EXHIBIT 4.10 FORM OF SUBSCRIPTION AGREEMENT DECEMBER 31, 2002
SUBSCRIPTION AGREEMENT
PRIVATE ISSUE
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To: STOCKGROUP INFORMATION SYSTEMS INC. (hereafter called the "COMPANY" or
"ISSUER"), a Colorado company, with an address for notice and delivery at
#000 - 000 X. Xxxxxx Xx., Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
[SUBSCRIBERS PLEASE NOTE THAT TO FULFILL THIS SUBSCRIPTION PROPERLY YOU MUST (A)
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READ THIS DOCUMENT CAREFULLY AND ACQUIRE YOUR INDEPENDENT LEGAL AND INVESTMENT
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ADVICE AS THIS DOCUMENT CONSTITUTES A BINDING LEGAL DOCUMENT UPON YOUR TENDERING
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THE SAME TO THE COMPANY OR ITS AGENTS, (B) FILL IN THE AMOUNT OF SECURITIES
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SUBSCRIBED FOR IN THE SECTION "SECURITIES REQUESTED FOR PURCHASE BY THE
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SUBSCRIBER" ON PAGE 2 HEREOF, (C) CHECK OFF THE EXEMPTION BELOW IN THE SECTION
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"ELIGIBILITY DECLARATION BY THE SUBSCRIBER" (PAGE 2 AND FOLLOWING) WHICH APPLIES
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TO YOU AS EITHER A US OR CANADIAN SUBSCRIBER, (D) COMPLETE THE SIGNATURE AND
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INFORMATION PAGE AT THE END OF THIS AGREEMENT, AND (E) DELIVER THIS SUBSCRIPTION
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AGREEMENT AND PAYMENT, IN ACCORDANCE WITH THE SECTION "METHOD OF SUBSCRIPTION",
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TO THE ISSUER OR ITS DESIGNATED AGENT AND IF SUBSCRIBING PURSUANT TO AN OFFERING
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MEMORANDUM ALSO INCLUDE A SIGNED 'RISK ACKNOWLEDGEMENT' DOCUMENT]
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COMPANY OFFERING
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The Company is offering, on a private placement basis, units (the "Units"
or also the "Securities"), whereby each Unit consists of one common share (the
"Share" or "Shares" as the context requires or also the "Securities") and one
non-transferable share purchase warrant (the "Warrant" or "Warrants" as the
context requires) of its own issue, to eligible investors (such an investor who
subscribes to this issue by this document is hereafter called the "Subscriber")
at a price of $0.16 US per Unit. The Company offers, and the Subscriber
accepts, the Units on the terms and conditions hereafter set forth.
With each Unit subscribed, the Subscriber shall receive one Share and shall
also receive a Warrant having the following characteristics:
(a) two Warrants permits the purchase of another Share at a price of $0.22
US until twelve months from the date of issue;
(b) the Warrants shall be altered for each alteration of capital of the
Company, or its successor, as to number and price in accordance with
industry practice; and
(c) the Warrants are non-transferable and the Warrants and any resultant
shares are subject to such restrictions as law requires.
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SECURITIES REQUESTED FOR PURCHASE BY THE SUBSCRIBER
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BASED UPON THE HEREAFTER TERMS, CONDITIONS, REPRESENTATIONS, WARRANTIES,
AND COVENANTS GIVEN BY EACH PARTY TO THE OTHER, THE SUBSCRIBER HEREBY SUBSCRIBES
FOR AND AGREES TO PURCHASE
UNITS OF THE COMPANY FOR AN AGGREGATE
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CONSIDERATION OF $ US (the "SUBSCRIPTION
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PRICE") AND FOR WHICH PAYMENT IS HEREBY DELIVERED TO THE COMPANY. The Company,
upon acceptance by the board of all or part of this subscription, agrees to
issue the accepted number of Securities, fully paid and non-assessable, as
consideration for the Subscriber's subscription, and to refund any excess
subscription monies of the Subscription Price of any non-accepted portion.
The Subscriber understands and acknowledges that the Company is a reporting
and publicly trading company listed on the NASD Over-the-Counter Bulletin Board
and a reporting issuer in British Columbia and the Subscriber acknowledges that
no party independent of the Company has made or will make any opinion or
representations on the merits or risks of an investment in the Securities. The
Subscriber acknowledges hereby being advised and is encouraged to seek
independent investment advice.
