Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Carbiz Inc. - Exhibit 10.2

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS SUCH SECURITIES ARE REGISTERED UNDER THE 1933 ACT
AND APPLICABLE STATE SECURITIES LAWS OR SUCH SECURITIES ARE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE 1933 ACT OR ANY APPLICABLE STATE SECURITIES LAW AND THE
COMPANY WILL BE PROVIDED WITH OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE
TO THE COMPANY OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH EXEMPTIONS ARE AVAILABLE.

WITHOUT COMPLIANCE WITH ALL APPLICABLE CANADIAN SECURITIES
LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED IN CANADA OR TO OR FOR THE BENEFIT
OF A CANADIAN RESIDENT UNTIL JULY 1, 2007. 

“This Debenture and the indebtedness evidenced hereby are
subordinate in the manner and to the extent set forth in that certain
Subordination and Intercreditor Agreement (the “Subordination
Agreement”) dated as of February 28, 2007 among Trafalgar Capital
Specialized Investment Fund, Luxembourg, the “Obligors” signatories thereto and
SWC Services, LLC, as Administrative Agent, to the Senior Indebtedness (as such
terms are defined in the Subordination Agreement), and each holder of this
Debenture, by its acceptance hereof, shall be bound by the provisions of the
Subordination Agreement.” 

SECURED DEBENTURE 

CARBIZ INC. 

Secured Convertible Debenture 

February 28, 2007 

	No. _____	US$________ 

     This Secured Debenture (the
“Debenture”) is issued on February 28, 2007 (the “Closing Date”)
by Carbiz Inc., an Ontario, Canada corporation (the “Company”), to
Trafalgar Capital Specialized Investment Fund, Luxembourg (together with its
permitted successors and assigns, the “Holder”) pursuant to exemptions
from registration under the Securities Act of 1933, as amended, and applicable
state securities laws. 

ARTICLE I. 

     Section 1.01 Principal and
Interest. For value received, the Company hereby promises to pay
to the order of the Holder on February ___, 2009 (the “Repayment Date”) in
lawful money of the United States of America and in immediately available funds
the principal sum of ___________ U.S. Dollars (US$ ________) together
with interest on the unpaid principal of this Debenture at the following rate:
(a) twelve percent (12%) per annum compounded monthly, to the extent unpaid,
from the date hereof until the date the registration statement (the
“Registration Statement”) is filed, pursuant to the Registration Rights
Agreement dated the date hereof, with the United States Securities and Exchange
Commission (the “SEC”) (the “Filing Date”) (b) ten percent (10%) per annum,
compounded monthly, to the extent unpaid, from the Filing Date until the SEC
declares the Registration Statement effective and (c) eight percent (8%) per
annum compounded monthly, to the extent unpaid, from the date the SEC declares
the Registration Statement Effective until paid. Interest shall be computed on
the basis of a 365-day year and the actual days elapsed and the Holder shall
deduct two (2) interest payments at each Closing (as defined in the Securities
Purchase Agreement) on the then outstanding balance. At the Company’s option,
but subject to the terms of the Subordination Agreement, including without
limitation, the prohibitions contained therein regarding payments of principal
in cash, the entire principal amount and all accrued interest shall be either
(a) paid to the Holder on the second (2nd) year anniversary from the
date hereof or (b) converted in accordance with Section 1.02 herein provided,
however, that in no event shall the Holder be entitled to convert this Debenture
for a number of common shares of the Company (“Common Shares”) in excess of that
number of Common Shares which, upon giving effect to such conversion, would
cause the aggregate number of Common Shares beneficially owned by the Holder and
its affiliates to exceed 4.99% of the outstanding shares of the Common Shares
following such conversion. 

     Section 1.02 Optional
Conversion. The Holder is entitled, at its option, to convert,
and sell on the same day or at any subsequent time, at any time and from time to
time, until payment in full of this Debenture, all or any part of the principal
amount of the Debenture, plus accrued interest, into Common Shares at the price
per share (the “Conversion Price”) equal to the lesser of (a) an amount
equal to twenty-two cents (US$0.22), or (b) an amount equal to eighty-five
percent (85%) of the lowest daily closing bid price (the “Closing Bid Price”) of
the Company’s Common Shares, as quoted by Bloomberg, L.P., both for the five (5)
trading days immediately preceding the Conversion Date (as defined herein). As
used herein, “Principal Market” shall mean The National
Association of Securities Dealers Inc.’s Over-The-Counter Bulletin Board, Nasdaq
Capital Market, Nasdaq Global Market or American Stock Exchange. If the Common
Shares is not traded on a Principal Market, the Closing Bid Price and/or the
VWAP shall mean, the reported Closing Bid Price or the VWAP for the Common
Shares, as furnished by the National Association of Securities Dealers, Inc.,
for the applicable periods. No fraction of shares or scrip representing
fractions of shares will be issued on conversion, but the number of shares
issuable shall be rounded to the nearest whole share. To convert this Debenture,
the Holder hereof shall deliver written notice thereof, substantially in the
form of Exhibit “A” to this Debenture, with appropriate insertions (the
“Conversion Notice”), to the Company at its address as set forth herein.
The date upon which the conversion shall be effective (the “Conversion
Date”) shall be deemed to be the date set forth in the Conversion Notice.
Within three (3) days of receipt of a Conversion Notice from the Holder, the
Company may redeem any conversion for 

