Document:

EXHIBIT 10.22

No. 1                                                           Principal Amount
                                                                         $75,000

                            IMAGIS TECHNOLOGIES INC.

                              SERIES "A" DEBENTURE

     IMAGIS   TECHNOLOGIES  INC.  (the  "Company")  for  value  received  hereby
acknowledges itself indebted and promises to pay to

                                414826 B.C. LTD.
                 (in custody with Canaccord Capital Corporation)

or the then  registered  holder hereof (the "Holder") on the Maturity Date or on
such earlier date as the principal  hereof may become due in accordance with the
terms and conditions hereinafter mentioned on presentation and surrender of this
Debenture the sum of

                     SEVENTY-FIVE THOUSAND DOLLARS ($75,000)

in lawful money of Canada,  and to pay  interest  thereon from the date of issue
hereof at the Prime Rate plus 2.0% per annum calculated monthly,  not in advance
(after as well as before  maturity  and after,  as well as before  default  with
interest on overdue  interest at the same  rate),  to a maximum  rate of 12% per
annum.

     The Company will pay interest accruing on the outstanding  principal amount
of this  Debenture from the date of issue hereof to and including June 30, 2003,
and on the  outstanding  amount of the interest  which  accrues from the date of
issue hereof to and including June 30, 2003, on June 30, 2003. Thereafter, until
the Maturity Date or until such time as the Debenture remains  outstanding,  the
Company will pay interest  monthly on the last day of each month  commencing  on
July  31,  2003.  At  maturity,  if the  Maturity  Date is not the last day of a
calendar month, the final interest payment will be made on such Maturity Date.

     As  interest  becomes due on this  Debenture  (except  interest  payable at
maturity or on redemption at which time interest will be paid in accordance with
the conditions  attached to this Debenture (the  "Conditions")) the Company will
send by prepaid ordinary mail a cheque for such interest payable to the order of
the Holder and  addressed to him at his last  address  appearing on the register
kept by and at the offices of the Company.  The  forwarding  of such cheque will
satisfy and discharge all liability for interest on this Debenture to the extent
of the sum  represented  thereby.  In the event of non-receipt of any cheque for
interest by the Holder to whom it is so sent as aforesaid,  the Company on proof
of such non-receipt and upon satisfactory indemnity being given to it will issue
to such Holder a replacement cheque for a like amount.

     This Debenture will mature,  and the principal amount and all other amounts
owing hereunder will be repaid by the Company to the Holder on November 30, 2004
(the "Maturity Date").

     This  Debenture  is one of a number  of like  Debentures  issued  and to be
issued by the Company,  each to be subject to the Conditions  which form part of
this  Debenture.  Reference is hereby made to the  Conditions for a statement of
the nature and extent of the security created thereby, the rights of the

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holders of the  Debentures  and of the Company in respect  thereof and the terms
and conditions upon which the Debentures are issued, secured and held, to all of
which the Holder by acceptance hereof assents and agrees to be bound.

     The Series "A"  Debentures  (of which this is one)  consist of an aggregate
principal   amount  of  up  to   $1,500,000  in  lawful  money  of  Canada  (the
"Debentures").  The Company  reserves the right in its  discretion,  and without
notice  to the  Holder,  to  increase  the  aggregate  principal  amount  of the
Debentures  issued  provided not more than  $1,750,000  in  principal  amount of
Debentures are issued.

     The Debentures are subject to redemption  before  maturity at the option of
the Company in the manner and upon the terms set forth in the Conditions.

     The principal  amount of this  Debenture may also become or be declared due
before  the stated  maturity  in the  events,  in the manner and with the effect
provided in the Conditions.

     The security  constituted  by this  Debenture  and all amounts owing by the
Company to the Holder  under this  Debenture,  whether on account of  principal,
interest or otherwise,  are  subordinate and rank subsequent to the security now
or  hereafter  granted  by the  Company  for  Senior  Debt  (as  defined  in the
Conditions).

     This Debenture is subject to a hold period and may not be traded or re-sold
except as  permitted  by  applicable  securities  legislation  and the rules and
regulations made thereunder.

     This  Debenture  will be registered in the name of the Holder in the manner
prescribed in the Conditions in the register to be kept by and at the offices of
the Company and on the registration panel attached to this Debenture.

IN WITNESS WHEREOF,  IMAGIS  TECHNOLOGIES  INC. has caused its common seal to be
affixed and this Debenture to be signed by its duly authorized  signatory on the
30th day of May, 2003.

IMAGIS TECHNOLOGIES INC.

Per:     /s/ Wayne Smith
         ------------------------------
         Name: Wayne Smith
         Title: Chief Financial Officer

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                           CONDITIONS REFERRED TO IN
                           THE SERIES "A" DEBENTURES
                                   ISSUED BY

                            IMAGIS TECHNOLOGIES INC.

                                     PART 1

                                 INTERPRETATION

1.1 In the Debenture and the terms and conditions herein set forth, unless there
is  something  in the  subject  matter or context  inconsistent  therewith,  the
following terms will have the meanings hereinafter set forth:

     "Change of  Control"  means any event  whereby  any  Person or any  Persons
     acting  jointly or in concert (as that term is used in the  Securities  Act
     (British  Columbia))  with such Person,  together  with any  affiliate  (as
     defined in the Company Act (British  Columbia)) of any such Person,  become
     (s) the  beneficial  owner(s)  of  shares  of the  Company,  or  securities
     exercisable or convertible  into shares of the Company,  carrying more than
     50% of the votes for the  election of  directors  and the votes  carried by
     such shares are sufficient,  if exercised, to elect a majority of the board
     of directors of the Company;

     "Company"  means Imagis  Technologies  Inc. and includes any Subsidiary for
     the purposes of the definition of Permitted Encumbrances;

     "Debenture"  means a Series "A"  Debenture  issued by the  Company to which
     these  terms and  conditions  form a part  thereof,  and for the time being
     outstanding, and "Debentures" means all of the Series "A" Debentures of the
     Company issued and outstanding from time to time;

     "Directors"  means the  Directors  of the Company  for the time being,  and
     reference to action by the  Directors  means  action by the  Directors as a
     board;

     "Event of Default" means an event described inss.8.1 of these Conditions;

     "Holder" means the registered holder of a Debenture and "Holders" means all
     of the Holders of Debentures;

     "Indenture"  means the terms and conditions set forth herein as referred to
     in the Debentures;

     "Mortgaged  Premises"  means all present and  after-acquired  property  and
     assets of the Company hereby or by any instrument supplemental or ancillary
     hereto  charged or made subject to a security  interest to and in favour of
     the Holder or expressed so to be;

     "Order"  means any order,  notice,  direction,  report,  recommendation  or
     decision rendered by any governmental or other regulatory agency;

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                                      -2-

     "Permitted Encumbrances" means:

     (a) liens for taxes,  assessments  and  governmental  charges which are not
     overdue or, if overdue,  which are being  contested  in good faith (and for
     the  payment of which  adequate  provision  has been  made) by  appropriate
     proceedings;

     (b) liens  arising out of  judgments or awards with respect to which at the
     time an appeal or proceedings for review is being  prosecuted in good faith
     (and  for the  payment  of  which  adequate  provision  has  been  made) by
     appropriate  proceedings  and with  respect  to which  there will have been
     secured a stay of execution pending such appeal or proceeding for review;

     (c) servitudes,  easements,  restrictions,  rights-of-way and other similar
     rights in real or immovable property or any interest therein,  provided the
     same are not of such nature as to  materially  adversely  affect the use of
     the property subject thereto by the Company;

