THE SECURITIES TO WHICH THIS
AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND MAY NOT BE
OFFERED OR SOLD DIRECTLY OR INDIRECTLY (A) WITHIN THE UNITED STATES
OR TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN
REGULATION S) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AS TO SUCH SECURITIES UNDER, OR AN EXEMPTION FROM, THE
PROSPECTUS AND REGISTRATION REQUIREMENTS OF THE 1933 ACT, OR (B) IN
CANADA OR TO RESIDENTS OF CANADA EXCEPT PURSUANT TO PROSPECTUS
EXEMPTIONS UNDER THE APPLICABLE PROVINCIAL SECURITIES LAWS AND
REGULATIONS OR PURSUANT TO AN EXEMPTION ORDER MADE BY THE
APPROPRIATE PROVINCIAL SECURITIES REGULATOR(S), IN EACH CASE AS
EVIDENCED BY AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY.
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SUBSCRIPTION
AGREEMENT
BY AND BETWEEN
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A. HEPALIFE TECHNOLOGIES, INC.
, a Florida corporation having
its principal office at the address set forth on the signature page
hereto (the “Company”);
B. The undersigned subscriber, an entity, having
an office or residential address, as the case may be, at the
address set forth on the signature page hereto
( the
“Subscriber”).
WHEREAS, the Company is offering on a no minimum basis
(the “ Offering ”) up to an aggregate of
14,117,647 units ( the “Offered
Units”) at a price
of US $0.425
per Offered Unit or
$6,000,000 in the aggregate; each Offered
Unit consists of one (1)
share (the “ Unit Shares ”) of the
Company’s common stock, $0.001 par value per share and one
(1) Series C
Non-redeemable Warrant (in the form of Exhibit A hereto)
to purchase a share of common stock at $ 0.55 per share for
a period of 24 months from the date of issuance (the “
Series C Warrants ”);
WHEREAS, the Company is conducting the Offering without
any private placement memorandum and will offer and sell Offered
Units, in reliance on, among others, the exemptions from the
registration requirements of the US Securities Act of 1933 as
amended (the “ 1933 Act ”) afforded by
Regulation D (“ Regulation
D ”) and
Regulation S (“ Regulation S ”) each as
promulgated pursuant to the 1933 Act, only to investors (the
“ Qualified
Investors ”) who
either are (i) residents of the United States and are
“ accredited
investors ” as
defined in Regulation D or (ii) residents of British Columbia,
Canada, and who satisfy the prospectus delivery exemption
requirements of Section 2.3 and/or 2.5 of National Instrument
45-106 Prospectus and Registration Exemptions (“
NI-45-106 ”);
WHEREAS , subject to the terms and conditions set forth
herein the Subscriber desires to purchase from the Company and the
Company desires to sell to the Subscriber the number of
Offered
1
Units (the
“ Subscribed for Units ”) set forth
on the signature page hereof.
NOW THEREFORE , in consideration of the recitals and the
mutual covenants herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as
follows:
1 . Definitions.
“ 1933 Act ”
has the meaning ascribed thereto in the recitals to this
Agreement.
“ 1934 Act ”
means the US Securities Exchange Act of 1934, as
amended.
“ Accredited
Investor ” means with
respect to any non-Canadian Person a Person who is an accredited
investor as that term is defined in Regulation D, as promulgated
pursuant to the 1933 Act, and with respect to any Canadian Person,
a Person who is an accredited investor as that term is defined in
NI-45-106.
“ Affiliate ”
means, with respect to any Person, any other Person that directly
or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, direct
or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the
terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
“ Aggregate Purchase
Price ” has the
meaning ascribed thereto in Section 2.2 hereof.
“ Agreement ”
means this Subscription Agreement.
“ Base Share
Price ” has the
meaning ascribed thereto in Section 11.16 hereof.
“ BC Investor
Questionnaire ” has the
meaning ascribed thereto in Section 3(d) hereof. “ BC Representation Letter
” has the meaning ascribed thereto in Section 3(d)
hereof. “ BCSC”
has the meaning ascribed thereto in
Section 8.3(b) hereof.
