Security Devices International Inc. - Exhibit 10.8 - Filed by newsfilecorp.com






 

SECURITY DEVICES INTERNATIONAL INC. 
SUBSCRIPTION
AGREEMENT 


SUBSCRIBER NAME:
_________________________________


INSTRUCTIONS FOR INVESTORS 

	 	1. 	
      Please complete the Investor Questionnaire attached
      hereto as Exhibit A.

	 	 	 
	 	2. 	
      Please review the Risk Factors attached hereto as
      Exhibit B.

	 	 	 
	 	3. 	
      EXECUTE this Subscription Agreement on page 12 (which
      includes an omnibus signature page to the Registration Rights Agreement,
      attached hereto as Exhibit C).

	 	 	 
	 	4. 	
      Please complete the Selling Stockholder Questionnaire
      attached to the Registration Rights Agreement.

	 	 	 
	 	5. 	
      If you are a corporation, partnership or other entity and
      (a) you have not previously filed Form 4C with the TSX Venture Exchange,
      or (b) you have previously filed Form 4C but there has been a change in
      the information disclosed in that form, complete and sign the Form 4C
      attached hereto as Exhibit D.

	 	 	 
	 	6. 	
      Include a check or wire in the amount of the investment
      (US Dollars) as follows:




	 	a. 	
      Checks should be made payable to: Security Devices
      International Inc. and sent overnight or by registered mail to the
      corporate address listed below in Wakefield, MA.

	 	 	 
	 	b. 	
      Wires should be sent to: TD Bank,
N.A.



Wilmington, Delaware
ABA# 031101266

Account: 8253167180 


	 	For international wires (also include): 	SWIFT BIC: NRTHUS33XXX 
	 	  	     * All
      incoming foreign currency wires need to be routed 
	 	  	     to the
      Company through its Toronto office under the 
	 	  	     BIC:
      TDOMCATTTOR 



	 	c. 	
      Reference: Subscription for SDI Units in the memo
      section of your check or wire.




	 	7. 	
      Please forward your executed Subscription Agreement to
      the Agent:



J. Streicher Capital, LLC

300 Park Avenue, 14th Floor 
New York, NY 10022

Attention: Tanner Wickham 


Please feel free to call us with any
questions at (905) 582-6402. Questions should be directed to Bryan Ganz,
Executive Chairman, or Dean Thrasher, CEO.

Security Devices International
Inc.
107 Audubon Road, Bldg 2, Suite 201 
Wakefield, MA, United States
01880 
Attn: Bryan Ganz 





PUBLICLY AVAILABLE INFORMATION 

Security Devices International Inc. (the “Company”) is a
reporting company in the United States and Canada. As such, the Company files
annual, quarterly and periodic reports with the Securities Exchange Commission
in the United States and with the Ontario Securities Commission in Canada. These
reports are available at: 

https://www.sec.gov/edgar/searchedgar/companysearch.html

and/or 
http://www.sedar.com/search/search_form_pc_en.htm


Investors are strongly urged to review these filings prior
to subscribing for the Units. All of the filings made by the Company in
the past 24 months are deemed to be incorporated herein by reference and shall
be deemed to be a part of this Subscription Agreement. Any statement
contained in a document incorporated or deemed to be incorporated by reference
in this Subscription Agreement shall be deemed to be modified or superseded for
purposes of this Subscription Agreement to the extent that a statement contained
herein or in any subsequently filed document or report that also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Subscription Agreement.


Prior to making an investment in this Offering, please
carefully review the entire Subscription Agreement including the Investor
Questionnaire attached hereto as Exhibit A and Risk Factors
(attached hereto as Exhibit B).

This Agreement also contains information related to the
compensation of the Agent for this Offering in Section 6 and the Use of Proceed
in Section 10. 

NASAA LEGEND 

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR
OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 

NEW YORK STATE LEGEND 

NOTICE TO NEW YORK RESIDENTS ONLY: THIS MEMORANDUM HAS NOT BEEN
REVIEWED BY THE ATTORNEY GENERAL OF THE STATE OF NEW YORK PRIOR TO ITS ISSUANCE
AND USE. THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL. THIS SUBSCRIPTION AGREEMENT DOES NOT CONTAIN AN UNTRUE STATEMENT OF A
MATERIAL FACT OR OMIT TO STATE A MATERIAL FACT NECESSARY TO MAKE THE STATEMENTS
MADE IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.
IT CONTAINS A FAIR SUMMARY OF MATERIAL TERMS AND DOCUMENTS PURPORTED TO BE
SUMMARIZED HEREIN. 

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SECURITY DEVICES INTERNATIONAL INC. 

SUBSCRIPTION AGREEMENT 

TO:          
Security Devices International Inc.

The undersigned (the “Subscriber”) hereby agrees with Security
Devices International Inc., a Delaware corporation (the “Company”), to the terms
of this Subscription Agreement (the “Agreement”) and each of the Company and the
Subscriber hereby make certain representations and warranties to the Agent and
to each other as follows: 

     1. The Offering. 

	 	a. 	
      Offering Amount and Purchase Price. The Company
      proposes to raise up to USD$4,500,000 (the “Offering”) from the sale of
      units (the “Units”) at a price of USD$0.106 per Unit (the “Purchase
      Price”) on a “best-efforts” basis. All funds from investors will be
      delivered directly to the Company, without provision for escrow.

	 	 	 
	 	b. 	
      Units. Each Unit shall consist of one share (a
      “Share”) of the Company’s common stock, par value $0.001 per share (the
      “Common Stock”) and one-half (1/2) of a warrant (each whole warrant is
      referred to herein as a “Warrant”) to purchase one-half (1/2) share of
      Common Stock.

	 	 	 
	 	c. 	
      Warrants. Each full Warrant is exercisable for one
      share of Common Stock (each, a “Warrant Share”) for the 60-month period
      following the first closing of the Offering at an exercise price of
      USD$0.18 per share. The Subscriber acknowledges and understands that at
      such time when he/she/it subscribes for the Units the first closing of the
      Offering may have happened and accordingly the Warrants issued to such
      Subscriber may have a term of less than 60 months. If the Company’s Common
      Stock trades at a price that closes above USD$0.36 per share for 20
      consecutive trading days ending more than two years after the first
      closing of the Offering, the Company may accelerate the expiration date of
      the Warrants to a date that is not less than 30 days from the date it
      gives the registered holders of the Warrants notice of such
      acceleration.

	 	 	 
	 	d. 	
      Restricted Securities. The offering and sale of
      the Units are intended to be exempt from registration under the Securities
      Act of 1933, as amended (the “Securities Act”), by virtue of Section
      4(a)(2) thereof and/or Rule 506(b) of Regulation D (“Regulation D”)
      promulgated by the United States Securities and Exchange Commission (the
      “SEC”) thereunder. The offering and sale of the Units are not registered
      under the Securities Act, or qualified or registered under the securities
      laws of any states. Consequently, the Shares and the Warrants included in
      the Units, as well as the Warrant Shares, may not be sold, transferred or
      hypothecated without registration under the Securities Act, and applicable
      state laws or without an exemption from such registration or
      qualification. The Shares, the Warrants and the Warrant Shares will bear a
      legend restricting their transfer accordingly, and may bear certain
      legends required by state law where required.

	 	 	 
	 	e. 	
      No Minimum Offering Amount. There is no minimum
      number of Units that must be sold to close this Offering.

	 	 	 
	 	f. 	
      Offering Period. The Offering will expire at 5:00
      p.m. EST on November 15, 2017, subject to one or more extensions of the
      Offering for up to an additional 60 days at the
joint discretion of the Company and the Agent (defined
      hereafter) (the period, as extended, if any, shall be referred to as the
      “Offering Period”). The Company may conduct one or more closings within
      the Offering Period prior to the receipt of the maximum offering amount of
      USD$4,500,000.



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	 	g. 	
      Information About The Company. The Company’s
      shares trade on the TSX Venture Exchange (the “TSX Exchange”) in Canada
      and the OTC:QB automated quotation system in the United States. The
      Company files annual, quarterly and periodic reports in the United States
      and Canada and all such reports are available on the SEC’s EDGAR web site
      and on the Canadian Securities Administrators’ SEDAR web site. No offering
      memorandum has been used for this Offering. All of the filings made by
      the Company at the EDGAR and SEDAR web sites in the past 24 months are
      deemed to be incorporated herein by reference and shall be deemed to be a
      part of this Agreement.

	 	 	 
	 		
      Any statement contained in a document incorporated or
      deemed to be incorporated by reference in this Agreement shall be deemed
      to be modified or superseded for purposes of this Agreement to the extent
      that a statement contained herein or in any subsequently filed document or
      report that also is or is deemed to be incorporated by reference herein
      modifies or supersedes such statement. Any such statement so modified or
      superseded shall not be deemed, except as so modified or superseded, to
      constitute a part of this Agreement.



2. Insider: If the Subscriber will be a new Insider (as
that term is defined in the policies of the TSX Exchange) of the Company,
the Company is not permitted to close on this subscription until the Company has
filed final materials with the TSX Exchange (including the personal information
collected in this Agreement) and the TSX Exchange has provided its final
acceptance. In these circumstances, the closing date for the Subscription shall
be extended to a date which is no later than five Business Days after the TSX
Exchange has provided its final acceptance. An Insider includes a director or
senior officer of the Company, a person or company that beneficially owns or
controls, directly or indirectly, common stock carrying more than 10% of the
voting rights attached to all common shock and a director or senior officer of
such a holder of common stock. 

     If the Subscriber is an existing
Insider, Insiders have subscribed for more than 25% of the Offering and such
amount was not disclosed in the notice of the Offering filed with the TSX
Exchange, the closing for the Subscription will occur in escrow and the release
from escrow will occur upon the TSX Exchange providing its final acceptance of
the Offering. Closing in escrow means that the Subscriber securities and the
Purchase Price will be held in escrow by the Company’s legal counsel or the
Agent and not released until final acceptance of the Offering is received from
the TSX Exchange. If final acceptance is not received within 14 days following
the last closing of the Offering, either the Company or the Subscriber may
terminate this Subscription Agreement on written notice to the other given while
that final acceptance is outstanding, in which case the Purchase Price will be
returned to the Subscriber and the Subscriber’s Units will be returned to the
Company.

     3. Subscription. Subject
to the terms and conditions of this Agreement, the Subscriber hereby irrevocably
subscribes for the number of Units indicated on the Signature Page of
this Agreement.

     4. Acceptance of
Subscription. It is understood and agreed that the Company shall have the
right to accept or reject this subscription, in whole or in part, and for any
reason deemed appropriate in its sole discretion, and that the same shall be
deemed to be accepted by the Company only when the form of acceptance appearing
herein is executed by the Company. 