The Subscriber warrants that the Subscriber has truthfully and fully
disclosed the Subscriber's information in this subscription document and has
read and concurs in all the statements of this subscription, upon which the
Company relies (to its possible damage if the Subscriber declares falsely), has
disclosed the Subscriber's proper jurisdiction and has declared whether the
Subscriber is or is not, directly or indirectly, a US subject and has considered
carefully and answered truthfully (and has sought appropriate counsel and
advice) as to the exemptions which apply to the Subscriber and has fully
considered the economic reasonableness of an investment by the Subscriber in the
Company in the circumstances of the Subscriber.
ELIGIBILITY DECLARATION BY THE SUBSCRIBER
-----------------------------------------
AS CONFIRMATION THAT THE SUBSCRIBER IS ELIGIBLE TO PURCHASE THE SECURITIES
AS AN EXEMPT PURCHASE THE SUBSCRIBER WARRANTS THAT IT COMPLIES WITH ONE OF THE
FOLLOWING EXEMPTIONS, WHICH HAS BEEN CHECKED OFF AND UPON WHICH THE COMPANY
RELIES.
BRITISH COLUMBIA AND ALBERTA SUBSCRIBERS
--------------------------------------------
THE SUBSCRIBER DECLARES THAT THE SUBSCRIBER IS NOT A UNITED STATES SUBJECT
AND IF THE SUBSCRIBER IS A RESIDENT OF BRITISH COLUMBIA OR ALBERTA THE
SUBSCRIBER FULFILLS ONE OF THE FOLLOWING CRITERIA (PLEASE CHECK OFF APPROPRIATE
CATEGORY) AND WHICH CATEGORY IS WARRANTED BY THE SUBSCRIBER:
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( ) at the time of the Subscriber's investment herein the Subscriber is a
director, officer, or employee of the Company or a subsidiary.
( ) The Subscriber is subscribing for an amount which has an aggregate
acquisition cost of not less than a prescribed amount (being $97,000) and
the purchaser is not a corporation, syndicate, partnership or other form of
incorporated or unincorporated entity or organization created solely to
permit the purchase of the Securities (or other similar purchases) by a
group of individuals whose individual share of the aggregate acquisition
cost of such Units is not less than $97,000.
( ) The Subscriber is purchasing the Securities as principal and fulfils one
of the following categories:
(a) a director, senior officer or control person of the issuer, or of an
affiliate of the issuer,
(b) a spouse, parent, grandparent, brother, sister or child of a director,
senior officer or control person of the issuer, or of an affiliate of
the issuer,
(c) a close personal friend of a director, senior officer or control
person of the issuer, or of an affiliate of the issuer,
(d) a close business associate of a director, senior officer or control
person of the issuer, or of an affiliate of the issuer, or
(e) a person or company that is wholly owned by any combination of persons
or companies described in paragraphs (a) to (d).
[SECTION 3.1 OF MULTILATERAL INSTRUMENT 45-103]
( ) The Subscriber is a resident of British Columbia and the Subscriber is
purchasing the Securities as principal and the Subscriber:
(a) has received an offering memorandum of the Issuer, and
(b) has signed a risk acknowledgement and provided the same to the Issuer.
Notwithstanding any other provision of this agreement, if the
Subscriber has subscribed employing this exemption then such
Subscriber shall have the benefit of any additional terms set forth in
the offering memorandum or provided by law in respect to rights of
recission and contractual rights in the event of misrepresentation.
[Subsection 4.1(1) of Multilateral Instrument 45-103]
( ) The Subscriber is a resident of Alberta and:
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(a) the Subscriber is purchasing the Securities as principal,
(b) the Subscriber has received an offering memorandum of the Issuer and
has signed a risk acknowledgement and provided the same to the Issuer;
and
(c) either
(i) the Subscriber is an eligible investor (a person whose net
assets, alone or with spouse, exceeds $400,000 or whose net
income before taxes in the two most recent years exceeded $75,000
(or $125,000 with spouse) and who reasonably expects to exceed
such amount in the current year), or
(ii) the Subscriber's aggregate acquisition cost does not exceed
$10,000. [Subsection 4.1(3) of Multilateral Instrument 45-103]
( ) The Subscriber is an accredited investor and therefor is an exempt
purchaser by virtue of the Subscriber's wealth. For an individual an
'accredited investor' is a person who alone or with spouse has, directly or
indirectly, financial assets (cash and securities)exceeding $1,000,000, net
of related liabilities, or whose net income before taxes exceeded $200,000
in the two most recent years (or $300,000 with spouse) and reasonably
expects to exceed that level in the current year.