     (d) security  interests charging property acquired by the Company where (i)
     the  principal  amount  secured  thereby  does not  exceed the cost of such
     property  or, in the case of any  extension,  renewal or  refunding  of the
     indebtedness  secured by such  security  interests,  the  principal  amount
     thereof outstanding on the date of such extension,  renewal or refunding is
     not increased;  (ii) such security  interests  extend only to such property
     and  its  proceeds;   and  (iii)  such  security   interests  were  created
     substantially concurrently with the acquisition of such property;

     (e) the right, title and interest of the lessors in respect of leases under
     which the Company is lessee;

     (f) liens for taxes  due but for which  notice of  assessment  has not been
     given;

     (g) liens, charges,  pledges,  security interests and other encumbrances of
     any kind over one or more equipment leases, the equipment leased thereunder
     and any  guarantees,  indemnities,  security  and other rights and benefits
     provided  to the  Company as  security  for the  obligations  of the lessee
     thereunder,  granted or arising in the  ordinary  course of business of the
     Company;

     (h) the Senior Security to a maximum of $500,000  principal amount (or such
     greater amount as may be approved by the Holder) of Senior Debt outstanding
     at any one time,  together with interest,  fees (including  legal fees on a
     solicitor  and  client  basis),  costs and any other  amounts  (other  than
     principal  amounts)  in  respect of which the  Company is liable  under the
     Senior Security; and

     (i) the security interests now or hereafter perfected by the following base
     registration  numbers in the British Columbia Personal  Property  Registry:
     159922A; 183210A; 476329A; 526650A; 535309A; 625430A; 005798B;

     "Person"  means  an  individual,  partnership,   corporation,  joint  stock
     company, trust, unincorporated  association,  joint venture or governmental
     or quasi-governmental agency;

     "Prime Rate" means the floating commercial loan reference rate of the Royal
     Bank of Canada publicly  announced from time to time as its "prime rate" or
     "reference rate"  (calculated on the basis of actual number of days elapsed
     over a year of 365 days), with any change in the Prime Rate to be effective
     on the date the "prime rate" or "reference rate" changes;

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                                      -3-

     "Senior  Debt" means the present and future  indebtedness  and liability of
     the Company to the Senior Lender to a maximum of $500,000  principal amount
     (or such greater  amount as may be approved by the Holder)  outstanding  at
     any one time,  together  with  interest,  fees  (including  legal fees on a
     solicitor  and  client  basis),  costs and any other  amounts  (other  than
     principal  amounts)  in respect of which the Company or any  Subsidiary  is
     liable under the Senior Security;

     "Senior  Lender" means Altaf Nazerali and any financial  institution  which
     may hereafter provide financing to the Company;

     "Senior  Security"  means the  mortgages,  assignments,  charges,  security
     agreements,  guarantees and other security  documents now or hereafter held
     by the Senior Lender as security for the Senior Debt;

     "Subscription  Agreement" means the subscription  agreement entered into by
     the Company pursuant to which the Debenture is issued;

     "Subsidiary" means a corporation controlled by the Company, as "controlled"
     is defined in section  1(4) of the Company  Act  (British  Columbia)  as in
     effect at the date hereof and without reference to amendments thereto after
     the date hereof; and

     "written order of the Company",  "written request of the Company", "written
     consent of the Company", and "certificate of the Company" mean respectively
     a written order, request, consent and certificate signed in the name of the
     Company  by the  President  or  Directors,  and may  consist of one or more
     instruments so executed.

1.2 For all purposes of this Debenture,  except as otherwise  expressly provided
or unless the context otherwise requires:

     (a) a  reference  to a  Part  is to a  Part  of  this  Agreement,  and  the
     symbolss.followed  by a number or some  combination  of numbers and letters
     refers to the section, paragraph, subparagraph, clause or subclause of this
     Agreement so designated;

     (b) headings are solely for  convenience  of reference and are not intended
     to be  complete  or  accurate  descriptions  of  content or to be guides to
     interpretation of this Agreement or any part of it;

     (c) the words  "herein" and  "hereunder"  and other words of similar import
     refer  to this  Debenture  and  these  Conditions  as a  whole  and not any
     particular  paragraph,  or other  subdivision  of this  Debenture  or these
     Conditions;

     (d) the word  "including",  when following a general  statement or term, is
     not to be  construed  as  limiting  the  general  statement  or term to any
     specific  item or matter  set forth or to  similar  items or  matters,  but
     rather as  permitting  the general  statement  or term to refer also to all
     other  items or matters  that could  reasonably  fall  within its  broadest
     possible scope;

     (e) a reference to currency means Canadian currency;

     (f) any a reference to a statute  includes all regulations made thereunder,
     all  amendments to the statute or  regulations  in force from time to time,
     and every statute or regulation that supplements or supersedes such statute
     or regulation; and

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                                      -4-

     (g) a word importing the masculine gender includes the feminine and neuter,
     a word in the singular includes the plural, and vice versa,

1.3 The proper law of this Debenture is the law of British Columbia.

1.4 Whenever the consent or approval of the Holder or the Company is required or
provided for under this Debenture, such provision will be deemed to require that
such Person will not  unreasonably  withhold or delay such  consent or approval.

                                     PART 2

                               ISSUE OF DEBENTURES

2.1 The aggregate principal amount of Debentures authorized for issue is limited
to $1,750,000 in lawful money of Canada.

2.2 The  Debentures  will be dated  individually,  each dated the day upon which
that particular  Debenture is fully paid for in cash, bank draft, money order or
by cheque, and the Holder's subscription for such Debenture has been accepted by
the Company,  will mature and be payable,  (subject to the redemption privileges
herein set forth),  together  with all  interest and other  amounts  outstanding
hereunder,  on November 30, 2004 (the "Maturity Date"). The Debentures will bear
such issuing reference numbers as the Company may determine.

2.3 The  Debentures  will bear  interest  at the Prime  Rate plus 2.0% per annum
calculated monthly,  not in advance (after as well as before maturity and after,
as well as before  default with interest on overdue  interest at the same rate),
on the basis of a year of 365 days, to a maximum of 12% per annum. Interest will
commence  being earned and accrued on each  Debenture  from the date of issuance
thereof.  The Company will pay interest  accruing on the  outstanding  principal
amount of each Debenture from the date of issue hereof to and including June 30,
2003, and on the outstanding  amount of the interest which accrues from the date
of issue hereof to and including  June 30, 2003,  on June 30, 2003.  Thereafter,
until the Maturity Date or until such time as the Debenture remains outstanding,
the Company will pay interest  monthly on the last day of each month  commencing
on July 31,  2003.  At maturity,  if the Maturity  Date is not the last day of a
calendar month,  the final interest  payment will be made on such Maturity Date.

2.4 The Debentures may be issued in such amounts, to such persons, on such terms
not inconsistent with this Debenture, and either at par or at a discount or at a
premium as the Company may determine.

2.5 The Company  will make all payments of  principal  and  interest  (including
interest on amounts in  default) on the  Debentures  without  withholding  of or
deduction for or account of any present or future taxes imposed or levied by any
taxing  authority  unless such taxes are  required to be withheld or deducted by
the Company by law or by the  interpretation  or administration  thereof,  or on
demand of the taxing  authority.  The Company  will remit the full amount of any
withheld  or  deducted  amount  to  the  taxing  authority  in  accordance  with
applicable law and will provide the Holder with full particulars thereof.