     5. Suitability to Invest.
This Offering is only open to US citizens resident in the United States. The
Subscriber represents that he, she or it is an “accredited investor” as such
term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act, as indicated
by his, her or its responses to the Investor Questionnaire, the form of which is
attached hereto as Exhibit A, and that he, she or it is able to bear the
economic risk of an investment in the Units. The Subscriber must complete the
applicable Investor Questionnaire to enable the Company to assess the
Subscriber’s eligibility for the Offering. 

4 




     6. Agent and Compensation of
Broker-Dealer. The Subscriber is aware and understands the following: 

	 	a. 	
      J. Streicher Capital, LLC (the “Agent”) is the Company’s
      exclusive placement agent in conducting this Offering in the United
      States; the Agent will not effect any sales of the Units to persons
      outside of the United States; and

	 	 	 
	 	b. 	
      The Agent will receive: (a) (i) a cash commission equal
      to 7% of the gross proceeds from the sale of Units to investors brought
      into the deal by the Agent and (ii) that number of agent warrants (the
      “Agent Warrants”) which is equal to 7% of the Shares issued in the
      Offering to investors brought into the deal by the Agent; plus (b) with
      respect to investors brought into the deal by the Company that are
      resident in the United States (i) a cash commission equal to 3.5% of the
      gross proceeds from the sale of Units to investors brought into the deal
      by the Company, and (ii) that number of Agent Warrants which is equal to
      3.5% of the Shares issued in the Offering to investors brought into the
      deal by the Company; plus (c) a cash commission equal to 1.875% of the
      gross proceeds from the sale of Units to investors that are officers or
      directors of the Company and/or participated in the Convertible Debenture
      Offering of December 7, 2016 that are residents of the United States, and
      (d) that number of Agent Warrants which is equal to 1.875% of the Shares
      issued to such investors. Each Agent Warrant is exercisable for one share
      of Common Stock during the 60 months following the first closing of the
      Offering for an exercise price of USD$0.15. If the Company’s Common Stock
      trades at a price that closes above USD$0.30 per share for 20 consecutive
      trading days ending more than two years after the first closing of the
      Offering, the Company may accelerate the expiration date of the Warrants
      to a date that is not less than 30 days from the date it gives the
      registered holders of the Agent Warrants notice of such
    acceleration.



     7. Confidentiality and No Trading
in Securities.

	 	a. 	
      Each Subscriber acknowledges that the information (the
      “Confidential Information”) about the Company, this Offering and this
      Agreement that comes to his/her/its possession in connection with the
      discussion and evaluation of the merits of the investment on the Units is
      private and confidential. Such Confidential Information is not to be
      reproduced or distributed by such Subscriber, other than in connection
      with confidentially sharing the Confidential Information with such
      Subscriber’ financial advisors and consultants for the purpose of
      evaluating this investment. By accepting this Agreement and reading the
      Confidential Information, the Subscriber agrees with the Company and its
      Agent to maintain in confidence the Confidential Information, including
      the existence and the terms of the Offering, and any other non-public
      information regarding the Company obtained from the Company, the Agent
      and/or their respective agents during the course of the
Offering.

	 	 	 
	 	b. 	
      Each Subscriber acknowledges that it is aware, and that
      its representatives will be made aware, that in connection with its
      discussions with the Company regarding an investment in this Offering,
      they may come into possession of non-public information about the Company
      (including the existence of this Offering). Accordingly, each Subscriber
      agrees that it will not trade (or cause or encourage any representative or
      third party to trade), and will use its commercially reasonable efforts to
      assure that none of its representatives will trade
(or cause or encourage any third party to
trade), in any securities of the Company while in possession of any such
non-public information. Such restrictions are in addition to, and not in lieu
of, any restrictions that the Company may impose upon insiders who are employees
or that may be imposed under applicable law. 



5 




     8. Representations and
Warranties of the Subscriber. The Subscriber represents and warrants to the
Company and the Agent as follows: 

	 	a. 	
      All documents, records and books pertaining to this
      investment that have been requested by the Subscriber have been made
      available for inspection by him/her/it, his/her/its attorney and/or
      his/her/its accountant;

	 	 	 
	 	b. 	
      Subscriber and/or his/her/its advisor(s) have had a
      reasonable opportunity to ask questions of, and receive answers from, a
      person or persons acting on behalf of the Company concerning the offering
      of the Units, and all such questions have been answered to the full
      satisfaction of the Subscriber;

	 	 	 
	 	c. 	
      Subscriber is not subscribing for the Units as a result
      of, or subsequent to, any advertisement, article, notice or other
      communication published in any newspaper, magazine or similar media or on
      the Internet or broadcast over television, radio or the Internet, any
      seminar or meeting, any solicitation of a subscription by a person not
      previously known to the Subscriber in connection with investments in
      securities generally or any general solicitation whatsoever;

	 	 	 
	 	d. 	
      The Subscriber was offered and sold the Units while in
      the United States.

	 	 	 
	 	e. 	
      The Subscriber initially became aware of the Offering as
      a result of being contacted directly by the Agent or an executive officer
      of the Company, and in particular, not through any press release issued by
      the Company.

	 	 	 
	 	f. 	
      If the Subscriber is a natural person, the Subscriber has
      reached the age of majority in the state in which the Subscriber resides,
      has adequate means of providing for the Subscriber’s current needs and
      personal contingencies, is able to bear the substantial economic risks of
      an investment in the Units and, at the present time, could afford a
      complete loss of such investment;

	 	 	 
	 	g. 	
      Subscriber, and/or his/her/its advisors, has such
      knowledge and experience in financial, tax and business matters so as to
      enable him/her/it to utilize the information made available to him/her/it
      in connection with the offering of the Units in order to evaluate the
      merits and risks of an investment in the Units and to make an informed
      investment decision with respect thereto;

	 	 	 
	 	h. 	
      Subscriber is not relying on the Company with respect to
      the tax and other economic considerations of the Subscriber relating to
      this investment. In regard to such considerations, Subscriber has relied
      on the advice of, or has consulted with, only his/her/its own
    advisors;

	 	 	 
	 	i. 	
      Subscriber is acquiring the Units solely for his/her/its
      own account as principal, for investment purposes only and not with a view
      to the resale or distribution thereof, in whole or in part in violation of
      applicable securities laws, and no other person has a direct or indirect
      beneficial interest in such Units;



6 





	 	j. 	
      Subscriber will not sell or otherwise transfer the Units,
      the Shares, the Warrants or the Warrant Shares without registration under
      the Securities Act or an exemption therefrom, and fully understands and
      agrees that such securities have not been registered under the Securities
      Act or under any state securities laws and, therefore, cannot be resold,
      pledged, assigned or otherwise disposed of unless they are subsequently
      registered under the Securities Act and under the applicable securities
      laws of such states or unless an exemption from such registration is
      available;

	 	 	 
	 	k. 	
      Subscriber understands that any certificate evidencing
      the Units, the Shares, Warrants and the Warrant Shares, will bear a legend
      reflecting the transfer restrictions imposed thereon and that a notation
      may be made in the records of the Company restricting the transfer of any
      Units, Shares, Warrants or Warrant Shares in a manner consistent with the
      foregoing, such legend to be substantially similar to the
  following:



THE SECURITIES [AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF] REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED BY THE
HOLDER THEREOF FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT, AND COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO COUNSEL FOR THE
CORPORATION THAT THE TRANSACTION WILL NOT RESULT IN A VIOLATION OF UNITED STATES
FEDERAL OR STATE SECURITIES LAWS. 

Until such time as it is no longer
required under the applicable Canadian securities laws and the rules of the TSX
Exchange, certificates representing the Units, including the Shares, Warrants
and the Warrant Shares, shall bear the following additional legend: 

WITHOUT PRIOR WRITTEN APPROVAL OF THE
EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE
EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT
UNTIL [A DATE WHICH IS 4 MONTHS1 PLUS ONE DAY FROM THE CLOSING
DATE]. 

	 	l. 	
      Subscriber is fully aware and understand that the Units,
      the Shares, the Warrants and the Warrant Shares, will be issued as
      restricted securities which can only be sold pursuant to Rule 144
      promulgated under the Securities Act after the applicable holding period
      has run;



__________________________________________
1
Notwithstanding this language, U.S. holders are required to hold the securities
for the applicable holding period provided under Rule 144 promulgated under the
Securities Act. 

7 





	 	m. 	
      Subscriber recognizes that the no Federal or state agency
      has passed upon or endorsed the merits of the investment in the Units or
      made any finding or determination as to the fairness of this
      investment;

	 	 	 
	 	n. 	
      If Subscriber is a corporation, partnership, trust or
      other entity, it is authorized to make this investment and the person
      signing this Agreement on behalf of such entity has been duly authorized
      by such entity to do so;

	 	 	 
	 	o. 	
      If Subscriber is a corporation or a partnership, the
      person signing this Agreement on its behalf hereby represents and warrants
      that the information contained herein is true and correct with respect to
      such shareholders or partners (and if any such shareholder or partner is
      itself a corporation or a partnership, with respect to all persons having
      an interest in such corporation or partnership, whether directly or
      indirectly) and that the person signing this Agreement has made due
      inquiry to determine the truthfulness and accuracy of the information
      contained herein;

	 	 	 
	 	p. 	
      Any information which the Subscriber has heretofore
      furnished and furnishes herewith to the Company, including, without
      limitation, the certification included in Exhibit A as to
      his/her/its status as an “accredited investor” as defined by Rule 501(a)
      under the Securities Act and any other information with respect to
      his/her/its financial position and business experience set forth herein is
      correct and complete as of the date hereof;

	 	 	 
	 	q. 	
      This Agreement requires the Subscriber to provide certain
      information about the Subscriber (the “Personal Information”). Such
      information is being collected by the Company for the purposes of
      completing the proposed issuance of the Units, which includes, without
      limitation, determining the Subscriber’s eligibility to purchase the Units
      under applicable securities laws, preparing and registering certificates
      representing the Shares and Warrants and completing filings required by
      the securities commissions, TSX Exchange and/or other securities
      regulatory authorities. The Subscriber agrees that the Subscriber’s
      Personal Information may be disclosed by the Company (including the filing
      of copies or originals of any of the Subscriber’s documents) to: (a)
      securities commissions, the TSX Exchange and/or other securities
      regulatory authorities, (b) the Company’s registrar and transfer agent,
      and (c) any of the other parties involved in this subscription, including
      legal counsel, and may be included in record books in connection with this
      subscription. In the case of information provided to the securities
      commissions and other securities regulatory authorities, such information
      is being collected indirectly by them for the purpose of the
      administration and enforcement of the applicable securities laws and the
      Subscriber authorizes the indirect collection of such information by them.
      In the case of the TSX Exchange, the Personal Information is being
      collected by them for the purposes identified by them from time to time.
      The Subscriber consents to the foregoing collection, use and disclosure of
      the Subscriber’s Personal Information and to the collection, use and
      disclosure of Personal Information by the securities commissions, TSX
      Exchange and/or other securities regulatory authorities. The title,
      business address and business telephone number of the public official in
      Ontario who can answer questions about the Ontario Securities Commission’s
      indirect collection of the information is the Inquiries Officer, Ontario
      Securities Commission, 20 Queen Street West, 22nd Floor, Toronto, Ontario
      M5H 3S8; Telephone: 416-593-8314;
  exemptmarketfilings@osc.gov.on.ca;

	 	 	 
	 	r. 	
      The Subscriber has no voting or other agreement with
      another existing shareholder of the Company or investor in this Offering
      and is not acting as part of a group in making this
  investment;