The Subscriber represents and warrants that he has declared that the
Subscriber is not a person subject to United States jurisdiction by checking off
one of the foregoing categories of exemption and such declaration warrants
without equivocation that the Subscriber is not a US investor, directly or
indirectly, and the Subscriber is not subscribing as an agent or nominee or
trustee or in any other capacity, partly or wholly or directly or indirectly,
for a US person subject to US law.
UNITED STATES SUBSCRIBERS
---------------------------
IF THE SUBSCRIBER IS A US CITIZEN (OR OTHERWISE SUBJECT TO US JURISDICTION)
THE SUBSCRIBER HEREBY SO DECLARES AND FURTHER DECLARES THAT THE SUBSCRIBER IS AN
"ACCREDITED INVESTOR" AS THAT TERM IS DEFINED IN REGULATION D PROMULGATED UNDER
THE RELEVANT SECURITIES ACT (THE "ACT") OF THE UNITED STATES, BY VIRTUE OF THE
SUBSCRIBER'S QUALIFICATION UNDER ONE OR MORE OF THE FOLLOWING CATEGORIES (PLEASE
CHECK OFF APPROPRIATE CATEGORY):
( ) The Subscriber is a natural person whose individual net worth, or joint
net worth with that person's spouse exceeds $1,000,000, not including the
Subscriber's principal residence.
( ) The Subscriber is a natural person who had an individual income in excess
of $200,000 in each of the two most recent years or joint income with that
person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current
year.
91
( ) The Subscriber is a corporation, organization described in section
501(c)(3) of the United States Internal Revenue Code, Massachusetts or
similar business trust, or partnership, not formed for the specific purpose
of acquiring the Securities, with total assets in excess of $5,000,000.
( ) The Subscriber is a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Securities, whose purchase
is directed by a sophisticated person.
( ) The Subscriber is a director or executive officer of the Corporation.
( ) The Subscriber is a private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of 1940.
( ) The Subscriber is a bank as defined in section 3(a)(2) of the Act, or a
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934; an insurance company as defined in section
2(13) of the Act; an investment company registered under the Investment
Company Act of 1940 or a business development company as defined in section
2(a)(48) of that Act; a Small Business Investment Company licensed by the
U.S. Small Business Administration under section 301(c) or (d) of the Small
Business Investment Act of 1958; a plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a
state or its political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000; an employee benefit
plan within the meaning of the Employee Retirement Income Security Act of
1974 if the investment decision is made by a plan fiduciary, as defined in
section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self- directed plan, with investment decisions made solely by persons that
are accredited investors.
( ) The Subscriber is an entity in which all of the equity owners are
accredited investors under one or more of the categories set forth above.
REGULATION S APPLICATION
------------------------
AS THE COMPANY IS A US COMPANY WHOSE SECURITIES ARE SUBJECT TO US LAW, THE
SUBSCRIBER HEREBY AGREES, REPRESENTS AND WARRANTS TO THE COMPANY AS FOLLOWS:
(i) Subscriber (i) is not a U.S. Person (as defined in Rule 902 of
Regulation S ("Regulation S") under the United States Securities Act of 1933
92
(the "1933 Act")), which definition includes, but is not limited to, any natural
person resident in the United States, any corporation or partnership
incorporated or organized under the laws of the United States, or any estate or
trust of which any executor, administrator or trustee is a U.S. Person); (ii) is
not purchasing any of the Securities for the account or benefit of any U.S.
Person or for offering, resale or delivery for the account or benefit of any
U.S. Person or for the account of any person in any jurisdiction other than the
jurisdiction set out in the name and address of Subscriber below; and (iii) was
not offered any Securities in the United States and was outside the United
States at the time of execution and delivery of this Subscription Agreement.
(ii) Subscriber acknowledges that the Securities have not been
registered under the 1933 Act and the Company has agreed to register the
securities purchased under this offering with the Securities and Exchange
Commission by filing a registration statement under the 1933 Act within 60 days
of the closing of this offering. The Subscriber agrees to resell the Securities
only in accordance with the provisions of Regulation S and any other applicable
securities laws, pursuant to a registration under the 1933 Act, or pursuant to
an available exemption from such registration, and that hedging transactions
involving the Securities may not be conducted unless in compliance with the 1933
Act. The Subscriber understands that any certificate representing the
Securities will bear a legend setting forth the foregoing restrictions. The
Subscriber understands that the Securities are restricted securities within the
meaning of Rule 144 promulgated under the 1933 Act; that the exemption from
registration under Rule 144 will not be available in any event for at least one
year from the date of purchase and payment of the Securities by the Subscriber,
and other terms and conditions of Rule 144 are complied with; and that any sale
of the Securities may be made by the Investor only in limited amounts in
accordance with such terms and conditions. In addition, any Subscriber who is a
British Columbia or Alberta resident will be subject to British Columbia and
Alberta resale restrictions which will be set out in the legend stamped on the
certificate representing the Securities.
