” means the Common Shares and Warrants comprising theUnits issuable upon the exercise of the conversion rights under the ConvertibleNotes;

 

“**United States**”means the United States as that term is defined in Regulation S;

 

“**U.S. Person**”means a U.S. Person as that term is defined in Regulation S;

 

“**U.S. Securities Act**”means the **Securities Act of 1933**,as amended, of the United States of America; and

 

“**Warrants Shares**”means the Common Shares issuable upon exercise of the Warrants.

 

3.             **Currency**.  All dollar amounts referred to in this subscriptionagreement and the schedules thereto are expressed in Canadian funds.

 

4.             **Representations and Warranties of theCorporation**.  The Corporationhereby represents and warrants for the benefit of the Purchasers as follows:

 

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(a)                 theCorporation is (and will be at the Closing Time) a reporting issuer in theProvinces of Ontario, Alberta and British Columbia, and is in compliance withall material obligations under Applicable Securities Laws of suchjurisdictions;

 

(b)                theCorporation has been duly **incorporated**and organized and is validly subsisting under the laws of the**Province of Ontario**and has all requisite corporate power and authority to own its assets and tocarry on its business as currently conducted;

 

**(c)                 each of the MaterialSubsidiaries has been duly incorporated and organized and is validly subsistingunder the laws of its jurisdiction of incorporation and has all requisitecorporate power and authority to carry on its business as now conducted and toown, lease and operate its properties and assets;**

 

(d)                theCorporation **and each of theMaterial Subsidiaries** is conducting its business in materialcompliance with all applicable laws, rules and regulations of each jurisdictionin which its business is carried on and is duly licensed, registered orqualified in all jurisdictions in which it owns, leases or operates itsproperty or carries on business to enable its business to be carried on as nowconducted and its property and assets to be owned, leased and operated and allsuch licences, registrations and qualifications are and will at the ClosingTime be valid, subsisting and in good standing, except in respect of matterswhich do not and will not result in any adverse material change in respect ofthe Corporation, and except for the failure to be so qualified or the absenceof any such license, registration or qualification which does not and will nothave a material adverse effect on the assets or properties, business, resultsof operations, prospects or condition (financial or otherwise) of theCorporation and its subsidiaries, on a consolidated basis;

 

(e)                 theCorporation has all required corporate power and authority to enter into andcarry out the provisions of this subscription agreement and the transactionscontemplated hereby and all necessary corporate action has been taken or willhave been taken prior to the Closing Time by the Corporation to duly authorizethe execution and delivery of this subscription agreement and such other agreementsand instruments and the consummation of the transactions contemplated therebyand so as to validly create, issue and deliver the Convertible Notes subscribedthereby and to validly create and irrevocably allot for issuance the UnderlyingSecurities and Warrant Shares;

 

(f)                 neitherthe Corporation **nor any of itsMaterial Subsidiaries** is in default or in breach in anymaterial respect of, and the execution and delivery of this subscriptionagreement by the Corporation, the performance and compliance with the terms ofthis subscription agreement, the issue and sale of the Convertible Notes, andthe issue of the Underlying Securities and Warrant Shares will not result inany breach of, or be in conflict with or constitute a default under, or createa state of facts which, after notice or lapse of time, or both, wouldconstitute a default either directly or indirectly under any term or provisionof the constating documents, by-laws or resolutions of the Corporation **or any of the Material Subsidiaries**or any material mortgage, note, indenture, contract, agreement,instrument, lease or other document to which any of them is a party or by whichany of them is bound;

 

(g)                theCommon Shares issuable upon exercise of the conversion rights under itsConvertible Notes and the Warrant Shares, if and when issued in accordance withthe Convertible Notes and Warrants, as applicable, will be validly issued andoutstanding as fully paid and non-assessable;

 

(h)                noapproval, authorization, consent or other order of, and no filing, registrationor recording with, any governmental authority is required by the Corporation inconnection with the execution and delivery or with the performance by theCorporation of this subscription agreement except in compliance with and the rulesof the TSX;

 

(i)                  tothe best of the Corporation’s knowledge, information and belief, no portion ofthe Corporation’s Information Record contained a misrepresentation as at itsdate of public dissemination;

 

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(j)                  therehas been no adverse material change in relation to the Corporation sinceDecember 31, 2003, and no adverse material fact exists in relation to theCorporation or its securities which, in either case, has not been generallydisclosed or disclosed in the Corporation’s Information Record;

 

(k)                 thissubscription agreement and all other agreements required in connection with theissue and sale of the Convertible Notes have been or will be, at or prior tothe Closing Time, duly authorized, executed and delivered by the Corporationand will be valid and binding obligations of the Corporation enforceable inaccordance with their respective terms (except as the enforceability thereofmay be limited by (i) bankruptcy, insolvency or similar laws affectingcreditors’ rights generally, (ii) general equitable principles or (iii)limitations under applicable law in respect of rights of indemnity,contribution and waiver of contribution); and

 

(l)                  theCorporation intends that the net proceeds of the Offering will be usedsubstantially in the manner specified in Schedule “B” hereto.

 

5.             **Reliance upon Representations, Warrantiesand Covenants of the Corporation**. The Corporation further agrees that, by delivering the Convertible Notesto the Subscriber, the Corporation will be representing and warranting that therepresentations, warranties and covenants contained in this subscriptionagreement are true as at the Closing Time with the same force and effect as ifthey had been made by the Corporation at the Closing Time and that they willsurvive the purchase by the Subscriber of the Convertible Notes and continue infull force and effect for a period of two (2) years following the Closing Datenotwithstanding any subsequent disposition by the Subscriber of the ConvertibleNotes or the Underlying Securities.

 

6.             **Closing of Purchase**.  The Subscriber acknowledges and agrees thatdelivery of and payment for the Convertible Notes will be completed at theoffices of **the Corporation’slegal counsel** at 10:00 a.m. (Toronto time) on the ClosingDate which will be on or about June 8, 2004, or such earlier or later date ortime as may be determined by the Agent.

 

7.             **Payment and Delivery**.  The Subscriber agrees to deliver to theAgent at 181 Bay Street, Suite 900, Toronto, Ontario M5J 2T3 (Attention:Jennifer Li), (fax number: (416) 864-9151), prior to the Closing Time:

 

(a)                 hisor her duly completed and executed subscription agreement (including Schedule“D” and Schedules E”, “F” or “G”);

 

(b)                acertified cheque or bank draft payable to “First Associates Investments Inc.”,or wire transfer in Canadian funds to the Agent for the principal amount ofConvertible Notes subscribed for under this subscription agreement or paymentof the same amount in such other manner as is acceptable to the Agent; and

 

(c)                 suchother documents as may be required pursuant to the terms of this subscriptionagreement.

 

8.             **Conditions of Closing**.  If, by the Closing Time, the terms andconditions contained in this subscription agreement have been complied with tothe satisfaction of the Corporation or waived by the Corporation, the Agentshall deliver to the Corporation all completed subscription agreements,including this subscription agreement, and deliver to the Corporation allcertified cheques or bank drafts representing subscription funds, including theSubscriber’s subscription funds against delivery by the Corporation of the NoteCertificates and such other documentation as may be required.  This subscription is subject to acceptanceby the Corporation (as described below). Unless other arrangements have been made with the Agent, certificatesendorsed by the Corporation representing Convertible Notes will be availablefor delivery to the Subscriber in Toronto, Ontario at the Closing Time againstpayment of the aggregate purchase price for the Convertible Notes.  The Agent will deliver such certificates tothe address set out for delivery on page **2** of this subscription agreementpromptly after the closing of its Offering.

