Exhibit 4.18


 


SUBSCRIPTION AGREEMENT


 


(for Ontario,
Alberta and British Columbia and Non-Canadian/Non-U.S. Subscribers)


 


A completed and originally executed copy of
this subscription agreement must be delivered or transmitted by facsimile
((416) 869-9151) by no later than 12:00 noon (Toronto time) on June 3,
2004 to First Associates Investments Inc. (Attention:  Jennifer Li).


 


	
  TO:

  	
  ADB Systems
  International Ltd. (the “Corporation”)

  
	
   

  	
   

  
	
  AND:

  	
  First
  Associates Investments Inc.

  
	
   

  	
   

  
	
  RE:

  	
  Sale of
  Convertible Notes of the Corporation entitling the holders to acquire units
  of securities of the Corporation upon conversion, each unit comprised of one
  common share in the capital of the Corporation and one-half of one Common
  Share purchase warrant.

  



 


Details of Subscription


 


The
undersigned (the “Subscriber”) hereby irrevocably subscribes, subject to the
terms and conditions set forth in this subscription agreement, for convertible
notes (“Convertible
Notes”) of the Corporation with the following specific purchase
instructions.  The particulars of the
Convertible Notes and the securities issuable upon conversion of the
Convertible Notes (together with certain other material covenants and
acknowledgements) are set out in Schedules “A” and “B” to this subscription
agreement and certain representations and warranties to be made by the
Subscriber so that the Corporation can ensure compliance with applicable
securities laws are set out in Schedule “C” to this subscription agreement, all
of which forms part of and is hereby incorporated as part of this subscription
agreement.


 


All Subscribers:


 


Complete and
sign Schedule “D” to this agreement, being the form of questionnaire and
undertaking required by the Toronto Stock Exchange


 


Ontario Subscribers:


 


Complete and
sign both the Ontario Resident Exemption Certificate and the Ontario Accredited
Investor Certificate – Schedule “E”.


 


Alberta and British Columbia
Subscribers:


 


If you are an
“accredited investor”, complete and sign the Accredited Investor Certificate –
Schedule “F”.

OR

If you are relying on the “family, friends and business associates”
exemption, complete and sign the Family, Friends and Business Associates
Certificate – Schedule “F”.


 


Non Canadian and Non U.S.
Subscribers:


 


Complete and
sign the Offshore Subscriber Certificate – Schedule “G”.


 

















 


Please print all information
(other than signatures), as applicable, in the spaces provided below.


 


	
  Principal Amount
  of Convertible Notes Subscribed for (to be issued at par):

  	
   

  	
   

  



 


	
  Subscriber Details

  	
   

  	
   

  	
  Registration
  Instructions (if
  different from name of 

  	
   

  
	
   

  	
   

  	
   

  	
  Subscriber and
  address set out in the box to the left):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name of
  Subscriber

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Authorized Signature

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  In Trust
  For, if applicable

  Account Reference, if applicable

  	
   

  
	
  Official
  Capacity or Title (if Subscriber is not an individual)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name of individual whose
  signature appears above if 

  	
   

  	
   

  	
   

  	
   

  
	
  different from name of
  Subscriber printed above

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address,
  including postal code

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Delivery
  Instructions (if different
  from name of Purchaser

  	
   

  
	
  Address of
  Subscriber, including province and postal code

  	
   

  	
   

  	
  and address set
  out in the box to the left):

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Telephone
  Number:

  	
   

  	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fax Number:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Account
  Reference, if applicable

  	
   

  
	
  E-mail
  Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address,
  including province and postal code

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Disclosed
  Principal (please complete if purchasing as agent 

  	
   

  	
   

  	
   

  	
   

  
	
  or trustee
  for a disclosed principal

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name of Principal:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Principal’s Address:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Street Address)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (City and Province)

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Postal Code)

  	
   

  	
   

  	
   

  	
   

  
										



 

















 


The Subscriber
acknowledges its consent and request that this subscription agreement
(including all schedules hereto) and all other documents evidencing or relating
in any way to its purchase of Convertible Notes be drawn up in the English
language only.  Nous reconnaissons
par les présentes avoir consenti et demandé à ce que la présente convention de
souscription (et les annexes s’y rapportant) et tous les autres documents
faisant foi ou se rapportant de quelque manière à notre souscription soient
rédigés en anglais seulement.


