**Exhibit 4.19**

** **

**SUBSCRIPTION AGREEMENT**

 

(for U.S.Subscribers)

 

*A completed and originally executed copy of this subscription agreementmust be delivered or transmitted by telecopier((416) 869-9151) by no later than 12:00 noon (Toronto time) on June1, 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

 

**U.S. Subscribers**:

 

Complete andsign the U.S. Accredited Investor Certificate – Schedule “E”.

 

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| **Principal Amount of Convertible Notes** |         |                 |   |
|-------------------------------------------|--------------|----------------------|--------|
| **Subscribed for (to be issued at par):** | $            |                 |   |   |
|                                      |         |                 |   |
| **Name and Address of Subscriber:**       | **Name:**    |                 |   |
|                                      |         | (please  print)      |   |
|                                      | **Address:** |                 |   |
|                                      |         | (Street  Address)    |   |
|                                      |         |                 |   |
|                                      |         | (City and  Province) |   |
|                                      |         |                 |   |
|                                      |         | (Postal  Code)       |   |
|                                           |              |                      |        |  |

** **

**Alternate Registration Instructions** (other than in the name of the Subscriber):

 
|   | **Name:**    |                 |   |
|--------|--------------|----------------------|--------|
|   |         | (please  print)      |   |
|   | **Address:** |                 |   |
|   |         | (Street  Address)    |   |
|   |         |                 |   |
|   |         | (City and  Province) |   |
|   |         |                 |   |
|   |         | (Postal  Code)       |   |

** **

**Disclosed Principal**(please complete if purchasing as agent or trustee for a disclosedprincipal):

 
|   | **Name  of Principal:**        |                 |   |
|--------|--------------------------------|----------------------|--------|
|   |                           | (please  print)      |   |
|   | **Principal’s  Address:** |                 |   |
|   |                           | (Street  Address)    |   |
|   |                           |                 |   |
|   |                           | (City and  Province) |   |
|   |                           |                 |   |
|   |                           | (Postal  Code)       |   |

** **

**Delivery Instructions**:  The name and address(including contact name and telephone number) of the person to whom thecertificate representing the Convertible Notes is to be delivered, if otherthan the Subscriber:

 
|   | **Name:**         |                 |   |
|--------|-------------------|----------------------|--------|
|   |              |                 |   |
|   | **Contact Name:** |                 |   |
|   |              |                 |   |
|   | **Telephone No:** |                 |   |
|   |              |                 |   |
|   | **Address:**      |                 |   |
|   |              | (Street  Address)    |   |
|   |              |                 |   |
|   |              | (City and  Province) |   |
|   |              |                 |   |
|   |              | (Postal  Code)       |   |

** **

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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 soient rédigésen 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 subscription agreement relating to thepurchase of Convertible Notes of ADB Systems International 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, it is contemplated that prior to the Closing Date (as definedbelow) the Corporation will be issuing up to $500,000 principal amount ofConvertible Notes to one investor, with such Convertible Notes to be the sameas the Convertible Notes under the Offering, except that they will also providesecurity 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, payablequarterly in arrears on each date that is the three month anniversary of the ClosingDate (as defined below) up to and including the third anniversary of theClosing Date (the “**Maturity****Date**”).  At any timeup to and including the Maturity Date, all or any portion of the principalamount 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:

 

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

 

“**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;

 

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

 

“**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 promulgated under the 1933Act;

 

“**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, its territoriesand possessions, any state of the United States and the District of Columbia;

 

“**U.S. Person**”means a U.S. Person as that term is defined in Regulation S and, withoutlimiting the foregoing but for greater clarity, a U.S. Person includes any naturalperson resident in the United States, any partnership or corporation organizedor incorporated under the laws of the United States, and any estate or trust ofwhich an executor, administrator or trustee is a U.S. Person; and

 

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

 

3.             **Currency**.  Unless otherwise stated, all dollar amountsreferred to in this subscription agreement and the schedules thereto areexpressed in Canadian funds.