 

9.             **Acceptance or Rejection**.  The Corporation will have the right toaccept or reject (in whole or in part) this subscription at any time at orprior to the Closing Time, and the right is reserved to the Corporation toallot to any

 

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subscriberless than the principal amount of Convertible Notes subscribed for.  The Subscriber acknowledges and agrees thatthe acceptance of this subscription agreement will be conditional upon the saleof the Convertible Notes to the Subscriber being exempt from any prospectus andregistration requirements of Applicable Securities Laws.  The Corporation will be deemed to haveaccepted this subscription agreement upon the delivery at closing of the NoteCertificate referred to in Section 8 above in accordance with the provisionshereof.

 

10.           **Information and Documents**.  The Subscriber acknowledges that pursuant toApplicable Securities Laws, the Subscriber may be required to file a reportwith a Securities Commission in the required form within 10 days of eachdisposition of all or any of the Convertible Notes purchased hereunder or anyof the Underlying Securities issued upon the exercise of the conversion rightsunder such Convertible Notes and, if so required, the Subscriber, undertakes tofile the required report.

 

11.           **Resale Restrictions**.  The Subscriber understands and acknowledgesthat the Convertible Notes and in certain circumstances the UnderlyingSecurities and Warrant Shares will be subject to certain resale restrictionsunder Applicable Securities Laws and the Subscriber agrees to comply with suchrestrictions.  Subscribers are advisedto consult their own legal advisors in this regard. The Subscriber alsoacknowledges that it has been advised to consult its own legal advisors withrespect to applicable resale restrictions and that it is solely responsible forcomplying with such restrictions (and neither the Corporation nor the Agent isin any manner responsible for ensuring compliance by the Subscriber with suchrestrictions).

 

12.           **Legend**.  The Subscriber acknowledges that thefollowing legend is to be placed on the Note Certificate (and the certificatesevidencing Underlying Securities and Warrants Shares, if issued during the fourmonth period referred to in such legend) being acquired:

 

“UNLESSPERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOTTRADE THE SECURITY BEFORE                    ”(four months and one day from the Closing Date.)

 

13.           **No Revocation**.  The Subscriber agrees that this offer ismade for valuable consideration and may not be withdrawn, cancelled, terminatedor revoked by the Subscriber.

 

14.           **Indemnity**.  The Subscriber agrees to indemnify and holdharmless the Corporation and the Agent and their respective directors,officers, employees, agents, advisers and shareholders from and against any andall loss, liability, claim, damage and expense whatsoever (including, any andall fees, costs and expenses whatsoever reasonably incurred in investigating,preparing or defending against any claim, lawsuit, administrative proceeding orinvestigation whether commenced or threatened) arising out of or based upon anyrepresentation, warranty or covenant of the Subscriber contained herein or inany document furnished by the Subscriber to the Corporation or the Agent inconnection herewith being untrue in any material respect or any breach orfailure by the Subscriber to comply with any covenant or agreement made by theSubscriber herein or in any document furnished by the Subscriber to theCorporation or the Agents in connection herewith.

 

15.           **Modification**.  Neither this subscription agreement nor anyprovision hereof shall be modified, changed, discharged or terminated except byan instrument in writing signed by the party against whom any waiver, change,discharge or termination is sought.

 

16.           **Compensation, Expenses and ReimbursementEntitlements of Agent**.  TheSubscriber understands that, in connection with the Offering, the Agent willreceive from the Corporation (i) aggregate commissions equal to 8% of the grossproceeds of the Offering; and (ii) subject to the terms of the AgencyAgreement, reimbursement for the Agent’s reasonable out-of-pocket expenses andthe reasonable fees and disbursements of its legal counsel incurred inconnection with the Offering.

 

The Subscriberfurther understands that as additional compensation for its services inconnection with the Offering, the Agent will receive an option, exercisableuntil the second anniversary of the Closing Date, to purchase that number ofUnits as is equal to 10% of the Units issuable upon full conversion of theConvertible Notes sold under the Offering, at an exercise price equal to theConversion Price.

 

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17.           **Miscellaneous**.

 

(a)                 Theagreement resulting from the acceptance of this subscription agreement by theCorporation contains the whole agreement between the parties hereto in respectof the subject matter hereof and there are no warranties, representations,terms, conditions or collateral agreements, express, implied or statutory,other than as expressly set forth herein and in any amendments hereto.

 

(b)                Allrepresentations, warranties, agreements and covenants made or deemed to be madeby the Subscriber in this subscription agreement will survive the execution anddelivery, and acceptance, of this subscription agreement and the closing of theOffering.

 

(c)                 Timeshall be of the essence of this subscription agreement.

 

(d)                Thissubscription agreement and the rights and obligations of the parties hereunderwill be governed by and construed according to the laws of the Province ofOntario and the laws of Canada applicable therein.

 

(e)                 Thissubscription agreement may be executed in any number of counterparts, each ofwhich when delivered, either in original or facsimile form, shall be deemed tobe an original and all of which together shall constitute one and the samedocument.

 

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**SCHEDULE “B”**

** **

**This is Schedule “B” to the subscriptionagreement relating to the purchase of Convertible Notes of ADB SystemsInternational Ltd. (the “**Corporation**”). Capitalized terms used butnot defined in this schedule are intended to have the meanings ascribedthereto, as applicable, on the first page of this subscription agreement andsections 1 and 2 of Schedule “A” to this subscription agreement**

 

**ADB SYSTEMS INTERNATIONAL LTD.**

** **

**Summary of Proposed Terms**

 

**Offering of Convertible Notes**

 

