Document:

EXHIBIT 10.5

                                STOCK OPTION PLAN

                                MIAD SYSTEMS LTD.

                                STOCK OPTION PLAN

                                   (JUNE 1999)

1.       A Stock Option Plan (herein called the "Plan") for MIAD SYSTEMS LTD.,
         (the "Corporation") is hereby established with the intent of advancing
         the interests of the Corporation by encouraging and enabling the
         acquisition of an equity interest in the Corporation by the
         participants.

2.       The Board of Directors, or any committee thereof specifically
         designated by the Board of Directors to be responsible therefor, shall
         from time to time by resolution designate those key employees,
         directors and officers and consultants, if any, who, in the opinion of
         the Board of Directors, are largely responsible for the management and
         growth of the Corporation and who, as an additional inducement to
         promote the best interests of the Corporation, are entitled to
         participate in the Plan (herein referred to as the "Participant(s)")
         and shall determine the extent and terms of such, participation by said
         Participants. If applicable, directors, as directors, and others who
         are not otherwise bonafide full-time employees of the Corporation shall
         not be eligible to become participants in the plan unless notice of the
         participation in the plan of such person has been accepted by or
         approved by any stock exchange or exchanges upon which any of the
         Corporation's securities are from time to time listed for trading and
         by any other applicable regulatory authority. The judgment of the said
         Board of Directors or committee thereof in designating Participants and
         the extent of their participation shall be final and conclusive;
         provided, however, that each designated Participant shall have the
         right not to participate in the Plan and any decision not to
         participate therein shall not affect the Participant's employment by or
         engagement with the Corporation.

3.       The total number of authorized but unissued shares allocated to and
         made available to be granted to Participants under the Plan shall not
         exceed fifteen percent (15%) of the common shares, as such may from
         time to time be issued and outstanding in the capital stock of the
         Corporation as the same is presently constituted, and the aggregate
         number of common shares which may be issued under the Plan to any one
         particular Participant under the Plan shall not exceed thirty percent
         (30%) of the said aggregate number of common shares allocated to and
         made available for the Plan.

4.       Except as provided in Paragraph 10 hereof or by the laws of descent and
         distribution, the rights of any Participant under the Plan are personal
         to the said Participant and are not assignable.

5.       No resident of the United States of America or any territory or
         possession thereof may be a Participant in the Plan unless such
         participation can be accomplished pursuant to or in accordance with and
         without violating any securities or other legislation of the United
         States

<PAGE>

         of America or of any state, territory or possession thereof.

6.       Subject to the approval of applicable stock exchanges and regulatory
         authorities, the Board of Directors, or any committee thereof
         specifically designated by the Board of Directors to be responsible
         therefor, shall have the unfettered right to interpret the provisions
         of this Plan and to make such regulations and formulate such
         administrative provisions for carrying this Plan into effect and to
         make such changes therein and in the regulations and administrative
         provisions therein as, from time to time, the said Board or committee
         thereof deem appropriate in the best interests of the Corporation. The
         Board of Directors shall also have the unfettered right from time to
         time and at any time to rescind or terminate the Plan as it shall deem
         advisable; provided, however, that no such rescission or termination
         shall impair or change the rights and options theretofore granted under
         the Plan without the prior written consent of the Participant or
         Participants affected.

7.       The Corporation shall pay all costs of administering the Plan.

8.       The exercise price of the shares purchased pursuant to stock options
         granted hereunder shall be not less than that from time to time
         permitted by the applicable regulations and policies of any stock
         exchange or exchanges as any securities of the Corporation may from
         time to time be listed.

9.       Each option granted hereunder shall be for a term not exceeding five
         (5) years and, unless the Board of Directors determines otherwise,
         shall be exercisable only after the first anniversary date of its
         grant, and on each subsequent anniversary date during the term of the
         option, with respect to twenty five percent (25%) of the total number
         of shares subject to the option (computed in each case to the nearest
         full share), and all or any part of the shares as to which the option
         shall have become exercisable may be purchased at any time or from time
         to time thereafter, until expiration or termination of the option. Each
         Participant shall execute a Stock Option Agreement in substantially the
         form annexed hereto as Schedule "A" prior to the grant of any stock
         option to a Participant becoming effective.

         Notwithstanding the foregoing, upon the making of an Offer, options
         shall become immediately exercisable in respect of any and all shares
         covered thereby in respect of which the Participant has not exercised
         such Participant's right to acquire under the option. For the purposes
         hereof, "Offer" means an offer made generally to the holders of the
         Corporation's voting securities in one or more jurisdictions to
         purchase directly or indirectly voting securities of the Corporation
         where the voting securities which are the subject of the offer to
         purchase, together with the offeror's then presently owned securities,
         will in the aggregate exceed twenty percent (20%) of the outstanding
         voting securities of the Corporation and where two or more persons or
         companies make offers jointly or in concert or intending to exercise
         jointly or in concert any voting rights attaching to the securities to
         be acquired, then the securities owned by each of them shall be
         included in the calculation of the percentage of the outstanding voting
         securities of the Corporation owned by each of them.