“ Business
Day” means any day except
Saturday, Sunday and any day which shall be a legal holiday or a
day on which banking institutions in the State of New York
generally are closed.
“ Canadian Securities
Laws ” has the
meaning ascribed thereto in Section 8.3(b) hereof.
“ Closing ”
has the meaning ascribed thereto in Section 2.5(a)
hereof.
“ Closing Date
” has the meaning ascribed thereto in Section 2.5 (a)
hereof.
“ Commission ”
means the United States Securities and Exchange
Commission.
“ Common Stock
” means shares of the Company's common stock, $0.001 par
value, or such securities that such stock shall hereafter be
reclassified into.
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“
Company” has the meaning ascribed thereto in the
preamble.
“ Effective
Date ” has the
meaning ascribed thereto in Section 11.17 hereof.
“ Exercise
Price ” means the
exercise price of the Warrants as the same may from time to time be
adjusted.
“ Family and
Friends ” has the
meaning ascribed thereto in Section 8.3(b) hereof. “ Filing Date” has
the meaning ascribed thereto in Section 10.2 hereof.
“NI-45-106”
has the meaning ascribed thereto in
the recitals to this Agreement. “ Offered
Shares ” means the
Unit Shares and the Warrant Shares.
“ Offered Units
” has the meaning ascribed thereto in the recitals to this
Agreement.
“ Offering ”
means the offering of Offered Units.
“ Person ”
means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any
kind.
“ Plan ” has
the meaning ascribed thereto in Section 8.1(k)
hereof.
“ Proceeding ”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial
proceed-ing, such as a deposition), whether commenced or
threatened.
“ Qualified
Investors ” has the
meaning ascribed thereto in the recitals to this Agreement.
“Registration Rights
Agreement” has the
meaning ascribed thereto in Section 3 (c) hereof.
“Registrable Securities” has the meaning
ascribed thereto in Section 10.1 hereof.
“ Registration
Statement ” has the
meaning ascribed thereto in Section 10.2 hereof.
“Regulation
D” has the meaning
ascribed thereto in the recitals to this Agreement.
“Regulation D Investor
Questionnaire” means the Investor Questionnaire delivered by
the Subscriber pursuant to Section 3(e) hereof.
“Regulation D Investor
Representative Acknowledgment” means the Investor Representative Acknowledgment
delivered by the Subscriber pursuant to Section 3(e)
hereof.
“ Regulation S
” has the meaning ascribed thereto in the recitals to this
Agreement.
“ Required Effectiveness
Date” has the meaning
ascribed thereto in Section 10.2 hereof.
“SEC
Filings” has the
meaning ascribed thereto in Section 7.5 hereof.
“ Series C
Warrants ” has the
meaning ascribed thereto in the recitals to this
Agreement.
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“
Subscribed for Units ” has the
meaning ascribed thereto in the recitals to this Agreement.
“Subscriber” has the meaning ascribed thereto in the recitals
to this Agreement.
“ Trading
Market ” means the
following markets or exchanges on which the Common Stock is listed
or quoted for trading on the date in question: the American Stock
Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board.
“Unit Purchase
Price” has the
meaning ascribed thereto in Section 2.2 hereof. “
Unit Shares ” has the meaning ascribed thereto in the
recitals to this Agreement. “ U.S. Person ” has
the meaning ascribed thereto in Regulation S .
“ Warrants ”
shall mean the Series C Warrant.
“ Warrant
Shares ” means,
collectively, the shares of the Company’s common stock
issuable upon the exercise of the Warrants.
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2
. Subscription and
Purchase of Shares; Closing.
2.1 Subscription and Purchase of Shares
.
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(a) Subject to the terms and conditions herein
set forth, the Subscriber hereby subscribes for and agrees to
purchase from the Company the Subscribed for Units, at a price of
US$ 0.425 per Subscribed for Unit .
(b) The Subscriber acknowledges that this
Agreement may be accepted or rejected by the Company with respect
to all or part of the amount subscribed and that, to the extent the
subscription may be rejected, the accompanying cash subscription
payment will be refunded without payment of interest and without
deduction of expenses.