**by way of Private Placement**

** **
| **Issuer:**            | ADB Systems  International Ltd.                                                                                                                                                                                                                 |
|------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                   |                                                                                                                                                                                                                                            |
| **Issue:**             | Up to $5,000,000  principal amount of Convertible Notes, to be issued by way of private  placement exemptions from prospectus and registration requirements, subject  to the receipt of any applicable regulatory and stock exchange approvals. |
|                   |                                                                                                                                                                                                                                            |
| **Issue Price:**       | The Convertible  Notes will be issued at par in integral multiples of $1,000.                                                                                                                                                                   |
|                   |                                                                                                                                                                                                                                            |
| **Convertible Notes:** | The  Convertible Notes will have the following material terms:                                                                                                                                                                                  |
|                   |                                                                                                                                                                                                                                            |
|                   | (a)                                                                                                                                                                                                                                             | The Convertible Notes will bear interest at an  annual rate of 7% of the principal amount of the Convertible Notes  outstanding from time to time, payable on the earlier of the conversion of  the Convertible Notes or the Maturity Date (as defined below).  Interest will continue to accrue until  paid; |
|                   |                                                                                                                                                                                                                                            |   |
|                   | (b)                                                                                                                                                                                                                                             | The Convertible Notes will mature and be payable on  the date that is the third anniversary of the Closing Date (the “**Maturity Date**”) |
|                   |                                                                                                                                                                                                                                            |   |
|                   | (c)                                                                                                                                                                                                                                             | At any time up to and including the Maturity Date,  all or any portion of the principal amount of the Convertible Notes  outstanding from time to time will be convertible, at the option of the  holder, provided that the holder complies with the notice provisions  therefor, into units of securities of the Corporation (“**Units**”) at a conversion price  of $0.31 per Unit (the “**Conversion Price**”), subject to adjustments for stock splits, consolidations, other  capital reorganizations, extraordinary dividends or distributions; |
|                   |                                                                                                                                                                                                                                            |   |
|                   | (d)                                                                                                                                                                                                                                             | Each Unit will consist of one common share in the  capital of ADB (a “**Common Share**”) and one-half of one Common Share purchase warrant (a “**Warrant**”).  Each whole Warrant will entitle the holder  to acquire one Common Share at an exercise price of $0.50 per share, and will  be exercisable at any time prior to the fourth anniversary of the Closing  Date; and |
|                   |                                                                                                                                                                                                                                            |   |
|                   | (e)                                                                                                                                                                                                                                             | In the event that at any time from and after the  first anniversary of the Closing Date the volume weighted average trading  price of the Common Shares through its principal trading market for a 20  consecutive trading day period is $0.70 or more, all then outstanding  Convertible Notes, including any accrued interest thereon, will be  automatically converted into Units at the Conversion Price. |
|                   |                                                                                                                                                                                                                                            |
| **Use of Proceeds:**   | For working  capital and general corporate purposes.                                                                                                                                                                                            |

 

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| **Minimum Subscription:** | $10,000 or  such other amount determined at the sole discretion of the Agent. The  Offering will be marketed in such provinces of Canada as the Agent may  designate and in which Multilateral Instrument 45-102 – Resale of Securities  has been adopted.  Convertible Notes  may also be offered to U.S. buyers under available exemptions from federal  and state prospectus requirements in the U.S. and may also be offered in  offshore jurisdictions.                                                                                               |
|---------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Lock-Up:**              | Until 180  days following the Closing Date, and except as provided herein, neither the  Corporation nor any of its officers or directors may offer or announce the  offering of, or make or announce any agreement to issue, sell or exchange  Common Shares, warrants or securities convertible into Common Shares, except  the grant of stock options or the issuance of Common Shares pursuant to  exercise of any purchase warrants existing on the date hereof, without the  prior written consent of the Agent, such consent not to be unreasonably  withheld. |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Security:**             | The  Convertible Notes will provide general security over the Corporation’s  assets.  Such security will be  subordinate liabilities of the Corporation to current secured creditors.                                                                                                                                                                                                                                                                                                                                                                      |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Hold Period:**          | The  Corporation will be a “reporting issuer” on the Closing Date, such that it is  expected that the Convertible Notes, the securities comprising the Units (and  the Common Shares issuable upon exercise of the Warrants) will have a  restricted period of four months from the Closing Date                                                                                                                                                                                                                                                           |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Listing:**              | The Common  Share component of the Units (and the Common Shares issuable upon exercise of  the Warrants) will be listed on the TSX.                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Commission:**           | 8% of the  gross proceeds of the Offering.  In  addition, the Agent will receive an option, exercisable until the second  anniversary of the Closing Date, to purchase that number of Units as is equal  to 10% of the Units issuable upon full conversion of the Convertible Notes  sold under the Offering, at an exercise price equal to the Conversion Price.                                                                                                                                                                                               |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Agent:**                | First  Associates Investments Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Closing Date:**         | On or about  June 8, 2004.  The Offering may be  completed through one or more closings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

 

B-2

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**SCHEDULE “C”**

** **

**SUBSCRIBER’S REPRESENTATIONSAND WARRANTIES**

 

**This is Schedule “C” to the subscriptionagreement relating to the purchase of Convertible Notes of ADB SystemsInternational Ltd. (the “**Corporation**”). Capitalized terms used butnot defined in this schedule are intended to have the meanings ascribedthereto, as applicable, on the first page of this subscription agreement andsections 1 and 2 of Schedule “A” to this subscription agreement.**

 

**By executing this subscriptionagreement, the Subscriber represents and warrants to the Corporation and theAgent, which representations and warranties are true as of the date of thissubscription agreement and will be true as of the Closing Date, that:**

 

**1.****                                      **Representations and Warranties

 

(a)                                  **Authorizationand Effectiveness**.  If the Subscriber is a corporation, the Subscriber is a valid andsubsisting corporation, has the necessary corporate capacity and authority toexecute and deliver this subscription agreement and to observe and perform itscovenants and obligations hereunder and has taken all necessary corporateaction in respect thereof.  If theSubscriber is a partnership, syndicate or other form of unincorporatedorganization, the Subscriber has the necessary legal capacity and authority toexecute and deliver this subscription agreement and to observe and perform itscovenants and obligations hereunder and has obtained all necessary approvals inrespect thereof.  If the Subscriber is anatural person, he or she has obtained the age of majority and is legallycompetent to execute this subscription agreement and to take all actionsrequired pursuant thereto.

 

Whether theSubscriber is a natural person or a corporation, partnership or other entity,upon acceptance by the Corporation, this subscription agreement will constitutea legal, valid and binding contract of the Subscriber, and any beneficialpurchaser for whom it is purchasing, enforceable against the Subscriber and anysuch beneficial purchaser in accordance with its terms.

 

(b)                                 **Residence**.  The Subscriber is aresident of, or otherwise subject to, the jurisdiction referred to under “Nameand Address of Subscriber” on the first page of this subscription agreement,which address is the residence or place of business of the Subscriber notcreated or used solely for the purpose of acquiring Convertible Notes, and:

 

(i)                                     isnot (and is not purchasing Convertible Notes for the account or benefit of) a U.S.Person;

 

(ii)                                  wasnot offered the Convertible Notes in the United States; and

 

(iii)                               did notexecute or deliver this agreement in the United States.

 

(c)                                  **InvestmentIntent**. The Subscriber is acquiring Convertible Notes to be held for investmentonly and not with a view to resale or distribution.

 

(d)                                 **ProspectusExemptions.** The Subscriber acknowledges and agrees that the sale and delivery of theConvertible Notes to the Subscriber is conditional upon such sale being exemptfrom the requirements under Applicable Securities Laws requiring the filing ofa prospectus in connection with the distribution of the Convertible Notes.

 

(e)                                  **OfferingDocuments.** The Subscriber has not received, nor does the Subscriber need toreceive, any document purporting to describe the business and affairs of theCorporation that has been prepared for delivery to and review by prospectiveinvestors so as to assist those investors to make

 

----

 

aninvestment decision in respect of securities being sold in a distribution ofsecurities of the Corporation.

 

(f)                                    **NoSolicitation or Advertising.**  The Subscriber acknowledges that it has notpurchased the Convertible Notes as a result of any general solicitation orgeneral advertising, including advertisements, articles, notices or other communicationspublished in any newspaper, magazine or similar media or broadcast over radioor television, or any seminar or meeting whose attendees have been invited byany general solicitation or general advertising.