 

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

 

(a)         theCorporation is (and will be at the Closing Time) a reporting issuer in the Provincesof Ontario, Alberta and British Columbia, and is in compliance with allmaterial obligations under Applicable Securities Laws of such jurisdictions;

 

(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 Material Subsidiaries hasbeen duly incorporated and organized and is validly subsisting under the lawsof its jurisdiction of incorporation and has all requisite corporate power andauthority to carry on its business as now conducted and to own, lease andoperate 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 thereby 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 otheragreements and instruments and the consummation of the transactionscontemplated thereby and so as to validly create, issue and deliver theConvertible Notes subscribed for thereby and to validly create and irrevocablyallot for the issuance of the Underlying Securities 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 therules of 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 and the schedules attached thereto are true as at the Closing Timewith the same force and effect as if they had been made by the Corporation atthe Closing Time and that they will survive the purchase by the Subscriber ofthe Convertible Notes and continue in full force and effect for a period of two(2) years following the Closing Date notwithstanding any subsequent dispositionby the Subscriber of the Convertible Notes 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 Schedule ”E”);

 

(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 the 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.           **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).

 

11.           **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.)

 

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

 

13.           **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.

 

14.           **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.

 

15.           **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 the ConvertibleNotes sold under the Offering, at an exercise price equal to the ConversionPrice.

 

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16.           **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 and the schedules thereto willsurvive the execution and delivery, and acceptance, of this subscriptionagreement and the closing of the Offering.

 

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

 

(d)        Thissubscription agreement and the rights and obligations of the parties thereunderwill 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 subscription agreement relating to thepurchase of Convertible Notes of ADB Systems International Ltd. (the “**Corporation**”).Capitalized terms used but not defined in this schedule are intended to havethe meanings ascribed thereto, as applicable, on the first page of thissubscription agreement and sections 1 and 2 of Schedule “A” to thissubscription 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  registration 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  for 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

 

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**SCHEDULE “C”**

** **

**SUBSCRIBER’S REPRESENTATIONSAND WARRANTIES**

 

*This is Schedule “C” to the subscription agreement relating to thepurchase of Convertible Notes of ADB Systems International Ltd. (the “**Corporation**”).Capitalized terms used but not defined in this schedule are intended to havethe meanings ascribed thereto, as applicable, on the first page of thissubscription agreement and sections 1 and 2 of Schedule “A” to this subscriptionagreement.*

 

**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 second 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.

 

(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 an investment decision inrespect of securities being sold in a distribution of securities of theCorporation.

 

(f)                                    **NoSolicitation or Advertising.**  The offer to sell the Convertible Notes wasdirectly communicated to the Subscriber. The Subscriber acknowledges that ithas not purchased the Convertible Notes as a result of any form of “generalsolicitation” or “general advertising” as those terms are used in Rule 501 ofRegulation D promulgated under the 1933 Act,, including, but not limited to,any advertisement, article, notice or other communication through published inany

 

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newspaper,magazine or similar media or broadcast over radio or television, or any seminaror meeting whose attendees have been invited by “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 the transactionscontemplated hereunder.

 

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

 

(j)                                     **NoRegistration Under the 1933 Act**.  The Subscriber understands that the issuanceof the Convertible Notes provided for in the subscription agreement is intendedto be exempt from registration under the 1933 Act, by virtue ofSection 4(2) thereof and Rule 506 of Regulation D promulgated underthe 1933 Act.  The Subscriberacknowledges that none of the Convertible Notes, Underlying Securities orWarrant Shares have been or may ever be registered under the **1933 Act** or thesecurities laws of any state of the United States by reason of their issuancein a transaction that does not require registration under the 1933 Act (basedin part on the representations and warranties of Subscriber contained herein)and that the Convertible Notes, Underlying Securities and Warrant Shares maynot be offered or sold, directly or indirectly, in the United States exceptpursuant to registration under the 1933 Act and the securities laws of allapplicable states or an available exemption therefrom, and the Corporation hasno obligation or present intention of filing a registration statement under the1933 Act in respect of any of the Securities. As a result of the foregoing, the Subscriber may be required to bear theeconomic risk of its investment for an indefinite period of time.