2.2 Payment of Purchase Price .
Simultaneously with the execution and delivery
of this Agreement by the Subscriber, the Subscriber shall deliver
to the company a dollar amount equal to (x) the number of
Subscribed for Units multiplied by (y) the Unit
Purchase Price (the “ Aggregate Purchase Price
”) by wire transfer of funds pursuant to wiring instructions
provided by the Company.
2.3
Limitations of Offering .
The Subscriber acknowledges that the Company is
offering and selling the Offered Units only to Qualified Investors.
In order to assist the Company in determining whether the
Subscriber is an accredited investor, in the case of Subscribers
resident in British Columbia, Canada, the Subscriber has delivered
to the Company a completed and signed BC Investor Questionnaire and
BC Representation Letter; and in the case of all other Subscribers
who are US Persons, a Regulation D Investor Questionnaire and, to
the extent applicable, the Regulation D Investor Representative
Acknowledgment.
2.4 No
Minimum Number of Offered Units Need be Sold .
4
The Subscriber acknowledges that
the Company is offering and selling the Offered Units on a no
minimum basis, and further acknowledges and understands that since
there is no minimum number of Offered Units to be sold, none of the
subscription proceeds will be held in an escrow account and all
funds will be immediately available to, and for use by, the
Company. Subscriber further acknowledges that it may be the only
investor in the Offering.
2.5
Closing .
(a) The Company will consummate the Offering
(the “ Closing
”), at the offices of the
Company, no event later than 5:00 pm (local Boston, MA, time) no
later than May 31, 2008 (the “ Closing
Date”).
(b) At a Closing, the Company in its sole
discretion shall either (i) accept this subscription (in whole or
in part) and shall cause its stock transfer agent to deliver to the
Subscriber certificate(s) for the Subscribed for Units, all against
delivery to the Company of the Aggregate Purchase Price for the
Subscribed for Units; or (ii) reject this subscription (or portion
thereof) and return or cause to be returned to the Subscriber,
without interest, his/her/its subscription payment or such portion
thereof applicable to the rejected portion of the Subscribers
subscription. The Company shall also deliver to the Subscriber a
countersigned copy of this Subscription Agreement and the
Registration Rights Agreement, effective as of the Closing
Date.
2.6 Use of Proceeds.
The Company will use the proceeds of this Offering for general
working capital purposes.
3. Subscriber’s
Closing Deliveries .
At the
Closing, the Subscriber’s shall have delivered to the
Company:
(a) This
Agreement, duly executed by the Subscriber;
(b) the
Aggregate Purchase Price by wire transfer in accordance with
written instructions provided by the Company;
(c) a
duly completed and executed Registration Rights Agreement
substantially in the form of Exhibit
B hereto (the “
Registration Rights Agreement ”);
(d) in
the case of Subscribers who are residents of British Columbia,
Canada, a completed and signed Representation Letter substantially
in the form of Exhibit C hereto (the “ BC
Representation Letter ”) and Investor Questionnaire
substantially in the form of Schedule A to the BC
Representation Letter (the “
BC Investor
Questionnaire ”);
and
(e) in
the case of Subscribers who are US Persons, a completed and signed
Investor Questionnaire substantially in the form of Exhibit
D hereto (the “ Regulation D
Investor Questionnaire ”), and to the extent applicable the
Investor Representative Acknowledgment substantially in the form
attached to the Regulation D Investor Questionnaire (the “
Regulation D Investor Representative Acknowledgment
”).
4 . Company’s
Closing Deliveries .
At the
Closing the Company shall have delivered to the
Subscriber:
5
(a)
If accepted by the Company, a
duly countersigned copy of this Agreement, duly executed by the
Subscriber;
(b) a duly
countersigned copy of the Registration Rights Agreement;
(c) the
Series C Warrant and;
(d) written instructions to its transfer agent
to issue and deliver certificates representing the Unit Shares
acquired by the Subscriber, all as more fully set forth on the
signature page hereto
5. Company’s
Conditions of Closing.
The Company’s obligation to sell the
Subscribed for Units is subject to the satisfaction or waiver, on
or before the Closing Date, of the conditions contained in this
Section 5 .
5.1
Representations, Warranties and Covenants.