 


IN WITNESS WHEREOF the Subscriber has executed, or caused its duly authorized
representative to execute, this subscription agreement on this
            day of
                                
, 2004.


 


 


	
   

  	
   

  	
   

  	
   

  
	
  Signature of
  Subscriber (if an individual)

  	
   

  	
   

  	
  Name of
  Subscriber (if an individual)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
  Name of
  Subscriber (if an individual)

  	
   

  	
   

  	
  (signature
  of authorized representative)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name and
  Title of Authorized Representative

  



 


 


ACCEPTANCE


 


The foregoing
is acknowledged, accepted and agreed to this
               
day of
                                
, 2004.


 


	
   

  	
  ADB SYSTEMS INTERNATIONAL LTD.

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  



 

















 


 


SCHEDULE “A”


 


This is Schedule “A” to the subscription
agreement relating to the purchase of Convertible Notes of ADB Systems
International Ltd.


 


TERMS OF THE OFFERING


 


1.             Offering.  The Convertible Notes subscribed for
hereunder form part of a larger sale by the Corporation (the “Offering”)
pursuant to an agency agreement (the “Agency Agreement”) to be entered
into between the Corporation and First Associates Investments Inc. (the “Agent”)
of a maximum of $5,000,000 principal amount of Convertible Notes. In addition
to the Offering, on May 19, 2004 the Corporation issued $500,000 of convertible
notes to one investor, with such convertible notes being substantially the same
as the Convertible Notes to be issued under the Offering, except that they also
provided security by way of an express assignment of insurance proceeds rights.


 


The
Convertible Notes will bear interest at an annual rate of 7% of the principal
amount of the Convertible Notes outstanding from time to time, payable on the
earlier of the conversion of the Convertible Notes or the third anniversary of
the Closing Date (the “Maturity  Date”).  Interest
will continue to accrue until paid.  At
any time up to and including the Maturity Date, all or any portion of the
principal amount of the Convertible Notes outstanding from time to time will be
convertible, at the option of the holder, provided that the holder complies
with the notice provision therefor, into units of securities of the Corporation
(“Units”)
at a conversion price of $0.31 per Unit (the “Conversion Price”), subject to
adjustments for stock splits, consolidations, other capital reorganizations,
extraordinary dividends or distributions.


 


Each Unit will
consist of one common share in the capital of the Corporation (a “Common Share”)
and one-half of one Common Share purchase warrant (a “Warrant”).  Each whole Warrant will entitle the holder
to acquire one Common Share at an exercise price of $0.50 per share, and will
be exercisable at any time prior to the fourth anniversary of the Closing Date.


 


In the event
that at any time from and after the first anniversary of the Closing Date the
volume weighted average trading price of the Common Shares through its
principal trading market for a 20 consecutive trading day period is $0.70 or
more, all then outstanding Convertible Notes, including any accrued interest
thereon, will be automatically converted into Units at the Conversion Price.


 


The material
terms of the Offering, the Convertible Notes and the Underlying Securities (as
hereinafter defined) are set out in this schedule and in Schedule “B” to this
subscription agreement.


 


The foregoing
description of the Convertible Notes is a summary only and the Subscriber
acknowledges that the definitive terms and conditions of the Convertible Notes
sold under the Offering will be set forth in the Note Certificates (as
hereinafter defined).


 


2.             Definitions.  In this subscription agreement and the
schedules to this subscription agreement the defined terms set out in the first
page of this subscription agreement or as set out in Section 1 above shall
apply and, unless the context otherwise requires:


 


“Applicable
Securities Laws” means the applicable securities laws of the
Province of Ontario and each other relevant jurisdiction and the regulations
and rules made and forms prescribed thereunder, together with all applicable
instruments, published policy statements, blanket orders, notices, rulings and
rules of the Ontario Securities Commission and each other securities regulatory
authority having competent jurisdiction;


 


“Business Day”
means a day other than a Saturday, Sunday or statutory or banking holiday in
Toronto, Ontario;


 


“Closing Date”
means on or about June 8, 2004, or such other date or dates as the Agent may
designate;


 

















 