8 





	 	s. 	
      The Subscriber has read and understood the Risk Factors
      attached to this Agreement as Exhibit B;

	 	 	 
	 	t. 	
      The Subscriber acknowledges and is aware of that certain
      Side Letter Agreement entered into by the Company with two subscribers
      (see Section 9.f. below); and

	 	 	 
	 	u. 	
      The foregoing representations, warranties and agreements,
      together with all other representations and warranties made or given by
      the Subscriber to the Company in any other written statement or document
      delivered in connection with the transactions contemplated hereby, shall
      be true and correct in all respects on and as of the date of the
      applicable closing as if made on and as of such date and shall survive the
      final closing.



     9. Representations and
Warranties of the Company. The Company represents and warrants to the
Subscriber and the Agent as follows: 

	 	a. 	
      Organization and Authority. The Company has all
      requisite corporate power and authority to execute, deliver and perform
      its obligations under this Agreement, and to consummate the transactions
      contemplated hereby.

	 	 	 
	 	b. 	
      Authorization. This Offering and this Agreement
      have been duly and validly authorized by the Company. This Agreement,
      assuming due execution and delivery by the Subscriber, when the Agreement
      is executed and delivered by the Company, will be, valid and binding
      obligations of the Company, enforceable in accordance with their
      respective terms, except as the enforceability hereof and thereof may be
      limited by bankruptcy, insolvency, reorganization, moratorium or other
      similar laws now or hereafter in effect relating to or affecting
      creditors’ rights generally and general principles of equity, regardless
      of whether enforcement is considered in a proceeding in equity or at
      law.

	 	 	 
	 	c. 	
      Non-Contravention. The execution and delivery of
      this Agreement by the Company and the issuance of the Units as
      contemplated hereunder do not and will not, with or without the giving of
      notice or the lapse of time, or both, (i) result in any violation of any
      provision of the certificate of incorporation or by-laws or similar
      instruments of the Company or its subsidiaries, (ii) conflict with or
      result in a breach by the Company or its subsidiaries of any of the terms
      or provisions of, or constitute a default under, or result in the
      modification of, or result in the creation or imposition of any lien,
      security interest, charge or encumbrance upon any of the properties or
      assets of the Company or its subsidiaries, pursuant to any agreements,
      instruments or documents or any indenture, mortgage, deed of trust or
      other agreement or instrument to which the Company or any of its
      subsidiaries is a party or by which Company or any of its subsidiaries or
      any of its properties or assets are bound or affected, in any such case
      which would have a material adverse effect on the business, properties,
      operations, condition (financial or other), results of operations or
      prospects of the Company and its subsidiaries, taken as a whole, or the
      validity or enforceability of, or the ability of the Company to perform
      its obligations under, this Agreement, (iii) violate or contravene any
      applicable law, rule or regulation or any applicable decree, judgment or
      order of any court, United States federal or state regulatory body,
      administrative agency or other governmental body having jurisdiction over
      the Company or any of its subsidiaries or any of its respective properties
      or assets that would have a material adverse effect on the business,
      properties, operations, condition (financial or other), results of
      operations or prospects of the Company and its subsidiaries, taken as a
      whole, or the validity or enforceability of, or the ability of the Company
      to perform its obligations under, this Agreement, or (iv) have any
      material adverse effect on any permit, certification,
      registration, approval, consent, license or franchise necessary for the
      Company or its subsidiaries to own or lease and operate any of its
      properties and to conduct any of its business or the ability of the
      Company or its subsidiaries to make use thereof.



9 





	 	d. 	
      Absence of Certain Proceedings. The Company is not
      aware of any action, suit, proceeding, inquiry or investigation before or
      by any court, public board or body, or governmental agency pending or
      threatened against or affecting the Company or any of its subsidiaries, in
      any such case wherein an unfavorable decision, ruling or finding could
      adversely affect the validity or enforceability of, or the authority or
      ability of the Company to perform its obligations under, this
      Agreement.

	 	 	 
	 	e. 	
      Registration of Securities. Pursuant to the terms
      of the Registration Rights Agreement, attached hereto as Exhibit C,
      within 120 days of the final closing of the Offering, the Company shall
      file a registration statement (the “Registration Statement”) covering the
      resale of all of the Shares and the Warrant Shares and use its reasonable
      commercial effort to obtain the effectiveness of the Registration
      Statement within 150 days from the filing thereof.

	 	 	 
	 	f. 	
      Side Letter Agreement with Certain Subscribers.
      The Company has agreed to enter into a side letter agreement (the “Side
      Letter Agreement”) with two institutional subscribers in this Offering
      (collectively, “Institutional Subscribers”). Pursuant to the Side Letter
      Agreement, within the two-year period following the final closing of this
      Offering the Company shall not conduct any future offerings of its
      securities at a price lower than USD$0.106 per share without the prior
      written consent of the Institutional Subscribers as long as each
      Institutional Subscriber continues to hold more than 75% of the securities
      it acquired in this Offering during such two-year period.

	 	 	 
	 	g. 	
      No Bad Actor Disqualifying Events. None of the
      Company, any of its predecessors, any affiliated issuer, any director,
      executive officer, other officer participating in the Offering, any
      beneficial owner of 20% or more of the voting power of the Company’s
      outstanding voting equity securities, any promoter connected with the
      Company in any capacity as of the date hereof, and any person that has
      been or will be paid (directly or indirectly) remuneration for
      solicitation of purchasers in connection with the sale of the Units in the
      Offering has been subject to certain disqualifying events described in
      Rule 506(d)(1) of Regulation D. The Company has exercised reasonable care
      to determine whether any such persons is subject to such a disqualifying
      event described in Rule 506(d)(1) of Regulation D.

	 	 	 
	 	h. 	
      Authorization of the Offering. The issuance, sale
      and delivery of the Units has been duly authorized by all necessary
      corporate action on the part of the Company. The shares of Common Stock
      comprising the Units have been duly authorized by all necessary corporate
      action on the part of the Company and, when such shares of Common Stock
      have been issued, delivered and paid for in accordance with the terms
      hereof and such issuance has been recorded in the stock ledger of the
      Company, will be validly issued, fully paid and non-assessable under the
      Delaware General Corporation Law (the “DGCL”).

	 	 	 
	 	i. 	
      Validly Issuance of Warrants and Warrant Shares.
      The Warrants comprising the Units have been duly authorized by all
      necessary corporate action on the part of the Company and, when such
      Warrants have been issued, delivered and paid for in accordance with the
      terms of this Agreement, will be validly issued. Upon payment of the
      exercise price therefor in accordance with the terms of the Warrants,
      the Warrant Shares will be validly issued, fully paid and non-assessable
      under the DGCL.



10 





	 	j. 	
      No Conflict. The execution, delivery and
      performance of this Agreement and the consummation of the transactions
      contemplated hereby do not and will not conflict with or result in the
      creation or imposition of any material lien, claim, charge, encumbrance or
      restriction upon any property or assets of the Company pursuant to, or
      constitute a material breach or violation of, or constitute a material
      default under, with or without notice or lapse of time or both, any of the
      terms, provisions or conditions of (a) the Certificate, Bylaws or other
      governing documents of the Company, or (b) any order, decree, judgment,
      franchise, license, permit, rule or regulation of any court, arbitrator,
      government or governmental agency or instrumentality in the State of
      Delaware.

	 	 	 
	 	k. 	
      No Further Authorization Required. Assuming the
      accuracy of the representations, warranties and covenants of all parties
      set forth herein, except for filings, registrations or qualifications that
      may be required by applicable securities laws, including the timely filing
      of a Form D pursuant to Regulation D with the United States Securities and
      Exchange Commission (“SEC”) with respect to the offer and sale of the
      Units, no authorization, approval, consent or order of, or filing,
      registration or qualification with, any person (including without
      limitation, any court, governmental body or authority) is required under
      the DGCL or the federal laws of the United States of America in connection
      with the offer and sale of the Units as contemplated hereby.

	 	 	 
	 	l. 	
      No Registration Required by Law. Assuming the
      accuracy of the representations, warranties and covenants of all parties
      set forth herein, it is not necessary in connection with the offer, sale
      and delivery of the Units to Purchasers domiciled in the United States of
      America pursuant to this Agreement to register the same under the
      Securities Act under the circumstances contemplated herein, subject to the
      timely filing of a Form D pursuant to Regulation D with respect to the
      offer and sale of the Units.

	 	 	 
	 	m. 	
      Compliance with Rule 506(b) of Regulation D.
      During the period in which Units are offered for sale, none of the
      Company, its affiliates, or any person acting on any of their behalf
      (other than an Agent or any person acting on its behalf, in respect of
      which no representation or warranty is made) has taken or will take any
      action that would cause the exemptions afforded by Section 4(a)(2) of the
      U.S. Securities Act and Rule 506(b) of Regulation D to be unavailable for
      offers and sales of Units, the Shares or the Warrants.

	 	 	 
	 	n. 	
      General Solicitation or General Advertising. None
      of the Company, any of its affiliates or any person acting on behalf of
      any of them (other than the Agent or any person acting on its behalf, as
      to whom the Company makes no representation or warranty) has offered or
      will offer to sell, or has solicited or will solicit offers to buy, any of
      the Units, the Shares or the Warrants by means of any form of “general
      solicitation” or “general advertising” (as such terms are defined in Rule
      502(c) of Regulation D) or in any manner involving a public offering
      within the meaning of Section 4(a)(2) of the Securities Act.

	 	 	 
	 	o. 	
      Integration. Except with respect to the offer and
      sale of the Units, neither the Company nor any person acting on behalf the
      Company has, within six months prior to the date of this Agreement, sold,
      offered for sale or solicited any offer to buy any of the Company's
      securities of the same or similar class as any of the securities
      comprising the Units, the Shares or the Warrants and will not do so for a
      period of six months following the completion of this Offering, in a
      manner that would be integrated with the offer and sale of the Units, the
      Shares or the Warrants and cause the exemption provided by
  Section 4(a)(2) and Rule 506(b) of Regulation D to become
      unavailable for the offer and sale of the Units, the Shares or the
      Warrants.