10.      In the event of the physical or mental disability, retirement with the
         consent of the

<PAGE>

         Corporation or death of the optionee on or prior to the expiry date
         while engaged as a key employee or director or officer or consultants
         of the Corporation, any option granted hereunder may be exercised up to
         the full amount of the optioned shares by the Participant or the legal
         personal representative(s) of the Participant, as the case may be at
         any time up to and including nine (9) months following the physical or
         mental disability, retirement or death of the Participant after which
         date the option shall forthwith expire and terminate and be of no
         further force or effect whatsoever. For greater certainty, any
         Participant who is deemed to be an employee of the Corporation pursuant
         to any medical or disability plan of the Corporation shall be deemed to
         be an employee for the purposes of the Plan.

11.      In the event the Participant's employment by or engagement with (as a
         director, officer, consultant or otherwise) the Corporation is
         terminated by the Corporation or the Participant for any reason other
         than the Participant's physical or mental disability, retirement with
         the consent of the Corporation or death before exercise of any options
         granted hereunder, the Participant shall have ninety (90) days from the
         date of such termination to exercise only that portion of the option
         such Participant is otherwise entitled to exercise at that time and
         thereafter such Participant's option shall expire and all rights to
         purchase shares hereunder shall cease and expire and be of no further
         force or effect. Options shall not be affected by any change of
         employment so long as the Participant continues to be employed by the
         Corporation or any of its subsidiaries or continues to be a director or
         officer of one of the foregoing.

12.      Subject to the provisions of the Plan, the options granted hereunder
         may be exercised from time to time by delivery to the Corporation at
         its head office of a written notice of exercise specifying the number
         of shares with respect to which the option is being exercised and
         accompanied, by payment in full of the purchase price of the shares
         then being purchased by way of cash or certified cheque in favour of
         the Corporation. Such notice shall contain the Participant's
         undertaking to comply, to the satisfaction of the Corporation and its
         counsel, with all applicable requirements of any stock exchange or
         exchanges upon which any securities of the Corporation are from time to
         time listed and any applicable regulatory authority or authorities.

13.      Subject to any required action by its shareholders, if the Corporation
         shall be a party to any reorganization, merger, dissolution or sale or
         lease of all or substantially all its assets, whether or not the
         Corporation is the surviving entity, the option shall be adjusted so as
         to apply to the securities to which the holder of the number of shares
         of capital stock of the Corporation subject to the option would have
         been entitled by reason of such reorganization, merger or sale or lease
         of all or substantially all of its assets, provided however, that the
         Corporation may satisfy any obligations to a Participant hereunder by
         paying to the said Participant in cash the difference between the
         exercise price of all unexercised options granted hereunder and the
         fair market value of the securities to which the Participant would be
         entitled upon exercise of all unexercised options, regardless of
         whether all conditions of exercise relating to continuous employment
         have been satisfied.. Adjustments under this paragraph or any
         determinations as to the fair market value of any securities shall be
         made by the Board of Directors, or any committee thereof specifically
         designated by the Board of Directors to be

<PAGE>

         responsible therefor, and any reasonable determination made by the said
         Board or committee thereof shall be binding and conclusive.

14.      In the event of any subdivision or subdivisions of the common shares of
         the Corporation as said common shares were constituted at the time any
         options granted hereunder were granted into a greater number of common
         shares, the Corporation will thereafter deliver at the time of exercise
         thereof in addition to the number of shares in respect of which the
         option is then being exercised, such additional number of shares as
         result from such subdivision or subdivisions of the shares for which
         the option is being exercised without the Participant exercising the
         option making any additional payment or giving any other consideration
         therefor.

15.      In the event of any consolidation or consolidations of the common
         shares of the Corporation as said common shares were constituted at the
         time any options granted hereunder were granted into a lesser number of
         common shares, the Participant shall accept, at the time of the
         exercise thereof in lieu of the number of shares in respect of which
         the option is then being exercised, the lesser number of shares as
         result from such consolidation or consolidations of the shares for
         which the option is being exercised.

16.      In the event of any change of the common shares of the Corporation as
         said common shares were constituted at the time any options granted
         hereunder were granted, the Corporation shall thereafter deliver at the
         time of the exercise thereof the number of shares of the appropriate
         class resulting from the said change as the Participant exercising the
         option would have been entitled to receive in respect of the number of
         shares so purchased had the option been exercised before such change.

17.      If the Corporation at any time while any options granted hereunder are
         outstanding shall pay any stock dividend or stock dividend(s) upon the
         shares of the Corporation in respect of which any options were granted
         hereunder, the Corporation will thereafter deliver at the time of
         exercise thereof in addition to the number of shares in respect of
         which the option is then being exercised, the additional number of
         shares of the appropriate class as would have been payable on the
         shares so purchased if they had been outstanding on the record date for
         the payment of said stock dividends or dividends.

18.      The Corporation shall not be obligated to issue fractional shares in
         satisfaction of any of its obligations hereunder.

19.      If at any time the Corporation grants to the holders of its capital
         stock rights to subscribe for and purchase pro rata additional
         securities of the Corporation or of any other corporation or entity,
         there shall be no adjustments made to the number of shares or other
         securities subject to the option in consequence thereof and the said
         stock option of the Participant shall remain unaffected.