 

(g)                                 **NoUndisclosed Information.**  The Convertible Notes are not beingpurchased by the Subscriber as a result of any material information concerningthe Corporation that has not been publicly disclosed and the Subscriber’sdecision to tender this offer and acquire Convertible Notes has not been madeas a result of any verbal or written representation as to fact or otherwisemade by or on behalf of the Corporation, or any other person and is basedentirely upon the currently available public information concerning theCorporation.

 

(h)                                 **InvestmentSuitability**.  The Subscriber has such knowledge and experience in financial andbusiness affairs as to be capable of evaluating the merits and risks of theinvestment hereunder in Convertible Notes (and the Underlying Securities inrespect thereof) and is able to bear the economic risk of loss of suchinvestment.  The Subscriber acknowledgesand agrees that the Subscriber is responsible for obtaining such legal adviceas the Subscriber considers appropriate in connection with the execution,delivery and performance by the Subscriber of this agreement and thetransactions contemplated hereunder.

 

(i)                                     **SubscriptionAgreement**. The Subscriber has read and understands the contents of this agreementand agrees to be legally bound hereby.

 

(j)                                     **NoConversion or Transfer of Convertible Notes, Underlying Securities or WarrantShares in U.S.**  The Subscriber acknowledges that the Convertible Notes,Underlying Securities and Warrant Shares may not be offered, sold or otherwisetransferred to persons in the United States or to U.S. Persons and may not beexercised in the United States or by or on behalf of a U.S. Person and theSubscriber understands that certificates representing the Convertible Notes,Underlying Securities and Warrant Shares issued to it will so indicate.

 

(k)                                  **OntarioSubscriber****.**  If the Subscriber is aresident of Ontario, the Subscriber or its disclosed principal is an“accredited investor” within the meaning of Ontario Securities Commission Rule45-501 – Exempt Distributions and falls within one or more of thesub-paragraphs of the definition of “Accredited Investor” set out in Appendix Ito Schedule “E” hereto or is purchasing pursuant to paragraph (b) of ScheduleE, and the Subscriber has concurrently executed and delivered to theCorporation a certificate in the form attached as Appendix I to Schedule “E”(the Subscriber having checked the applicable subparagraph(s)).

 

(l)                                     **Albertaor British Columbia Subscriber****.**  If the Subscriber is a resident of Albertaor British Columbia, the Subscriber or the disclosed principal for which it isacting, as the case may be, is an “accredited investor” as defined inMultilateral Instrument 45-103, by virtue of the fact that the Subscriber orsuch disclosed principal, as the case may be, falls within one or more of thesubparagraphs of the definition of “accredited investor” set out in Schedule“F” hereto (the Subscriber having checked the applicable subparagraph(s)) orthe Subscriber otherwise falls within one or more of the subparagraphs of the“Family, Friends and Business Associates Certificate” attached as Appendix I toSchedule “F” (the Subscriber having checked the applicable subparagraph(s)).

 

2.                                       **RelianceUpon Representations, Warranties and Covenants**. The Subscriber acknowledges that the representations and warrantiescontained herein are made by the Subscriber with the intention that they may berelied upon by the Corporation in determining the Subscriber’s eligibility topurchase Convertible Notes under Applicable Securities Laws.  The Subscriber agrees that by acceptingdelivery of the Convertible

 

C-2

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Noteson the Closing Date, the Subscriber will be representing and warranting thatthe foregoing representations and warranties are true and correct as at theClosing Time with the same force and effect as if they had been made by theSubscriber at the Closing Time and that they will survive the purchase by theSubscriber of Convertible Notes and will continue in full force and effectnotwithstanding any subsequent disposition by the Subscriber of suchConvertible Notes.

 

3.                                       **PersonalInformation****.**  The Subscriber acknowledgesand consents to the fact that the Corporation and the Agent are collecting theSubscriber’s personal information for the purpose of fulfilling thissubscription agreement.  The subscriberfurther acknowledges and consents to the fact that the Corporation may berequired by Applicable Securities Laws to provide the applicable regulatoryauthorities with any personal information provided by the Subscriber inaccordance with and for the purposes required under Applicable Securities Laws.

 

C-3

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**SCHEDULE “D”**

** **

**THE TORONTO STOCK EXCHANGE**

 

**PRIVATE PLACEMENT QUESTIONNAIRE ANDUNDERTAKING**

** **

**QUESTIONNAIRE**

 

**1.****                                      **DESCRIPTION OF TRANSACTION

 

(a)                                  Nameof Issuer of the Securities:

 

ADB SystemsInternational Ltd. (the “**Issuer**”)

 

(b)                                 Numberand Class of Securities to be Purchased:

 

$                         principal amount of convertible Notes of the Issuer (“**Notes**”).  The Notes are convertible, at the option ofthe holder, into units of securities of the Issuer, (“**Units**”)at conversion price of $0.31 (the “**Conversion Price**”). Each Unitwill be comprised of one common share in the capital of the Corporation (a “**Common Share**”)and one-half of one Common Share purchase warrant (a “**Warrant**”).  Each whole Warrant will entitle the holderto acquire one Common Share at an exercise price of $0.50 per share, and willbe exercisable at any time prior to the fourth anniversary of the ClosingDate.  In the event that at any timefrom and after the first anniversary of the Closing Date the volume weightedaverage trading price of the Common Shares through its principal trading marketfor a 20 consecutive trading day period is $0.70 or more, all then outstandingConvertible Notes, including any accrued interest thereon, will beautomatically converted into Units at the Conversion Price.

 

(c)                                  PurchasePrice: The Notes are being issued at par.

 

**2.****                                      **DETAILS OF PURCHASER

 

(a)                                  Nameof Purchaser:

 

(b)                                 Address:

 

(c)                                  Namesand addresses of persons having a greater than 10% beneficial interest in thepurchaser:

 

 

 

**3.****                                      **RELATIONSHIP TO ISSUER

 

(a)                                  Isthe purchaser (or any person named in response to 2(c) above) an insider of theIssuer for the purposes of the **SecuritiesAct** (Ontario) (before giving effect to this private placement)? If so,state the capacity in which the purchaser (or person named in response to 2(c))qualifies as an insider.

 

 

----

 

(b)                                 Ifthe answer to (a) is “no”, are the purchaser and the Issuer controlled by thesame person or company? If so give details

** **

** **

** **

**4.****                                      **DEALINGS OF PURCHASER IN SECURITIES OF THE ISSUER

 

Give detailsof all trading by the purchaser, as principal, in the securities of the Issuer(other than debt securities which are not convertible into equity securities),directly or indirectly, within the 60 days preceding the date hereof.

 

 

 

 

D-2

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**UNDERTAKING**

 

**TO:****                                    THE TORONTO STOCK EXCHANGE**

 

Theundersigned has subscribed for and agreed to purchase, as principal, thesecurities described in Item 1 of this Private Placement Questionnaire andUndertaking.

 

Theundersigned undertakes not to sell or otherwise dispose of any of the saidsecurities so purchased or any securities derived therefrom for a period offour months from the date of the closing of the transaction herein or for suchperiod as is prescribed by applicable securities legislation, whichever islonger, without the prior consent of the Toronto Stock Exchange and any otherregulatory body having jurisdiction.