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                                      -5-

                                     PART 3

                          DEBENTURES TO RANK PARI PASSU

3.1 Subject to the express terms thereof,  all  Debentures  will rank pari passu
without discrimination,  preference or priority, notwithstanding the actual date
of issue of the same, save and except that the principal  amount payable on each
Debenture may vary and that interest on each of the Debentures  will accrue from
the date of its issue.  For  clarity and  subject to the  foregoing  exceptions,
notwithstanding  that the Debentures  may be issued at different  times and from
time to time, all Debentures will be deemed to have been created, registered and
perfected at the same time, and, subject to the express terms thereof, will rank
pari passu each with the others as to the security  interest granted  hereunder.

                                     PART 4

                            REGISTRATION AND TRANSFER

4.1 The Company at all times will keep or cause to be kept at its records office
in the City of Vancouver, and at such other places (if any) as may be designated
by the Company,  a register of Debentures  where there will be entered the names
and addresses of the Holders and the  particulars of the Debentures held by them
respectively.

4.2 This Debenture may be assigned by the Holder with the prior written  consent
of the Company, such consent not to be unreasonably withheld. This Debenture may
be  transferred  only by transfer  in writing  signed by its Holder or his legal
personal representative and will only be effective in regard to the Company when
it has been  delivered to the Company's  records  office in  Vancouver,  British
Columbia or at such other place (if any) as may be designated by the Company and
the Company has given its written consent to such transfer.

4.3 On any transfer of this  Debenture and compliance  with ss.4.2,  the Company
will cause to be recorded such transfer on the register and upon this Debenture,
or at its  option,  issue  a  replacement  Debenture  in the  same  form as this
Debenture in exchange for this Debenture after the appropriate  form of transfer
is lodged with it and upon compliance with all other conditions  required by the
Company or by law.

4.4 The charges and security  interests  contained in any replacement  Debenture
resulting from a transfer will rank in all respects pari passu with the security
contained in the Debenture which it replaces and such replacement Debenture will
for all purposes be taken and deemed to be a Debenture.

4.5 The  person in whose name the  Debenture  is  registered  will be deemed and
regarded  as the owner and Holder  for all  purposes  and the  payment to and/or
receipt by any such Holder as the case may be, of any funds hereby  secured will
be a good  discharge  to the  Company  for the  same,  and such  Holder  will be
entitled  to receive  such funds free from all  equities or rights of set-off or
counterclaim  between the Company and the original or any intermediate holder of
the Debenture.

4.6 The Company will not be bound to enter in the register or on this  Debenture
notice of any trusts or to inquire  into the title of any Holder or to recognize
any trust or equity  affecting  the title of a Holder,  save as  ordered by some
court  of  competent  jurisdiction  or as  required  by law.  Debentures  may be
registered  in the name of a trustee at the sole  option and  discretion  of the
Holder,  but in such case the

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                                      -6-

Company will be deemed not to have notice of the beneficiary represented by such
trustee  and will not be bound to see to the  execution  of such  trust  whether
express or implied.

4.7 The register  referred to herein will during business hours (subject to such
reasonable  restrictions  as the Company  may impose,  so that not less than two
hours in each day be allowed for  inspection)  be open to the  inspection by the
Holders free of charge.  The Company will from time to time when requested so to
do by the Holders  furnish the Holders with a list of the names and addresses of
the  Holders  and  showing  the  principal  amount  and  serial  numbers  of the
Debentures held by each such Holder.

4.8 For each Debenture  exchanged,  registered,  transferred or discharged  from
registration  the Company may charge a  reasonable  fee for its  services and in
addition may charge a reasonable fee for each  replacement  Debenture issued (if
any); and payment of such charges and reimbursement of the Company for any taxes
or governmental  or other charges  required to be paid will be made by the party
requesting such exchange, registration,  transfer or discharge from registration
as a condition precedent thereto.

                                     PART 5

                                    SECURITY

5.1 In  consideration  of the  premises  and to secure  the due  payment  of the
principal  and interest of this  Debenture  and all other money (if any) for the
time being and from time to time owing  hereunder and the due performance of the
obligations  of the Company  herein  contained,  the Company  hereby  charges in
favour of the  Holder,  as any by way of a  floating  charge,  and grants to the
Holder, a security  interest in, all the Company's right,  title and interest in
and to,  all  presently  owned or held,  and  after-acquired  or held,  real and
personal  property  of the Company of  whatever  nature or kind and  wheresoever
situate and all proceeds thereof and therefrom  including,  without limiting the
generality  of  the  foregoing,   all  such  equipment,   fixtures,   furniture,
furnishings, debts, accounts, claims, instruments,  monetary obligations, choses
in action,  documents of title,  chattel paper,  contractual  rights,  licenses,
goodwill, patents,  trade-marks,  trade names, copyrights and other intellectual
property of the Company, choses in action and all such other intangible property
of the Company,  of every kind which now is, or which may at any time  hereafter
be, due or owing to or owned by the Company;  PROVIDED  HOWEVER that the Company
will not be at  liberty  to and will not  create  or suffer  to be  created  any
further  mortgage,  charge,  lien,  encumbrance  or security  interest  upon its
undertaking  or any of its  property  or assets,  ranking in priority to or pari
passu with the security  interest and charge created by ss.5.1,  SAVE AND EXCEPT
for the Permitted  Encumbrances and for security  interests and floating charges
ranking  pari  passu  with  the  security  hereby  created  which  secure  other
Debentures issued by the Company from time to time.

5.2 The last day of any term  reserved by any lease,  verbal or written,  or any
agreement  therefor,  now held or  hereafter  acquired  by the Company is hereby
excepted out of any pledge, mortgage, charge or security interest created hereby
or by any other  instrument  supplemental  hereto and does not and will not form
part  of  the  security  hereunder  or by any  such  other  instrument  pledged,
mortgaged or charged so as to be charged with the monies  intended to be secured
hereby,  but the Company will stand possessed of the reversion  remaining in the
Company of any leasehold  premises,  for the time being  demised,  as aforesaid,
upon trust to assign and dispose thereof as the Holder will direct.

5.3 The  Company  hereby  covenants  and  agrees  that it will at all  times do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts,

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                                      -7-

deeds, mortgages,  hypothecations,  transfers, assignments and assurances in law
as the Holder may require for the better  assuring,  mortgaging,  hypothecating,
charging,  transferring,  assigning and confirming unto the Holder the Mortgaged
Premises and for the better accomplishing of the intent hereof.

5.4 Until the security  hereby  constituted  will have become  enforceable,  the
Company will,  subject to the express terms hereof,  be permitted to possess and
use the Mortgaged Premises to sell, lease and otherwise deal with and dispose of
property  forming part of the Mortgaged  Premises in the ordinary  course of its
business  for fair value and to receive and use the rents,  revenues and profits
thereof  to the  same  extent  as if this  Debenture  had not been  issued.  Any
purchaser,  lessee or other Person  taking  from,  or payee of, the Company in a
transaction  or matter  referred to in this ss.5.4 will take its interest in the
property  received by it free and clear of the mortgages,  pledges,  charges and
security interests created by this Debenture.

5.5 The mortgage,  pledge,  charge and security  interest hereby created will be
effective  whether the money hereby secured or any part thereof will be advanced
before or after or at the same time as the issue of this Debenture.