<PAGE>

                                   SCHEDULE "A"

                             STOCK OPTION AGREEMENT

                  THIS AGREEMENT made as of the [DATE] day of [MONTH], [YEAR].

BETWEEN:

                  [NAME OF PARTICIPANT], being a person residing in the City of
                  [NAME OF CITY], in the Province of [NAME OF PROVINCE],

                  (hereinafter referred to as the "Optionee")

                                                             OF THE FIRST PART;

                                      -and-

                  MIAD SYSTEMS LTD, a corporation incorporated under the laws of
                  the Province of Ontario,

                  (hereinafter referred to as the "Corporation").

                                                           OF THE SECOND PART;

1.        Pursuant to the Stock Option Plan of the Corporation established by
          the directors of the Corporation on the 17th day of June, 1999, and
          approved by the shareholders of the Corporation on the [INSERT DATE],
          the Corporation hereby grants to the Optionee the irrevocable option
          to purchase up to [INSERT NUMBER OF COMMON SHARES BEING GRANTED]
          common shares (the "Shares") in the capital stock of the Corporation,
          as presently constituted, for cash, at a price of
          [INSERT PURCHASE PRICE PER SHARE] per Share, upon the following terms:

          (a) The option shall be non-exercisable until [INSERT DATE] and on
          each subsequent year to and including [INSERT EXPIRY DATE OF THE
          OPTION], the option shall become exercisable with respect to twenty
          five percent (25%) of the total number of Shares (computed in each
          case to the nearest full share), and all or any part of the Shares as
          to which the option shall have become exercisable may be purchased at
          any time, or from time to time, thereafter, until expiration or
          termination of the option. The option may only be exercised by the
          Optionee, or by the person or persons entitled to exercise the same
          pursuant to the provisions of subparagraph (d) below, on or prior to
          [INSERT EXPIRY DATE OF THE OPTION], by the delivery to the Corporation
          at its head office of written notice of election to exercise the same,
          specifying the number of Shares with respect to which the option is
          being exercised and accompanied by payment in full of the purchase
          price of the Shares then purchased by way of cash or certified cheque,
          in favour of the Corporation. Such notice shall

<PAGE>

           constitute the Optionee's acknowledgement of and undertaking to
           comply to the satisfaction of the Corporation and its counsel, with
           all applicable requirements of any stock exchange or exchanges upon
           which any securities of the Corporation may from time to time be
           listed and of any applicable regulatory authority or authorities.
           Such requirements may include the placement of legends on share
           certificates restricting transfer of such Shares, the making of
           representations by the Optionee that the Optionee is acquiring such
           Shares for investment and not with a view to distribution, the filing
           of any required information or statements with the aforesaid
           authorities and the making of arrangements with the Optionee's
           employer to withhold income taxes which may become payable under the
           Optionee's exercise of an option under this Agreement. Concurrently
           with its receipt of any such notice and payment, the Corporation
           shall deliver, or cause to be delivered, to the Optionee a
           certificate representing the Shares purchased by the Optionee. The
           Corporation may at its election require that this Agreement be
           presented for appropriate endorsement upon any such exercise.

           Notwithstanding the foregoing, upon the making of an Offer, options
           shall become immediately exercisable in respect of any and all Shares
           covered thereby in respect of which the Optionee has not exercised
           such Optionee's right to acquire under the option. For the purposes
           of this subparagraph, "Offer" means an offer made generally to the
           holders of the Corporation's voting securities in one or more
           jurisdictions to purchase directly or indirectly voting securities of
           the Corporation where the voting securities which are the subject of
           the offer to purchase together with the offeror's then presently
           owned securities will in the aggregate exceed twenty percent (20%) of
           the outstanding voting securities of the Corporation and where two or
           more persons or companies make offers jointly or in concert or
           intending to exercise jointly or in concert any voting rights
           attaching to the securities to be acquired, then the securities owned
           by each of them shall be included in the calculation of the
           percentage of the outstanding voting securities of the Corporation
           owned by each of them.

           (b) The option shall be non-assignable and nontransferable by the
           Optionee otherwise than by will or the laws of descent and
           distribution or as contemplated in subparagraph (d) hereof.

           (c) The option shall expire and all rights to purchase Shares
           hereunder shall cease and become null and void at 5:00 p.m. Eastern
           Standard Time on [INSERT DATE OF EXPIRY OF OPTION] and the option
           hereby granted shall expire and all rights hereunder shall cease at
           such time or upon the happening of certain events as hereinafter
           provided.

           (d) In the event of the physical or mental disability, retirement
           with the consent of the Corporation or death of the Optionee on or
           prior to the expiry date while engaged as an employee, or director or
           officer or consultant of the Corporation, the option granted may be
           exercised, up to the full amount of the optioned Shares by the
           Optionee or the legal personal representative(s) of the Optionee, as
           the case may be, at any time up to and including nine (9) months
           following the physical or mental disability, retirement or death of
           the Optionee after which date the option shall forthwith expire and
           terminate and be of no further force or effect whatsoever. For
           greater certainty, any Optionee who is deemed to be an employee of
           the Corporation pursuant to any medical or disability plan of the
           Corporation shall be deemed to

<PAGE>

           be an employee for the purposes of the Plan.