The representations, warranties and covenants of
the Subscriber set forth in Section 8
hereof shall be true in all material
respects on and as of the Closing Date.
5.2
Closing Deliveries.
The
conditions in Section 3 hereof shall have
been satisfied or waived by the Company.
5.3 No
Adverse Action or Decision.
There shall be no action, suit, investigation or
proceeding pending, or to the Company’s knowledge,
threatened, against or affecting the Company or any of its
properties or rights, or any of its affiliates, associates,
officers or directors, before any court, arbitrator, or
administrative or governmental body that (i) seeks to restrain,
enjoin, prevent the consummation of or otherwise adversely affect
the transactions contemplated by this Agreement, or (ii) questions
the validity or legality of any such transaction or seeks to
recover damages or to obtain other relief in connection with any
such transaction.
6. Subscriber’s
Conditions of Closing.
The Subscriber’s obligation to purchase
the Subscribed for Units is subject to the satisfaction or waiver,
on or before the Closing Date, of the conditions contained in this
Section 6 .
6.1
Representations, Warranties and Covenants.
The representations, warranties and covenants of
the Company set forth in Section 7
hereof shall be true in all material
respects on and as of the Closing Date.
6.2
Closing Deliveries.
The
conditions in Section 4 hereof shall have
been satisfied or waived by the Subscriber.
6.3 No Adverse Action or Decision.
6
There shall
be no action, suit, investigation or proceeding pending, or to the
Company’s knowledge, threatened, against or affecting the
Company or any of its properties or rights, or any of its
affiliates, associates, officers or directors, before any court,
arbitrator, or administrative or governmental body that (i) seeks
to restrain, enjoin, prevent the consummation of or otherwise
adversely affect the transactions contemplated by this Agreement,
or (ii) questions the validity or legality of any such transaction
or seeks to recover damages or to obtain other relief in connection
with any such transaction.
7. Representations and
Warranties of the Company.
The Company represents, warrants
and covenants to the Subscriber that:
7.1
Corporate Existence.
The Company is a Company duly organized, legally
existing, and in good standing under the laws of the State of
Florida with the requisite corporate power and authority to own and
use its properties and assets and to carry on its business as
currently conducted.
7.2
Authorization; Enforcement.
The Company has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by this Agreement, and otherwise to carry out its
obligations hereunder. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
action on the part of the Company. When executed and delivered in
accordance with the terms hereof, this Agreement shall constitute
the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application. Anything herein to the contrary notwithstanding, this
Agreement shall not become a binding obligation of the Company
until it has been accepted by the Company as evidenced by its
execution by a duly authorized officer.
7.3 Agreement Not in Conflict.
The execution and delivery of this Agreement by
the Company and the completion of the transactions contemplated
hereby do not and will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under (whether after notice or lapse of time or both): (A)
any statute, rule or regulation applicable to the Company; (B) the
charter documents, by-laws or resolutions of the Company which are
in effect at the date hereof; (C) any mortgage, note, indenture,
contract, agreement, instrument, lease or other document to which
the Company is a party or by which it is bound; or (D) any
judgment, decree or order binding the Company or, to the best of
its knowledge, information and belief, the property or assets of
the Company.
7.4
Authorized and Outstanding Capital Stock.
The Company’s authorized capital stock of
consists of 300,000,000 shares of Common Stock, $0.001 par value
per share and 1,000,000 shares of preferred stock, $0.10 par value
per share. As of the April 28, 2008, there were 78,606,999 shares
of Common Stock issued and outstanding and no preferred shares
issued and outstanding. If all of the Offered Units are sold there
will be an aggregate of 92,724,646 shares of common stock issued
and outstanding. The Company has reserved for issuance up to
28,235,294 shares of Common Stock for issuance in connection with
the Offering.
7
7.5 Reporting
Issuer Status.
(a) The Company is not a “ reporting
issuer ” in any province of Canada. The Company has a
reporting obligation under the 1934 Act and files current,
quarterly and annual reports with the Commission on forms 8-K, 10-Q
and 10-K (collectively, the “ SEC Filings ”).