 

DATED at                                this                day of                                , 2004.

 
|   |                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------|
|   | (Name of  Purchaser – please print)                                                                                  |
|   |                                                                                                                      |
|   |                                                                                                                      |
|   | (Authorized  Signature)                                                                                                   |
|   |                                                                                                                      |
|   |                                                                                                                      |
|   | (Official Capacity  – please print)                                                                                  |
|   |                                                                                                                      |
|   |                                                                                                                      |
|   | (please  print here name of individual whose signature appears above, if different  from name of purchaser printed above) |

 

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**SCHEDULE “E”**

** **

**CERTIFICATES**

 

**ONTARIO RESIDENTS ONLY**

 

**Complete both of the two following certificates:**

 

**ONTARIO RESIDENT EXEMPTION CERTIFICATE**

** **

The Subscriber(on its own behalf and, if applicable, on behalf of each person on whose behalfthe Subscriber is acting hereunder) represents, warrants and covenants to theCorporation and acknowledges that the Corporation, and its counsel, are relyingthereon that: **[Initialor place a checkmark in the box to the left of each applicable item; chooseonly one of item (a) or (b) below and choose only one sub item in (a) or (b)]**:

 
| o      | (a)    | the  Subscriber is resident in Ontario and falls within one or more of the  categories described in the sub-paragraphs of the definition of “accredited  investor” as such term is defined in Ontario Securities Commission Rule  45-501 (“**Rule 45-501**”)  and has completed the Ontario Accredited Investor Certificate attached hereto  as Appendix I, and: |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | o      | (i)                                                                                                                                                                                                                                                                                                                                                                                       | if  purchasing the securities as principal, the Subscriber is an “accredited  investor” (as such term is defined in Rule 45-501), is purchasing the  securities as principal for its own account and not for the benefit of any  other person, it is purchasing for investment only and not with a view to  resale or distribution and no other person, corporation, firm or other  organization has a beneficial interest in the said securities being purchased;  or |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | o      | (ii)                                                                                                                                                                                                                                                                                                                                                                                      | if  purchasing the securities as agent for a principal disclosed on the cover  page of this subscription agreement, the Subscriber is an agent or trustee of  such disclosed principal and such disclosed principal for whom the Subscriber  is acting is an “accredited investor”, is purchasing the securities as  principal for its own account and not for the benefit of any other person,  and is purchasing for investment only and not with a view to resale or  distribution and no other person, corporation, firm or other organization has  a beneficial interest in the said securities being purchased; **OR** |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |   |
| o      | (b)    | the  Subscriber is resident in Ontario and is purchasing the securities for a  principal or principals which is or are undisclosed or identified by account  number only and the Subscriber is:                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | o      | (i)                                                                                                                                                                                                                                                                                                                                                                                       | a portfolio  adviser (as such term is defined in Rule 45-501) and is purchasing the  securities for one or more managed accounts (as defined in Rule 45-501); or |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                      |   |
|   | o      | (ii)                                                                                                                                                                                                                                                                                                                                                                                      | a trust  corporation registered under the **Loan  and Trust Corporations Act**(Ontario) or under the **Trust and Loan Companies Act**  (Canada) or under comparable legislation in any jurisdiction and is  purchasing the securities for an account that is fully managed by such trust  company. |
|        |        |                                                                                                                                                                                                                                                                                                                                                                                           |  |  |

 

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**APPENDIX IONTARIO ACCREDITED INVESTOR CERTIFICATE**

** **

The Subscriberhereby represents, warrants and certifies to Corporation that the Subscriber(or its disclosed principal) is an “accredited investor” as defined in Rule45-501 by virtue of being: **[check appropriate boxes]**

 

AccreditedInvestors

 
| o      | (a)    | a bank  listed in Schedule I or II of the **Bank  Act**(Canada), or an authorized foreign bank listed in Schedule III  of the **Bank Act** (Canada);                                                                                                                                                                               |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (b)    | the Business  Development Bank incorporated under the **Business Development Bank Act (Canada);**                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (c)    | a loan  corporation or trust corporation registered under the **Loan and Trust Corporations Act**  (Ontario) or under the **Trust and  Loan Corporations Act** (Canada), or under comparable legislation in  any other jurisdiction;                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (d)    | a  co-operative credit society, credit union central, federation of caisses  populaires, credit union or league, or regional caisse populaire, or an  association under the **Cooperative  Credit Associations Act**(Canada), in each case, located in Canada;                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (e)    | a company  licensed to do business as an insurance company in any jurisdiction of  Canada;                                                                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (f)    | a subsidiary  of any company referred to in paragraph (a), (b), (c), (d) or (e), where the  company owns all of the voting shares of the subsidiary;                                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (g)    | a person or  company registered under the **Securities  Act** (Ontario) or securities legislation in another jurisdiction of  Canada as an adviser or dealer, other than a limited market dealer;                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (h)    | the  government of Canada or of any jurisdiction, or any crown corporation,  instrumentality or agency of a Canadian federal, provincial or territorial  government;                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (i)    | any Canadian  municipality or any Canadian provincial or territorial capital city;                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (j)    | any  national, federal, state, provincial, territorial or municipal government of  or in any foreign jurisdiction, or any instrumentality or agency thereof;                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (k)    | a pension  fund that is regulated by either the Office of the Superintendent of  Financial Institutions (Canada) or a provincial pension commission or similar  regulatory authority;                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (l)    | a registered  charity under the **Income Tax Act**  (Canada);                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (m)    | an  individual who beneficially owns, or who together with a spouse beneficially  own, financial assets having an aggregate realizable value that, before taxes  but net of any related liabilities, exceeds $1,000,000;                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (n)    | an  individual whose net income before taxes exceeded $200,000 in each of the two  most recent years or whose net income before taxes combined with that of a  spouse exceeded $300,000 in each of those years and who, in either case, has  a reasonable expectation of exceeding the same net income level in the  current year; |
|   |   |                                                                                                                                                                                                                                                                                                                               |
| o      | (o)    | an  individual who has been granted registration under the **Securities Act** (Ontario) or  securities legislation in another jurisdiction of Canada as a representative  of a person or company referred to in paragraph (g), whether or not the  individual’s registration is still in effect;                              |

 