 

(k)                                  **NoExercise of Warrants by U.S. Person**.  The Subscriber acknowledges that theConvertible Notes may not be exercised or deemed exercised by or on behalf of aU.S. Person or a person in the United States unless an exemption is availablefrom the registration requirements of the 1933 Act and the securities laws ofall applicable states, and the holder has, unless waived by the Corporation andthe Agent, furnished an opinion of counsel satisfactory to the Corporation andthe Agent to such effect; provided that a Subscriber who delivers the U.S.Accredited Investor Certificate attached as Schedule “E” hereto in connectionwith its purchase of Convertible Notes and the Warrants pursuant to theOffering will not be required to deliver an opinion of counsel in connectionwith the due exercise or deemed exercise of the Convertible Notes and theWarrants at a time when the representations, warranties and covenants made bythe Subscriber therein are true and correct.

 

(l)                                     **Nota Broker-Dealer.** The Subscriber is neither aregistered broker-dealer nor an affiliate of a registered broker-dealer.

 

(m)                               **Primary Purpose**. The Subscriber has not been created or is not being used primarilyto permit the purchase of the Convertible Notes, Underlying Securities orWarrant Shares.

 

2.                                       **RelianceUpon Representations, Warranties and Covenants**. The Subscriber acknowledges that the representations andwarranties contained herein are made by the Subscriber with the intention thatthey may

 

C-2

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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 Notes on the Closing Date, the Subscriber will berepresenting and warranting that the foregoing representations and warrantiesare true and correct as at the Closing Time with the same force and effect asif they had been made by the Subscriber at the Closing Time and that they willsurvive the purchase by the Subscriber of Convertible Notes and will continuein full force and effect notwithstanding any subsequent disposition by theSubscriber of such Convertible 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. Each Unit will be comprised of one common sharein the capital of the Corporation (a “**Common Share**”) and one-half ofone 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.

 

(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)? Ifso, state the capacity in which the purchaser (or person named in response to2(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

 

 

 

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**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”**

** **

**U.S. ACCREDITED INVESTOR CERTIFICATE**

** **

The Subscriberunderstands and agrees that the Convertible Notes, Underlying Securities andthe Warrant Shares (collectively, the “**Securities**”) have not been andwill not be registered under the United States *Securities Act of 1933*, asamended (the “**1933Act**”), or applicable state securities laws, and the ConvertibleNotes are being offered and sold on behalf of the Corporation, by the Agentthrough a U.S. affiliate (the “**U.S. Affiliate**”) to the Subscriber in reliance upon Rule 506of Regulation D under the 1933 Act. Capitalized terms used in this Schedule “E” and defined in theSubscription Agreement to which this Schedule “E” is attached have the meaningsdefined in such Subscription Agreement unless otherwise defined in thisSchedule “E”.

 

Theundersigned represents, warrants and covenants (which representations,warranties and covenants shall survive the Closing Date) to the Corporation,the Agent and the U.S. Affiliate (and acknowledges that the Corporation,the Agent and the U.S. Affiliate are relying thereon)****that:

 
|   |   | (a)    | it is  purchasing the Convertible Notes for its own account for investment purposes  only, and not with a view to any resale or distribution and, in particular,  it has not sold, offered, distributed or otherwise disposed of any of the  Securities and has no intention to sell, offer, distribute or otherwise  dispose of, either directly or indirectly, any of the Securities in the  United States; provided, however, that this paragraph shall not restrict the  Subscriber from selling, offering, distributing or otherwise disposing of any  of the Securities pursuant to the registration thereof under the 1933 Act and  any applicable state securities laws or pursuant to an exemption from such  registration requirements; |
|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   | (b)    | it, and if  applicable, each person for whose account it is purchasing the Convertible  Notes satisfies one or more of the categories of “accredited investor”  indicated below (**the Subscriber must check the appropriate line(s)**):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