           (e) In the event the Optionee's employment by or engagement with the
           Corporation is terminated by the Corporation or the Optionee for any
           reason other than the Optionee's physical or mental disability,
           retirement with the consent of the Corporation or death before
           exercise of the option contained herein, the Optionee shall have
           ninety (90) days from the date of such termination to exercise only
           that portion of the option such Optionee is otherwise entitled to
           exercise at that point of time and thereafter this option shall
           expire and all rights to purchase Shares hereunder shall cease and
           expire and be of no further force or effect. Options shall not be
           affected by any change of employment so long as the Optionee
           continues to be employed by the Corporation or one of its
           subsidiaries or continues to be a director or an officer of one of
           the foregoing.

           (f) If the Corporation shall be a party to any reorganization,
           merger, dissolution or sale of all or substantially all of its
           assets, whether or not the Corporation is the surviving entity, the
           option shall be adjusted so as to apply to the securities to which
           the holder of the number of Shares of the Corporation subject to the
           option would have been entitled by reason of such reorganization,
           merger, dissolution or sale of all or substantially all of its assets
           provided, however, that the Corporation may satisfy any obligations
           to the Optionee hereunder by paying to the Optionee in cash the
           difference between the exercise price of all unexercised options
           granted hereunder and the fair market value of the securities to
           which the Optionee would be entitled, upon exercise of all
           unexercised options, regardless of whether all conditions of exercise
           relating to continuous employment have been satisfied. Adjustments
           under this subparagraph or any determinations as to the fair market
           value of any securities shall be made by the Board of Directors of
           the Corporation, or any committee thereof specifically designated by
           the Board of Directors to be responsible therefor, and any reasonable
           determination made by the said Board or committee thereof shall be
           binding and conclusive.

           (g) In the event of any subdivision or subdivision(s) of the common
           shares of the Corporation as said common shares were constituted at
           the time any options granted hereunder were granted into a greater
           number of common shares, the Corporation will thereafter deliver at
           the time of exercise thereof in addition to the number of Shares in
           respect of which the option is then being exercised, such additional
           number of Shares as result from such subdivision or subdivisions
           without the Optionee exercising the option being obligated to make
           any additional payment or giving any other consideration therefor.

           (h) In the event of any consolidation or consolidations of the common
           shares of the Corporation as said common shares were constituted at
           the time any options granted hereunder were granted into a lesser
           number of common shares, the Optionee shall accept, at the time of
           the exercise thereof in lieu of the number of Shares in respect of
           which the option is then being exercised, the lesser number of Shares
           as result from such consolidation or consolidations.

           (i) In the event of any change of the common shares of the
           Corporation as said common

<PAGE>

         shares were constituted at the time any options granted hereunder were
         granted, the Corporation shall thereafter deliver at the time of the
         exercise thereof the number of shares of the appropriate class
         resulting from the said change as the Optionee exercising the option
         would have been entitled to receive in respect of the number of shares
         so purchased had the option been exercised before such change.

         (j) If the Corporation at any time while any options granted hereunder
         are outstanding shall pay any stock dividend or stock dividends upon
         the shares of the Corporation in respect of which any options were
         granted hereunder, the Corporation will thereafter deliver at the time
         of exercise thereof in addition to the number of shares in respect of
         which the option is then being exercised, the additional number of
         shares of the appropriate class as would have been payable on the
         shares so purchased if they had been outstanding on the record date for
         the payment of said stock dividend or dividends.

         (k) The Corporation shall not be obligated to issue fractional Shares
         in satisfaction of its obligations hereunder.

         (1) If at any time the Corporation grants to its shareholders the right
         to subscribe for and purchase pro rata additional securities of the
         Corporation or of any other corporation or entity, there shall be no
         adjustments made to the number of Shares or other securities subject to
         the option in consequence thereof and the said option of the Optionee
         shall remain unaffected.

2.       Nothing in this Agreement shall confer upon the Optionee any right to
         continue in the employ of the Corporation or its subsidiaries and
         nothing herein contained shall interfere in any way with the right of
         the Corporation or any of its subsidiaries to terminate the employment
         of the Optionee at any time.

3.       The Corporation hereby represents to and agrees with the Optionee that
         if for any reason, other than the failure or default of the Optionee,
         the Corporation is unable to issue and deliver the Shares as
         contemplated herein to the Optionee upon the exercise by the Optionee
         of the option to purchase any of the Shares covered by this option, the
         Corporation will pay, in complete satisfaction of its obligations
         hereunder, to the Optionee, in cash, an amount equal to the difference
         between the option exercise price and the fair market value of such
         Shares on the date that the Optionee gave notice of such exercise in
         accordance with paragraph 1(a) hereof. For the purposes of this
         Agreement, if the Shares subject to this option are traded on a stock
         exchange or exchanges, the fair market value shall be the closing sale
         price on the exchange having the greatest volume of trading on the last
         trading day immediately prior to the date such notice is given.