The filed material may be inspected and copied at the Public
Reference Room maintained by the Commission at 100 F Street, N.E.,
Washington, D.C. 20549. You can obtain information about operation
of the Public Reference Room by calling the Commission at
1-800-U.S. The Commission also maintains an Internet site that
contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the
U.S. Securities & Exchange Commission at http://www.sec.gov
. Copies of such material can be
obtained from the public reference section of the U.S. Securities
& Exchange Commission at prescribed rates.
(b) The SEC Filings made by the Company or
required to have been filed by the Company during the past 12
months (the “ SEC Reports ”) have been so filed
on a timely basis. As of the time it was filed with the SEC (or, if
amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing):
(i) each of the SEC Reports complied
in all material respects with the applicable requirements of the
1933 Act or the 1934 Act; and
(ii) none of the SEC Reports
contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not
misleading.
(c) The financial statements contained in the
SEC Reports: (i) complied as to form in all material respects with
the published rules and regulations of the SEC applicable thereto;
(ii) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered (except as may be indicated in
the notes to such financial statements and, in the case of
unaudited statements, as permitted by Form 10-QSB of the SEC); and
(iii) fairly present, in all material respects, the financial
position of Company as of the respective dates thereof and the
results of operations of Company for the periods covered thereby.
All adjustments considered necessary for a fair presentation of
such financial statements have been included.
(d) The Company is engaged in all material
respects only in the business described in the SEC Reports, and the
SEC Reports contain a complete and accurate description in all
material respects of the business of the Company. The Company has
made available to each Subscriber through the EDGAR system true and
complete copies of the SEC Reports.
7.6 Market for the Company’s Common
Stock.
The Company’s common stock is quoted for
trading on the over the counter bulletin board market under the
symbol HPLF .
7.7
Filings, Consents and Approvals .
The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution and delivery of this Agreement and
performance by the Company of the transactions contemplated hereby,
other than (i) filings required pursuant under the 1934 Act, (ii)
the filing with the Commission of the Registration Statement,
(iii)
8
application(s), if any, to each applicable
Trading Market for the listing of the Securities for trading
thereon in the time and manner required thereby, (iv) the filing of
Form D with the Commission and such filings as are required to be
made under applicable state securities laws; and (v) filing, if
applicable, of a Notice of Exempt Distribution with the British
Columbia Securities Commission.
7. 8 No General Solicitation
. Neither the Company nor, to the
Company’s knowledge, any person acting on behalf of the
Company has offered or sold any of the Securities by any form of
general solicitation or general advertising. The Company has
offered the Securities for sale only to the Subscribers and certain
other “accredited investors” within the meaning of Rule
501 under the 1933 Act.
7.9 Private Placement .
Assuming the accuracy of the
Subscribers’ representations and warranties set forth in
Section 8, no registration under the 1933 Act is required for the
offer and sale of the Offered Units by the Company to the
Subscribers as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations
of the Trading Market.
7.10 Issuance of the Securities
. The Unit Shares and
Warrant Shares are duly authorized and, when issued and paid for in
accordance with this Agreement or the Warrant, as the case may be,
will be duly and validly issued, fully paid and
nonassessable.
7.11 Litigation . Except as set forth in the SEC Reports, there is
no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign).
8. Representations,
Warranties and Acknowledgements of Subscriber .
8.1 Representations, Warranties and Acknowledgements Applicable
to all Subscribers .
The Subscriber represents, warrants
and covenants to the Company that:
(a) Organization; Authority .
(1) The Subscriber:
(i) if a company, trust,
partnership, qualified plan or other entity, it is duly
incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction of its organization and is authorized
and qualified to become a holder of the Subscribed for Units, the
person signing this Agreement on behalf of such entity has been
duly authorized to execute and deliver this agreement, and the
acquisition of the Subscribed for Units by the Subscriber and the
consummation by the Subscriber of the transactions contemplated
hereby have been duly authorized by all necessary action to be
taken on the part of the Subscriber and all necessary approvals of
its directors, partners, shareholders, trustees or otherwise (as
the case may be) with respect to such matters have been given or
obtained; or
(ii) if a natural person, has
the requisite power, authority and legal capacity to execute and
deliver this Subscription Agreement, to perform all of his
obligations hereunder and to undertake all actions required of the
Subscriber hereunder;
(2) has duly executed and delivered
this Agreement and it constitutes a valid
9
and
legally binding obligation of the Subscriber, enforceable against
the Subscriber, in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of
equity. The entering into of this Agreement and the consummation of
the transactions contemplated hereby will not result in a violation
of any of the terms or provisions of any law applicable to the
Subscriber, or of any agreement to which the Subscriber is a party
or by which he/she/it is bound, or, if the Subscriber is not a
natural person, any of the Subscriber’s charter
documents.