 
| o      |   | Category 1. | A bank, as  defined in Section 3(a)(2) of the 1933 Act, whether acting in its individual  or fiduciary capacity; or                                                                                                                         |
|--------|--------|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |        |                                                                                                                                                                                                                                        |
| o      |   | Category 2. | A savings  and loan association or other institution as defined in Section 3(a)(5)(A) of  the 1933 Act, whether acting in its individual or fiduciary capacity; or                                                                          |
|   |   |        |                                                                                                                                                                                                                                        |
| o      |   | Category 3. | A broker or  dealer registered pursuant to Section 15 of the United States *Securities  Exchange Act of 1934*, as  amended; or                                                                                                              |
|   |   |        |                                                                                                                                                                                                                                        |
| o      |   | Category 4. | An insurance  company as defined in Section 2(13) of the 1933 Act; or                                                                                                                                                                       |
|   |   |        |                                                                                                                                                                                                                                        |
| o      |   | Category 5. | An  investment company registered under the United States *Investment Company Act of 1940*;  or                                                                                                                                             |
|   |   |        |                                                                                                                                                                                                                                        |
| o      |   | Category 6. | A business  development company as defined in Section 2(a)(48) of the United States *Investment  Company Act of 1940*; or                                                                                                                   |
|   |   |        |                                                                                                                                                                                                                                        |
| o      |   | Category 7. | A small  business investment company licensed by the U.S. Small Business  Administration under Section 301 (c) or (d) of the United States *Small  Business Investment Act of 1958*; or                                                     |
|   |   |        |                                                                                                                                                                                                                                        |
| o      |   | Category 8. | A plan  established and maintained by a state, its political subdivisions or any  agency or instrumentality of a state or its political subdivisions, for the  benefit of its employees, with total assets in excess of U.S. $5,000,000; or |

 

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| o      |   | Category 9.  | An employee  benefit plan within the meaning of the United States *Employee Retirement Income Security  Act of 1974*in which the investment decision is made by a plan  fiduciary, as defined in Section 3(21) of such Act, which is either a bank,  savings and loan association, insurance company or registered investment  adviser, or an employee benefit plan with total assets in excess of U.S.  $5,000,000 or, if a self-directed plan, with investment decisions made solely  by persons who are accredited investors; or |
|--------|--------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| o      |   | Category 10. | A private  business development company as defined in Section 202(a)(22) of the United  States *Investment  Advisers Act of 1940*; or                                                                                                                                                                                                                                                                                                                                                                                               |
|   |   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| o      |   | Category 11. | An  organization described in Section 501(c)(3) of the United States *Internal  Revenue Code*, a corporation, a Massachusetts or similar business  trust, or a partnership, not formed for the specific purpose of acquiring the  securities offered, with total assets in excess of U.S. $5,000,000; or                                                                                                                                                                                                                            |
|   |   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| o      |   | Category 12. | Any director  or executive officer of the Corporation; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| o      |   | Category 13. | A natural  person whose individual net worth, or joint net worth with that person’s  spouse, at the date hereof exceeds U.S.$1,000,000; or                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| o      |   | Category 14. | A natural  person who had an individual income in excess of U.S.$200,000 in each of the  two most recent years or joint income with that person’s spouse in excess of  U.S.$300,000 in each of those years and has a reasonable expectation of  reaching the same income level in the current year; or                                                                                                                                                                                                                         |
|   |   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| o      |   | Category 15. | A trust,  with total assets in excess of U.S.$5,000,000, not formed for the specific  purpose of acquiring the securities offered, whose purchase is directed by a  sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act;  or                                                                                                                                                                                                                                                                                 |
|   |   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| o      |   | Category 16. | Any entity  in which all of the equity owners meet the requirements of at least one of  the above categories;                                                                                                                                                                                                                                                                                                                                                                                                                       |

 
|   |   | (c) | it  understands and agrees that the certificates representing the Warrants and  all certificates issued in exchange therefor or in substitution thereof,  shall bear the following legends: |
|--------|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|   |   |   | “THIS  WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES  ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE EXERCISED BY OR ON BEHALF  OF ANY U.S. PERSON, OR SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED  OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT ACT AND UNDER  APPLICABLE STATE SECURITIES LAWS OR ADB SYSTEMS INTERNATIONAL LTD. SHALL HAVE  RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT REGISTRATION OF SUCH  SECURITIES UNDER THAT ACT AND UNDER THE PROVISIONS OF APPLICABLE FEDERAL AND  STATE SECURITIES LAWS IS NOT REQUIRED.” |
|--------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 
|   |   |   | provided,  that if the Warrants are being sold outside the United States in compliance  with Rule 904 of Regulation S under the 1933 Act, at a time when  the Issuer is a “foreign issuer” as defined in Rule 902 under the 1933  Act, the legend set forth above may be removed at the time of sale by  providing a declaration to the Corporation in the form attached hereto as  Appendix A or as the Corporation may from time to time prescribe; |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