4.       The Optionee, if an employee, officer or consultant, represents and
         warrants to the Corporation that the Optionee's participation in the
         Stock Option Plan, acceptance of the option granted hereunder and
         entering into of the Agreement is voluntary and have not been effected
         by expectation of employment or continued employment, appointment or
         continued appointment as an officer, or engagement or continued
         engagement as a consultant, as the

<PAGE>

         case may be.

5.       The Optionee hereby acknowledges receipt from the Corporation of a copy
         of the Stock Option Plan. The Optionee acknowledges that upon any
         conflict between the terms of said Plan and this option agreement, the
         terms of this option agreement shall prevail.

         IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the [INSERT DATE] day of [INSERT MONTH], [INSERT YEAR].

SIGNED, SEALED AND            )
DELIVERED in the              )
presence of                   )
                              )              ----------------------------
                              )              Name of Participant
                              )
                              )              MIAD SYSTEMS LTD.
                              )
                              )              Per:
                              )              ----------------------------
                              )
                              )

<PAGE>

                                  SCHEDULE "B"

                              OPTION EXERCISE FORM

           The undersigned Optionee (or the Optionee's legal representative(s)
  permitted under the Plan) hereby irrevocably elects to exercise this option
  for the number and class of Shares (or other property or securities subject
  thereto) as set forth below:

                    (a) Number of Shares to be Acquired:              --------

                    (b) Class of Shares:                              --------

                    (c) Option Exercise Price per Share:             $--------

                    (d) Aggregate Purchase Price [(a) times (c)]:    $--------

   and hereby tenders a certified cheque or bank draft for such aggregate
   purchase prices directing such Shares to be registered and a certificate
   therefor to be issued as directed below.

            IN WITNESS WHEREOF the parties hereto have duly executed this
   Agreement as of the [INSERT DATE] day of [INSERT MONTH], [INSERT YEAR].

SIGNED, SEALED AND            )
DELIVERED in the              )
presence of                   )
                              )              ----------------------------
                              )              Name of Optionee
                              )
                              )
                              )
                              )
                              )              ----------------------------
                              )              Signature of Optionee

Direction as to Registration:

------------------------------
Name of Registered Holder

------------------------------
Address of Registered Holder

------------------------------EXHIBIT 10.6

                           Merisel Security Agreement

                               SECURITY AGREEMENT

                                                           DATE: July 27th, 2000

TO:               MERISEL CANADA INC.
                  200 Ronson Drive
                  Suite 700
                  Etobicoke, Ontario
                  M9W 5Z9

                  (herein called the "Secured Party")

FROM:             MIAD SYSTEMS LTD.
                  43 Riviera Drive, Unit 7
                  Markham, Ontario
                  L3R 5J6

                  (herein called the "Debtor")

================================================================================

         For good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged), the Debtor covenants, acknowledges, represents
and warrants as follows:

                  DEFINITIONS
                  -----------

         Each word and phrase with initial capitals used in this Security
Agreement has the meaning assigned to it in Schedule "A", annexed hereto and
forming part of this Agreement. Words and phrases defined in the PPSA and used
without initial capitals in the Security Agreement (including Schedule "A") have
the meanings assigned to them in the PPSA, unless the context otherwise
requires.

1.00              GRANT OF SECURITY INTEREST
                  ==========================

1.01              Security Interest

         As general and continuing security for the due payment and performance
of all Obligations, the Debtor grants to the Secured Party fixed and specific
charges, mortgages, hypothecations, pledges and assignments on and of the
Collateral, and a purchase-money security interest to the extent that the
criteria for such interest in the PPSA is satisfied.

<PAGE>

1.02              Attachment

         The Debtor acknowledges that value has been given. The parties have not
agreed to postpone the time for attachment and the Security Interests are
intended to attach, as to all of the Collateral in which the Debtor has an
interest, forthwith when the Debtor executes this Security Agreement, and, as to
all Collateral in which the Debtor acquires an interest after the execution of
this Security Agreement, when the Debtor acquires such interest.

2.00              REPRESENTATIONS AND WARRANTIES
                  ------------------------------

         The Debtor represents and warrants to and in favor of the Secured Party
as follows:

2.01              Corporate Power

         Where a corporation, that the Debtor is a valid and subsisting
Corporation under the laws applicable to it and has the power, capacity, legal
right and authority and has taken all necessary corporate action to enter into
this Security Agreement.

2.02              Non-Conflict

         Neither the execution nor the performance of this Security Agreement is
in contravention of or in conflict with the provisions of any Agreement to which
the Debtor is a party or by which any of it's property may be bound.

2.03              Enforceability

         This Security Agreement constitutes a valid and legally binding
obligation of the Debtor enforceable against the Debtor in accordance with its
terms, subject only to bankruptcy, insolvency or other statute or judicial
decisions affecting the enforcement of creditors' rights in general and to
general principles of equity under which specific performance and injunctive
relief may be refused by a court in its discretion.