2 

cash in lieu of issuing the Conversion Shares paying a 15%
redemption premium when the price of the Common Shares is below the Fixed Price.

This Debenture may not be converted unless an exemption is
available from the registration requirements under the United States Securities
Act of 1933, as amended (the “U.S. Securities Act”), and the securities laws of
all applicable states, and the Company has received an opinion of counsel or
other evidence to such effect reasonably satisfactory to it; provided, however,
that a holder who purchased this Debenture in the Company’s private placement of
such securities will not be required to deliver an opinion of counsel in
connection with the conversion of this Debenture. Upon conversion of this
Debenture, the certificate representing the Conversion Shares will bear a legend
restricting transfer without registration under the U.S. Securities Act and
applicable state securities laws unless an exemption from registration is
available and will contain any other restrictions required by applicable United
States federal or state securities laws. Further, without compliance with
all applicable Canadian securities legislation, this Debenture and any
securities received upon conversion of this Debenture, may not be sold,
transferred, hypothecated or otherwise traded in Canada or to or for the benefit
of a Canadian resident until July 1, 2007. 

     Section 1.03 Reservation of
Common Shares. The Company shall reserve and keep available out
of its authorized but unissued Common Shares, solely for the purpose of
effecting the conversion of this Debenture, such number of Common Shares as
shall from time to time be sufficient to effect such conversion, based upon the
Conversion Price. If at any time the Company does not have a sufficient number
of Conversion Shares authorized and available, then the Company shall call and
hold a special meeting of its shareholders within thirty (30) days of that time
for the sole purpose of increasing the number of authorized Common Shares. 

     Section 1.04 Right of
Redemption. The Company at its option shall have the right to redeem,
with three (3) business days advance written notice (the “Redemption
Notice”), a portion or all outstanding convertible debenture. The redemption
price shall be one hundred fifteen percent (115%) of the amount redeemed
including accrued interest (the “Redemption Amount”). The Company shall deliver
to the Holder the Redemption Amount on the third (3rd) business day
after the Redemption Notice. 

     Section 1.05 Mandatory
Redemption. Following the twelve month anniversary of the First Closing
(as defined in the Securities Purchase Agreement), the Company shall redeem this
Debenture using a straight line amortization at a rate of five percent per month
of the outstanding principal balance on this and all outstanding Debentures,
adjusted for the Redemption Premium, plus any accrued interest. The Company may
make such redemptions in cash or registered shares of the Company’s Common
Shares. Notwithstanding the foregoing, should the Company’s common share price
be above the Fixed Price on any Redemption day, the Company shall deliver shares
using the Fixed Price in the calculation for purposes of effecting its
Redemption. 

     Section 1.06 Interest
Payments. The interest so payable will be paid monthly (the “Interest
Payment Date”) to the person in whose name this Debenture is registered. Holder
shall deduct two (2) interest payments at each Closing on the then outstanding
balance. At the time such interest is payable, the Holder, in its sole
discretion, may elect to receive the interest in cash (via wire transfer or
certified funds) or in the form of Common Shares. In the event of default, as
described in Article III Section 3.01 hereunder, the Holder may elect that the
interest 

3 

be paid in cash (via wire transfer or certified funds) or in
the form of Common Shares. If paid in the form of Common Shares, the amount of
stock to be issued will be calculated as follows: the value of the stock shall
be the Closing Bid Price on: (i) the date the interest payment is due; or (ii)
if the interest payment is not made when due, the date the interest payment is
made. A number of Common Shares with a value equal to the amount of interest due
shall be issued. No fractional shares will be issued; therefore, in the event
that the value of the Common Shares per share does not equal the total interest
due, the Company will pay the balance in cash. 

     Section 1.07 Paying Agent
and Registrar. Initially, the Company will act as paying agent and
registrar. The Company may change any paying agent, registrar, or
Company-registrar by giving the Holder not less than ten (10) business days’
written notice of its election to do so, specifying the name, address, telephone
number and facsimile number of the paying agent or registrar. The Company may
act in any such capacity. 