11 





	 	p. 	
      Regulation M. None of the Company, its affiliates
      or any person on behalf of any of them (other than the Agent and any
      person acting on its behalf, as to whom the Company makes no
      representation or warranty) has engaged or will engage in any violation of
      Regulation M under the United States Securities Exchange Act of 1934, as
      amended, in connection with the Offering contemplated by this
      Agreement.

	 	 	 
	 	q. 	
      Investment Company. The Company is not, and
      following the application of the proceeds from the sale of the Units will
      not be, registered or required to be registered as an “investment company”
      under the United States Investment Company Act of 1940, as
  amended.

	 	 	 
	 	r. 	
      Rule 503 Matters. None of the Company or any of
      its predecessors or affiliates has been subject to any order, judgment or
      decree of any court of competent jurisdiction temporarily, preliminarily
      or permanently enjoining such person for failure to comply with Rule 503
      of Regulation D.

	 	 	 
	 	s. 	
      Form D Filing. The Company will complete and file
      with the SEC a Notice on Form D within 15 days after the first sale of
      Units, and will make such filings with any applicable state securities
      commission as required by state law.

	 	 	 
	 	t. 	
      Sales of Units by Issuer. No sales of Units have
      ultimately been made or will be made directly by the Issuer (i) except
      through the Agent pursuant to the terms of this Agreement in the United
      States, or (ii) issuances of securities to existing security holders,
      officers and directors who are U.S. persons located in the United States.
      For the avoidance of doubt, all sales of Units in the Offering have been
      and will be made only in the United States.



     10.Use of Proceeds: The
Company intends to use the net proceeds of the Offering to pay down debt, for
capital expenditures related to the acquisition of new molds and for working
capital purposes.

     11.Miscellaneous. 

	 	a. 	
      Any notice or other communication given hereunder shall
      be deemed sufficient if in writing and sent by registered or certified
      mail, return receipt requested. Notices shall be deemed to have been given
      three (3) business days after the date of mailing, except notices of
      change of address, which shall be deemed to have been given when
      received.

	 	 	 
	 	b. 	
      This Agreement may be amended through a written
      instrument signed by both the Subscriber and the Company; provided,
      however, that the terms of Section 11 of this Agreement may be amended
      without the consent or approval of the Subscriber so long as such
      amendment applies in the same fashion to all of the other subscribers in
      the Offering and at least holders of a majority of the Units sold in the
      Offering have given their approval of such amendment, which approval shall
      be binding on all holders of the Units.

	 	 	 
	 	c. 	
      This Agreement shall be binding upon and inure to the
      benefit of the parties hereto and to their respective heirs, legal
      representatives, successors and assigns. This Agreement sets forth the
      entire agreement and understanding between the parties as to the subject
      matter hereof and merges and supersedes all prior discussions, agreements
      and understandings of any and every nature among
them.



12 





	 	d. 	
      This Agreement shall be construed in accordance with the
      laws of the State of Delaware, without regard to principles of conflicts
      of law. SUBSCRIBER HEREBY WAIVES ANY RIGHT TO SEEK ANY TYPE OF DAMAGES
      (INCLUDING BUT NOT LIMITED TO CONSEQUENTIAL DAMAGES AND PUNITIVE DAMAGES)
      OTHER THAN COMPENSATORY DAMAGES. SUBSCRIBER HEREBY FURTHER WAIVES THE
      RIGHT TO A TRIAL BY JURY, THE RIGHT TO BRING A CLASS ACTION SUIT, AND
      OTHER POTENTIAL REMEDIES THAT OTHERWISE MAY BE AFFORDED BY LAW. THIS IS A
      CLASS ACTION WAIVER THAT APPLIES TO ALL DISPUTES ARISING OUT OF THIS
      INVESTMENT, INCLUDING BUT NOT LIMITED TO ANY DISPUTES WITH THE COMPANY,
      ITS AGENT, AND ALL OF THEIR EMPLOYEES, AGENTS, REPRESENTATIVES, OFFICERS,
      DIRECTORS, OR ATTORNEYS.

	 	 	 
	 	e. 	
      This Agreement may be executed in counterparts. It shall
      not be binding upon the Company unless and until it is accepted by the
      Company. Upon the execution and delivery of this Agreement by the
      Subscriber, this Agreement shall become a binding obligation of the
      Subscriber with respect to the purchase of the Units as herein provided;
      subject, however, to the right hereby reserved to the Company to enter
      into the same agreements with other subscribers and to add and/or to
      delete other persons as subscribers. This Agreement may be executed and
      delivered by facsimile or by email with scanned copy.

	 	 	 
	 	f. 	
      The holding of any provision of this Agreement to be
      invalid or unenforceable by a court of competent jurisdiction shall not
      affect any other provision of this Agreement, which shall remain in full
      force and effect.

	 	 	 
	 	g. 	
      It is agreed that a waiver by either party of a breach of
      any provision of this Agreement shall not operate, or be construed, as a
      waiver of any subsequent breach by that same party.

	 	 	 
	 	h. 	
      The parties agree to execute and deliver all such further
      documents, agreements and instruments and take such other and further
      action as may be necessary or appropriate to carry out the purposes and
      intent of this Agreement.

	 	 	 
	 	i. 	
      This Agreement is intended to be read and construed in
      conjunction with the Registration Rights Agreement pertaining to the
      issuance by the Company of the Shares and Warrant Shares. Accordingly,
      pursuant to the terms and conditions of this Agreement and such related
      agreements it is hereby agreed that the execution by the Subscriber of
      this Agreement, in the place set forth herein, shall constitute agreement
      to be bound by the terms and conditions hereof and the terms and
      conditions of the Registration Rights Agreement, with the same effect as
      if each of such separate but related agreement were separately
    signed.

	 	 	 
	 	j. 	
      The obligation of the Subscriber hereunder is several and
      not joint with the obligations of any other subscribers for the purchase
      of the Units in the Offering (the “Other Subscribers”), and the Subscriber
      shall not be responsible in any way for the performance of the obligations
      of any Other Subscribers of the Offering. Nothing contained herein and no
      action taken by the Subscriber pursuant hereto shall be deemed to
      constitute the Subscriber and the Other Subscribers of the Offering as a
      partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Subscriber and the Other Subscribers of
      the Offering are in any way acting in concert with respect
  to



13 




such obligations or the transactions
contemplated by this Agreement. The Subscriber shall be entitled to protect and
enforce the Subscriber’s rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any Other Subscribers
of the Offering to be joined as an additional party in any proceeding for such
purpose. The Subscriber is not acting as part of a “group” (as that term is used
in Section 13(d) of the Exchange Act) in negotiating and entering into this
Agreement or purchasing, disposing of or voting any of the Units. The Company
hereby confirms that it understands and agrees that the Subscriber is not acting
as part of any such group. 

[SIGNATURE PAGE FOLLOWS] 

14 




OMNIBUS SIGNATURE PAGE TO THE 
SUBSCRIPTION AGREEMENT
AND
REGISTRATION RIGHTS AGREEMENT 


      
     IN WITNESS WHEREOF, the parties have executed this
Subscription Agreement as of this ____ day of ___________, 2017. 

	 	 
	Units Subscribed
      For: 	___________________________________
	 	 
	Total
      Subscription Price (USD$0.106 for each Unit): 	$
      __________________________________
	 	 



	Subscriber: 	 	  
	 	 	 
	 	 	 
	 	 	 
	Full Legal Name of Subscriber (Please print) 	 	Full Legal Name of Co-Subscriber (if
      applicable) 
	 	 	 
	 	 	 
	 	 	 
	Signature of (or on behalf of) Subscriber 	 	Signature of or on behalf of Co-Subscriber (if
    
	 	 	applicable)
	 	 	 
	  	 	
	Name: 	 	  
	Title: 	 	  
	 	 	 
	 	 	 
	 	 	 
	Address of Subscriber 	 	Address of Co-Subscriber (if applicable) 
	 	 	 
	 	 	 
	Telephone No. of Subscriber 	 	Telephone No. of Co-Subscriber (if applicable)
    
	 	 	 
	 	 	 
	Social Security or Taxpayer 	 	Social Security or Taxpayer Identification
  
	 	 	 
	 	 	 
	Identification Number of Subscriber 	 	Number of Co-Subscriber (if applicable)
  


Agreed to and accepted by the Company: 

SECURITY DEVICES INTERNATIONAL
INC.

 

By:
__________________________
          
Authorized Officer


15 




Exhibit A 

SECURITY DEVICES INTERNATIONAL INC. 

ACCREDITED INVESTOR CERTIFICATION 

Please complete and return the applicable paperwork based on
the registration type below: 

	 	[   ] 	Corporate Account 
	 	 	       
                 Certification of Accredited
      Investor 
	 	 	       
                 Corporate Resolution 
	 	 	       
                 Investor Information 
	 	 	       
                 Valid government issued photo ID
      with signature 
	 	 	       
                 W9 
	 	 	  
	 	[   ] 	Individual Account 
	 	 	       
                 Certification of Accredited
      Investor 
	 	 	       
                 Investor Information 
	 	 	       
                 Valid government issued photo ID
      with signature 
	 	 	       
                 W9 
	 	 	  
	 	[   ] 	Individual Retirement Account
      (IRA) 
	 	 	       
                 Certification of Accredited
      Investor 
	 	 	       
                 Investor Information 
	 	 	       
                 Valid government issued photo ID
      with signature 
	 	 	       
                 W9 
	 	 	  
	 	[   ] 	Joint Account (2 or more
      investors) 
	 		       
                 Certification of Accredited
      Investor 
	 	 	       
                 Investor Information 
	 	 	       
                 Valid government issued photo ID
      with signature 
	 	 	       
                 W9 for each investor 
	 	 	  
	 	[   ] 	Trust Account 
	 	 	       
                 Certification of Accredited
      Investor 
	 	 	       
                 Investor Information 
	 	 	       
                 Trust Agreement, including names
      of trustees and signature pages 
	 	 	       
                 Valid government issued photo ID
      with signature 
	 	 	       
                 W9 


************************************************ 

I understand that investment in the Units of Security Devices
International Inc. (the “Company”) is an illiquid investment. In
particular, I recognize that I must bear the economic risk of investment in the
Units of the Company (the “Units”) for an indefinite period of time,
since the Units, the Shares, the Warrants and the Warrant Shares have not been
registered under the Securities Act of 1933, as amended (the “Securities
Act”) and therefore cannot be sold unless either they are subsequently
registered under the Securities Act or an exemption from such registration is
available and an opinion of counsel satisfactory in substance and form to
counsel for the Company to that effect is obtained. I consent to the affixing by
the Company of such legends on certificates representing the Shares, the
Warrants and the Warrant Shares as any applicable federal or state securities
law or any securities law of any other applicable jurisdiction may require from
time to time. 