E-2

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| o      | (p)    | a promoter  of the Corporation or an affiliated entity of a promoter of the Corporation;                                                                                                                                                                                                                                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (q)    | a spouse,  parent, brother, sister, grandparent or child of an officer, director or  promoter of the Corporation;                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (r)    | a person or company  that, in relation to the Corporation, is an affiliated entity or a person or  company referred to in clause (c) of the definition of distribution in  subsection 1(1) of the **Securities  Act** (Ontario);                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (s)    | a company,  limited partnership, limited liability partnership, trust or estate, other  than a mutual fund or non-redeemable investment fund, that had net assets of  at least $5,000,000 as reflected in its most recently prepared financial  statements;                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (t)    | a person or  company that is recognized by the Ontario Securities Commission as an  accredited investor, pursuant to a discretionary order of the Ontario  Securities Commission;                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (u)    | a mutual  fund or non-redeemable investment fund that, in Ontario, distributes its  securities only to persons or companies that are accredited investors;                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (v)    | a mutual  fund or non-redeemable investment fund that, in Ontario, distributes its  securities under a prospectus for which a receipt has been granted by the  Director as defined in the **Securities  Act** (Ontario) or, if it has ceased distribution of its securities,  has previously distributed securities in this manner; |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (w)    | a fully  managed account if it is acquiring a security that is not a security of a  mutual fund or non-redeemable investment fund;                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (x)    | an account  that is fully managed by a trust corporation registered under the **Loan and Trust Corporations Act**  (Ontario) or under the **Loan and  Trust Companies Act** (Canada) or under comparable legislation in any  other jurisdiction;                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (y)    | an entity  organized outside of Canada that is analogous to any of the entities referred  to in paragraphs (a) through (g) and paragraph (k) in form and function; or                                                                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                |
| o      | (z)    | a person or  company in respect of which all of the owners of interests, direct or indirect,  legal or beneficial, are persons or companies that are accredited investors.                                                                                                                                                          |

 

For thepurposes hereof, the following terms shall have the following meanings:

 

“**company**”means any corporation, incorporated association, incorporated syndicate orother incorporated organization.

 

“**control person**”means any person, company or combination of persons or companies holding asufficient number of any securities of the Corporation to affect materially thecontrol of the Corporation, but any holding of any persons, company orcombination of persons or companies holding more than 20 per cent of theoutstanding voting securities of the Corporation, in the absence of evidence tothe contrary, shall be deemed to affect materially the control of theCorporation.

 

“**director**”where used in relation to a person, includes a person acting in a capacitysimilar to that of a director of a company.

 

“**entity**”means a company, syndicate, partnership, trust or unincorporated organization.

 

“**financial assets**”means cash, securities, or any contract of insurance or deposit or evidencethereof that is not a security for the purposes of the **Securities Act** (Ontario).

 

E-3

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“**fully managedaccount**” means an investment portfolio account of a clientestablished in writing with a portfolio adviser who makes investment decisionsfor the account and has full discretion to trade in securities of the accountwithout requiring the client’s express consent to a transaction.

 

“**individual**”means a natural person, but does not include a partnership, unincorporatedassociation, unincorporated organization, trust or a natural person in his orher capacity as trustee, executor, administrator or other legal personalrepresentative.

 

“**mutual fund**”includes an issuer whose primary purpose is to invest money provided by itssecurity holders and whose securities entitle the holder to receive on demand,or within a specified period after demand, an amount computed by reference tothe value of a proportionate interest in the whole or in a part of the netassets, including a separate fund or trust account, of the issuer of thesecurities.

 

“**non-redeemableinvestment fund**” means an issuer

 

(a)                                  whoseprimary purpose is to invest money provided by its securityholders;

 

(b)                                 thatdoes not invest for the purpose of exercising effective control, seeking toexercise effective control, or being actively involved in the management of theissuers in which it invests, other than other mutual funds or non-redeemableinvestment funds; and

 

(c)                                  isnot a mutual fund.

 

“**officer**”means the chair, any vice-chair of the board of directors, the president, anyvice-president, the secretary, the assistant secretary, the treasurer, theassistant treasurer, and the general manager of a company, and any other persondesignated an officer or a company by by-law or similar authority, or anyindividual acting in a similar capacity on behalf of the Corporation.

 

“**person**”means an individual, partnership, unincorporated association, unincorporated syndicate,unincorporated organization, trust, trustee, executor, administrator, or otherlegal representative.

 

“**portfolio adviser**”means (a) a portfolio manager; or (b) a broker or investment dealer exemptedfrom registration as an adviser under subsection 148(1) of the Regulation tothe Securities Act (Ontario) if that broker or investment dealer is not exemptfrom the by-laws or regulations of the Toronto Stock Exchange or the InvestmentDealers’ Association of Canada referred to in that subsection.

 

“**promoter**”means (a) a person or company who, acting alone or in conjunction with one ormore other persons, companies or a combination thereof, directly or indirectly,has taken the initiative in founding, organizing or substantially reorganizingthe business of the Corporation, or (b) a person or company who, in connectionwith the founding, organizing or substantial reorganizing of the business ofthe Corporation, directly or indirectly, received in consideration of servicesor property, or both services and property, 10 per cent or more of any class ofsecurities of the Corporation or 10 percent or more of the proceeds from thesale of any class of securities of a particular issue, but a person or companywho receives such securities or proceeds either solely as underwritingcommissions or solely in consideration of property shall not be deemed apromoter within the meaning of this definition if such person or company doesnot otherwise take part in founding, organizing, or substantially reorganizingthe business.

 

“**related liabilities**”means liabilities incurred or assumed for the purpose of financing theacquisition or ownership of financial assets and liabilities that are securedby financial assets.

 

“**spouse**”,in relation to an individual, means another individual to whom that individualis married, or another individual of the opposite sex or the same sex with whomthat individual is living in a conjugal relationship outside marriage.

 

E-4

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For thepurposes of the foregoing:

 

(a)                                  a person or company is considered to be an affiliated entity ofanother person or company if one is a subsidiary entity of the other, or ifboth are subsidiary entities of the same person or company, or if each of themis controlled by the same person or company.

 

(b)                                 a person or company is considered to be controlled by a person orcompany if

 

(i)                                     in the case of a person or company,

 

(A)                              voting securities of the first mentioned person or company carryingmore than 50 percent of the votes for the election of directors are held,otherwise than by way of security only, by or for the benefit of the otherperson or company, and

 

(B)                                the votes carried by the securities are entitled, if exercised, toelect a majority of the directors of the first-mentioned person or company;

 

(ii)                                  in the case of a partnership that does not have directors, otherthan a limited partnership, the second-mentioned person or company holds morethan 50 percent of the interests in the partnership; or

 

(iii)                               in the case of a limited partnership, the general partner is thesecond-mentioned person or company; and

 

(c)                                  a person or company is considered to be a subsidiary entity ofanother person or company if

 

(i)                                     it is controlled by,

 

(A)                              that other, or

 

(B)                                that other and one or more persons or companies each of which iscontrolled by that other, or

 

(C)                                two or more persons or companies, each of which is controlled bythat other; or

 

(d)                                 it is a subsidiary entity of a person or company that is the other’ssubsidiary entity.

 

The foregoingrepresentations contained in this certificate are true and accurate as of thedate hereof and will be true and accurate as of the Closing Date. If any suchrepresentations shall not be true and accurate prior to the Closing Date, the Subscribershall give immediate notice to the Corporation.