(iii) No U.S. Person, either directly or indirectly, has any
beneficial interest in any of the Securities acquired by Subscriber hereunder,
nor does Subscriber have any agreement or understanding (written or oral) with
any U.S. Person respecting:
(a) the transfer or any assignment of any rights or interest in
any of the Securities;
(b) the division of profits, losses, fees, commissions or any
financial stake in connection with this subscription; or
(c) the voting of the Securities.
(iv) the Subscriber understands that each person
exercising any Warrant comprising a part of the Securities will be required to
give to the Company at the time of exercise written certification that such
person is not a U.S. person and that the Warrant is not being exercised on
behalf of a U.S. person.
93
RESTRICTED SECURITIES AND RESTRICTED DISPOSITION
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THE SUBSCRIBER REPRESENTS AND WARRANTS THAT THE SUBSCRIBER WAS NOT SPECIFICALLY
FORMED AND HAS NOT ACTED TO ACQUIRE ANY OF THE SECURITIES SUBSCRIBED FOR IN THIS
AGREEMENT IN VIOLATION OF THE PROVISIONS OF REGULATION S OR RULE 144 UNDER THE
SECURITIES LAWS OF THE UNITED STATES OR IN VIOLATION OF ANY OF THE EXEMPTIONS
PROVIDED BY THE SECURITIES LAWS OF ALBERTA OR BRITISH COLUMBIA. THE SUBSCRIBER
ACKNOWLEDGES THAT THE SECURITIES WILL BE RESTRICTED AS TO DISPOSITION AS SET
FORTH BELOW AND AGREES TO ABIDE BY SUCH RESTRICTIONS.
Whether the Subscriber has purchased subject to Rule 144 or Reg. S or
pursuant to any exemptions under the securities laws of British Columbia or
Alberta the Subscriber represents and warrants that the Subscriber understands
that:
(a) neither the sale of the Securities which the Subscriber is
acquiring nor the Securities themselves has been registered under any state
securities laws and the Securities must be held indefinitely unless subsequently
registered or an exemption from such registration is available; and
(b) the share certificate representing the Securities will be
stamped with the following legends (or substantially equivalent language)
restricting transfer:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933 or the laws of any state and have been
issued pursuant to an exemption from registration pertaining to such
securities and pursuant to a representation by the security holder named
hereon that said securities have been acquired for purposes of investment
and not for purposes of distribution. These securities may not be offered,
sold, transferred, pledged or hypothecated in the absence of registration,
or the availability of an exemption from such registration. Furthermore, no
offer, sale, transfer, pledge or hypothecation is to take place without the
prior written approval of counsel to the issuer being affixed to this
certificate. The stock transfer agent has been ordered to effectuate
transfers of this certificate only in accordance with the above
instructions."
"Unless permitted under securities legislation in British Columbia or
Alberta, the holder of the securities shall not trade the securities before
the earlier of (i) the date that is 12 months and a day after the date the
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issuer first became a reporting issuer in any of Alberta, British Columbia,
Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan, if the issuer is a
SEDAR filer; and (ii) the date that is 12 months and a day after the later
of (A) the distribution date, and (B) the date the issuer became a
reporting issuer in the local jurisdiction of the purchaser of the
securities that are the subject of the trade."
It is acknowledged by the parties hereto that the Company will attempt to
acquire the benefit of four month hold periods to the Securities for the benefit
of British Columbia and Alberta subscribers (and any subscribers in other
provinces who may participate where such is permitted) by application to listing
on the TSX Venture Exchange and filing of an AIF under the policies of such
jurisdictions. However, it is acknowledged that the Company will make
reasonable commercial efforts to effect such and there is no warranty that such
will occur. In the event of failure of the same the forgoing restrictions will
apply and the investor is also directed to the terms of section 2 under the
section headed "Additional Investment Subscription Terms, Corporate Disclosure
and General Subscriber Acknowledgements and Warranties" below.
METHOD OF SUBSCRIPTION
----------------------
A subscription shall be made by delivering to the Company or its agent a signed
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and fully completed copy of this subscription agreement (with a 'risk
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acknowledgement declaration' if subscribing pursuant to an offering memorandum)
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and the Subscription Price made to the order of the Company or its designated
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agent.
------
The Company shall return to the Subscriber the Subscription Price, or such
amount as has not been accepted, as to such part of the subscription which the
Company has not accepted.