     Section 1.08 Secured Nature
of Debenture. This Debenture is secured by all of the assets and
property of the Company as set forth on Exhibit A to the Security Agreement
dated the date hereof between the Company and the Holder (the “Security
Agreement”). As set forth in the Security Agreement, Holder’s security
interest shall terminate upon the occurrence of an Expiration Event as defined
in the Security Agreement. 

     Section 1.09 Currency Exchange
  Rate Protections. 

     (a)
“Closing Date Exchange Rate”, as to each Closing Date, means the Euro to US
dollar spot exchange rate as quoted in the London edition of the Financial Times
on such Closing Date. 

     (b)
“Repayment Exchange Rate” means in relation to each date of a Conversion
Notice or date of a Redemption Notice, the Euro to US dollar spot
exchange rate as quoted by in the London edition of the Financial Times on such
date. 

     (c) If on
the date of any Conversion Notice or Redemption Notice, the Repayment Exchange
Rate is less than the corresponding Closing Date Exchange Rate for such
Convertible Debenture, then the number of Shares to be issued shall be increased
by the same percentage as results from dividing the Closing Date Exchange Rate
by the relevant Repayment Exchange Rate. By way of example, if the number of
Shares to be issued in respect of a particular Conversion Notice or Redemption
Notice would, but for this Section 1.09, be 1,000 and if the Closing Date
Exchange Rate is 1.80 and the relevant Repayment Exchange Rate is 1.75, then
1,029 Shares will be issued in relation to that Conversion Notice or Redemption
Notice, as the case may be. 

     (d) If on
the Repayment Date or any Interest Repayment Date, the Cash Payment Date
Exchange Rate, as defined below is less than the Closing Date Exchange Rate then
the amount of cash required to satisfy the amounts due at such time shall be
increased by the same percentage as results from dividing the Closing Date
Exchange Rate by the relevant Cash Payment Date Exchange Rate. “Cash Payment
Date Exchange Rate” means in relation to each Repayment Date or
Interest Repayment Date the Euro to US dollar spot exchange rate
as quoted in the London edition of the Financial Times on 

4 

such date. By way of example, if the
amount of cash required to repay all amounts due on such date would, but for
this Section 1.09, be $1,000 and if the Closing Date Exchange Rate is 1.80 and
the relevant Repayment Date Exchange Rate is 1.75 then the amount of cash from
the Cash Payment required to repay all amounts due on such date will be
$1,028.57.

ARTICLE II. 

     Section 2.01 Amendments and
Waiver of Default. The Debenture may not be amended.
Notwithstanding the above, without the consent of the Holder, the Debenture may
be amended to cure any ambiguity, defect or inconsistency, or to provide for
assumption of the Company obligations to the Holder. 

ARTICLE III. 

     Section 3.01 Events of
Default. An Event of Default is defined as follows: (a) failure
by the Company to pay amounts due hereunder within fifteen (15) days of the date
of maturity of this Debenture; (b) failure by the Company to comply with the
terms of the Irrevocable Transfer Agent Instructions attached to the Securities
Purchase Agreement; (c) failure by the Company for ten (10) days after notice to
it to comply with any of its other agreements in the Debenture; (d) events of
bankruptcy or insolvency; (e) a breach by the Company of its obligations under
the Securities Purchase Agreement which is not cured by the Company within ten
(10) days after receipt of written notice thereof. Upon the occurrence of an
Event of Default, the Holder may, in its sole discretion, accelerate full
repayment of all debentures outstanding and accrued interest thereon or may,
notwithstanding any limitations contained in this Debenture and/or the
Securities Purchase Agreement, convert all debentures outstanding and accrued
interest thereon into Common Shares pursuant to Section 1.02 herein.

     Section 3.02 Failure to
Issue Unrestricted Common Shares. As indicated in Article III
Section 3.01, a breach by the Company of its obligations under the Securities
Purchase Agreement shall be deemed an Event of Default, which if not cured
within ten (10) days, shall entitle the Holder to accelerate full repayment of
all debentures outstanding and accrued interest thereon or, notwithstanding any
limitations contained in this Debenture and/or the Securities Purchase
Agreement, to convert all debentures outstanding and accrued interest thereon
into Common Shares pursuant to Section 1.02 herein. The Company acknowledges
that failure to honor a Notice of Conversion shall cause irreparable harm to the
Holder.

ARTICLE IV. 