A-1 




I represent and warrant to the Company that: (i) the
information provided in this Accredited Investor Certification is complete, true
and correct; (ii) I and my Investment Managers, if any, have carefully reviewed
and understand the risks of, and other considerations relating to, a purchase of
the Units; (iii) I and my Investment Managers, if any, have been afforded the
opportunity to obtain any information necessary to verify the accuracy of any
representations or information provided to me and have had all inquiries to the
Company answered, and have been furnished all requested materials, relating to
the Company and the offering and sale of the Units; (iv) neither I nor my
Investment Managers, if any, have been furnished any offering literature by the
Company or any of its affiliates, associates or agents other than the
Subscription Agreement; and (v) I am acquiring the Units for which I am
subscribing for my own account, as principal, for investment and not with a view
to the resale or distribution of all or any part of the Units. 

I understand that the purchase price for the Units does not
reimburse for any costs incurred by me for legal, tax, accounting or financial
advice, including fees paid to my purchaser representative, if any. 

The undersigned, if a corporation, partnership, trust or other
form of business entity, (i) is authorized and otherwise duly qualified to
purchase and hold the Units, (ii) has obtained such additional tax and other
advice that it has deemed necessary, (iii) has its principal place of business
at its residence address set forth in this Subscription Agreement, and (iv) has
not been formed for the specific purpose of acquiring the Units (although this
may not necessarily disqualify the Subscriber as a purchaser). The persons
executing the Subscription Agreement, as well as all other agreements related to
the Offering, if any, represent that they are duly authorized to execute all
such agreements on behalf of the entity. (If the undersigned is one of the
aforementioned entities, it agrees to supply any additional written information
that may be required.) 

All of the information which I have furnished to the Company
and which is set forth in the Subscription Agreement is correct and complete as
of the date of the Subscription Agreement. If any material change in this
information should occur prior to my subscription being accepted, I will
immediately furnish the revised or corrected information. I further agree to be
bound by all of the terms and conditions of the Offering described in the
Subscription Agreement and the other documents and agreements related thereto,
if any. I am the only person with a direct or indirect interest in the Units
subscribed for by this Subscription Agreement. I agree to indemnify and hold
harmless the Company and its officers, directors, affiliates, agents, and
attorneys, including the Placement Agent and its attorneys, from and against all
damages, losses, costs and expenses (including reasonable attorneys’ fees) that
they may incur by reason of the failure of the undersigned to fulfill any of the
terms or conditions of this Subscription Agreement or by reason of any breach of
the representations and warranties made by the undersigned herein or in any
agreement provided by the undersigned to the Company in connection with this
Offering. This subscription is not transferable or assignable by me without the
written consent of the Company. If more than one person is executing this
Agreement, the obligations of each shall be joint and several and the
representations and warranties contained in this Subscription Agreement shall be
deemed to be made by, and be binding upon, each of these persons and his or her
heirs, executors, administrators, successors and assigns. This subscription,
upon acceptance by the Company, shall be binding upon my heirs, executors,
administrators, successors and assigns. This Subscription Agreement shall be
construed in accordance with and governed in all respects by the laws of the
State of Delaware. 

Capitalized terms used and not otherwise defined herein shall
have the meanings set forth in the Subscription Agreement.

2 




INDIVIDUAL and JOINT ACCOUNTS

I certify that I am an accredited investor by initialing
in the applicable space (initial both spaces if both apply): 

	____________     ____________	
      I had an Individual Income* of more than $200,000 in the
      past two full calendar years. I expect to have an Individual Income in
      excess of $200,000 in this calendar year; or my spouse and I had Joint
      Income* in excess of $300,000 in the past two full calendar years, and we
      expect to have a Joint Income in excess of $300,000 in this calendar year.
      My/our income(s) last year was/were: 




	 	[   ] <$50,000 	[   ] $50,001 - $100,000 
	 	[   ] $100,001 - $250,000 	[   ] $250,001 - $500,000 
	 	[   ] $500,001 - $750,000 	[   ] $750,001 - $1,000,000 
	 	[   ] $1,000,001 - $2,500,000 	[   ] $2,500,001 - $5,000,000 
	 	[   ] $5,000,001 - $7,500,000 	[   ] >$7,500,001



and two years ago was/were: 

	 	[   ] <$50,000 	[   ] $50,001 - $100,000 
	 	[   ] $100,001 - $250,000 	[   ] $250,001 - $500,000 
	 	[   ] $500,001 - $750,000 	[   ] $750,001 - $1,000,000 
	 	[   ] $1,000,001 - $2,500,000 	[   ] $2,500,001 - $5,000,000 
	 	[   ] $5,000,001 - $7,500,000 	[   ] >$7,500,001





	____________     ____________	I/We have a total Net Worth* in excess of
      $1,000,000 USD, excluding primary residence. 



____ 
* See additional information below. 

Income. For purposes of this Subscription
Agreement, “Individual Income” means “adjusted gross income” as reported for
Federal income tax purposes, exclusive of any income attributable to a spouse or
to property owned by a spouse: 

	(1) 	
      the amount of any interest income received which is
      tax-exempt under Section 103 of the Internal Revenue Code of 1986, as
      amended, (the “Code”)

	(2) 	
      the amount of the losses claimed as a limited partner in
      a limited partnership (as reported on Schedule E of IRS Form
  1040)

	(3) 	
      any deduction claimed for depletion under Section 611, et
      seq. of the Code and

	(4) 	
      any amount by which income from long-term capital gains
      has been reduced in arriving at adjusted gross income pursuant to the
      provisions of Sections 1202 of the Internal Revenue Code as it was in
      effect prior to enactment of the Tax Reform Act of
1986.



(Items (1) to (4), inclusive, above is referred to herein as
the “Adjustment Amounts”) 

For purposes of this Subscription Agreement, “Joint Income”
means “adjusted gross income” as reported for Federal income tax purposes,
including any income attributable to a spouse or to property owned by a spouse,
and increased by the Adjustment Amounts, as defined above. 

Net Worth. For your calculation of Net Worth,
exclude (i) from your assets the fair market value of your primary
residence and (ii) from your liabilities the debt that is secured by your
primary residence up to the fair market value of the primary residence
(i.e., debt secured by your primary residence that exceeds its fair market value
must be included as a liability). In any event, if there was any increase in the
amount of debt secured by your primary residence within the past 60 days,
you are required to include a liability in an amount equal to such increase,
unless such increase in debt was incurred in connection with the purchase of
your primary residence. 

3 




CORPORATE ACCOUNT 

Initial applicable space(s) below. See additional information
below under DEFINITION OF “ACCREDITED INVESTOR”, on the following page. 

	____________     ____________	
      An employee benefit plan within the meaning of Title I of
      the Employee Retirement Income Security Act of 1974, provided that the
      investment decision is made by a plan fiduciary, as defined in section
      3(21) of such Act, and the plan fiduciary is a bank, savings and loan
      association, insurance company or registered investment adviser; or
  

	 	
       

	____________     ____________	
      An employee benefit plan within the meaning of Title I of
      the Employee Retirement Income Security Act of 1974 that has total assets
      in excess of $5,000,000; or 

	 	
       

	____________     ____________	
      Each of its shareholders, partners, or beneficiaries
      meets at least one of the conditions described under the above section,
      INDIVIDUAL AND JOINT ACCOUNTS. Please also initial the appropriate
      space(s) in that section; or 

	 	
       

	____________     ____________	
      The plan is a self-directed employee benefit plan and the
      investment decision is made solely by a person that meets at least one of
      the conditions described above under INDIVIDUAL AND JOINT ACCOUNTS. Please
      also initial the appropriate space in that section; or 

	 	
       

	____________     ____________	A corporation, a partnership or a Massachusetts
      or similar business trust with total assets in excess of $5,000,000.
  


TRUST ACCOUNT 

	____________     ____________	
      The trust has total assets in excess of $5,000,000 and
      the investment decision has been made by a “sophisticated person;”*
  

	 	
	____________     ____________	
      The trustee making the investment decision on its behalf
      is a bank (as defined in Section 3(a)(2) of the Act), a saving and loan
      association or other institution as defined in Section 3(a)(5)(A) of the
      Securities Act, acting in its fiduciary capacity; or 

	 	
	____________     ____________	
      The grantor(s) of the trust may revoke the trust at any
      time and regain title to the trust assets and has (have) retained sole
      investment control over the assets of the trust and the (each) grantor(s).
      



4 




DEFINITION OF “ACCREDITED INVESTOR” 

The term “accredited investor” means: 

	
  A bank as defined in Section 3(a)(2) of the Securities Act, or a savings
  and loan association or other institution as defined in Section 3(a)(5)(A) of
  the Securities 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
  Securities Act; an investment company registered under the Investment Company
  Act of 1940 (the “Investment Company Act”) or a business development
  company as defined in Section 2(a)(48) of the Investment Company 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 US
  $5,000,000; an employee benefit plan within the meaning of the Employee
  Retirement Income Security Act of 1974 (“ERISA”), if the investment
  decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA,
  which is either a bank, savings and loan association, insurance company, or
  registered investment advisor, or if the employee benefit plan has total
  assets in excess of US $5,000,000 or, if a self- directed plan, with
  investment decisions made solely by persons that are accredited investors.


  
	
  A private business development company as defined in Section 202(a)(22) of
  the Investment Advisers Act of 1940. 

  
	
  An organization described in Section 501(c)(3) of the Internal Revenue
  Code, corporation, Massachusetts or similar business trust, or partnership,
  not formed for the specific purpose of acquiring the securities offered, with
  total assets in excess of US $5,000,000. 

  
	
  A director or executive officer of the Company. 

  
	
  A natural person whose individual net-worth or joint net worth with that
  person’s spouse, at the time of his or her purchase exceeds US $1,000,000. See
  Definitions section, above, for additional information. 