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(b)
Acquisition of Subscribed for Subscribed Units for
Investment .
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The Subscriber is acquiring the Subscribed for
Units as principal for its own account for investment purposes only
and not with a view to or for distributing or reselling the
Subscribed for Units or any part thereof or interest therein,
without prejudice, however, to the Subscriber’s right,
subject to the provisions of this Agreement and in accordance with
all applicable laws, at all times to sell or otherwise dispose of
all or any part of such Subscribed for Units as otherwise permitted
hereunder.
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(c)
Experience of Subscriber .
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The Subscriber either alone or together with its
representatives, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating
and assessing the merits and risks of the prospective investment in
the Subscribed for Units, and has so evaluated the merits and risks
of such investment and has determined that the Subscribed for Units
are suitable to investment for him . If the Subscriber is
relying on its representatives to evaluate the risks and merits of
an investment in the Offered Units, it has caused its
representative to complete, execute and deliver the Investor
Representative Acknowledgment.
The Subscriber is unaware of, is in no way
relying on, and did not become aware of the Offering through or as
a result of, any form of general solicitation or general
advertising including, without limitation, any article, notice,
advertisement or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio, or
electronic mail over the Internet, in connection with the Offering
and is not subscribing for Offered Units and did not become aware
of the Offering through or as a result of any seminar or meeting to
which the Subscriber was invited by, or any solicitation of a
subscription by, a person not previously known to the Subscriber in
connection with investments in securities generally.
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(e)
Ability of Subscriber to Bear Risk of
Investment.
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The Subscriber acknowledges that the purchase of
the Subscribed for Units is a highly speculative investment,
involving a high degree of risk and the Subscriber is able to bear
the economic risk of an investment in the Subscribed for Units;
and, at the present time, is able to afford a complete loss of such
investment.
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(f) No
Conflict or Violation.
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The execution, delivery and performance by the
Subscriber of this Subscription Agreement and the completion of the
transaction contemplated hereby do not and will not result in a
violation of any law, regulation, order or ruling applicable to the
Subscriber, and do not and will not constitute a breach of or
default under any of the Subscriber's charter documents (if the
Subscriber is not a natural person) or any agreement to which the
Subscriber is a party or by which it is bound.
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(g) No
Approval by Regulatory Authority.
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The Subscriber understands that no securities
commission, stock exchange, governmental agency, regulatory body or
similar authority has made any finding or determination or
expressed any opinion with respect to the merits of the purchase of
any of the Offered Units.
Except as disclosed in writing to
the Company, the Subscriber does not act jointly or in concert with
any other person or company for the purposes of acquiring the
Subscribed for Units.
The Subscriber is responsible for obtaining such
legal advice as it considers appropriate in connection with the
execution and delivery of this Agreement and the purchase of the
Offered Units. The Subscriber acknowledges that it has been advised
that no accountant or attorney engaged by the Company is acting as
its representative, accountant or attorney in connection with this
Agreement and/or the transactions contemplated hereby.
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(j)
Information Provided by the Subscriber.
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All information which the Subscriber has
provided or is providing the Company, or to its agents or
representatives concerning the Subscriber’s suitability to
invest in the Company is complete, accurate and correct as of the
date of the signature on the last page of this Agreement. Such
information includes, but is not limited to the Investor
Questionnaire and information concerning the Subscriber’s
personal financial affairs, business position and the knowledge and
experience of the Subscriber and the Subscriber’s
advisors.