5.6 Subject to the express terms of the Debentures, the mortgage, pledge, charge
and security  interest  created by this  Debenture will rank pari passu with the
mortgages, pledges, charges and security interests securing the other Debentures
issued by the Company from time to time.

5.7 The mortgages,  pledges, charges, assignments and security interests created
by this  Debenture are subject and  subordinate in all respects to the Permitted
Encumbrances.

5.8 Upon the  maturity  of any  Senior  Debt by lapse of time,  acceleration  or
otherwise,  then all  principal  of and  premium,  if any,  and  interest on and
related fees and  expenses  associated  with all such  matured  Senior Debt will
first be paid in full,  or will first have been duly  provided  for,  before any
payment on account of principal  of and interest on or other  amounts in respect
of the Debentures is made.

5.9 Upon the  happening  of an event of default with respect to any Senior Debt,
as defined  therein or in the  instrument  under which the same is  outstanding,
permitting the holders  thereof to accelerate  the maturity  thereof and written
notice of such event of default having been given by or on behalf of the holders
of Senior Debt to the  Company,  unless and until such event of default has been
cured or waived or has ceased to exist, no payment (by purchase of Debentures or
otherwise)  will be made by the  Company  with  respect to the  principal  of or
interest  on or other  amounts in respect of the  Debentures.  The fact that the
payment which is required to be made by the Company in respect of the Debentures
is  prohibited  by this ss.5.9 will not prevent the failure to make such payment
from being an Event of Default hereunder.

5.10 Upon request by the Company, the Holder will from time to time promptly do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged and
delivered all such further acts, discharges and other documents requested by the
Company from time to time in order to evidence or register the  subordination of
this  Debenture in favour of any Permitted  Encumbrance  or the discharge of the
mortgage,  pledge,  charge and security  interest created by this Debenture from
any property of the Company which is no longer part of the Mortgaged Premises by
virtue of ss.5.4.  Any officer or director of the Company is hereby  constituted
the  attorney  of the Holder for the  purposes  of signing  and  delivering  any
acknowledgement, discharge or other instrument referred to in this ss.5.10.

5.11 The Company  will not grant and the Holder will not obtain any security for
amounts owing under this Debenture, other than the security provided for herein.

<PAGE>

                                      -8-

                                     PART 6

                                    COVENANTS

6.1 The Company represents, warrants and covenants that:

     (a)  Corporate  Status - the Company is a  corporation  duly  incorporated,
     organized  and  validly  existing  and in good  standing  under the laws of
     British  Columbia and has all  requisite  corporate  power and authority to
     carry on its business as now conducted and to issue this  Debenture and the
     other Debentures;

     (b) Title - the Company is the beneficial owner of (or, with respect to any
     leased or licensed property forming part of the Mortgaged Premises, holds a
     valid  leasehold or licensed  interest in) the  Mortgaged  Premises and has
     good right and lawful  authority to grant the security hereby created,  and
     the  Mortgaged  Premises  are  free  and  clear of any  liens,  charges  or
     encumbrances whatsoever of any nature or kind whatsoever,  which would rank
     in  priority  to or pari  passu  with  the  said  security  except  for the
     Permitted  Encumbrances  and  mortgages,   pledges,  charges  and  security
     interests  ranking pari passu with the security hereby created which secure
     other Debentures issued by the Company from time to time;

     (c) General Covenants -the Company will:

          (i) maintain its corporate existence;

          (ii)  itself or  through  any  Subsidiary,  carry on and  conduct  its
          business in accordance with industry standards,  provided that nothing
          herein will  prevent the Company  from ceasing to carry on any portion
          of its business (but not  substantially all of its business) if in the
          opinion of the  directors  of the Company it is  advisable  and in the
          best interests of the Company;

          (iii)  keep  proper  books of  account  with  correct  entries  of all
          transactions in relation to its business;

          (iv) pay all taxes, rates,  government fees and dues levied,  assessed
          or imposed upon it or its property as and when the same become due and
          payable  save and except  where it contests in good faith the validity
          thereof  by  proper  legal  proceedings  and for which  provision  for
          payment  adequate  in the  reasonable  opinion of the Holders has been
          made; and

          (v) forthwith notify the Holder of any default (or event, condition or
          occurrence  which with the  giving of notice  and/or the lapse of time
          would  constitute a default) in connection  with any  indebtedness  or
          guarantee in an amount exceeding $100,000;

     (d) Pay  Debenture - the  Company  will duly pay or cause to be paid to the
     Holder  the  principal  and  interest  of this  Debenture  at the dates and
     places,  in the  currencies,  and the manner  mentioned  herein and in this
     Debenture;

     (e)  Securities  Law - the Company will fully comply with the provisions of
     applicable  securities  legislation  and the  rules  and  regulations  made
     thereunder and  Regulations  thereto in respect to the  distribution of the
     Debentures  and will fully comply with all  regulatory  authorities  having
     jurisdiction over the Company;

<PAGE>

                                      -9-

     (f) Defend  Title - the  Company  will  defend  the title of the  Mortgaged
     Premises  for the benefit of the Holders  against the claims and demands of
     all Persons, other than Persons holding Permitted Encumbrances;

     (g)  Maintain  Security  -  subject  to the terms  and  conditions  of this
     Debenture,  the  Company  will  fully  and  effectually  maintain  and keep
     maintained the security hereby created as valid and effective security;

     (h) Registration - the Company will forthwith register this Debenture (or a
     financing  statement in respect  thereof) and all instruments  supplemental
     thereto in accordance  with the laws of British  Columbia and Canada and in
     such other places and jurisdictions where similar registration is necessary
     to perfect or protect the interest of the Holder in the Mortgaged  Premises
     and will  register  such renewals or amendments as may from time to time be
     necessary to maintain such perfection or protection;

     (i) Financial  Statements and  Information - the Company will submit to the
     Holder all annual and quarterly financial  statements of the Company at the
     same time as they are made generally  available to the  shareholders of the
     Company.

     (j) Merger or Sale of Assets - the Company will not,  except in  compliance
     with Part 18,  amalgamate  or merge with any other person or  transfer,  or
     otherwise  dispose of, directly or indirectly,  all or substantially all of
     the  undertaking  and  assets of the  Company  to any  person  other than a
     wholly-owned subsidiary of the Company;

     (k) Senior Debt - the  Company  will not permit the  outstanding  principal
     amount of the Senior  Debt to exceed  $500,000  without  the prior  written
     consent of the Holder;

     (l)  Dividends - the Company  will not  declare,  pay or make,  or agree to
     declare,  make or pay, any dividend or other distribution (whether in cash,
     securities or other  property) on any of its shares or allow any subsidiary
     to make any such  declarations  or  payments  except to or in favour of the
     Company;

     (m)  Repurchase  or  Retraction  of Shares - except with the prior  written
     consent of the Holder,  the Company will not redeem,  repurchase or retract
     any shares in the capital of the Company; and

     (n) Loans, etc. - except with the prior written consent of the Holder,  the
     Company  will not make any loan or advance to, or make any  investment  in,
     any Person or guarantee or become liable for the  obligations  of any other
     Person;

6.2 If the Company will fail to perform any of its  covenants  contained  herein
the Holder may perform any of the said covenants  capable of being  performed by
the Holder,  but will be under no  obligation to do so; and all sums expended or
advanced in such connection  will form part of the principal  amount owing under
the  Debenture;  but no such  performance or advance or notice will be deemed to
relieve the Company from any default hereunder.