  
	
  A natural person who had an individual income in excess of US $200,000 in
  each of the two most recent years or joint income with that person’s spouse in
  excess of US $300,000 in each of those years and has a reasonable expectation
  of reaching the same income level in the current year. See Definitions
  section, above, for additional information. 

  
	
  A trust, with total assets in excess of US $5,000,000, not formed for the
  specific purpose of acquiring the securities offered, whose purchase is
  directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a
  person who has such knowledge and experience in financial and business matters
  that he is capable of evaluating the merits and risks of the prospective
  investment). 

  
	
  An entity in which all of the equity owners are accredited investors. (The
  Subscriber must identify each equity owner and provide statements signed by
  each demonstrating how each is qualified as an accredited investor.)




5 




SUBSCRIBER QUESTIONNAIRE

	Subscriber Name 	 
    
	 	 
	Subscriber Tax ID 	________________________     Country of
      Citizenship _________________________________
	 	 
	Investment 	$                                                                                                                                                                                USD 
	Amount 	  




	Source of funds for this investments 	[   ] Annuity 	[   ] Gift 	[   ] Income from earnings 
	  	[   ] Inheritance 	[   ] Insurance Proceeds 	[   ] Investment Proceeds 
		[   ] Legal Settlement 	[   ] Lottery/Gaming 	[   ] Pension/IRA/Retirement 
	  	[   ] Sale of business 	[   ] Spouse/Parent 	[   ] Other 
	Is this account a private banking account defined under the
      USA Patriot Act? 	 	[   ] Yes    
      [   ] No 	  
	Is this an account for a foreign bank as defined under the
      USA Patriot Act? 	 	[   ] Yes   
       [   ] No 	  



Contact Information (This address will be used for mailing
unless you indicate otherwise): 

INDIVIDUAL CONTACT INFORMATION: 

	 	 	 
	Street Address 	 	  
	 	 	 
	 	 	 
	City, State 	 	Zip Code 
	 	 	 
	 	 	 
	Home Phone Number 	 	Fax Number 
	 	 	 
	 	 	 
	Email Address 	 	  


ENTITY CONTACT INFORMATION: 

	 	 	 
	Name of Company 	 	  
	 	 	 
	 	 	 
	Contact Name 	 	Email Address 
	 	 	 
	 	 	 
	Street Address 	 	Suite/Floor 
	 	 	 
	 	 	 
	City, State 	 	Zip Code 
	 	 	 
	 	 	 
	Business Phone Number 	 	Fax Number 


6 




For Individual Investors 

	Income 	[   ] <$50,000 	[   ] $50,001 - $100,000 	 
	  	[   ] $100,001 - $250,000 	[   ] $250,001 - $500,000 	 
	  	[   ] $500,001 - $750,000 	[   ] $750,001 - $1,000,000 	 
	  	[   ] $1,000,001 - $2,500,000 	[   ] $2,500,001 - $5,000,000 	 
	  	[   ] $5,000,001 - $7,500,000 	[   ] >$7,500,001 	 



	Source of Income      
      _____________________________________	  
	 	 
	Occupation                
      _____________________________________	Industry                       
      _____________________________________
	 	 
	Education                   
      _____________________________________	If retired,
      former           _____________________________________
	  	occupation 
	Employer
      Name          _____________________________________	  
	  	No. of Years 
	Employer Address    
      _____________________________________	 
    


Marital
Status           
[   ] M      [   ] 
M      [   ] DM     
[   ] DP M      [   ]
Dependents M      [   ] 0
M      [   ] 1
M      [   ] 2
M      [   ] >2 W 

Liquid Net Worth 
[   ]
<$50,000                 
        [   ] $50,001 -
$100,000               
[   ]  $100,001 -
$250,000              
[   ]  $250,001 - $500,000 
[   ] $500,001 -
$750,000        [  
]  $750,001 -
$1,000,000          [   ]
$1,000,001 -
$2,500,000          [  
] $2,500,001 - $5,000,000 
[   ] $5,000,001 - $7,500,000
 [   ] >$7,500,001 

Net Worth (excluding primary residence) 
[   ]
<$50,000                 
        [   ] $50,001 -
$100,000               
[   ]  $100,001 -
$250,000              
[   ]  $250,001 - $500,000 
[   ] $500,001 -
$750,000        [  
]  $750,001 -
$1,000,000          [   ]
$1,000,001 -
$2,500,000          [  
] $2,500,001 - $5,000,000 
[   ] $5,000,001 - $7,500,000
 [   ] >$7,500,001 

Annual Expenses (recurring) 
[   ] $50,000 and
under         [   ] $50,001 -
$100,000              
 [   ] $100,001 -
$250,000               
[   ] $250,001 - $500,000 


Special Expenses (Future, non-recurring) 
[   ]
None                          
    [   ] $50,000 and
under          
     [   ] $50,001 -
$100,000           
      [   ] $100,001 - $250,000 
Timeframe
for Special Expenses 
[   ] Within 1
year         [   ] 2 – 3
years             
 [   ] 3 – 5
years          [   ] 6 –
8 years           
[   ] > 8
years          
 [   ]  None 


Are you or anyone with an interest in this account either: (1)
a senior military, governmental, or political official in a non-US country, or
(2) closely associated with an immediate family member of such an official? 

[   ] Yes    [   ]
No            If yes,
identify the name of the official, office held, and
____________________________________ country 


BROKER DEALER AFFILIATIONS

	Are you an employee of J. Streicher Capital, LLC? 	[   ] Yes 	[   ] No 	  
	Are your related to an employee of J. Streicher Capital,
	[   ] Yes 	[   ] No 	If yes, specify relationship to the 
	LLC 	  	  	employer 
	  	  	  	  
	  	  	  	  
	Are you an employee of another broker dealer? 	[   ] Yes 	[   ] No 	If yes, name of the broker dealer 
	 	 	 	 


7 





	Are you related to an employee of another broker dealer?
	[   ] Yes 	[   ] No 	If yes, specify relationship to the 
	  	  	  	employee 
	 	 	 	 
	  	  	  	  
	Are you maintaining other brokerage accounts? 	[   ] Yes 	[   ] No 	If yes, specify financial institution 
	 	 	 	 



	Are you a senior officer, director, or 10% or more
      shareholder of a public company? 	[   ] Yes 	[   ] No 
	  	If yes, specify company 
	 	 




	INSIDER STATUS 	PRESENT OWNERSHIP OF SECURITIES

	  	You either [CHECK APPROPRIATE ITEM]: 
	You either [CHECK APPROPRIATE ITEM]: 	 ______    DO NOT own or
      control directly or indirectly, or 
	    ______     ARE NOT
      an Insider of the Company. 	             
           exercise control or direction over, any Common 
	    ______     ARE
      an “Insider” of the Company as defined in 	             
           Stock or securities convertible into Common Stock; or
    
	                 
           the Rules of the TSX Exchange. 	
	“Insider” includes: 	 ______    DO own directly
      or indirectly, or exercises control 
	(a) a director or senior officer of the Company; 	                   or
      direction over ___________________, shares 
	(b) a director or senior officer of a person that is itself an
    	             
           of Common Stock and convertible securities 
	insider or subsidiary of the Company; or 	             
           entitling the Subscriber to acquire an additional
  
	(c) a person that beneficially owns or controls, directly or
	                   ____________________shares
      of Common Stock. 
	indirectly, common stock carrying more than 10% of the 	 
	voting rights attached to all outstanding common stock of the
    	 
	Company 	 
	 
    	 
	   CORPORATE PLACEE REGISTRATION FORM
    	 
	 
    	 
	   If you are not an individual, you either
      [CHECK 	 
	   APPROPRIATE ITEM]: 	 
	                 
           HAVE PREVIOUSLY FILED with the TSX 	 
	                 
           Exchange a Form 4C, Corporate Placee 	 
	                 
           Registration Form, and there has been no change 	 
	                 
           to any of the information in the Form 4C 	 
	                 
           previously filed; or 	 
	                 
           HEREBY DELIVER to the Corporation a 	 
	                 
           completed Form 4C in the form attached as 	 
	                 
           Exhibit D for filing with the TSX Exchange. 	 



8 




Exhibit B 

SECURITY DEVICES INTERNATIONAL INC. 

RISK FACTORS 

Risks Relating to Our Business

Senior and Subordinate Secured Convertible
Debentures

On December 7, 2016, the Company entered a Securities Purchase
Agreement with several accredited investors to sell $1,500,000 of 10% senior
secured convertible notes (the “Secured Notes”), convertible into shares of the
Company’s Common Stock, in a private placement pursuant to Regulation D under
the Securities Act. Concurrent with the sale of the Secured Notes, CAD$1,364,000
of the Company’s outstanding unsecured debentures (the “Unsecured Debentures”),
were exchanged for an equal principal amount of the subordinated secured
debentures and an additional CAD$37,000 of subordinated secured debentures were
issued in satisfaction of a portion of the accrued interest on the Unsecured
Debentures. Both senior and subordinated secured debentures mature on June 6,
2019 unless converted or extended and are fully secured against the undertaking,
property and assets of the Company including its patents. Inability to repay the
secured debt on maturity, if the debt is neither converted nor extended, will
result in the financial condition of the Company to be materially adversely
affected and could result in investors losing all or part of their investment in
this Offering. 

Additional Financing

The Company does not have adequate revenue, cash flow or
capital to fund all of its operational needs and may require additional
financing to continue its operations if it is unable to generate substantial
revenue growth or raise additional capital. There can be no assurance that such
financing will be available at all or on favorable terms. Any additional
financing could result in dilution to investors. In addition, the Company’s
failure to generate substantial revenue growth or borrow or raise additional
capital would likely result in delay or indefinite postponement of the Company’s
deployment of its products, resulting in the possible loss to investors of part
or all of their investment in the Company. 

Uncertainty of Revenue or Revenue Growth

There can be no assurance that the Company can generate
substantial revenue or revenue growth, or that any revenue growth that is
achieved can be sustained. Even the limited revenue that the Company has
achieved or may achieve may not be indicative of future operating results. In
addition, the Company may increase further its operating expenses in order to
increase its sales and marketing efforts and increase its administrative
resources in anticipation of future growth. To the extent that increases in such
expenses precede or are not subsequently followed by increased revenues, the
Company’s business, operating results and financial condition will be materially
adversely affected. 

Dependence on Management and Key Personnel

The Company is dependent on certain members of its senior
management. The loss of the services of one or more of them could adversely
affect the Company. The Company’s ability to maintain its competitive position
is also dependent upon its ability to attract and retain highly qualified
managerial, specialized technical, manufacturing, sales and marketing personnel.
There can be no assurance that the Company will be able to continue to recruit and retain such personnel.
The inability of the Company to recruit and retain such personnel would
adversely affect the Company’s operations and product development. 