The fiduciary of the ERISA plan (the “
Plan ”) represents that such fiduciary has been
informed of and understands the Company’s investment
objectives, policies and strategies, and that the decision to
invest “plan assets” (as such term is defined in ERISA)
in the Company is consistent with the provisions of ERISA that
require diversification of plan assets and impose other fiduciary
responsibilities. The Subscriber or Plan fiduciary (i) is
responsible for the decision to invest in the Company; (ii) is
independent of the Company and any of its affiliates; (iii) is
qualified to make such investment decision; and (iv) in making such
decision, the Subscriber or Plan fiduciary has not relied primarily
on any advice or recommendation of the Company or any of its
affiliates.
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(l)
Acquisition of Shares for Investment.
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The Subscriber is acquiring the Subscribed for
Units as principal for its own account for investment purposes only
and not with a view to or for distributing or reselling the
Subscribed for Units or any part thereof or interest therein.
Except as otherwise disclosed in writing to the Company, the
Subscriber is not acting jointly or in concert with any other
person or company for the purposes of acquiring any of the
Shares.
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(m) No
Offering Memorandum.
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The Subscriber acknowledges that the offering is
being conducted without delivery of an offering memorandum and that
it has not relied on any oral representation, warranty or
information in connection with the offering of the Subscribed for
Units by the Company, or any officer, employee, agent, affiliate or
subsidiary of the Company.
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(n) No
Representation as to Value of Offered Units.
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The Subscriber confirms that neither the Company
nor any of its directors, employees, officers, consultants, agents
or affiliates, has made any representations (written or oral) to
the Subscriber regarding the future value of the Offered Units and
acknowledges and confirms that no representation has been made to
the Subscriber with respect to the listing of the Offered Units on
any exchange or that application has been or will be made be made
for such listing. In making its investment decision with respect to
the Subscribed for Units, the Subscriber has relied solely upon
publicly available information relating to the Company and the
written representation made by or on behalf of the Company
herein.
The Subscriber understands that the sale and
delivery of the Subscribed for Units is conditional upon such sale
being exempt from the registration and prospectus requirements
under applicable securities legislation or upon the issuance of
such orders, consents or approvals as may be required to permit
such sale and delivery without complying with such requirements. If
required under applicable securities legislation or regulatory
policy, or by any securities commission, stock exchange or other
regulatory authority, the Subscriber will execute, deliver, file
and otherwise assist the Company in filing such reports,
undertakings and other documents with respect to the issue of the
Subscribed for Units.
The Subscriber understands that the investment
in the Subscribed for Units may have tax consequences under
applicable taxation laws, that it is the sole responsibility of the
Subscriber to determine and assess such tax consequences as may
apply to its particular circumstances, and the Subscriber has not
received and is not relying on the Company for any tax advice
whatsoever.
This Agreement is not enforceable by the
Subscriber unless it has been accepted by the Company, and the
Subscriber acknowledges and agrees that the Company reserves the
right to reject any subscription for any reason.
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(r) Risk
Acknowledgement.
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The Subscriber acknowledges that the purchase of
the Offered Units is a speculative investment involving substantial
risks, including, but not limited to, the risks set forth in the
SEC Reports, which risks the Subscriber has reviewed and
considered, and are incorporated herein by reference.
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(s)
Information Provided by the Company.
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The Subscriber has been provided with copies of
or access to all of the SEC Reports. There has been made available
the opportunity to ask questions of and receive answers from the
Company concerning the terms and conditions of this offering and to
obtain any additional information (to the
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extent the
Company possesses such information or can acquire it without
unreasonable effort or expense) desired or necessary to verify the
accuracy of the information provided. No oral or written
representations or warranties have been made to the Subscriber by
the Company or any of its officers, employees, agents, sub-agents,
affiliates, advisors or subsidiaries, other than any
representations of the Company contained herein, and in subscribing
for the Offered Units, the Subscriber is not relying upon any
representations other than those contained herein.
Subscriber acknowledges that the Company will,
from time to time, offer and sell additional shares of Common Stock
on such terms and conditions as its Board of Directors, in its sole
discretion, may determine. The terms and conditions of the offer
and sale of any such additional shares of Common Stock may be
different from and better than the terms of this
Offering.
1.
The Subscriber acknowledges that the certificates representing Unit
Shares, the Warrants and the Warrant Shares shall bear a legend
substantially as follows:
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(u)
Transfer Restrictions.