 

E-5

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**EXECUTED** by the Subscriber at                                      this              day of                               , 2004.

 
| **If a corporation, partnership or other  entity:** |   | **If an individual:**           |
|-----------------------------------------------------|--------|---------------------------------|
|                                                |   |                            |
|                                                |   |                            |
| **(Print Name of Subscriber)**                      |   | **(Print Name)**                |
|                                                |   |                            |
|                                                |   |                            |
| **(Signature of Authorized Signatory)**             |   | **(Signature)**                 |
|                                                |   |                            |
|                                                |   |                            |
| **(Name and Position of Authorized Signatory)**     |   | **(Jurisdiction of Residence)** |
|                                                |   |                            |
|                                                |   |                            |
| **(Jurisdiction of Residence)**                     |   | **(Print Name of Witness)**     |
|                                                |   |                            |
|                                                |   |                            |
|                                                |   | **(Signature of Witness)**      |

 

E-6

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**SCHEDULE “F”**

** **

**CERTIFICATE**

 

**ALBERTA AND BRITISH COLUMBIARESIDENTS ONLY**

 

**Complete one of the two following certificates(as applicable):**

 

**ACCREDITED INVESTOR CERTIFICATE**

** **

If theSubscriber is a resident of, or the purchase and sale of securities to theSubscriber is otherwise subject to the securities legislation of, Alberta orBritish Columbia, the Subscriber hereby represents, warrants and certifies tothe Corporation that the Subscriber (and, if applicable, any disclosedprincipal for whom it is acting) is an “accredited investor” as defined inSection 1.1 of Multilateral Instrument 45-103 (Capital Raising Exemptions), byvirtue of being:

 

**[Check appropriate item]**

** **
| o      | (a)    | a Canadian  financial institution, or an authorized foreign bank listed in Schedule III  of the **Bank Act** (Canada);                                                                                                                                                 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (b)    | the Business  Development Bank of Canada incorporated under the **Business Development Bank of Canada Act** (Canada);                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (c)    | an  association under the **Cooperative  Credit Associations Act** (Canada) located in Canada or a central  cooperative credit society for which an order has been made under subsection  473(1) of that Act;                                                          |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (d)    | a subsidiary  of any person or company referred to in paragraphs (a) to (c), if the person  or company owns all of the voting securities of the subsidiary, except the  voting securities required by law to be owned by directors of that  subsidiary;                |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (e)    | a person or  company registered under the securities legislation of a jurisdiction of  Canada, as an adviser or dealer, other than a limited market dealer  registered under the **Securities Act**  (Ontario) or the **Securities Act**  (Newfoundland and Labrador); |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (f)    | an  individual registered or formerly registered under the securities legislation  of a jurisdiction of Canada, as a representative of a person or company  referred to in paragraph (e);                                                                              |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (g)    | the  government of Canada or a jurisdiction of Canada, or any crown corporation,  agency or wholly owned entity of the government of Canada or a jurisdiction  of Canada;                                                                                              |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (h)    | a  municipality, public board or commission in Canada;                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (i)    | any  national, federal, state, provincial, territorial or municipal government of  or in any foreign jurisdiction, or any agency of that government;                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (j)    | a pension  fund that is regulated by either the Office of the Superintendent of  Financial Institutions (Canada) or a pension commission or similar regulatory  authority of a jurisdiction of Canada;                                                                 |
|   |   |                                                                                                                                                                                                                                                                   |
| o      | (k)    | an  individual who, either alone or with a spouse, beneficially owns, directly or  indirectly, financial assets having an aggregate realizable value that before  taxes, but net of any related liabilities, exceeds $1,000,000;                                       |

 

----

 
| o      | (l)    | an  individual whose net income before taxes exceeded $200,000 in each of the two  most recent years or whose net income before taxes combined with that of a  spouse exceeded $300,000 in each of the two most recent years and who, in  either case, reasonably expects to exceed that net income level in the  current year;                                                                                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (m)    | a person or  company, other than a mutual fund or non-redeemable investment fund, that,  either alone or with a spouse, has net assets of at least $5,000,000, and  unless the person or company is an individual, that amount is shown on its  most recently prepared financial statements;                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (n)    | a mutual  fund or non-redeemable investment fund that, in the local jurisdiction,  distributes its securities only to persons or companies that are accredited  investors;                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (o)    | a mutual  fund or non-redeemable investment fund that, in the local jurisdiction, is  distributing or has distributed its securities under one or more prospectuses  for which the regulator has issued receipts;                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (p)    | a trust  company or trust corporation registered or authorized to carry on business  under the **Trust and Loan Companies  Act**(Canada) or under comparable legislation in a jurisdiction of  Canada or a foreign jurisdiction, trading as a trustee or agent on behalf of  a fully managed account;                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (q)    | a person or  company trading as agent on behalf of a fully managed account if that person  or company is registered or authorized to carry on business under the  securities legislation of a jurisdiction of Canada or a foreign jurisdiction  as a portfolio manager or under an equivalent category of adviser or is  exempt from registration as a portfolio manager or the equivalent category or  adviser; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (r)    | a registered  charity under the **Income Tax Act**  (Canada) that, in regard to the trade, has obtained advice from an  eligibility adviser or other adviser registered to provide advice on the  securities being traded;                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (s)    | an entity  organized in a foreign jurisdiction that is analogous to any of the entities referred  to in paragraphs (a) through (e) and paragraph (j) in form and function; or                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                             |
| o      | (t)    | a person or  company in respect of which all of the owners of interests, direct or  indirect, legal or beneficial, except the voting securities required by law  to be owned by directors, are persons or companies that are accredited  investors.                                                                                                                                                              |

 

As used inthis certificate, the following terms have the following meanings:

 

“**eligibilityadviser**” means an investment dealer equivalent category ofregistration, registered under the securities legislation of the jurisdictionof a purchaser and authorized to give advice with respect to the type ofsecurity being distributed;

 

“**financial assets**”means cash and securities;

 

“**fullymanaged account**”  means anaccount for which a person or company makes investment decisions if that personor company has full discretion to trade in securities for the account withoutrequiring the client’s express consent to a transaction;

 

“**non-redeemableinvestment fund**” means an issuer

 

(a) wherecontributions of security holders are pooled for investment,

 

(b) wheresecurity holders do not have day-to-day control over the management andinvestment decisions of the issuer, whether or not they have the right to beconsulted or to give directions, and

 

F-2

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(c) whosesecurities do not entitle the security holder to receive on demand, or within aspecified period after demand, an amount computed by reference to the value ofa proportionate interest in the whole or in part of the net assets of theissuer; and

 

“**related liabilities**”means: (a) liabilities incurred or assumed for the purpose of financing theacquisition or ownership of financial assets, or (b) liabilities that aresecured by financial assets.