<PAGE>

                                      -10-

                                     PART 7

                         EARLY REDEMPTION OF DEBENTURES

7.1 The  Company  will have the right at its  option in the  manner  hereinafter
provided to redeem prior to its maturity the whole or any part of the  principal
amount of the Debentures for the time being  outstanding  upon payment in lawful
money of Canada, at the places where such principal is payable, provided that:

     (a) all interest and other amounts owing hereunder and all interest accrued
     for the period from the date of issue  hereof have been paid as of the date
     of each such redemption;

     (b) a premium of $0.10 will be paid in respect of each dollar of  principal
     redeemed; and

     (c) after each such redemption,  the Company will be in compliance with the
     terms of this Debenture and the Senior Debt.

7.2 If less than all of the aggregate  principal  amount of the Debentures  then
outstanding  is  redeemed  at any one time,  then such  principal  repaid by the
Company  will be repaid to the Holders on a pro rata basis as to the  respective
principal amounts of Debentures held by each Holder.

7.3 A minimum of 10 days' notice of each early redemption of this Debenture will
be given by the Company to the Holder in the manner provided herein.  Every such
notice  will  specify  the  redemption  date and the amount of  principal  to be
repaid.

7.4 If redeemed in whole this  Debenture  will  forthwith  be  delivered  to and
cancelled by the Company.  If redeemed in part this  Debenture will be delivered
to the Company  prior to payment for  notation  by the  Company  indicating  the
amount of principal repaid.

7.5 For each instance of redemption of this  Debenture by the Company,  interest
will be calculated on the  principal  amount  redeemed from the date of the then
most recent interest payment to the redemption date on a per diem basis and will
be paid by the Company on the date of redemption.

                                     PART 8

                                EVENTS OF DEFAULT

8.1 The security hereby constituted will become enforceable subject to the terms
hereinafter  contained,  in case one or more of the following  Events of Default
will have occurred:

     (a) if the Company  makes  default in the  payment of any funds  secured by
     this Debenture when the same becomes due and payable and the default is not
     remedied within 30 days of notice of default by the Holder;

     (b) if:

          (i) the Company makes default in the  observance or performance of any
          other  covenant  or  condition  herein  required  to  be  observed  or
          performed; or

<PAGE>

                                      -11-

          (ii) there is default under any  agreement or  agreements  between the
          Holder and the Company contained herein; and

     any such default is not remedied within 30 days of notice of the default by
     the Holder to the Company;

     (c) if an order is made or a resolution  passed for the  winding-up  of the
     Company or if a petition is filed for the winding-up of the Company;

     (d) if the  Company  becomes  insolvent  or  bankrupt  or  makes a  general
     assignment for the benefit of its creditors or otherwise  acknowledges  its
     insolvency, or if a bankruptcy petition or receiving order is filed or made
     against the Company and is not dismissed or stayed within 30 days after its
     filing or making;

     (e)  if  the  Company  takes  any  corporate   proceedings  in  respect  of
     liquidation of the assets of the Company;

     (f) if any  execution,  sequestration,  extent or any other  process of any
     Court becomes enforceable against the Company;

     (g) if the Company  will permit any debt which has been  admitted as due by
     the  Company  or is not  disputed  to be due by it and  which  forms  or is
     capable of being made a charge,  other than a Permitted  Encumbrance,  upon
     any of the  property  subject to a charge or security  interest  created by
     this Debenture in priority to a charge or security interest created by this
     Debenture to remain unpaid;

     (h) if the Company ceases or threatens to cease to carry on its business or
     if the Company commits or threatens to commit any act of bankruptcy;

     (i) if the Company makes a proposal under the Bankruptcy and Insolvency Act
     or takes any  action in  respect  of the  settlement  of any  claims of its
     creditors under the provisions of the Bankruptcy and Insolvency Act;

     (j) if the Company  passes or purports  to pass,  or takes,  or purports to
     take any corporate  proceedings  to enable it to take  proceedings  for its
     dissolution or liquidation;

     (k) if the Company fails to maintain its corporate existence; or

     (l) if the Company fails to observe or perform,  or a default occurs under,
     any of the terms of any agreement or instrument  evidencing or securing any
     loan  indebtedness of the Company and fails to cure such failure or default
     within any applicable grace period.

                                     PART 9

                        REMEDIES IN THE EVENT OF DEFAULT

9.1 If the security hereby  constituted will become  enforceable as hereinbefore
provided,  the  Holder  may  declare  the  then  outstanding  principal  of this
Debenture and other money secured hereby to be due and payable and the same will
forthwith become  immediately due and payable to the Holder on demand,  anything
therein or herein to the contrary notwithstanding,  and the Company will on such

<PAGE>

                                      -12-

demand,  forthwith  pay to the  Holder  the then  outstanding  principal  of the
Debenture and all other money secured  hereby or payable in accordance  herewith
and such  payment when made will be deemed to have been made in discharge of its
obligations  thereunder  and any money so received by the Holder will be applied
in the same manner as if they were  proceeds  of  realization  of the  Mortgaged
Premises.

9.2 If the security hereby constituted will become enforceable,  the Holder may,
enforce his rights by any one or more of the following remedies:

     (a) sale of the Mortgaged Premises under the provisions hereof;

     (b) appointment of a receiver or  receiver-manager  under the provisions of
     this Debenture,  or proceeding in any court of competent  jurisdiction  for
     the appointment of a receiver or receiver-manager of all or any part of the
     Mortgaged Premises;

     (c) any other action,  suit, remedy or proceeding,  authorized or permitted
     by  this  Debenture  or by law or by  equity,  and no such  remedy  for the
     realization of the security  hereof or for the enforcement of the rights of
     the Holders  will be exclusive of or dependent on any other such remedy but
     any one or  more  of  such  remedies  may  from  time to time be  exercised
     independently or in combination; and

     (d) such  other  remedies  available  to a secured  party  pursuant  to the
     Personal  Property  Security  Act  (British  Columbia)  as if the same were
     expressly set out herein.

                                    PART 10

             WAIVERS OF DEFAULT, AMENDMENTS, CONSENTS AND APPROVALS

10.1 The Holder may in writing:

     (a) waive any breach by the Company of any of the  provisions  contained in
     this  Debenture  or any  default  by the  Company  of  the  payment  of the
     principal  sum or any other  funds  secured  by this  Debenture,  or in the
     observance  or  performance  of any  covenant or  condition  required to be
     observed or performed by the Company under the terms of this Debenture; and

     (b)  sanction  any  modification,  abrogation,  alteration,  compromise  or
     arrangements  of the  rights  of the  Holder  against  the  Company  or the
     security  hereby  created,  or any part  thereof,  whether such rights will
     arise under this Debenture or otherwise;

provided  that if 75% of the  Holders of  Debentures  by  instrument  in writing
approve of an action described in ss.(a) or ss.(b), the Holder will be deemed to
have also approved of such action.

10.2 Any provision of the  Debentures  may, with the consent of the Company,  be
amended  or waived  (including  any Event of  Default)  by the  Holders,  either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by one or more written  instruments  signed in the aggregate by
the Holders  holding not less than 75% of the  aggregate  outstanding  principal
amount of the  Debentures,  provided that,  without the written  consent of each
Holder,  no such  amendment  or waiver  will:

     (a) change the maximum  aggregate  principal  amount of the Debentures that
     may be issued;

     (b)  amend  the  interest  rate or terms of  payment  of  interest  on this
     Debenture;

<PAGE>

                                      -13-

     (c) amend the terms of payment of the principal amount of this Debenture;

     (d) give one or more  Debentures  any  preference  or  priority  over  this
     Debenture;

     (e) increase the principal amount of the Senior Debt above $500,000; or (f)
     amend this ss.10.2.