B-1 




Dependence on Key Suppliers

The Company purchases certain key components of its products
from a limited number of suppliers. Failure of a supplier to provide sufficient
quantities on favorable terms or on a timely basis could result in possible lost
sales. 

Product Liability

The Company may be subject to proceedings or claims that may
arise in the ordinary conduct of the business or otherwise, which could include
product and service warranty claims, as well as damages claims, any or all of
which could be substantial. If the Company’s products fail to perform as
warranted and it fails to quickly resolve product quality or performance issues
in a timely manner, sales may be lost and the Company may be forced to pay
damages. Any failure to meet customer requirements could materially affect the
Company’s business, results of operations and financial condition. In addition,
the occurrence of product defects could result in claims or litigation for
damages, the cost of which could be substantial. The inability of the Company to
correct errors could additionally result in the delay or loss of market
acceptance of its products, material warranty expense, diversion of
technological and other resources from its product development efforts, and the
loss of credibility with customers, manufacturer’s representatives,
distributors, value added resellers, systems integrators, original equipment
manufacturers and end-users, any of which could have a material adverse effect
on the Company’s business, operating results and financial conditions. 

The Company currently has general liability insurance that
includes product liability coverage. There is no assurance this insurance policy
will cover any or all potential claims, which may have a material adverse effect
on the business or financial condition of the Company. A product recall could
also have a material adverse effect on the business or financial condition of
the Company. 

Insurance and Uninsured Risks

The Company’s business is subject to a number of risks and
hazards including industrial accidents, labor disputes and changes in the
regulatory environment. Such occurrences could result in damage to equipment,
personal injury or death, monetary losses and possible legal liability. Although
the Company maintains liability insurance in amounts which it considers
adequate, the nature of these risks is such that liabilities might exceed policy
limits, the liabilities and hazards might not be insurable, or the Company may
elect not to insure against such liabilities due to high premium costs or other
reasons, in which event the Company could incur significant costs that could
have a materially adverse effect upon its financial position. 

Adverse Effect of Possible Litigations

From time to time in the normal course of business or
otherwise, the Company may become subject to litigation that may result in
liability material to the Company’s financial statements as a whole or may
negatively affect its operating results if changes to business operation are
required. The cost to defend such litigation may be significant and may require
a diversion of the Company’s resources. There also may be adverse publicity
associated with litigation that could negatively affect customer perception of
the Company’s business, regardless of whether the allegations are valid or
whether the Company is ultimately found liable. As a result, litigation may adversely affect the
Company’s business, financial condition and results of operations. 

B-2 




Strategic Alliances

The Company relies upon, and expects to rely upon, strategic
alliances with original equipment manufacturers for the manufacturing and
distribution of its products. There can be no assurance that such strategic
alliances can be achieved or will achieve their goals. 

Marketing and Distribution Capabilities

In order to commercialize its technology, the Company must
either acquire or develop an internal marketing and sales force with technical
expertise and with supporting distribution capabilities or arrange for third
parties to perform these services. In order to market any of its products, the
Company must either acquire or develop a sales and distribution infrastructure.
The acquisition or development of a sales and distribution infrastructure would
require substantial resources which may be unavailable to the Company. In
addition, developing or acquiring a sales force would divert the attention of
its management and key personnel and defer could result in a delay of the
Company’s product development and deployment efforts. To the extent that the
Company enters into marketing and sales arrangements with other companies, its
revenues will depend on the efforts of others. These efforts may not be
successful. If the Company fails to develop substantial sales, marketing and
distribution channels, or enter into arrangements with third parties for those
purposes, it will experience delays in product sales, reduced revenue and cash
flow, if any, and increase costs and expenses. Failure to develop sales would in
all likelihood adversely impact the Company’s ability to continue operations and
could result in a loss to investors of part or all of their investment. 

Rapid Technological Development

The Company’s business is the development, manufacture and sale
of less-lethal ammunition. The markets for the Company’s products and services
in the ammunition industry are characterized by rapidly changing technology and
evolving industry standards, which could result in product obsolescence or short
product life cycles. Accordingly, the Company’s success is dependent upon its
ability to anticipate technological changes in the industries it serves and to
successfully identify, obtain, develop and market new products that satisfy
evolving industry requirements. There can be no assurance that the Company will
successfully develop new products or enhance and improve its existing products
or that any new products and enhanced and improved existing products will
achieve market acceptance. Further, there can be no assurance that competitors
will not market products that have perceived advantages over the Company’s
products or which render the products currently sold by the Company obsolete or
less marketable. Regardless of the industry as a whole, the less lethal sector
of ammunition moves somewhat slower in the adaptation and integration of new
products. 

The Company must commit significant resources to developing new
products before knowing whether its investments will result in products the
market will accept. To remain competitive, the Company may be required to invest
significantly greater resources then currently anticipated in research and
development and product enhancement efforts, and result in increased operating
expenses. 

Competition

The Company’s industry is highly competitive and composed of
many domestic and foreign companies. The Company has experienced and expects to
continue to experience, substantial competition from numerous competitors whom it expects to continue to improve
their products and technologies. Competitors may announce and introduce new
products, services or enhancements that better meet the needs of end-users or
changing industry standards, or achieve greater market acceptance due to
pricing, sales channels or other factors. Competitors may be able to respond
more quickly than the Company to changes in end-user requirements and devote
greater resources to the enhancement, promotion and sale of their products. 

B-3 




Regulation

The Company is subject to numerous federal, provincial, state
and local environmental, health and safety legislation and measures relating to
the manufacture of ammunition. There can be no assurance that the Company will
not experience difficulties with its efforts to comply with applicable
regulations as they change in the future or that its continued compliance
efforts (or failure to comply with applicable requirements) will not have a
material adverse effect on the Company’s results of operations, business,
prospects and financial condition. The Company’s continued compliance with
present and changing future laws could restrict the Company’s ability to modify
or expand its facilities or continue production and could require the Company to
acquire costly equipment or to incur other significant expense. 

Political Regulatory Risks

Any changes in government policy may result in changes to laws
affecting the sale of the Company’s products. This may affect the Company’s
ability to ship product in the future. The possibility that future governments
may adopt substantially different policies, may also affect the Company’s
operations. Local governments in all countries the Company deals with issue end
user certificates to purchase or receive live ammunition from the Company. It is
the decision of these countries in the Middle East, the United States, Canada,
Europe, Africa, and the Baltics whether or not they will take possession or
purchase such munitions. 

Intellectual Property

The Company’s ability to compete effectively will depend, in
part, on its ability to maintain the proprietary nature of its technology and
manufacturing processes. Although the Company considers certain of its product
designs as well as manufacturing processes involving certain of its products to
be proprietary, patents or copyrights do not protect all design and
manufacturing processes. The Company has adopted procedures to protect its
intellectual property and maintain secrecy of its confidential business
information and trade secrets. However, there can be no assurance that such
procedures will afford complete protection of such intellectual property,
confidential business information and trade secrets. There can be no assurance
that the Company’s competitors will not independently develop technologies that
are substantially equivalent or superior to the Company’s technology. 

To protect the Company’s intellectual property, it may become
involved in litigation, which could result in substantial expenses, divert the
attention of its management, cause significant delays and materially disrupt the
conduct of its business. 

Infringement of Intellectual Property Rights

While the Company believes that its products and other
intellectual property do not infringe upon the proprietary rights of third
parties, its commercial success depends, in part, upon the Company not
infringing intellectual property rights of others. A number of the Company’s
competitors and other third parties have been issued or may have filed patent
applications or may obtain additional patents and proprietary rights for technologies similar to those utilized
by the Company. Some of these patents may grant very broad protection to the
owners of the patents. The Company has not undertaken a review to determine
whether any existing third party patents or the issuance of any third party
patents would require the Company to alter its technology, obtain licenses or
cease certain activities. The Company may become subject to claims by third
parties that its technology infringes their intellectual property rights due to
the growth of products in its target markets, the overlap in functionality of
those products and the prevalence of products. The Company may become subject to
these claims either directly or through indemnities against these claims that it
provides to end-users, manufacturer’s representatives, distributors, value added
resellers, system integrators and original equipment manufacturers. 

B-4 




Litigation may be necessary to determine the scope,
enforceability and validity of third party proprietary rights or to establish
the Company’s proprietary rights. Some of its competitors have, or are
affiliated with companies having, substantially greater resources than the
Company and these competitors may be able to sustain the costs of complex
intellectual property litigation to a greater degree and for a longer period of
time than the Company. Regardless of their merit, any such claims could be time
consuming to evaluate and defend, result in costly litigation, cause product
shipment delays or stoppages, divert management’s attention and focus away from
the business, subject the Company to significant liabilities and equitable
remedies, including injunctions, require the Company to enter into costly
royalty or licensing agreements and require the Company to modify or stop using
infringing technology. 

The Company may be prohibited from developing or
commercializing certain technologies and products unless it obtains a license
from a third party. There can be no assurance that it will be able to obtain any
such license on commercially favorable terms or at all. If it does not obtain
such a license, it could be required to cease the sale of certain of its
products. 

Health and Safety

Health and safety issues related to the Company’s products may
arise that could lead to litigation or other action against the Company or to
regulation of certain of its product components. The Company may be required to
modify its technology and may not be able to do so. It may also be required to
pay damages that may reduce its profitability and adversely affect its financial
condition. Even if these concerns prove to be baseless, the resulting negative
publicity could affect the Company’s ability to market certain of its products
and, in turn, could harm its business and results from operations. 

Stress in the Global Financial System 

Recent events have demonstrated that businesses and industries
throughout the world are very tightly connected to each other. Thus, events
seemingly unrelated to the Company, or to its industry, may adversely affect its
finances or operations in ways that are hard to predict or defend against. For
example, credit contraction in financial markets may hurt the Company’s ability
to access credit when it is needed or rapid changes in foreign exchange rates
may adversely affect financial results. Finally, a reduction in credit, combined
with reduced economic activity, may adversely affect businesses and industries
that collectively constitute a significant portion of the Company’s customer
base. As a result, these customers may need to reduce their purchases of the
Company’s products, or there may be greater difficulty in receiving payment for
the products that these customers purchase from the Company. Any of these
events, or any other events caused by turmoil in world financial markets, may
have a material adverse effect on the business, operating results, and financial
condition. 