2.04              Locations of Collateral

         The Debtor's principal places of business and the locations where it
keeps the Collateral (except where any Collateral is in transit to and from such
premises or except when it is on lease or consignment to any lessee or consignee
from the Debtor), including its records relating thereto, are listed in Schedule
B.

                                        2

<PAGE>

3.0               COVENANTS OF DEBTOR
                  -------------------

3.01              Books of Account

         The Debtor shall keep proper books of account in accordance with
generally accepted accounting principles and shall furnish all information and
statements relating to its business and the Collateral which the Secured Party
requests.

3.02              Further Assurances

         The Debtor shall at all times do, execute, acknowledge and deliver or
cause to be done, executed, acknowledged or delivered all such further acts,
deeds, transfers, assignments, security agreements and assurances as the Secured
Party may reasonably require in order to give effect to the provisions hereof
and for the better granting, transferring, assigning, charging, setting over,
assuring, confirming or perfecting the Security Interests and the priority
accorded to them by law or under this Security Agreement.

3.03              Notice of Change of Address, etc.

         The Debtor shall notify the Secured Party in writing:

(a) forthwith of any significant loss of or damage to any Collateral, the
failure of any account debtor in the payment or performance of obligations due
to the Debtor in respect of the Collateral or of any proceedings before any
court, administrative board or other tribunal which could materially adversely
affect the Debtor or any Collateral;

(b) forthwith should the Debtor change the nature of it's business or amalgamate
or otherwise merge with any Person or permit all or a substantial portion of
it's property to become the property of any other Person, whether in one or a
series of transactions;

(c) at least 20 Business Days prior to any change of name of the Debtor, any
transfer of the Debtor's interest in any Collateral not expressly permitted
hereunder or any change in the location of any Collateral.

3.04              Reimbursements as Obligations

         All amounts for which the Debtor is required hereunder to reimburse the
Secured Party or any Receiver shall, from the date of disbursement until the
date the Secured Party or the Receiver receives reimbursement, be deemed to be
advanced to the Debtor by the Secured Party, shall be deemed to be Obligations
and shall bear interest at the highest rate per annum charged by the Secured
Party on any of the other Obligations.

                                        3

<PAGE>

3.05              Reliance and Survival

         All representations and warranties of the Debtor made herein or in any
certificate or other document delivered by or on behalf of the Debtor for the
benefit of the Secured Party are material, shall survive the execution and
delivery of this Security Agreement and shall continue in full force and effect
without time limit. The Secured Party shall be deemed to have relied upon each
such representation and warranty notwithstanding any investigation made by or on
behalf of the Secured Party at any time.

4.00              DEALING WITH COLLATERAL BY THE DEBTOR
                  -------------------------------------

4.01              Sale of Inventory

         Prior to any Default, the Debtor may in the ordinary course of its
business, and on customary trade terms, sell, consign or lease items of
Inventory, but all rights of the Debtor as vendor, consignor or lessor and all
resulting Accounts shall be subject to the Security Interests.

4.02              Proceeds Held in Trust

         If requested by the Secured Party the Debtor shall hold all Proceeds in
trust, separate and apart from other moneys, instruments or property, and shall
forthwith endorse as necessary and pay over or deliver them to the Secured
Party.

4.03              Account Debtors

         The Secured Party may require an account debtor to make payment to the
Secured Party and the Secured Party may hold all amounts acquired from any
account debtors and any Proceeds as part of the Collateral.

5.00              DEFAULT
                  -------

5.01              Default

         Whenever any Default defined in any of Subsections 5.02(f), (g) or (h)
occurs, the Obligations shall be accelerated and immediately due and payable in
full and the Security Interests shall become immediately enforceable without the
necessity for any further action or notice by the Secured Party. Whenever any
other Default occurs, the Secured Party may, at its option, declare the
Obligations accelerated and immediately due and payable in full and the Security
Interest shall become immediately enforceable.

5.02              Events of Default

         Each of the following events constitutes a Default:

                                        4

<PAGE>

         (a)      the Debtor fails to make any payment of any of the Obligations
                  when due;

         (b)      the Debtor commits a breach of, or fails to observe or
                  perform, any covenant, representation or warranty under this
                  Security Agreement of [sic] any other Agreement from time to
                  time in effect between the Debtor and the Secured Party,
                  whether relating to the Obligations or not, or if any
                  representation or warranty of the Debtor contained herein or
                  in any such other Agreement, whether relating to the
                  Obligations or not, shall prove to be false or incorrect in
                  any material respect;

         (c)      the Debtor threatens to cease to carry on its business;

         (d)      the Debtor fails to discharge forthwith any judgment for the
                  payment of money rendered against it;

         (e)      the Debtor commits any act of bankruptcy, becomes insolvent or
                  admits its insolvency (as defined or provided for in any
                  applicable statute);

         (f)      any proceeding, voluntary or involuntary, is commenced
                  respecting the Debtor pursuant to any statute relating to
                  bankruptcy, insolvency, reorganization of debts, liquidation,
                  winding up or dissolution, including, without limitation, any
                  proceedings under the Bankruptcy Act, the Companies' Creditors
                  Arrangement Act or the Winding-up Act;