Any amendment or waiver  approved by the Holders in accordance with this ss.10.2
will be binding upon the Holders.

10.3 Any consent or approval of the Holders may be given by one or more  written
instruments  signed in the aggregate by the Holders holding not less than 75% of
the aggregate  outstanding  principal  amount of  Debentures  and any consent or
approval will be valid and binding upon the Holder.

                                    PART 11

                   APPOINTMENT OF RECEIVER OR RECEIVER-MANAGER

11.1 If the security hereby constituted will become enforceable,  the Holder may
by instrument in writing appoint a receiver or receiver-manager (herein referred
to as a "Receiver")  of the  Mortgaged  Premises,  or any part thereof,  and may
remove any Receiver so appointed and appoint another in his or their stead.

11.2 Any such Receiver will, so far as concerns  responsibility for his acts, be
deemed  the  agent  of the  Company  and  the  Holder  will  not  be in any  way
responsible for any misconduct or negligence on the part of any such Receiver.

11.3 Any such Receiver so appointed will have power:

     (a) to take possession of the Mortgaged Premises or any part thereof;

     (b) to sell or lease or concur in selling or leasing the Mortgaged Premises
     or any part thereof; and

     (c) to make any  arrangement  or  compromise  which the Receiver will think
     expedient;

and, to the extent permitted by law or to such lesser extent as may be permitted
by terms of his appointment, he will have power:

     (d) to carry on or concur in carrying on the business of the Company;

     (e) for the purpose of the said business, to employ such agents,  managers,
     solicitors,  accountants,  contractors,  employees  and other persons as he
     thinks proper;

     (f) to repair or renew  such of the  plant,  machinery  and  effects of the
     Company as may be worn out or lost or otherwise become unserviceable; and

     (g) for the  purposes  aforesaid,  to raise  money on the  security  of the
     Mortgaged Premises and to charge the same by charges ranking in priority to
     or pari passu  with or  subordinate

<PAGE>

                                      -14-

     to the  mortgage,  pledge,  charge and  security  interest  created by this
     Debenture and at such rate of interest and on such terms as he thinks fit.

11.4 To enable any such  Receiver to exercise the powers  granted to him herein,
the Company hereby appoints such Receiver to be its irrevocable attorney for the
purpose of making any sale of all or any part of the  Mortgaged  Premises or any
arrangement or compromise and executing any deed, conveyance,  transfer, bill of
sale or instrument necessary to effect such sale, arrangement or compromise.

11.5 The rights and powers  conferred by this ss.11.5 are in  supplement  of and
not in substitution for any other rights the Holder may have.

11.6 The Holder may from time to time fix the  remuneration of such Receiver and
direct the payment thereof out of the property and assets hereby charged.

11.7  Any  such  Receiver  may be  vested  with  all or  any of the  powers  and
discretions of the Holder.

11.8  Subject to the rights of the holders of Permitted  Encumbrances  including
the Senior  Lender,  all moneys from time to time received by such Receiver will
be paid by him:

     (a) in  discharge  of all  rents,  taxes,  rates,  insurance  premiums  and
     outgoings affecting the Mortgaged Premises;

     (b) in payment of his remuneration and expenses as Receiver;

     (c) in  keeping in good  standing  all liens and  charges on the  Mortgaged
     Premises which rank prior to the security hereby constituted;

     (d) in payment rateably and proportionately of the interest accruing due on
     this Debenture and the other Debentures issued by the Company;

     (e) in  payment  rateably  and  proportionately  of any  principal  due and
     payable upon this Debenture and the other Debentures issued by the Company;

and the residue of any moneys so received  will be paid to the Company  provided
that the Receiver  will not be obliged to make any of the payments  described in
clauses (a) and (c) of this  ss.11.8 if in his  opinion the overall  recovery of
the Holder would be increased by not making such payments.

11.9 The Holder in appointing or refraining  from  appointing such Receiver will
not incur any liability to the Receiver the Company or otherwise.

11.10 If all moneys received by the Receiver are not sufficient to fully satisfy
all amounts  secured hereby or by any  supplemental  debenture or other security
agreement and all expenses  incurred by the Holder or the Receiver,  the Company
will be liable to pay to the Holder for any deficiency.

<PAGE>

                                      -15-

                                    PART 12

                                 SALE BY HOLDER

12.1 If the Holder will have determined  under the provisions  herein to realize
the security hereby  constituted by sale, the Holder will have the right to sell
and dispose of all or any part of the Mortgaged  Premises en bloc or in parcels,
at public auction or by tender,  subject to such reasonable reserve bid, at such
time or times,  and on such terms and conditions,  as the Holder will determine,
having  first  given  such  notice  of the time and place of such sale as it may
think proper.

12.2 In the event of no bid at the  auction or by tender  reaching  the  reserve
bid, the Holder may sell at public  auction or by tender  without a reserve bid,
or by private contract.  It will be lawful for the Holder to make any such sale,
whether by auction,  tender or private contract,  either for cash or upon credit
or partly for one and partly for the other,  upon such reasonable  conditions as
to terms of payment as it may deem proper;  also to rescind or vary any contract
of sale  that may have been  entered  into and  resell  with or under any of the
powers conferred herein;  also to stop, suspend or adjourn any sale from time to
time and hold the sale as adjourned  without further notice;  also to deliver to
the  purchaser or  purchasers  of the said property or any part thereof good and
sufficient deed for the same.

                                    PART 13

                         APPLYING DEBENTURES IN PAYMENT

13.1 Upon any sale of the Mortgaged  Premises or any part thereof,  whether made
under the power of sale herein  contained  or pursuant to judicial  proceedings,
the Holder or any agent or representative thereof may become purchasers and may,
in paying the purchase price,  deliver any of the Debentures in place of cash to
the amount which would,  upon  distribution of the net proceeds of such sale, be
payable thereon; and in case the amount so payable thereon will be less than the
amount due  thereon,  such  Debentures  will be returned  after  being  properly
stamped to show such partial payment; provided, however, that any such purchaser
will  pay in cash so much as will  be  necessary  to  provide  for the  payments
mentioned in ss.14.1(a).

                                    PART 14

                     APPLICATION OF PROCEEDS OF REALIZATION

14.1 Except as otherwise  herein  provided,  the money  arising from any sale or
other  realization of the whole or any part of the Mortgaged  Premises,  whether
under any sale by the Holder, Receiver or by judicial process or otherwise, will
be held and applied,  together  with any other money then or  thereafter  in the
hands of the Holder available for the purpose, as follows:

     (a)  firstly,  in  payment  of the costs and  expenses  of the sale and the
     proceedings   incidental  thereto  (including  Receiver's  costs)  and  all
     encumbrances,  taxes,  dues,  rates,  assessments  and other charges on the
     Mortgaged  Premises (except those subject to which such sale will have been
     made),  ranking in  priority to the  Debentures,  including  amounts  owing
     pursuant to the Senior Debt;

<PAGE>

                                      -16-

     (b) secondly,  in payment of the interest  accrued and  outstanding  on the
     Debentures which will then be outstanding, rateably and proportionately;

     (c) thirdly,  in payment of the principal of the Debentures which will then
     be outstanding rateably and proportionately; and

     (d) the  surplus,  if any, of such money will be paid to the Company or its
     assigns.