E-2

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(d)                                 itunderstands that upon the issuance thereof, and until such time as the same isno longer required under the applicable requirements of the 1933 Act orapplicable U.S. state laws and regulations, the certificates representing theCommon Shares and Warrant Shares, and all securities issued in exchangetherefor or in substitution thereof, will bear a legend in substantially thefollowing form:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN ANDWILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, ASAMENDED (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS.  THESE SECURITIES MAY BE OFFERED, SOLD,PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ENCUMBERED ONLY(A) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION SPROMULGATED UNDER THE 1933 ACT, (B) IN COMPLIANCE WITH THE EXEMPTION FROMTHE REGISTRATION REQUIREMENTS UNDER THE 1933 ACT PROVIDED BY RULE 144THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH ANY APPLICABLE STATESECURITIES LAWS, OR (C) IN A TRANSACTION THAT IS OTHERWISE EXEMPT FROM THEREGISTRATION REQUIREMENTS OF THE 1933 ACT AND ANY APPLICABLE STATE LAWS, ANDTHE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OFCOUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORYTO THE COMPANY.  DELIVERY OF THIS CERTIFICATEMAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCKEXCHANGES IN CANADA.  IF THESESECURITIES ARE BEING SOLD AT ANY TIME THE COMPANY IS A “FOREIGN ISSUER” ASDEFINED IN RULE 902 UNDER THE 1933 ACT, A NEW CERTIFICATE, BEARING NO LEGEND,THE DELIVERY OF WHICH WILL CONSTITUTE “GOOD DELIVERY” MAY BE OBTAINED FROM THECOMPANY’S TRANSFER AGENT UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTEDDECLARATION, IN FORM SATISFACTORY TO THE COMPANY AND THE COMPANY’S TRANSFERAGENT TO THE EFFECT THAT THE SALE OF THE SECURITIES IS BEING MADE IN COMPLIANCEWITH RULE 904 OF REGULATION S UNDER THE 1933 ACT.”

 

provided, that if the Common Shares and Warrant Sharesare being sold under clause (B) above, at a time when the Corporation is a“foreign issuer” as defined in Rule 902 under the 1933 Act, the legend setforth above may be removed at the time of sale by providing a declaration tothe Corporation and its transfer agent in the form attached hereto asAppendix A or as the Corporation may from time to time prescribe, to theeffect that the sale of the securities is being made in compliance with Rule904 of Regulation S under the 1933 Act; provided further, that if any of theCommon Shares or Warrant Shares are being sold pursuant to Rule 144 of the 1933Act and in compliance with any applicable state securities laws, the legend maybe removed by delivery to the Corporation’s transfer agent of an opinionsatisfactory to the Corporation to the effect that the legend is no longerrequired under applicable requirements of the 1933 Act or state securitieslaws;

 

(e)                                  itagrees not to offer, sell or otherwise transfer any of the Convertible Notes orWarrant Shares except as permitted by paragraph (c) or (d), above, asapplicable, and the legend(s) included therein;

 

E-3

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(f)                                    ithas had the opportunity to ask questions of and receive answers from theCorporation regarding the investment, and has received all the informationregarding the Issuer that it has requested;

 

(g)                                 itconsents to the Corporation making a notation on its records or givinginstruction to the registrar and transfer agent of the Issuer in order toimplement the restrictions on transfer set forth and described herein;

 

(h)                                 itunderstands and acknowledges that the Corporation has no obligation or presentintention of filing with the United States Securities and Exchange Commissionor with any state securities administrator any registration statement inrespect of resales of the Securities in the United States;

 

(i)                                     theoffice or other address of the Subscriber at which the Subscriber received andaccepted the offer to purchase the Convertible Notes is the address listed asthe “Address of Subscriber” on the second page of the Subscription Agreement;

 

(j)                                     itunderstands and agrees that there may be material tax consequences to theSubscriber of an acquisition, disposition or exercise of any of the Securities;neither the Corporation, the Agent nor any U.S. affiliate gives any opinion ormakes any representation with respect to the tax consequences to the Subscriberunder United States, state, local or foreign tax law of the undersigned’sacquisition or disposition of such Securities; in particular, no determinationhas been made whether the Issuer will be a “passive foreign investment company”(“PFIC”) within the meaning of Section 1291 of the United States InternalRevenue Code;