     Section 4.01 Rights and
Terms of Conversion. Subject to the terms hereof, this Debenture,
in whole or in part, may be converted at any time following the Closing Date,
into Common Shares at a price equal to the Conversion Price as described in
Section 1.02 above. 

5 

     Section 4.02 Re-issuance of
Debenture. When the Holder elects to convert a part of the
Debenture, then the Company shall reissue a new Debenture in the same form as
this Debenture to reflect the reduced original principal amount. 

     Section 4.03 Termination of
Conversion Rights. The Holder’s right to convert the Debenture
into the Common Shares in accordance with this Debenture shall terminate on the
date that is the third (3rd) year anniversary from the date hereof
and this Debenture shall be automatically converted on that date in accordance
with the formula set forth in Section 1.02 hereof, and the appropriate Common
Shares and amount of interest shall be issued to the Holder. 

ARTICLE V. 

     Section 5.01
Anti-dilution. In the event that the Company shall at any
time subdivide the outstanding Common Shares, or shall issue a stock dividend on
the outstanding Common Shares, the Conversion Price in effect immediately prior
to such subdivision or the issuance of such dividend shall be proportionately
decreased, and in the event that the Company shall at any time combine the
outstanding Common Shares, the Conversion Price in effect immediately prior to
such combination shall be proportionately increased, effective at the close of
business on the date of such subdivision, dividend or combination as the case
may be. 

     Section 5.02 Consent of
Holder to Sell Capital Stock or Grant Security Interests. Except
for the Securities Purchase Agreement dated the date hereof between the Company
and Trafalgar Capital Specialized Investment Fund, Luxembourg, so long as any of
the principal of or interest on this Debenture remains unpaid and unconverted,
the Company shall not, without the prior consent of the Holder, issue or sell
(i) any Common Shares or Preferred Stock without consideration or for a
consideration per share less than its fair market value determined immediately
prior to its issuance, (ii) issue or sell any Preferred Stock, warrant, option,
right, contract, call, or other security or instrument granting the holder
thereof the right to acquire Common Shares without consideration or for a
consideration per share less than such Common Shares’s fair market value
determined immediately prior to its issuance, (iii) other than as in effect on
the Closing Date, enter into any security instrument granting the holder a
security interest in any of the assets of the Company, or (iv) file any
registration statement on Form S-8 related to anything other than shares
underlying an employee benefit plan that have been or will be awarded to
employees and/or directors of the Company and its subsidiaries. 

6 

ARTICLE VI. 

     Section 6.01
Notice. Notices regarding this Debenture shall be sent to
the parties at the following addresses, unless a party notifies the other
parties, in writing, of a change of address: 

	If to the Company, to: 	Carbiz Inc. 	  
	  	7405 North Tamiami Trail 
	  	Sarasota, FL 34243 
	  	Attn: Mr. Carl Ritter, CEO 
	  	Telephone: (800) 547-2277 
	  	Facsimile: (941) 308-2718 
	  	  	  
	With a copy to: 	Troutman Sanders LLP 
	  	222 Central Park Avenue, Suite 2000
    
	  	Virginia Beach, VA 23462 
	  	Attn: Mr. Thomas M. Rose, Esq. 
	  	Telephone: 	 (757) 687-7715 
	  	Facsimile: 	 (757) 687-1529 
	  	  	  
	If to the Holder: 	Trafalgar Capital Specialized
      Investment Fund, Luxembourg 
		8-10 Rue Mathias Hardt
    
	  	BP 3023 	  
		Luxembourg L-1030

	  	Facsimile: 	  
		011-44-207-405-0161
  
	  	and 	  
	  	001-786-323-1651 
	  	  	  
	With a copy to: 	James G. Dodrill II, P.A. 
	  	5800 Hamilton Way 
	 	Boca Raton, FL 33496
  
	  	Attention: 	 James Dodrill, Esq. 
	  	Telephone: 	 (561) 862-0529 
	  	Facsimile: 	 (561) 892-7787 

     Section 6.02 Governing
Law. This Debenture shall be deemed to be made under and shall be
construed in accordance with the laws of the State of Florida without giving
effect to the principals of conflict of laws thereof. Each of the parties
consents to the jurisdiction of the U.S. District Court sitting in the District
of the State of Florida or the state courts of the State of Florida sitting in
Broward County, Florida in connection with any dispute arising under this
Debenture and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non
conveniens to the bringing of any such proceeding in such jurisdictions.

7 

     Section 6.03
Severability. The invalidity of any of the provisions of
this Debenture shall not invalidate or otherwise affect any of the other
provisions of this Debenture, which shall remain in full force and effect. 