                                    PART 15

                          PERSONS DEALING WITH HOLDERS

15.1 No person dealing with the Holder or its agent will be concerned to inquire
whether the security hereby constituted has become  enforceable,  or whether the
powers which the Holder is purporting to exercise  have become  exercisable,  or
whether any money  remains due upon the security of the  Debentures or as to the
necessity or expediency of the stipulations and conditions  subject to which any
sale will be made or otherwise as to propriety or  regularity  of any sale or of
any other  dealing by the Holders  with the  Mortgaged  Premises,  or to see the
application of any money paid to the Holders.

                                    PART 16

                           SATISFACTION AND DISCHARGE

16.1 These  presents  are upon this express  condition  that if the Company will
well and truly pay to the Holder the  principal  of this  Debenture  as the same
will  respectively  become  due and  payable  and will also pay all  other  sums
payable  hereunder by the Company and secured hereby and will keep,  perform and
observe the covenants in this Debenture and in this Debenture agreed to be kept,
performed  and  observed  by or on the part of the  Company,  then the  security
hereby  created will cease and become  utterly  null and void and the  Mortgaged
Premises  will  revert  to  and  revest  in the  Company  without  any  release,
acquittance,  reconveyance,  re-entry or other act or formality whatever; and at
the  request and at the expense of the  Company,  the Holder and its  successors
will execute and deliver to the Company, its successors and assigns,  such deeds
and other  instruments as will be required to cancel the pledges,  mortgages and
charges hereby constituted.

16.2 All matured  Debentures  will forthwith  after payment thereof be cancelled
and delivered to the Company.

16.3 In case the Holder will fail to present this  Debenture  for payment on the
date on which the principal hereof or represented  hereby becomes payable either
at  maturity,  on  redemption  or  otherwise  the Company  will upon  payment be
entitled  to note  in the  register  and its  records  the due  payment  of this
Debenture and the cancellation thereof.

                                    PART 17

                                     NOTICES

17.1 Any notice or other communication  required or permitted to be given to the
Holder  hereunder  will be in  writing  and may be  given  by  mailing  the same
registered postage prepaid or

<PAGE>

                                      -17-

delivering the same addressed to the Holder at its address shown on the register
of Debentures kept by and at the offices of the Company.

17.2 Any notice or other communication  required or permitted to be given to the
Company hereunder will be in writing and may be given by facsimile transmission,
or  delivering  the same  addressed,  to the Company at 1630 - 1075 West Georgia
Street, Vancouver,  B.C. V6E 3C9, Attention:  Chief Financial Officer, Fax (604)
684-9314.

17.3 Any notice,  direction or other instrument aforesaid,  if delivered or sent
by facsimile transmission, will be deemed to have been given or made on the date
on which it was delivered or sent by facsimile transmission, or, if mailed, will
be deemed to have been given or made on the third  business  day  following  the
date on which it was  mailed.  The Holder or the  Company  may change his or its
address for notice from time to time by notice given in accordance  with ss.17.1
or ss.17.2, as applicable.

                                    PART 18

                             SUCCESSORS AND ASSIGNS

18.1 This Debenture and all of its  provisions  will enure to the benefit of the
Holder,  his  administrators,  successors  and  permitted  assigns,  and will be
binding upon the Company,  its successors and permitted assigns. The Company may
not assign this Debenture without the prior written consent of the Holder,  such
consent not to be unreasonably withheld or delayed.

18.2 The  Company  will not  enter  into any  transaction  (including  by way of
reconstruction,    reorganization,    consolidation,    amalgamation,    merger,
liquidation,  transfer,  sale, lease or otherwise)  whereby all or substantially
all of its  undertaking,  property  and assets  would become the property of any
other person, or, in the case of an amalgamation,  of the continuing corporation
resulting therefrom, unless:

     (a)  such  other  person  or   continuing   corporation   (the   "Successor
     Corporation")   has  executed,   before  or   contemporaneously   with  the
     consummation  of  such  transaction,  such  instruments,  if  any,  as  are
     necessary  or  advisable  to  evidence  the  assumption  by  the  Successor
     Corporation  of  liability  for  the due and  punctual  payment  of all the
     Debentures,  interest thereon and all other monies payable  hereunder,  and
     the covenants of the Successor  Corporation  to pay the same and to observe
     and perform all the  covenants  and  obligations  of the Company under this
     Debenture;

     (b) such transaction  will be upon such terms as to substantially  preserve
     and not impair any of the rights and powers of the Holders; and

     (c) no condition or event exists in respect of the Successor Corporation at
     the time of such  transaction  or after  giving full effect  thereto  which
     constitutes or would constitute an Event of Default hereunder.

18.3 Whenever the  conditions of ss.18.2 have been duly observed and  performed,
upon the Successor  Corporation  duly  executing and  delivering a notice to the
Holder:

     (a) the  Successor  Corporation  will  possess  and  from  time to time may
     exercise such and every right and power of the Company under this Debenture
     or otherwise and any act or  proceeding by any provision of this  Debenture
     required  to be done or  performed  by any  directors

<PAGE>

                                      -18-

     or officers of the  Company may be done and  performed  with like force and
     effect by the directors or officers of such Successor Corporation; and

     (b) the Company will be released and discharged  from liability  under this
     Debenture and the Holder will execute any documents which it may be advised
     are necessary or advisable  for  effecting or  evidencing  such release and
     discharge.

                                    PART 19

                 ISSUE IN SUBSTITUTION FOR DEBENTURES MUTILATED,
                                LOST OR DESTROYED

19.1 In case this Debenture will become  mutilated or be lost or destroyed,  the
Company in its discretion may issue and deliver a new Debenture of like date and
tenor as the one  mutilated,  lost or  destroyed in exchange for and in place of
and  upon  cancellation  of  such  mutilated  Debenture  or in  lieu  of  and in
substitution for such lost or destroyed Debenture and the substituted  Debenture
will be entitled to the benefit  hereof and rank equally in accordance  with its
terms with all other Debentures.

19.2 In case of loss or destruction,  the applicant for a substituted  Debenture
will, as a condition precedent to the issue thereof, furnish to the Company such
evidence of ownership, personal identification and of the loss or destruction of
the Debenture so lost or destroyed as will be satisfactory to the Company in its
discretion and such applicant will also furnish  indemnity in an amount and form
satisfactory to it in its discretion and will pay the reasonable  charges of the
Company therefor and the cost of the preparation of the new Debenture.

<PAGE>

                                      -19-

                               REGISTRATION PANEL

                    (No writing hereon except by the Company)

<TABLE>
-------------------- ------------------------------ -------------------------------- -------------------------------
      Date of                                                                           Authorized Signature of
   Registration            Registered Holder         Address of Registered Holder               Company
-------------------- ------------------------------ -------------------------------- -------------------------------

<S>                  <C>                            <C>
May 30th, 2003       414826 B.C. LTD.               680 Fairmile Road                /s/ Wayne Smith
                     (in custody with Canaccord     West Vancouver, BC               ---------------
                     Capital Corporation)           V7S 1R2
-------------------- ------------------------------ -------------------------------- -------------------------------
</TABLE>EXHIBIT 10.57 

SETTLEMENT AGREEMENT  

        This
Settlement Agreement (“Agreement”) is made by and among Joseph Karwat
(hereinafter referred to as “Karwat”) on the one hand, and Moving Bytes Inc.
f/k/a/ E*Comnetrix, Inc., a company incorporated under the Canada Business Corporations
Act, Moving Bytes, Inc., a Nevada Corporation, and all of their predecessors, parent
companies, subsidiaries, and all related entities (hereinafter collectively referred to
as the “Company”).  