         (g)      the Debtor passes any resolution for its liquidation, winding
                  up or dissolution;

         (h)      any receiver, manager, receiver and manager, trustee,
                  sequester, custodian or liquidator or Person with similar
                  powers is appointed judicially or extra-judicially for the
                  Debtor or for any of its property;

         (i)      the Debtor or any Guarantor, or any property of either of
                  them, becomes subject to any execution, sequestration or other
                  process of any court or to distress or any analogous process;

         (j)      the Debtor fails to pay any Taxes when due and as a result any
                  Encumbrance arises upon any Collateral;

         (k)      the Secured Party in good faith believes, and has commercially
                  reasonable grounds for believing, that the prospect of payment
                  or performance of the Obligations is or is about to be
                  impaired or that the Collateral is or is about to be placed in
                  jeopardy.

                                        5

<PAGE>

5.03              Security Enforceable

         The fact that this Security Agreement provides for Defaults and rights
of acceleration shall not derogate from the demand nature of any Obligation
payable on demand.

6.0      REMEDIES ON DEFAULT
         -------------------

         In addition to, and not in substitution for, any other rights, remedies
or powers the Secured Party may have under this Security Agreement, at law, in
equity or by or under the PPSA or any other statute, if the security interest
becomes enforceable, the Secured Party shall have the following rights, remedies
and powers:

6.1      Receiver

         The Secured Party may appoint by instrument in writing one or more
Receivers of any Collateral. In addition to any right or power of the Secured
Party authorized by the PPSA or any other statute or law applicable thereto any
such Receiver shall have the rights and powers set out in Sections 6.02 through
6.04. In exercising such rights and powers, any Receiver shall act as and for
all purposes, shall be deemed to be the agent of the Debtor and the Secured
Party, shall not be responsible for any act or default of any Receiver. The
Secured Party may remove any Receiver and appoint another from time to time. An
officer or employee of the Secured Party may be appointed as a Receiver. No
Receiver appointed by the Secured Party need by appointed by, nor need its
appointment be ratified by, or its actions in any way supervised by, a Court.

6.02     Power of Entry

         The Debtor shall forthwith upon demand deliver to a Receiver possession
of any Collateral at the place specified by the Receiver. Any Receiver may at
any time enter upon any premises where any Collateral is located to take
possession of, disable or remove any Collateral, and may use whatever means the
Receiver considers advisable to do so.

6.03     Carrying on Business

         Any Receiver may carry on, or concur in the carrying on of, any of the
business or undertaking of the Debtor and may, to the exclusion of all others,
including the Debtor, enter upon, occupy and use any of the premises, buildings,
plant and undertaking of or occupied or used by the Debtor and may use any of
the tools, machinery, equipment and intangibles of the Debtor for such time and
such purposes as the Receiver sees fit. No Receiver shall be liable to the
Debtor for any negligence in so doing or in respect of any rent, charges, costs,
depreciation or damages in connection with any such action.

                                        6

<PAGE>

6.04     Retention of Collateral

         The Secured Party may elect to retain any Collateral in satisfaction of
the Obligations or any of them. The Secured Party may designate any part of the
Obligations to be satisfied by the retention of particular Collateral which the
Secured Party considers to have a net realizable value approximating the amount
of the designated part of the Obligations, in which case only the designated
part of the Obligations shall be deemed to be satisfied by the retention of the
particular Collateral.

6.05     Limitation of Liability

         The Secured Party shall not be liable or accountable for any failure to
seize, collect realize, dispose of, enforce or otherwise deal with any
Collateral and shall not be bound to institute proceedings for any such purposes
or for the purpose of preserving any rights, remedies and powers of the Secured
Party, the Debtor or any other Person in respect of any Collateral. The Secured
Party shall not be liable or responsible for any loss or damage whatever which
may accrue in consequence of any such failure resulting from any negligence of
the Secured Party or its officers, employees, agents, or any Receiver, or
otherwise. If any Receiver or the Secured Party takes possession of any
Collateral, neither the Secured Party nor any Receiver shall have any liability
as a mortgagee in possession or be accountable for anything except actual
receipts.

6.06     Set-Off, Combination of Accounts and Cross-claims

         The Obligations will be paid by the Debtor without regard to any
equities between the Debtor and the Secured Party or any right of set-off,
combination of accounts or cross-claim. Any indebtedness owing by the Secured
Party to the Debtor may be set off or applied against, or combined with, the
Obligations by the Secured Party at any time, either before or after maturity,
without demand upon or notice to anyone.

6.07     Waiver

         The Secured Party may waive any Default or any breach by the Debtor of
any of the terms or provisions of this Security Agreement. No waiver, however,
shall be deemed to extend to a subsequent breach or Default, whether or not the
same as or similar to the breach or Default waived, and no act or omission by
the Secured Party shall extend to, or be taken in any manner whatsoever to
affect, any subsequent breach or Default or the rights of the Secured Party
arising therefrom. Any such waiver must be in writing and signed by the Secured
Party to be effective.