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“THE
SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”) AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER AND MAY NOT BE OFFERED OR SOLD
DIRECTLY OR INDIRECTLY (A) WITHIN THE UNITED STATES OR TO OR FOR
THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION S)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH
SECURITIES UNDER, IN COMPLIANCE WITH REGULATION S AND/OR OTHER
APPLICABLE EXEMPTION FROM, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT, OR (B) IN CANADA OR TO RESIDENTS OF CANADA EXCEPT
PURSUANT TO REGISTRATIONS AND PROSPECTUS EXEMPTIONS UNDER THE
APPLICABLE PROVINCIAL SECURITIES LAWS AND REGULATIONS OR PURSUANT
TO AN EXEMPTION ORDER MADE BY THE APPROPRIATE PROVINCIAL SECURITIES REGULATOR(S), IN EACH CASE
AS EVIDENCED BY AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY.”
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2. The Subscriber understands and
acknowledges that the Company has the right not to record a
purported transfer of the Subscribed for Units, without the Company
being satisfied that such transfer is exempt from or not subject to
(a) registration under the 1933 Act and any applicable state
securities laws, and (b) the registration and prospectus
requirements under Canadian Securities Laws.
3. In addition to resale
restrictions imposed under U.S. federal securities law, there are
additional restrictions on the Subscriber’s ability to resell
the Subscribed for Units under applicable Canadian Securities
Law.
4. The Subscriber understands and
acknowledges that the Company is not obligated to file and, except
as provided in a registration rights agreements of even date
herewith between the Subscriber and the Company, has no present
intention of filing any registration statement or prospectus in
respect of re-sales of the Subscribed for Units with the SEC in the
United States or with any of the provincial securities regulatory
authorities in Canada.
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5. The Subscriber confirms that it
has been advised to consult its own legal and financial advisors
with respect to the suitability of the Subscribed for Units as an
investment for the Subscriber and the resale restrictions
(including “ hold periods ”) to which
the Subscribed for Units will be subject under applicable
securities legislation and confirms that no representation has been
made to the Subscriber by or on behalf of the Company with respect
thereto.
6. Subscriber will not resell any
Subscribed for Units except in accordance with the provisions of
applicable securities legislation and stock exchange
rules.
8.2 Representation By Subscribers who are US Persons As to
Accredited Investor Status under Regulations
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If
the Subscriber is a U.S. Person, the Subscriber represents and
warrants that he is an Accredited Investor.
8.3 Additional Representations, Acknowledgements and Warranties
bySubscribers Who Are Residents of British Columbia,
Canada.
(a) Regulation S.
If
the Subscriber is a resident of British Columbia, Canada, the
Subscriber represents, warrants, acknowledges, and covenants
that:
1. he is not a “ U.S.
Person ” as that term is defined in Rule 902 of
Regulation S;
2. the Subscribe d for Uni ts
are being offered and sold in reliance on the exemptions from the
registration requirements of the 1933 Act provided by the
provisions of Regulation S as promulgated under the 1933 Act, and
that the Subscribed for Units may not be resold in the United
States or to a US Person as defined in Regulation S, except
pursuant to an effective registration statement or an exemption
from the registration provisions of the 1933 Act as evidenced by an
opinion of counsel acceptable to the Company, and that in the
absence of an effective registration statement covering the
Subscribed for Units or an available exemption from registration
under the 1933 Act, the Subscribed for Units must be held
indefinitely. The Subscriber further acknowledges that this
Agreement is not intended as a plan or scheme to evade the
registration requirements of the 1933 Act;
3. he is a resident of British
Columbia, Canada;
4. he is not, and on the Closing
Date will not be, an Affiliate of the Company;
5. all offers and sales of the
Subscribed for Units shall be made in compliance with all
applicable laws of any applicable jurisdiction and, particularly,
in accordance with Rules 903 and 904, as applicable, of Regulation
S or pursuant to registration of the Subscribed for Units under the
1933 Act or pursuant to an exemption from registration. In any
case, none of the Subscribed for Units have been and will be
offered or sold by the Subscriber to, or for the account or benefit
of a U.S. Person