Should the Subscriber's subscription be submitted to the solicitors for the
Issuer and payment delivered to the solicitors in trust then the Subscriber
agrees that the solicitors shall have no accountability to the Subscriber
whatsoever, and acknowledges that the solicitors are merely recipients for the
Issuer and have no solicitors obligations of any nature to the Subscriber. The
only duty the solicitors shall have is to deliver the subscription agreement and
the subscription monies to the Issuer and the solicitors shall require no
further instruction other than this paragraph from the Subscriber in order to
deliver the same to the Issuer. Under no circumstances shall the Company's
solicitors be considered to be giving legal or other advice or services to the
Subscriber and no communication between the Subscriber and such solicitors shall
be considered advice (at the most only administrative subscription assistance on
behalf of the Company) but the Subscriber shall rely solely and exclusively on
his own judgement and the advice of his own counsel.
95
ADDITIONAL INVESTMENT SUBSCRIPTION TERMS, CORPORATE DISCLOSURE AND GENERAL
SUBSCRIBER ACKNOWLEDGMENTS AND WARRANTIES
1. DESCRIPTION OF THE SECURITIES. The Securities are a part of the common
------------------------------
shares of the Company. The Company's authorized capital consists of 75,000,000
common shares without par value, of which 15,875,768 shares were issued and
outstanding as of August 20, 2002, and 5,000,000 preferred shares without par
value, of which no shares were issued and outstanding as of August 20, 2002.
Copies of the constating documents of the Company describing the common
securities and the rights of holders and other corporate materials of the
Company are available upon request.
2. CLOSING OF SUBSCRIPTION AND USE OF FUNDS OF THE SECURITIES. The
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Subscriber agrees that closing of this subscription, and completion of the
transaction, is subject to and deferred until listing of the Issuer on the TSX
Venture Exchange and until completion of an effective AIF filing ("Closing
Conditions"). Notwithstanding such deferral the subscription monies shall be
advanced to the Issuer to reserve the Subscriber's subscription and the Issuer
may employ such funds for its business purposes nor shall such funds be
considered a loan and shall not bear interest but shall constitute solely a
reservation of subscription and advance of funds. The Subscriber shall not
demand return of its subscription unless the Closing Conditions have not
occurred for a period in excess of one year from the date of this subscription.
Notwithstanding the Closing Conditions the Issuer may elect to waive the Closing
Conditions on or before such one year subject to the Issuer being a trading
issuer in good standing on the OTCBB or another public exchange and subject to
the Issuer proceeding to file an amended or new SB-2 qualifying the Securities
unless the Shares of the Securities otherwise have the benefit of an exemption
permitting trading. The Subscriber acknowledges that the funds to be raised
from the Securities are to be employed for the business of the Company in
accordance with management's determination as to the best use of the same for
the Company's business plans. Notwithstanding any disclosure document provided
concurrent with this subscription the Company reserves the right at any time to
alter its business plans in accordance with management's appreciation of the
market for the goods and services of the Company and the best use of the
Company's funds to advance its business, whether present or future.
3. SECURITIES ISSUED AT DIFFERENT PRICES AND CHARACTERISTICS. The
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Subscriber acknowledges that the Company will issue its securities at different
-
prices which may occur sequentially, from time-to-time, or at the same time.
The Company will also issue offerings which have warrants, or other benefits,
attached and some offerings which do not. Not all subscribers will receive
common shares, or other share classes, of the Company at the same price and such
may be issued at vastly different prices to that of the Subscriber. For
example, the Company has or may issue Securities at nominal prices for
developmental assets (which cannot be valued and so may be assigned a nominal
value on the Company's books) or for services or to attract expertise or
management talent or other circumstances considered advisable by the board of
directors. Such issuance at different prices are made by the board in its
judgement as to typical structuring for a company such as the Company, to
incentivise, reward, and to provide a measure of developmental control, to
acquire assets or services which the board considers necessary or advisable for
the Company's development and success, and other such considerations in the
board's judgement. The Subscriber acknowledges these matters, understands that
the Subscriber's investment is not necessarily the most advantageous investment
in the Company, and authorizes the Board now and hereafter to use its judgement
to make such issuances whether such issuances are at a lesser, equal or greater
price than that of the Subscriber and whether such is prior to, concurrent with,
or subsequent to the Subscriber's investment. The Subscriber acknowledges that
the Subscriber has had disclosed to the Subscriber that the Company has issued
securities at different prices and with different characteristics, the
Subscriber has had the opportunity for full disclosure and questions in respect
thereto, and the Subscriber accepts without equivocation the securities
structure and pricing of the Company by subscription hereto.