     Section 6.04 Entire
Agreement and Amendments. This Debenture represents the entire
agreement between the parties hereto with respect to the subject matter hereof
and there are no representations, warranties or commitments, except as set forth
herein. This Debenture may be amended only by an instrument in writing executed
by the parties hereto. 

     Section 6.05
Counterparts. This Debenture may be executed in multiple
counterparts, each of which shall be an original, but all of which shall be
deemed to constitute on instrument. 

     IN WITNESS WHEREOF, with
the intent to be legally bound hereby, the Company as executed this Debenture as
of the date first written above. 

	 	CARBIZ INC. 
	 	  
	 	By:
  
	 	Name: 
	 	Title: 

8 

EXHIBIT “A” 

NOTICE OF CONVERSION 

(To be executed by the Holder in order to Convert the
Debenture) 

TO: 

     The undersigned hereby
irrevocably elects to convert US$ of the principal amount of the above Debenture
into Common Shares of CARBIZ INC., according to the conditions stated therein,
as of the Conversion Date written below. 

	Conversion Date: 	 
    
	Applicable Conversion Price: 	 
    
	Signature: 	 
    
	Name: 	 
    
	Address: 	 
    
	Amount to be converted: 	US$
  
	Amount of Debenture
      
unconverted: 	
US$
	Conversion Price per share: 	US$
  
	Number of Common Shares to 
be
      issued: 	

	Please issue the Common 
Shares
      in the following name 
and to the following address: 	

	Issue to: 	 
    
	Authorized Signature: 	 
    
	Name: 	 
    
	Title: 	 
    
	Phone Number: 	 
    
	Broker DTC Participant Code: 	 
    
	Account Number: 	 
    

     The undersigned represents,
warrants and certifies as follows (only one of the following must be checked):

A-1 

	 	A. [ ] 	
      The undersigned holder (a) purchased these Debentures
      directly from the Company pursuant to a written purchase agreement for the
      purchase of such securities, and (b) is converting these Debentures for
      its own account and not on behalf of any other person; or

	 	 	
       

	 	B. [ ] 	
      The undersigned holder has delivered to the Company a
      written opinion of counsel of recognized standing or such other evidence
      in form and substance satisfactory to the Company to the effect that an
      exemption from the registration requirements of the United States
      Securities Act of 1933, as amended (the “U.S. Securities Act”), and
      applicable state securities laws is available for the issuance of the
      Conversion Shares. 

The undersigned holder understands that the certificate
representing the Conversion Shares will bear a legend restricting transfer
without registration under the U.S. Securities Act and applicable state
securities laws unless an exemption from registration is available and will
contain any other restrictions required by applicable United States federal or
state securities laws or Canadian securities laws. With respect to Box A above,
the undersigned holder agrees to provide any additional information that the
Company may reasonably request to establish that an exemption or exclusion from
registration under the U.S. Securities Act is available for the issuance of the
Conversion Shares. Unless Box B above is checked, certificates representing
Conversion Shares will not be registered or delivered to an address in the
United States. 

If Box B is checked, any opinion tendered or other evidence
delivered must be in form and substance reasonably satisfactory to the Company.
Holders planning to deliver such documentation in connection with the conversion
of a Debenture should contact the Company in advance to determine whether such
documentation will be acceptable to the Company. 

2Filed by Automated Filing Services Inc. (604) 609-0244 - Carbiz Inc. - Exhibit 10.3

PLEDGE AND ESCROW AGREEMENT 

     THIS PLEDGE AND ESCROW
AGREEMENT (the “Agreement”) is made and entered into as of February
28, 2007 (the “Effective Date”) by and among CARBIZ INC., a
corporation organized and existing under the laws of Ontario, Canada (the
“Pledgor”), TRAFALGAR CAPITAL SPECIALIZED INVESTMENT FUND,
LUXEMBOURG, (the “Pledgee”), and JAMES G. DODRILL II, P.A., as
escrow agent (“Escrow Agent”).

RECITALS: 

     WHEREAS, in order to
secure the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all of the Company’s obligations (the
“Obligations”) to the Pledgee or any successor to the Pledgee under this
Agreement, the Securities Purchase Agreement of even date herewith between the
Pledgor and the Pledgee (the “Securities Purchase Agreement”), the
Convertible Debentures (the “Convertible Debentures”) issued or to be
issued by the Company to the Pledgee, either now or in the future, up to a total
of Two Million Five Hundred Thousand Dollars ($2,500,000) of principal, plus any
interest, costs, fees, and other amounts owed to the Pledgee thereunder, the
Security Agreement of even date herewith between the Pledgor and the Pledgee
(the “Security Agreement”), and all other contracts entered into between
the parties hereto (collectively, the “Transaction Documents”), the
Pledgor has agreed to irrevocably pledge to the Pledgee thirty million
(30,000,000) common shares of the Pledgor (the “Pledged Shares”) with the
certificate representing such securities containing any restrictive legends
required under applicable United States and Canadian securities laws.