 

(k)                                  itunderstands and acknowledges that the Corporation is not obligated to remain a“foreign issuer”;

 

(l)                                     itunderstands and agrees that the financial statements of the Corporation havebeen prepared in accordance with Canadian generally accepted accountingprinciples, which differ in some respects from United States generally acceptedaccounting principles, and thus may not be comparable to financial statementsof United States companies; and

 

(m)                               itunderstands that none of the Convertible Notes, the Underlying Shares or theWarrant Shares have been recommended by any federal or state securitiescommission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracyor determined the adequacy of the information in the subscription agreement orthe schedules attached thereto.  Anyrepresentation to the contrary is a criminal offense.

 

The Subscriberundertakes to notify the Corporation immediately of any change in anyrepresentation, warranty or other information relating to the Subscriber setforth herein which takes place prior to the Closing Date.

 
| If a  Corporation, Partnership or Other Entity:        |   | If an  Individual:        |
|--------------------------------------------------------|--------|---------------------------|
|                                                   |   |                      |
|                                                   |   |                      |
|   Name of Entity                                  |   |   Signature          |
|                                                   |   |                      |
|                                                   |   |                      |
|   Type of Entity                                  |   |   Print or Type Name |
|                                                   |   |                      |
|                                                   |   |                      |
|   Signature of Person Signing                     |   |                      |
|                                                   |   |                      |
|                                                   |   |                      |
|   Print or Type Name and Title of Person  Signing |   |                      |

 

E-4

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**Appendix A to**

** **

**Schedule “E” – U.S. AccreditedInvestor Certificate**

 

**FORM OF DECLARATION FOR REMOVALOF LEGEND**

 

TO:         Registrar and transfer agent for theCommon Shares, Warrant Shares and Warrants of **ADB SYSTEMS INTERNATIONAL LTD.**(the“Issuer”):

 

Theundersigned (A) acknowledges that the sale of the securities of the Issuer towhich this declaration relates is being made in reliance on Rule 904 ofRegulation S under the United States *Securities Act of 1933*, as amended (the“1933 Act”), and (B) certifies that: (1) the undersigned is not an “affiliate” of the Issuer (as that term isdefined in Rule 405 under the 1933 Act); (2) the offer of such securities wasnot made to a person in the United States and either (a) at the time the buy orderwas originated, the buyer was outside the United States or the seller and anyperson acting on its behalf reasonably believed that the buyer was outside theUnited States, or (b) the transaction is being executed on or through thefacilities of the Toronto Stock Exchange or the TSX Venture Exchange or anyother designated offshore securities market as defined in Regulation S underthe 1933 Act and neither the seller nor any person acting on its behalf knowsthat the transaction has been prearranged with a buyer in the United States;(3) neither the seller nor any affiliate of the seller nor any personacting on their behalf has engaged or will engage in any directed sellingefforts in the United States in connection with the offer and sale of suchsecurities; (4) the sale is bona fide and not for the purpose of “washingoff” the resale restrictions imposed because the securities are “restrictedsecurities” (as that term is defined in Rule 144(a)(3) under the 1933Act); (5) the seller does not intend to replace such securities withfungible unrestricted securities; and (6) the contemplated sale is not atransaction, or part of a series of transactions, which, although in technicalcompliance with Regulation S, is part of a plan or scheme to evade the registrationprovisions of the 1933 Act. Terms used herein have the meanings given to themby Regulation S under the 1933 Act.

 

Dated                                                                ,200         .

 

 
|   | **X**                                                           |   |
|--------|-----------------------------------------------------------------|--------|
|   | Signature of  individual (if Holder **is** an individual)       |
|   |                                                            |   |
|   | **X**                                                           |   |
|   | Authorized  signatory (if Holder is **not** an individual)      |
|   |                                                            |   |
|   |                                                            |
|   | Name of  Holder (**please  print**)                             |
|   |                                                            |   |
|   |                                                            |
|   | Name of  authorized signatory (**please print**)                |
|   |                                                            |   |
|   |                                                            |
|   | Official  capacity of authorized signatory  (**please  print**) |

 

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