4. SUBSCRIBER'S ACKNOWLEDGMENTS. The Subscriber agrees and acknowledges
-----------------------------
that:
(a) Withdrawal or Revocation. This Subscription Agreement is given for
-------------------------- valuable consideration and shall not be
withdrawn or revoked by the Subscriber once tendered with the
Subscription Price except for Subscribers in British Columbia or
Alberta subscribing by offering memorandum exemption who shall have a
right to cancel the subscription by midnight on the second business
day after the Subscriber has signed this agreement;
(b) Agreement to be Bound. The Subscriber hereby specifically agrees to be
---------------------- bound by the terms of this Subscription
Agreement as to all particulars hereof and hereby reaffirms the
acknowledgments, representations, and powers set forth in this
Subscription Agreement;
(c) Reliance on Subscriber's Representations. The Subscriber understands
------------------------------------------- that the Company will rely
on the acknowledgments, representations, and covenants of the
Subscriber herein in determining whether a sale of the Securities to
the Subscriber is in compliance with applicable securities laws. The
Subscriber warrants that all acknowledgments, representations and
covenants are true and accurate;
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(d) Waiver of Preemptive Rights. The Subscriber hereby grants, conveys,
------------------------------- and vests the President of the Company
as the Subscriber's power of attorney solely for the purpose of
waiving any prior or preemptive rights which the Subscriber may have
to further issues of equity by the Company.
5. SUBSCRIBER'S REPRESENTATIONS, WARRANTIES, AND UNDERSTANDINGS. The
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Subscriber represents and warrants to the Company and states that:
(a) Principal. The Subscriber is purchasing the Securities as principal
--------- for his own account and not for the benefit of any other
person except as otherwise stated herein, and not with a view to the
resale or distribution of all or any of the Securities;
(b) Decision to Purchase. The decision of the Subscriber to enter into
----------------------- this agreement and to purchase Securities
pursuant hereto has been based only on the representations of this
agreement and any collateral business plan or offering memorandum
provided herewith. It is not made on other information relating to the
Company and not upon any oral representation as to fact or otherwise
made by or on behalf of the Company or any other person. The
Subscriber agrees that the Company assumes no responsibility or
liability of any nature whatsoever for the accuracy, adequacy or
completeness of any business plan information, which has been created
based upon the Company's management experience. In particular, and
without limiting the generality of the foregoing, the decision to
subscribe for Securities has not been influenced by:
(i) Newspaper, magazine or other media articles or reports related to
the Company or its business; or
(ii) Promotional literature or other materials used by the Company for
sales or marketing purposes; or
(iii) Any representations, oral or otherwise, that the Securities will
be repurchased or have any guaranteed future realizable value, or
that there is any certainty as to the success of the Company or
liquidity or value of the Securities.
(c) Economic Risk. The Subscriber has such knowledge and experience in
-------------- financial and business affairs as to be capable of
evaluating the merits and risks of his investment in the Securities,
or has sought and received independent professional advice, and the
Subscriber is able to bear the economic risk of a total loss of the
Subscriber's investment in the Securities;
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(d) Speculative Investment. The Subscriber understands that an investment
------------------------ in the Securities is a speculative
investment, that there is no guarantee of success of Management's
plans and that any offering memorandum or business plan provided to
the Subscriber is made based upon business experience to date and
management's reasonable efforts at disclosure and is subject to error
and subject to be proven wrong by future events and experience.
Management's plans are an effort to apply present knowledge and
experience to project a future course of action which is hoped will
result in financial success employing the Company's assets and with
the present level of management's skills and of those whom the Company
will need to attract (which cannot be assured). Additionally, all
plans are capable of being frustrated by new or unrecognized or
unappreciated present or future circumstances which can typically not
be accurately, or at all, predicted.
(e) Status. If the Subscriber has stated that he is not a U.S. person, as
------ defined under the United States Securities Act of 1933, as
amended (the "U.S. ---------------------- Act"), then he declares
unequivocally that he is not a US person and was not offered the
Securities in the United States (as that term is defined in the U.S.