     NOW, THEREFORE, in
consideration of the mutual covenants, agreements, warranties, and
representations herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

TERMS AND CONDITIONS

     1. Pledge and
Transfer of Pledged Shares. The Pledgor hereby grants to Pledgee
a security interest in all Pledged Shares as security for Pledgor’s obligations
under the Convertible Debentures. Simultaneously with the execution of the
Transaction Documents, the Pledgor shall deliver to the Escrow Agent a shares
certificate representing the Pledged Shares and such other transfer documents
that may be required and all such documents shall be held by the Escrow Agent
until the full payment of all amounts due to the Pledgee under the Convertible
Debentures and through repayment in accordance with the terms of the Convertible
Debentures, or the termination or expiration of this Agreement.

     2. Rights Relating
to Pledged Shares. Upon the occurrence of an Event of Default (as
defined herein), the Pledgee shall be entitled to vote the Pledged Shares
released to the Pledgee, to receive dividends and other distributions thereon,
and to enjoy all other rights and privileges incident to the ownership of such
Pledged Shares. Until such time, 

the Pledgee shall not have voting rights with respect to the
Pledged Shares and the Pledgee shall not be entitled to any dividends,
distributions or other rights incident to ownership of such securities. 

     3. Release of
Pledged Shares from Pledge. Upon the payment of all amounts due to the
Pledgee under the Convertible Debentures by repayment in accordance with the
terms of the Convertible Debentures, the parties hereto shall notify the Escrow
Agent to such effect in writing. Upon receipt of such written notice of full
payment of the amounts due to the Pledgee under the Convertible Debentures, the
Escrow Agent shall return to the Pledgor the certificates representing the
Pledged Shares and any other documentation provided to the Escrow Agent
(collectively the “Pledged Materials”), whereupon any and all rights of
Pledgee in the Pledged Materials shall be terminated. Notwithstanding anything
to the contrary contained herein, upon full payment of all amounts due to the
Pledgee under the Convertible Debentures, by repayment in accordance with the
terms of the Convertible Debenture, this Agreement and Pledgee’s security
interest and rights in and to the Pledged Shares shall terminate.

     4. Event of
Default. An “Event of Default” shall be deemed to have occurred
under this Agreement upon an Event of Default under the Transaction
Documents.

     5. Remedies.
Upon and anytime after the occurrence of an Event of Default, the Pledgee shall
have the right to provide written notice of such Event of Default (the
“Default Notice”) to the Escrow Agent, with a copy to the Pledgor.
Subject to compliance with all applicable laws, as soon as practicable after
receipt of the Default Notice, the Escrow Agent shall deliver to Pledgee a
certificate representing that number of Pledged Shares that will satisfy any
amounts due under the Convertible Debentures and any other Pledged Material
(which for the avoidance of doubt will not include any Pledged Shares not
required to be delivered to the Pledgee as set forth herein) held by the Escrow
Agent hereunder. Upon the occurrence of an Event of Default, the per share price
of the Pledged Shares shall be equal to seventy-five percent (75%) of the lowest
daily closing bid price (the “Closing Bid Price”) of the Company’s Common
Shares, as quoted by Bloomberg, L.P.,, or any other securities exchange where
such securities may be listed or quoted for trading, for the five (5) trading
days immediately preceding the day such notice of such Event of Default is
dated. Upon receipt of the Pledged Materials and subject to the terms of this
Agreement and all applicable United States and Canadian securities laws, the
Pledgee shall have the right to (i) sell the Pledged Shares and to apply the
proceeds of such sales, net of any selling commissions, to the Obligations owed
to the Pledgee by the Pledgor under the Transaction Documents, including,
without limitation, outstanding principal, interest, legal fees, and any other
amounts owed to the Pledgee, and exercise all other rights and (ii) any and all
remedies of a secured party with respect to such property as may be available
under the Uniform Commercial Code as in effect in the State of Florida. To the
extent that the net proceeds received by the Pledgee are insufficient to satisfy
the Obligations in full, the Pledgee shall be entitled to a deficiency judgment
against the Pledgor for such amount. The Pledgee shall have the absolute right
to sell or dispose of the Pledged Shares released to Pledgee in any manner it
sees fit, as long as such sale or disposal is in accordance with applicable
securities, corporate and any other applicable law, and shall have no liability
to the Pledgor or any other party for 

selling or disposing of such Pledged Shares even if other methods of sales or dispositions would or allegedly would result in greater proceeds than the method actually used. The Escrow Agent shall have the absolute right to disburse the Pledged
Shares to the Pledgee in batches not to exceed 9.9% of the outstanding capital of the Pledgor (which limit may be waived by the Pledgee providing not less than 65 days’ prior written notice to the Escrow Agent). Any Pledged Shares not released
to the Pledgee pursuant to the terms herein shall be returned to the Pledgor to be cancelled.