                                        7

<PAGE>

7.00     GENERAL
         -------

7.01     Security in Addition

         The Security Interests do not replace or otherwise affect any existing
or future Encumbrance held by the Secured party. Neither the taking of any
action, suit or proceedings, judicial or extra- judicial, nor the refraining
from so doing, nor any dealing with any other security for any Obligations shall
release or affect the Security Interests. Neither the taking of any action, suit
or proceedings, judicial or extra-judicial, pursuant to this Security Agreement,
nor the refraining from so doing, nor any dealing with any Collateral shall
release or affect any of the Secured Party's other security for the payment or
performance of any Obligation.

7.02     No Merger

         Neither the taking of any judgment nor the exercise of any power of
seizure or disposition shall extinguish the liability of the Debtor to pay and
perform the Obligations nor shall the acceptance of any payment or alternate
security constitute or create any novation. No covenant, representation or
warranty of the Debtor herein shall merge in any judgment.

7.03     Notices

         Any notice required or permitted hereunder shall be in writing and may
be delivered or sent by Transmission or sent by registered mail except during
any general interruption of postal service or one week before any such
threatened interruption. Delivered notices shall be effective upon delivery
during business hours to an apparently responsible employee of the Debtor or
Secured Party, as the case my be; notices sent by Transmission shall be deemed
to have been received on the next Business Day at the opening of business.
Mailed notices shall be deemed to have been received forty-eight (48) hours
after mailing. Notices shall be addressed to the Debtor or the Secured Party at
its respective address first set out above. Addresses for notice may be changed
by giving notice in accordance with this Section.

7.04     Time of the Essence

         Time is and shall remain of the essence of this Security Agreement and
each of its provisions.

7.05     Governing Law

         This Security Agreement shall be governed by, and interpreted and
enforced in accordance with, the laws in force in the province in which the
Collateral is located. The Debtor irrevocably submits to the non-exclusive
jurisdiction of the courts of Ontario with respect to any matter arising
hereunder or related hereto.

                                        8

<PAGE>

7.06     Entire Agreement

         There are no representations, warranties, covenants or acknowledgments
affecting this Security Agreement or any Collateral, other than as expressed
herein in writing.

7.07     Joint and Several Liability

         If more than one Person executes this Security Agreement as Debtor,
their obligations hereunder shall be joint and several.

7.08     Invalidity

         In the event that any provision of this Security Agreement is found to
be invalid or unenforceable, that provision shall be deemed to be severed
herefrom and the remaining provisions of this Security Agreement shall not be
affected thereby but shall remain valid and enforceable.

7.09     Amendment

         No agreement purporting to amend, supplement or otherwise vary this
Security Agreement shall be binding upon either the Debtor or the Secured Party
unless that agreement is in writing and signed by the Debtor and the Secured
Party.

7.10     Binding Effect

         This Security Agreement shall enure to the benefit of the Secured Party
and its successors and assigns and shall bind the Debtors and its successors.

7.11     Language

         The Debtor and Creditor have expressly required that this Security
Agreement and all documents and notices relating hereto be drafted in English.
Les Parties aux presentes ont expressement exige que la presente convention et
tous les documents et avis qui y sont afferents soient rediges en englais.

7.12     Receipt of Copy

         The Debtor acknowledges receipt of an executed copy of this Security
Agreement.

7.13     Information

         At any time the Secured Party may provide to any person copies of this
Security Agreement or information about it or about the Obligations.

                                        9

<PAGE>

7.14     Headings

         The Articles and Section headings in this Security Agreement are
included solely for convenience, are not intended to be full or accurate
descriptions and shall not be considered part of this Security Agreement.

7.15     Number and Gender

         In this Security Agreement, words in the singular include the plural
and vice-versa and words in one gender include all genders.

         TO WITNESS this Security Agreement, the Debtor has caused it to be duly
signed and sealed as of the date first above written.

                              MIAD SYSTEMS LTD.
                              ----------------------------------
                              (Debtor's Name - full legal name)

                              Per: /s/ Michael Green
                                  --------------------------------------
                                       (signature)

                              Print Name: M. Green
                                          ------------------------------

                              Title: President
                                     -----------------------------------
                                        I have authority to bind the Corporation

/s/ M.. Green   This agreement is to include the following:

         1.    Merisel Canada Inc. agrees to subordinate to the bank on behalf
               of MIAD Systems LTD.

         2.    Merisel will take no priority over the debt in the amount of
               $74,000 owed to Metcon Information Technologies Inc.

                                            /s/ M.. Green, President
                                                --------------------------------

                                       10

<PAGE>

                                   SCHEDULE A

                                   Definitions

"Agreement" means any agreement, oral or written.

"Accounts" means all accounts and any item thereof, which are now owned by or
are due, owing or accruing due to the Debtor or which may hereafter be owned by
or become due, owing or accruing to the Debtor.

"Chattel Paper" means all chattel paper in which the Debtor now or hereafter has
an interest.

"Collateral" means all of the Accounts, Chattel Paper, Documents of Title,
Equipment, Instruments Intangibles, Inventory, Money, Securities, Records,
Replacements and Proceeds, wherever located and any Item or part thereof,
including, without limitation, the items listed in Schedule B.

                                       11

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