RECITALS  

        WHEREAS,
Karwat prevailed against the Company in several of the claims he brought in arbitration
before Elaine Leitner of the American Arbitration Association (hereinafter the “Arbitration”)
related to his former employment with the Company; and  

        WHEREAS,
the Company has represented to Karwat that it does not have the financial resources to
pay the entire Arbitration award to Karwat in the immediate future; and  

        WHEREAS,
the parties wish to agree on a payment schedule for the Company to pay the Arbitration
award without jeopardizing its ability to continue operations.  

AGREEMENT  

        NOW
THEREFORE, in consideration of the foregoing and of the provisions of this Agreement
hereinafter set forth, it is agreed by the Parties as follows:  

        1.                 The
Company owes and will pay to Karwat the sum of two hundred ninety-two           thousand
nine hundred fifty-three dollars and sixty-three cents ($292,953.63).           The
Company shall pay this amount to Karwat as follows: (a) fifty-thousand           dollars
($50,000) at the time this Agreement is executed; (b) the greater of the
          following: thirty-thousand dollars ($30,000) on or before September 16, 2003
or,           if the Company receives any payments from its insurer related to this case
in           excess of $ 30,000 on or before September 16, 2003, the Company will pay to
          Karwat those same amounts, up to fifty-thousand dollars ($50,000), within
          fourteen (14) days of the Company’s receipt of the payments from the
          insurer; and (c) the balance of two hundred twelve thousand nine hundred
          fifty-three dollars and sixty-three cents ($212,953.63) plus five percent (5%)
          annualized simple interest, in eighteen (18) equal monthly installments of
          twelve thousand three hundred and four dollars and fifty-seven cents
          ($12,304.57), with the first installment due on July 15, 2003 and the remaining
          installments due on the 15th of each month thereafter, provided that any
          payments to Karwat out of proceeds from the insurer in excess of thirty
thousand           dollars ($30,000), as described in subparagraph (b) above, shall be
credited           against the final two installment payments. The Company shall request
of the           insurer that on the same day the insurer transmits to the Company any
proceeds           related to this case, that the insurer notify Karwat’s counsel in
writing           of such and the Company hereby authorizes the insurer, its attorneys
and the           Company’s attorneys to promptly and candidly respond to any
inquiries from           Karwat’s counsel regarding whether any such payments have
yet been made.           Further, if the Company sells its Telecommunications business
and pays to Karwat           the proceeds described in paragraph 2 of the attached
Security Agreement, the           proceeds will be credited against the outstanding
principal, with any then           unpaid principal paid by the company to be paid over
the remainder of the           18-month period in equal monthly installments plus five
percent (5%) annualized           simple interest. All payments to Karwat referred to
herein shall be in the form           of a cashier’s check or money order, payable
to “Joseph Karwat and his           attorney, Anthony J. Sperber.” All
payments, except the first one, shall be           delivered by express mail to Karwat’s
attorney, addressed as follows:           Anthony J. Sperber, Law Office of Anthony J.
Sperber, 2637 Grant Street,           Berkeley, CA 94703.  

        2.                 The
parties agree that any lateness in payment will result in substantial but
          unknown harm to Karwat, which will be impossible to calculate with precision.
          Therefore, the parties agree that any late payments will be subject to
          liquidated damages in the amount of $75.00 per day for each day that any of the
          above-described payments is late. This liquidated damages provision is not a
          penalty but rather a good faith approximation of the likely financial and other
          damage caused by the lateness of payment. Payments will be deemed late if they
          are not received by the dates indicated above. If any payment is late, the
          Company shall automatically include the liquidated damages in that late
payment.  

        3.                 The
amounts due to Karwat under this Agreement will be secured by the assets of           the
Company, as provided in the attached Security Agreement, attached hereto as
          Exhibit 1 and incorporated by reference herein.  

        4.                 The
prevailing party in any action to enforce this Agreement shall be entitled           to
recover reasonable attorneys’ fees and costs from the other party.           Karwat
will also be entitled to his reasonable attorneys’ fees and costs           incurred
in any enforcement, execution or collection actions that are necessary           because
of the Company’s breach of this Agreement.  

        5.                 Karwat’s
right to receive the amounts awarded in the Arbitration against           the Company is
governed by the Arbitration award and applicable state law           governing the
enforcement of such awards. However, in order to help the Company           continue
operating without undue burden, Karwat has agreed to the payment plan           provided
in this Agreement. The parties shall cause to be prepared and entered,           within
ten (10) days of the date this Agreement is executed, a judgment           incorporating
the terms and conditions of this Agreement. Karwat agrees that he           will take no
action to enforce or execute the stipulated judgment during the           term of this
Agreement, provided that the Company makes all payments on a timely           basis and
otherwise carries out all of its obligations under this Agreement.  

        6.                 After
the Arbitration award was issued, the Company raised the argument that it           might
not be liable for the award on the ground that Karwat had not named the           correct
corporate entity. The Company hereby waives for all time any argument           regarding
whether the demand for arbitration named, or the Arbitration included,           the
correct corporate entity. The Company hereby admits liability for the
          Arbitration award and the resulting amount of two hundred ninety-two thousand
          nine hundred fifty-three dollars and sixty-three cents ($292,953.63).  

        7.                 Each
Party warrants that it has not assigned any of the claims released herein.  

        8.                 Each
of the undersigned, in executing this Agreement, represents and warrants           that
it/he has full authority and legal power to represent and execute this
          Agreement on behalf of itself/himself, and its/his heirs, agents, successors
and           predecessors in interest, and assigns, and employees. Each of the
undersigned           further represents and warrants that said Parties’ signature
below shall be           binding on all of the foregoing persons and entities.  

        9.                 By
its/his signature, each of the undersigned represents and warrants that it/he
          has carefully read the foregoing Agreement and knows the content thereof and
          signs the same as of its/his own free act.  

        10.                The
terms of this Agreement shall be governed by the laws of the State of
          California. In the event that any term of this Agreement shall be found to be
          null or void, the remaining terms shall continue to have full force and effect,
          provided the intent of the Agreement can be effectuated by enforcing the
          remaining terms. Any invalidity, ambiguity, or unenforceability of this
          Agreement will not render invalid, ambiguous, or unenforceable, nor in any way
          affect, the underlying Arbitration award or any judgment entered pursuant
          thereto or pursuant to this Agreement.  

        11.                The
parties understand and agree that this Agreement incorporates the entire
          understanding among the parties, and recites the sole consideration for the
          promises exchanged herein. This Agreement expressly supersedes any and all
prior           written or oral agreements, understandings, covenants or promises between
the           parties. In negotiating this Agreement, no party has relied upon any
          representation or promise except those expressly set forth herein.  

        12.                Full
Cooperation by Each Party. Each of the parties hereto shall do all acts,
          execute all documents and provide all information which is reasonably required
          by any party hereto to give full force and effect to the terms of this
          Settlement Agreement and the attached and incorporated Security Agreement.  

		
	Dated: June ____, 2003 	Moving Bytes Inc. f/k/a E*Comnetrix, Inc., 
	  	Moving Bytes, Inc. 
	  	  
	  	  
	  	By:      
             
             
             
             
        
              
	  	Mark Smith 
	  	  
	  	  
	Dated: June ____, 2003 	       
             
             
             
             
             
              
	  	Joseph Karwat

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