 

F-3

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**APPENDIX I**

** **

**FAMILY, FRIENDS AND BUSINESS ASSOCIATESCERTIFICATE**

** **

If theSubscriber is a resident of, or the purchase and sale of securities to theSubscriber is otherwise subject to the securities legislation of Alberta orBritish Columbia, the Subscriber hereby represents, warrants and certifies tothe Corporation that the Subscriber (and, if applicable, any disclosedprincipal for whom it is acting) is either:

 

**[Check appropriate item]**

** **
| o      | (a)    | a director,  senior officer or control person of the Corporation, or of an affiliate of  the Corporation; or                                                                                |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                        |
| o      | (b)    | a spouse,  parent, grandparent, brother, sister or child of a director, senior officer  or control person of the Corporation, or of an affiliate of the Corporation;  or                    |
|   |   |                                                                                                                                                                                        |
| o      | (c)    | a parent,  grandparent, brother, sister or child of a director, senior officer or  control person of the Corporation, or of an affiliate of the Corporation; or                             |
|   |   |                                                                                                                                                                                        |
| o      | (d)    | a close  business associate of a director, senior officer or control person of the  Corporation, or of an affiliate of the Corporation; or                                                  |
|   |   |                                                                                                                                                                                        |
| o      | (e)    | a close  personal friend of a director, senior officer or control person of the  Corporation, or of an affiliate of the Corporation; or                                                     |
|   |   |                                                                                                                                                                                        |
| o      | (f)    | a founder of  the Corporation or a spouse, parent, grandparent, brother, sister, child,  close personal friend or close business associate of a founder of the  Corporation; or             |
|   |   |                                                                                                                                                                                        |
| o      | (g)    | a parent,  grandparent, brother, sister or child of the spouse of a founder of the Corporation;  or                                                                                         |
|   |   |                                                                                                                                                                                        |
| o      | (h)    | a person or  company of which a majority of the voting securities are beneficially owned by, as a majority of  the directors are, persons or companies described in sections (a) to (g); or |
|   |   |                                                                                                                                                                                        |
| o      | (i)    | a trust or  estate of which all of the beneficiaries or a majority of the trustees are  persons or companies described in paragraphs (a) to (g).                                            |

 

As used inthis certificate, the following terms have the following meanings:

 

A “**close personalfriend**” is an individual who has known a director, senior officer orcontrol person of the Corporation for a sufficient period of time to be in aposition to assess the capabilities and trustworthiness of the director, seniorofficer or control person.  An individualis not a close personal friend solely because the individual is a member of thesame organization, association or religious group.  An individual is not a close personal friend solely because theindividual is a client, customer or former client or customer (e.g. anindividual is not a close personal friend of a registrant or former registrantsimply because the individual is a client or former client of that registrantor former registrant).  The relationshipbetween the subscriber and the director, senior officer or control person ofthe Corporation must be direct (e.g. the exemption is not available for a closepersonal friend of a close personal friend of the director, senior officer orcontrol person of the Corporation); and

 

A “**close businessassociate**” is an individual who has had sufficient prior businessdealings with a director, senior officer or control person of the Corporationto be in a position to assess the capabilities and trustworthiness of thedirector, senior officer or control person. A casual business associate or a person introduced or solicited for thepurpose of purchasing securities is not a close business associate.  An individual is not a close businessassociate solely because the individual is a client, customer or former clientor customer (e.g. an individual is not a close business associate of aregistrant or former registrant simply because the individual is a client orformer client of that registrant or former registrant).  The relationship between the subscriber andthe director, senior officer or control

 

F-4

----

 

person of theCorporation must be direct (e.g. the exemption is not available for a closebusiness associate of a close business associate of the director, seniorofficer or control person of the Corporation ).

 

A “**founder**”,in respect of the Corporation, means a person or company who,

 

(a) actingalone, in conjunction or in concert with one or more other persons orcompanies, directly or indirectly, takes the initiative in founding, organizingor substaintially reorganizing the business of the Corporation, and

 

(b) at thetime of the proposed trade, is actively involved in the business of theCorporation.

 

F-5

----

 

The foregoingrepresentations contained in this certificate are true and accurate as of thedate hereof and will be true and accurate as of the Closing Date. If any suchrepresentations shall not be true and accurate prior to the Closing Date, theSubscriber shall give immediate notice to the Corporation.

 

**EXECUTED** by the Subscriber at                                     this                   day of                                 , 2004.

 
| **If a corporation, partnership or other  entity:** |   | **If an individual:**           |
|-----------------------------------------------------|--------|---------------------------------|
|                                                |   |                            |
|                                                |   |                            |
| **(Print Name of Subscriber)**                      |   | **(Print Name)**                |
|                                                |   |                            |
|                                                |   |                            |
| **(Signature of Authorized Signatory)**             |   | **(Signature)**                 |
|                                                |   |                            |
|                                                |   |                            |
| **(Name and Position of Authorized Signatory)**     |   | **(Jurisdiction of Residence)** |
|                                                |   |                            |
|                                                |   |                            |
| **(Jurisdiction of Residence)**                     |   | **(Print Name of Witness)**     |
|                                                |   |                            |
|                                                |   |                            |
|                                                |   | **(Signature of Witness)**      |

 

F-6

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**SCHEDULE “G”**

** **

**OFFSHORE SUBSCRIBER CERTIFICATE**

 

**NON-CANADIAN SUBSCRIBERS**

 

**(OTHER THAN U.S SUBSCRIBERS)**

 

We, on our ownbehalf and (if applicable) on behalf of others for whom we are contractinghereunder, represent, warrant, covenant and certify to and with the Corporationand the Agent (and acknowledge that the Corporation and the Agent are relyingthereon) that we are, and (if applicable) any beneficial subscriber for whom weare contracting hereunder is, a resident of, or otherwise subject to, thesecurities legislation of a jurisdiction **other than Canada or the United States**, and:

 

(a)                                  weare, and (if applicable) any other subscriber for whom we are contractinghereunder, is:

 

(i)                                     subscriberthat is recognized by the securities regulatory authority in the jurisdictionin which we are, and (if applicable) any other subscriber for whom we arecontracting hereunder is resident or otherwise subject to the securities lawsof such jurisdiction, as an exempt subscriber and are purchasing theConvertible Notes as principal for our, or (if applicable) each such othersubscriber’s, own account, and not for the benefit of any other person, forinvestment only and not with a view to resale or distribution; or

 

(ii)                                  asubscriber which is purchasing Convertible Notes pursuant to an exemption fromany prospectus or securities registration requirements (particulars of whichare enclosed herewith) available to the Corporation, the Agent, us and any suchother subscriber under Applicable Securities Laws of our jurisdiction ofresidence or to which we and any such other subscriber are otherwise subjectto, and we and any such other subscriber shall deliver to the Corporation andthe Agent such further particulars of the exemption and our qualificationthereunder as the Corporation or the Agent may reasonably request;

 

(b)                                 thepurchase of Convertible Notes by us, and (if applicable) each such othersubscriber, does not contravene any of the Applicable Securities Laws in suchjurisdiction and does not trigger: (i) any obligation to prepare and file aprospectus, an offering memorandum or similar document, or any other ongoingreporting requirements with respect to such purchase or otherwise; or (ii) anyregistration or other obligation on the part of the Corporation or the Agent;and

 

we, and (ifapplicable) any other subscriber for whom we are contracting hereunder will notsell or otherwise dispose of any Convertible Notes, Underlying Securities orWarrant Shares, except in accordance with applicable Canadian securities lawsand in accordance with the rules and regulations of the TSX, and if we, or (ifapplicable) such beneficial subscriber sell or otherwise dispose of anyConvertible Notes, Underlying Securities or Warrant Shares to a person otherthan a resident of Canada, we, and (if applicable) such beneficial subscriber,will obtain from such subscriber representations, warranties and covenants inthe same form as provided in this Schedule “E” or “F” and shall comply withsuch other requirements as the Corporation may reasonably require.

 

Dated at                                    this                 day of                                     , 2004.

 
|   |                          |
|--------|-------------------------------|
|   | **(Signature of Subscriber)** |
|   |                          |
|   |                          |
|   | **(Print Name)**              |

 

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