EX-2 3 ex2.htm MATERIAL CHANGE REPORT DATED FEBRUARY 13, 2006 Material Change Report Dated February 13, 2006
Exhibit 2
 

ADB SYSTEMS INTERNATIONAL LTD.
 
FORM 51-102F3
 
MATERIAL CHANGE REPORT
 
Item 1.    Name and Address of Company
 
ADB Systems International Ltd. (the “Corporation”), Valhalla Executive Centre, 302 The East Mall, Suite 300, Toronto, Ontario M9B 6C7.

Item 2.    Dates of Material Change
 
February 9, 2006

Item 3.    News Release
 
A press release disclosing the nature and substance of the material changes were issued through the facilities of Canada NewsWire on February 9th, 2006 and were filed on SEDAR.

Item 4.    Summary of Material Changes
 
The Corporation announced on February 9, 2006 that it had successfully completed its previously announced private placement, securing gross proceeds of $755,000 (CDN). The Corporation raised the proceeds through the issuance of secured subordinate convertible debentures to a group of institutional and private investors, and members of the Corporation’s senior management and board of directors, including Chris Bulger, Jeff Lymburner, and Jim Moskos. Approximately 15 percent of the proceeds were raised by Corporation insiders.
 
Item 5.     Full Description of Material Change
 
Closing of Private Placement
 
The Corporation announced on February 9, 2006 that it had successfully completed its previously announced funding arrangement, securing gross proceeds of $755,000 (CDN). The Corporation raised the proceeds through the issuance of secured subordinate convertible debentures to a group of institutional and private investors, and members of the Corporation’s senior management and board of directors, including Chris Bulger, Jeff Lymburner, and Jim Moskos. Approximately 15 percent of the proceeds were raised by Corporation insiders.
 
Under the terms of the private placement, the investors will be able to convert their debentures at any time during the five-year term into units priced at $0.15, with each unit consisting of one common share and one warrant. The underlying securities are subject to a four month and one day hold period. Each Warrant is exercisable into one Common Share at an exercise price of $0.20, any time prior to the earlier of (i) the third year anniversary of the closing date and (ii) the date which is sixty (60) days following the issuance of a notice by the Corporation to holders confirming that the closing price of the common shares of the Corporation on the Toronto Stock Exchange was greater than or equal to $0.35 for any 10 consecutive trading days, following the 4 months and one day hold period from the date of issuance of the Warrant. The Corporation will pay debenture holders 11 percent interest per annum for unconverted debentures over the five-year term. Payment of interest to debenture holders during the first year of the financing arrangement will be made through the issuance of a number of shares of the Corporation equal to the interest payable divided by the 20 day weighted average trading price less permitted discount up to a maximum of 8,463,292 common shares. Accrued interest not satisfied by the issuance of shares will be paid in cash.
 


As a result of the financing arrangement, ADB will issue an estimated 10,585,729 common shares, including 5,033,333 common shares upon conversion of the debentures, 5,033,333 common shares upon the exercise of warrants, which are exercisable at $0.20 subject to the accelerated expiry terms set out above and an estimated 519,063 common shares in lieu of cash interest payments.
 
Mr. Jeffrey Lymburner, an officer of the Corporation, Mr. Chris Bulger, a director of the Corporation and Mr. Jim Moskos, an officer of the Corporation subscribed for an aggregate principal amount of $36,250, $56,250 and $12,500 of debentures, respectively. The issue of debentures to these individuals is a related party transaction under Ontario Securities Commission Rule 61-501 - Insider Bids, Issuer Bids, Going Private Transactions and Related Party Transactions (“OSC Rule 61-501”).
 
The Corporation’s board of directors, including the independent directors, considered the proposed private placement and unanimously passed a resolution approving the terms of the private placement. The insider portion to the private placement is exempt from the valuation and minority approval requirements of OSC Rule 61-501 because the fair market value of the insider private placement is less than 25 percent of the market capitalization of the Corporation. The material change report respecting the initial announcement of the private placement was filed less than twenty-one days prior to closing of the private placement as management felt that closing the private placement as soon as possible following its initial announcement was reasonable in the circumstances. The Corporation has also received conditional approval from the TSX for the private placement.
 
Item 6.     Reliance on subsection 7.1(2) or (3) of National Instrument 51-102
 
Not applicable.

Item 7.     Omitted Information
 
No information has been omitted on the basis that it is confidential information.

Item 8.     Executive Officer
 
For further information, please contact:
Jeff Lymburner
Chief Executive Officer
(416) 640-0400

Item 9.    Date of Report
 
February 13, 2006



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