     5.1. Each right, power and remedy of the Pledgee provided for in this Agreement or any other Transaction Document shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Pledgee of any one or more of the rights, powers or remedies provided for in this Agreement or any other Transaction Document or now or hereafter existing at law or in equity or by statute or
otherwise shall not preclude the simultaneous or later exercise by the Pledgee of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee to exercise any such right, power or remedy shall operate as a waiver
thereof. No notice to or demand on the Pledgor in any case shall entitle it to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee to any other further action in any
circumstances without demand or notice. The Pledgee shall have the full power to enforce or to assign or contract is rights under this Agreement to a third party.

     5.2. In addition to all other remedies available to the Pledgee, upon an Event of Default, the Pledgor shall promptly, but in no event more than thirty (30) days after the date of the Default Notice, file a
registration statement to register with the United States Securities and Exchange Commission the Pledged Shares released to the Pledgee for the resale by the Pledgee. The Pledgor shall use its best efforts to cause the registration statement to
remain in effect until all of the Pledged Shares have been sold by the Pledgee. 

6. Concerning the Escrow Agent.

     6.1. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations shall be read into this Agreement against the Escrow Agent.

     6.2. The Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may assume the validity and accuracy of any statement or assertion contained in such
a writing or instrument, and may assume that any person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for
the sufficiency or correctness as to form, manner, and execution, or validity of any instrument deposited in this escrow, nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the
safekeeping of such certificates, monies, instruments, or other document received by it as such escrow holder, and for the disposition of the same in accordance with the written instruments accepted by it in the escrow.

     6.3. Pledgee and the Pledgor hereby agree, to defend and indemnify the Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits, or proceedings at law or in equity, or any other
expenses, fees, or charges of any character or nature which it may incur or with which it may be threatened by reason of its acting as Escrow Agent under this Agreement; and in connection therewith, to indemnify the Escrow Agent against any and all
expenses, including attorneys’ fees and costs of defending any action, suit, or proceeding or resisting any claim (and any costs incurred by the Escrow Agent pursuant to Sections 6.4 or 6.5 hereof). The Escrow Agent shall be vested with a lien
on all property deposited hereunder, for indemnification of attorneys’ fees and court costs regarding any suit, proceeding or otherwise, or any other expenses, fees, or charges of any character or nature, which may be incurred by the Escrow
Agent by reason of disputes arising between the makers of this escrow as to the correct interpretation of this Agreement and instructions given to the Escrow Agent hereunder, or otherwise, with the right of the Escrow Agent, regardless of the
instructions aforesaid, to hold said property until and unless said additional expenses, fees, and charges shall be fully paid. Any fees and costs charged by the Escrow Agent for serving hereunder shall be paid by the Pledgor.

     6.4. If any of the parties shall be in disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow
Agent may, at its sole discretion deposit the Pledged Materials with the Clerk of the United States District Court Southern District of Florida, sitting in Miami, Florida, and, upon notifying all parties concerned of such action, all liability on
the part of the Escrow Agent shall fully cease and terminate. The Escrow Agent shall be indemnified by the Pledgor and the Pledgee for all costs, including reasonable attorneys’ fees in connection with the aforesaid proceeding, and shall be
fully protected in suspending all or a part of its activities under this Agreement until a final decision or other settlement in the proceeding is received.

     6.5. The Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Pledgor and the Pledgee) and shall have full and complete authorization and protection for any action
taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable for any mistakes of fact or error of judgment, or for any actions or omissions of any kind, unless caused by its
willful misconduct or gross negligence.

     6.6. The Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement. If a successor Escrow Agent is not appointed within this ten (10) day period, the Escrow Agent may petition a
court of competent jurisdiction to name a successor.

     6.7 The Pledgor hereby acknowledges that the Escrow Agent is securities counsel to the Pledgee and counsel to the Pledgee in connection with the transactions contemplated and referred herein. The Pledgor agrees that in
the event of any dispute arising in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted to continue to represent the Pledgee and the
Pledgor will not seek to disqualify 

such counsel and waives any objection Pledgor might have with
respect to the Escrow Agent acting as the Escrow Agent pursuant to this
Agreement. 