B-5 




Conflicts of Interest

Certain directors and officers of the Company are or may become
associated with other companies in the same or related industries which may give
rise to conflicts of interest. Directors who have a material interest in any
person who is a party to a material contract or a proposed material contract
with the Company are required, subject to certain exceptions, to disclose that
interest and generally abstain from voting on any resolution to approve the
contract. In addition, the directors and the officers are required to act
honestly and in good faith with a view to the best interests of the Company. The
directors and officers of the Company have either other full-time employment or
other business or time restrictions placed on them and accordingly, the Company
will not be the only business enterprise of these directors and officers. 

Risks Related To the Offering and Our
Securities

Reliance on Exemptions From Registration

The Offering is being made in reliance upon Section 4(a)(2) of
the Securities Act and/or the provisions of Rule 506(b) of Regulation D
promulgated thereunder, and the exemptions from registration provided by the
laws of certain states in which the Offering is conducted. Reliance on these
exemptions does not, however, constitute a representation or guarantee that such
exemptions are, indeed, available. If for any reason the Offering is deemed not
to qualify as exempt under Section 4(a)(2) or Rule 506(b) of Regulation D, and
if no other exemption from registration or qualification is available, and the
Offering is not registered or qualified with the applicable federal or state
authorities, the offer and sale of the Units would be deemed to have been made
in violation of the applicable laws requiring such registration or
qualification. As a remedy, in the event of such violation, each investor
purchasing the Units in the Offering would have the right to rescind his/her/its
purchase of the Units and to have his/her/its purchase price returned. If an
investor requests a return of his/her/its purchase price, funds might not be
available for that purpose. In that event, liquidation of our company might be
required. Any refunds made would reduce funds available for our operations. A
significant number of requests for rescission would probably leave us without
funds sufficient to respond to such requests or successfully to proceed with our
activities. 

Illiquid Investment 

An investment in the Company requires a long-term commitment,
with no certainty of return. Currently there is no liquid market for our Common
Stock and we cannot guarantee that such liquid market for our Common Stock would
develop in the near future. The lack of an active market may also reduce the
fair market value of your Common Stock. An inactive market may also impair our
ability to raise capital to continue to fund operations by selling shares.
Moreover, we do not expect security analysts of brokerage firms to provide
coverage of our company in the near future.

Limitation on Sale and Transfer 

The Units are being offered and sold pursuant to one or more
exemptions from the registration requirement of the Securities Act and without
qualification or registration under the securities laws of various states.
Consequently, the Units offered hereby may not be sold, transferred or
hypothecated without registration under the Securities Act, and applicable state
laws or without an exemption from such registration or qualification. The Units,
including the Shares, the Warrants and Warrant Shares, will bear a legend
restricting their transfer accordingly, and may bear certain legends required by
state law where required.

B-6 




General Venture Company Risks

The Units must be considered highly speculative due to the
nature of the Company’s business, the early stage of its deployment, its current
financial position and ongoing requirements for capital. An investment in the
Units should only be considered by those persons who can afford a total loss of
investment, and is not suited to those investors who may need to dispose of
their investment in a timely fashion. Investors should consult with their own
professional advisors to assess the legal, financial and other aspects of an
investment in the Units. 

Dividend Policy

The Company has not paid dividends in the past and has no plans
to pay dividends for the foreseeable future. The future dividend policy of the
Company will be determined by its directors. 

Market Price of Common Stock

There can be no assurance that an active market for the Common
Stock will be sustained. Securities of small and midcap companies have
experienced substantial volatility in the past, often based on factors unrelated
to the financial performance or prospects of the companies involved. These
factors include global economic developments and market perceptions of the
attractiveness of certain industries. The price per share of Common Stock is
also likely to be affected by change in the Company’s financial condition or
results of operations as reflected in its quarterly filings. Other factors
unrelated to the performance of the Company that may have an effect on the price
of Common Stock include the following: the extent of analytical coverage
available to subscribers concerning the business of the Company may be limited
if investment banks with research capabilities do not follow the Company’s
securities; lessening in trading volume and general market interest in the
Company’s securities may affect a subscriber’s ability to trade significant
numbers of shares of Common Stock, the size of the Company’s public float may
limit the ability of some institutions to invest in the Company’s securities; a
substantial decline in the price of the Common Stock that persists for a
significant period of time could cause the Company’s securities to be delisted
from the exchange, further reducing market liquidity. If an active market for
the Common Stock does not continue, the liquidity of a subscriber’s investment
may be limited and the price of the Common Stock may decline. If such a market
does not develop, subscribers may lose their entire investment in the Units.


Management’s Broad Discretion in the Use of Proceeds


Management of the Company will have broad discretion in
allocating the net proceeds of the Offering, which creates uncertainty for
shareholders and could adversely affect the Company’s business, prospects,
financial condition and results of operations.

No Investor Counsel Retained to Represent the
Subscribers

Counsel has not been retained to represent the Subscribers of
the Units. Prospective Subscribers of the Units are urged to consult with their
own legal counsel, and retain their services as deemed necessary. 

Arbitrary Basis of the Offering Price of the Units

The offering price of the Units and the exercise price of the
Warrants were determined by us on an arbitrary basis and bear no relationship to
earnings, asset values, book value or any other recognized criteria of value. The offering price of the Units and the
exercise price of the Warrants should not be viewed as an indication of the
value of those securities. 

B-7 




No Escrow 

All funds from investors will be delivered directly to the
Company, without provision for escrow. 

No Minimum Proceeds Required

There is no minimum number of Units that must be sold to close
this Offering. If only limited proceeds are raised in the Offering, they may not
be enough for the Company to operate and investors could lose their entire
investment. 

Side Letter Agreement with Certain Subscribers 

The Company has agreed to enter into a Side Letter Agreement
with two institutional subscribers in this Offering (collectively,
“Institutional Subscribers”). Pursuant to the Side Letter Agreement, within the
two-year period following the final closing of this Offering the Company shall
not conduct any future offerings of its securities at a price lower than
USD$0.106 per share without the prior written consent of the Institutional
Subscribers as long as each Institutional Subscriber continues to hold more than
75% of the securities it acquired in this Offering during such two-year period.
The terms contained in the Side Letter Agreement are not included in the
Subscription Agreement entered into by other Subscribers.

Placement Agent Cannot Guarantee the Completeness and
Accuracy of Information in the Reports Filed by the Company 

Each Subscriber in this Offering has been provided with the
website link to the reports (the “Company Reports”) the Company filed with the
SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
All of the filings made by the Company in the past 24 months are incorporated by
reference in this Agreement. The Company Reports were prepared and filed by the
Company without the assistance of the Agent. The Agent has not confirmed that
the information contained in the Company Reports is accurate, complete or
correct. Each Subscriber is urged to conduct its own due diligence on the
accuracy and completeness of the information in the Company Reports and herein
before making an investment in this Offering. 

B-8 




Exhibit C 

Registration Rights Agreement 

(see attached) 

 

 

 

C-1 




Exhibit D 

 

FORM 4C 
CORPORATE PLACEE
REGISTRATION FORM 


This Form will remain on file with the Exchange and must be
completed if required under section 4(b) of Part II of Form 4B. The corporation,
trust, portfolio manager or other entity (the “Placee”) need only file it on one
time basis, and it will be referenced for all subsequent Private Placements in
which it participates. If any of the information provided in this Form changes,
the Placee must notify the Exchange prior to participating in further placements
with Exchange listed Issuers. If as a result of the Private Placement, the
Placee becomes an Insider of the Issuer, Insiders of the Placee are reminded
that they must file a Personal Information Form (2A) or, if applicable,
Declarations, with the Exchange. 

	1. 	
      Placee Information:

	 	 	 
		(a) 	
      Name:______________________________________________________________________

	 	 	 
		(b) 	
      Complete
      Address:____________________________________________________________

	 	 	 
		(c) 	
      Jurisdiction of Incorporation or
      Creation:____________________________________________




	2. 	(a) 	Is the Placee purchasing
      securities as a portfolio manager: (Yes/No)? __________
	 	 	 
		(b) 	Is the Placee carrying on
      business as a portfolio manager outside of Canada: (Yes/No)?
  __________



	3. 	
      If the answer to 2(b) above was “Yes”, the undersigned
      certifies that:

	 	 	 
		(a) 	
      it is purchasing securities of an Issuer on behalf of
      managed accounts for which it is making the investment decision to
      purchase the securities and has full discretion to purchase or sell
      securities for such accounts without requiring the client’s express
      consent to a transaction;

	 	 	 
		(b) 	
      it carries on the business of managing the investment
      portfolios of clients through discretionary authority granted by those
      clients (a “portfolio manager” business) in ____________________
      [jurisdiction], and it is permitted by law to carry on a portfolio manager
      business in that jurisdiction;

	 	 	 
		(c) 	
      it was not created solely or primarily for the purpose of
      purchasing securities of the Issuer;



D-1 





	 	(d) 	
      the total asset value of the investment portfolios it
      manages on behalf of clients is not less than $20,000,000; and

	 	 	 
	 	(e) 	
      it has no reasonable grounds to believe, that any of the
      directors, senior officers and other insiders of the Issuer, and the
      persons that carry on investor relations activities for the Issuer has a
      beneficial interest in any of the managed accounts for which it is
      purchasing.




	4. 	
      If the answer to 2(a). above was “No”, please provide the
      names and addresses of Control Persons of the
Placee:





	Name * 	City 	Province or State 	Country 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 



* If the Control Person is not an
individual, provide the name of the individual that makes the investment
decisions on behalf of the Control Person. 

	5. 	
      Acknowledgement - Personal Information and Securities
      Laws

	 	 	 
		(a) 	
      “Personal Information” means any information about an
      identifiable individual, and includes information contained in sections 1,
      2 and 4, as applicable, of this Form.



The undersigned hereby acknowledges and
agrees that it has obtained the express written consent of each individual to:


	 	(i) 	
      the disclosure of Personal Information by the undersigned
      to the Exchange (as defined in Appendix 6B) pursuant to this Form;
    and

	 	 	 
	 	(ii) 	
      the collection, use and disclosure of Personal
      Information by the Exchange for the purposes described in Appendix 6B or
      as otherwise identified by the Exchange, from time to
  time.




	 	(b) 	
      The undersigned acknowledges that it is bound by the
      provisions of applicable Securities Law, including provisions concerning
      the filing of insider reports and reports of
  acquisitions.



D-2 




Dated and certified (if applicable), acknowledged and agreed,
at _____________________________________  _______on
____________________________________

	 	 
	 	(Name of Purchaser - please print) 
	 	 
	 	 
	 	(Authorized Signature) 
	 	 
	 	 
	 	(Official Capacity - please print) 
	 	 
	 	 
	 	(Please print name of individual whose
      signature appears above) 


THIS IS NOT A PUBLIC DOCUMENT 

 

 

D-3