Act), and did not execute or deliver this Agreement in the United
States. If the Subscriber is a US person then such has been declared
in this document by noting the Subscriber as having a US address
below, completing the declarations at the commencement of this
document (all of which are truly stated), and the Subscriber qualifies
as an eligible investor (by virtue of having the requisite personal
wealth and income and/or qualifying under other appropriate exemption)
under the relevant securities laws;
(f) Address. The Subscriber is resident as set out on the last page of
------- this Agreement as the "Subscriber's Address" and the address
set forth on the last page of this Agreement is the true and correct
address of the Subscriber;
(g) Risk and Resale Restriction. The Subscriber is aware of the risks and
----------------------------- other characteristics of the Securities
and of the fact that the Subscriber will not be able to resell the
Securities except in accordance with the applicable securities
legislation and regulatory policy;
(h) Receipt of Information. The Subscriber acknowledges that, to his
------------------------
satisfaction:
(i) He has either had access to or has been furnished with sufficient
information regarding the Company and the terms of this
investment transaction to his satisfaction;
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(ii) He has been provided the opportunity to ask questions concerning
this investment transaction and the terms and conditions thereof
and all such questions have been answered to his satisfaction;
and
(iii) He has been given ready access to and an opportunity to review
any information, oral or written, that he has requested, in
particular to any offering memorandum or business plan of the
Company, if available concurrent with or as a part of this
subscription;
(i) No Prospectus filing. The Subscriber acknowledges that this is an
---------------------- offering made on a private basis without a
prospectus and that no federal, state, provincial or other agency has
made any finding or determination as to the merits of the investment
nor made any recommendation or endorsement of the Securities, and
that:
(i) The Subscriber may be or is restricted from using most of the
civil remedies available under the applicable securities act; and
(ii) The Company is relieved from certain obligations that would
otherwise apply under the applicable securities act;
(j) Confidentiality. The Subscriber understands that the Company's
--------------- business plan and this Agreement are confidential. The
Subscriber will not and has not distributed such, or divulged the
contents thereof, to anyone other than such legal or financial
advisors as the Subscriber has deemed desirable for purposes of
evaluating an investment in the Securities and the Subscriber has not
made any copies thereof except for his own records;
(k) Age of Majority. The Subscriber, if an individual, has attained the
--------------- age of majority and is legally competent to execute
this Agreement and to take all actions required pursuant hereto;
(l) Authorization and Formation of Subscriber. The Subscriber, if a
--------------------------------------------- corporation,
partnership, trust or other form of business entity, is authorized and
otherwise duly qualified to purchase and hold the Securities and such
entity has not been formed for the specific purpose of acquiring
Securities in the Offering. If the Subscriber is one of the
aforementioned entities, it hereby agrees that upon request of the
Company it will supply the Company with any additional written
information that may be requested by the Company;
99
(m) Legal Obligation. This Agreement has been duly and validly authorized,
----------------- executed and delivered by and constitutes a legal,
valid, binding and enforceable obligation of the Subscriber;
(n) Compliance With Applicable Laws. The Subscriber knows of no reason
------------------------------- (and is sufficiently knowledgeable to
determine the same or has sought legal advice) why the delivery of
this Agreement, the acceptance of it by the Company and the issuance
of the Securities to the Subscriber will not comply with all
applicable laws of the Subscriber's jurisdiction of residence or
domicile, and all other laws applicable to the Subscriber, and the
Subscriber has no reason to believe that the Subscriber's subscription
hereby will cause the Company to become subject to or required to
comply with any disclosure, prospectus or reporting requirements or to
be subject to any civil or regulatory review or proceeding. The
Subscriber will comply with all applicable securities laws and will
assist the Company in all reasonable manners to comply with all
applicable securities laws; and
(o) Encumbrance or Transfer of Securities. The Subscriber will not sell,
---------------------------------------- assign, gift, pledge or
encumber in any manner whatsoever the Securities herein subscribed
without the prior written consent of the Company and in accordance
with applicable securities laws.
The Subscriber agrees that the above representations and warranties of the
Subscriber will be true and correct as of the execution of and acceptance of
this Agreement and will survive the completion of the issuance of the
Securities. The Subscriber understands that the Company will rely on the
representations and warranties of the Subscriber herein in determining whether a
sale of the Securities to the Subscriber is in compliance with law and the
Subscriber warrants to indemnify and hold harmless the Company from all damages
or claims resulting from any misrepresentation by the Subscriber.
6. MATERIAL CHANGES. The Subscriber undertakes to notify the Company
-----------------
immediately should there be any material change in the foregoing warranties and
representations and provide the Company with the revised or corrected
information. The Subscriber hereby agrees to indemnify and hold the Company and
its affiliates harmless from and against any and all matters incurred on account
of or arising out of:
100
(a) Any inaccuracy in the Subscriber's acknowledgments, representations or
warranties set forth in this Agreement;
(b) The Subscriber's disposition of any of the Securities contrary to the
Subscriber's acknowledgments, representations or warranties in this
Agreement;
(c) Any suit or proceeding based upon a claim that said acknowledgments,
representations or warranties were inaccurate or misleading or
otherwise cause for obtaining damages or redress from the Company or
its affiliates or the disposition of all or any part of the
Subscriber's Securities; and
(d) The Subscriber's failure to fulfill any or all of the Subscriber's
obligations herein.