     6.8 Unless otherwise provided
herein, all demands, notices, consents, service of process, requests and other
communications hereunder shall be in writing and shall be delivered in person or
by overnight courier service, or mailed by certified mail, return receipt
requested, addressed:

	If to the Pledgor, to: 	Carbiz Inc. 
	  	7405 North Tamiami Trail 
	  	Sarasota, FL 34243 
	  	Attn: Mr. Carl Ritter, CEO 
	  	Telephone: (800) 547-2277 
	  	Facsimile: (941) 308-2718 
	  	  
	With a copy to: 	Troutman Sanders LLP 
	  	222 Central Park Avenue, Suite 2000 
	  	Virginia Beach, Virginia 23462 
	  	Attention: Thomas M. Rose, Esq. 
	  	Telephone: (757)687-7715 
	  	Facsimile: (757)687-1529 
	  	  
	If to the Pledgee: 	Trafalgar Capital Specialized 
	  	Investment Fund, Luxembourg 
	  	8-10 Rue Mathias Hardt 
	  	B{ 3023 
	  	L-1030 Luxembourg 
	  	Attention: Andrew Garai, Chairman 
	  	Of Trafalgar Capital Sarl 
	  	Facsimile: 011-44-207-405-0161 
	  	  
	With copy to: 	James G. Dodrill II, P.A. 
	  	5800 Hamilton Way 
	  	Boca Raton, FL 33496 
	  	Telephone: (561) 862-0529 
	  	Facsimile: (561) 892-7787 

Any such notice shall be effective (a) when delivered, if
delivered by hand delivery or overnight courier service, or (b) five (5) days
after deposit in the United States mail, as applicable.

     7. Binding
Effect. All of the covenants and obligations contained herein shall be
binding upon and shall inure to the benefit of the respective parties, their
successors and assigns.

     8. Governing Law;
Venue; Service of Process. The validity, interpretation and performance
of this Agreement shall be determined in accordance with the laws of the State
of Florida applicable to contracts made and to be performed wholly within that
state 

except to the extent that Federal law applies. The parties
hereto agree that any disputes, claims, disagreements, lawsuits, actions or
controversies of any type or nature whatsoever that, directly or indirectly,
arise from or relate to this Agreement, including, without limitation, claims
relating to the inducement, construction, performance or termination of this
Agreement, shall be brought in the state courts located in Broward County,
Florida or United States District Courts for the Southern District of Florida,
and the parties hereto agree not to challenge the selection of that venue in any
such proceeding for any reason, including, without limitation, on the grounds
that such venue is an inconvenient forum. The parties hereto specifically agree
that service of process may be made, and such service of process shall be
effective if made, pursuant to Section 8 hereto.

     9. Enforcement
Costs. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default
or misrepresentation in connection with any provisions of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys’ fees, court costs and all expenses even if not taxable as
court costs (including, without limitation, all such fees, costs and expenses
incident to appeals), incurred in that action or proceeding, in addition to any
other relief to which such party or parties may be entitled.

     10. Remedies
Cumulative. No remedy herein conferred upon any party is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law, in equity, by statute, or otherwise. No single or
partial exercise by any party of any right, power or remedy hereunder shall
preclude any other or further exercise thereof.

     11.
Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute the same instrument.

     12. No
Penalties. No provision of this Agreement is to be interpreted as
a penalty upon any party to this Agreement.

     13. JURY
TRIAL. EACH OF THE PLEDGEE AND THE PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING OUT OF, UNDER
OR IN ANY WAY CONNECTED WITH THE DEALINGS BETWEEN PLEDGEE AND PLEDGOR, THIS
PLEDGE AND ESCROW AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.

IN WITNESS WHEREOF, the parties hereto have duly
executed this Pledge and Escrow Agreement as of the date first above
written.

	  	 	           
                         
                         
               TRAFALGAR CAPITAL 
	  	 	           
                         
                         
               SPECIALIZED INVESTMENT 
	  	 	           
                         
                         
               FUND, LUXEMBOURG 
	  	 	  
	By: 	 	Trafalgar Capital Sarl 
	Its: 	 	General Partner 
	By:
    	 	 
    
	Name: 	 	  
	Title: 	 	Portfolio Manager 
	  	 	           
                         
                         
                 Carbiz Inc. 
	  	 	  
	  	 	  
	By:
    	 	 
    
	  	 	  
	Name: 	 	  
	  	 	  
	Title: CEO 	 	  
	  	 	Escrow Agent: James G. Dodrill II, P.A.
    
	  	 	  
	By:
    	 	 
    
	Name: 	 	James Dodrill, Esq. 
	Title 	 	President

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