7. ADDRESS FOR DELIVERY. Each notice, demand or other communication
----------------------
required or permitted to be given under this Agreement shall be in writing and
shall be sent by delivery (electronic or otherwise) or prepaid registered mail
addressed to the Subscriber or the Company at the addresses specified in this
Agreement. The date of receipt of such notice, demand or other communication
shall be the date of delivery thereof if delivered, or, if given by registered
mail as aforesaid, shall be deemed conclusively to be the fifth day after the
same shall have been so mailed, except in the case of interruption of postal
services for any reason whatsoever, in which case the date of receipt shall be
the date on which the notice, demand or other communication is actually received
by the addressee.
8. CHANGE OF ADDRESS. Either party may at any time and from time to time
-------------------
notify the other party in writing of a change of address and the new address to
which notice shall be given to it thereafter until further change.
9. SEVERABILITY AND CONSTRUCTION. Each section, sub-section, paragraph,
-------------------------------
sub-paragraph, term and provision of this Agreement, and any portion thereof,
shall be considered severable, and if, for any reason, any portion of this
Agreement is determined to be invalid, contrary to or in conflict with any
applicable present or future law, rule or regulation, that ruling shall not
impair the operation of, or have any other effect upon, such other portions of
this Agreement as may remain otherwise intelligible (all of which shall remain
binding on the parties and continue to be given full force and agreement as of
the date upon which the ruling becomes final). The word "he" in this Agreement
shall also mean she or it relative to the identity of the Subscriber.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the province of British Columbia and the laws of
101
Canada applicable therein. Any dispute regarding matters as between the
Subscriber and the Company, whether as a subscriber or shareholder and whether
arising under this Agreement or pursuant to shareholder rights pursuant to the
constating documents of the Company or applicable law, shall be adjudicated
exclusively in British Columbia unless the Company shall permit otherwise.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The covenants,
----------------------------------------------
representations and warranties contained herein shall survive the closing of the
transactions contemplated hereby.
12. COUNTERPARTS. This Agreement may be signed by the parties hereto in as
------------
many counterparts as may be necessary, each of which so signed shall be deemed
to be an original, and such counterparts together shall constitute one and the
same instrument and notwithstanding the date of execution will be deemed to bear
the execution date as set forth in this Agreement. This Agreement may be
executed and exchanged by facsimile and such facsimile copies shall be valid and
enforceable agreements.
13. ENTIRE AGREEMENT. This Agreement constitutes the only agreement between
----------------
the parties with respect to the subject matter hereof and shall supersede any
and all prior negotiations and understandings. There are no collateral
agreements or understandings hereto and this Agreement, and the documents
contemplated herein, constitutes the totality of the parties' agreement. This
Agreement may be amended or modified in any respect by written instrument only.
14. SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement
------------------------
shall be binding upon and enure to the benefit of the Subscriber, the Company
and their respective successors and lawfully permitted assigns; provided that,
except as herein provided, this Agreement shall not be assignable by any party
without the written consent of the other. The benefit and obligations of this
Agreement, insofar as they extend to or affect the Subscriber, shall pass with
any assignment or transfer of the Securities in accordance with the terms of
this Agreement.
102
SIGNATURE PAGE TO A PRIVATE ISSUE SUBSCRIPTION AGREEMENT OF STOCKGROUP
INFORMATION SYSTEMS INC.
DATED this day of , 2002.
--------- --------------
-------------------------------------------- ----------------------------
(NAME OF SUBSCRIBER - please print)
----------------------------
----------------------------
By:
-------- ------------------------------------- ----------------------------
(Official Capacity or Title if a company) (SUBSCRIBER'S ADDRESS ABOVE)
--------------------------------------- ----------------------------
SIGNATURE OF SUBSCRIBER or Official (Telephone Number)
------------------------------------------- ----------------------------
(Please print name of individual whose (Facsimile Number)
signature appears above if different than the
name of the Subscriber printed above). ----------------------------
(e-mail address)
ACCEPTANCE
----------
STOCKGROUP INFORMATION SYSTEMS INC. hereby accepts the above subscription as of
-----------------------------------
this day of , 2002.
---- ------------------
STOCKGROUP INFORMATION SYSTEMS INC.
--------------------------------------
by its authorized signatory: )
)
---------------------------------- )
Authorized Signatory )
103