“Closing Time”
means 10:00 a.m. (Toronto time) on the Closing Date, or such other time on the
Closing Date as the Agent may designate;


 


“Corporation’s
Information Record” means any statement contained in any press
release, material change report, financial statements or other document of the
Corporation which has been or is publicly disseminated, whether pursuant to any
Applicable Securities Laws or otherwise, prior to the Closing Time;


 


“including”
means including without limitation;


 


“material”
means material in relation to the Corporation;


 


“material change”
means any change in the business, operations, assets, liabilities, ownership or
capital of the Corporation, on a consolidated basis, that would reasonably be
expected to have a significant effect on the market price or value of the
Common Shares and includes a decision to implement such a change made by the
board of directors of the Corporation or by senior management of the
Corporation who believe that confirmation of the decision by the board of
directors is probable;


 


“material fact”
means any fact that significantly affects or would reasonably be expected to
have a significant effect on the market price or value of the Common Shares;


 


“Material Subsidiaries” means the material direct
or indirect subsidiaries of the Corporation, being, ADB Systemer ASA (Norway),
ADB Systems USA, Inc. (Delaware), ADB Systems International Limited (Ireland)
and Internet Liquidators USA, Inc.;


 


“misrepresentation”
means an untrue statement of material fact, or an omission to state a material
fact that is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made;


 


“Note Certificates”
means the definitive certificates representing the Convertible Notes;


 


“Purchasers”
means those persons who subscribe for Convertible Notes under the Offering,
including the Subscriber;


 


“Regulation S”
means Regulation S under the U.S. Securities Act;


 


“TSX”
means the Toronto Stock Exchange;


 


“Underlying
Securities” means the Common Shares and Warrants comprising the
Units issuable upon the exercise of the conversion rights under the Convertible
Notes;


 


“United States”
means the United States as that term is defined in Regulation S;


 


“U.S. Person”
means a U.S. Person as that term is defined in Regulation S;


 


“U.S. Securities Act”
means the Securities Act of 1933,
as amended, of the United States of America; and


 


“Warrants Shares”
means the Common Shares issuable upon exercise of the Warrants.


 


3.             Currency.  All dollar amounts referred to in this subscription
agreement and the schedules thereto are expressed in Canadian funds.


 


4.             Representations and Warranties of the
Corporation.  The Corporation
hereby represents and warrants for the benefit of the Purchasers as follows:


 


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(a)                 the
Corporation is (and will be at the Closing Time) a reporting issuer in the
Provinces of Ontario, Alberta and British Columbia, and is in compliance with
all material obligations under Applicable Securities Laws of such
jurisdictions;


 


(b)                the
Corporation has been duly incorporated
and organized and is validly subsisting under the laws of the
Province of Ontario
and has all requisite corporate power and authority to own its assets and to
carry on its business as currently conducted;


 


(c)                 each of the Material
Subsidiaries has been duly incorporated and organized and is validly subsisting
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to carry on its business as now conducted and to
own, lease and operate its properties and assets;


 


(d)                the
Corporation and each of the
Material Subsidiaries is conducting its business in material
compliance with all applicable laws, rules and regulations of each jurisdiction
in which its business is carried on and is duly licensed, registered or
qualified in all jurisdictions in which it owns, leases or operates its
property or carries on business to enable its business to be carried on as now
conducted and its property and assets to be owned, leased and operated and all
such licences, registrations and qualifications are and will at the Closing
Time be valid, subsisting and in good standing, except in respect of matters
which do not and will not result in any adverse material change in respect of
the Corporation, and except for the failure to be so qualified or the absence
of any such license, registration or qualification which does not and will not
have a material adverse effect on the assets or properties, business, results
of operations, prospects or condition (financial or otherwise) of the
Corporation and its subsidiaries, on a consolidated basis;


 


(e)                 the
Corporation has all required corporate power and authority to enter into and
carry out the provisions of this subscription agreement and the transactions
contemplated hereby and all necessary corporate action has been taken or will
have been taken prior to the Closing Time by the Corporation to duly authorize
the execution and delivery of this subscription agreement and such other agreements
and instruments and the consummation of the transactions contemplated thereby
and so as to validly create, issue and deliver the Convertible Notes subscribed
thereby and to validly create and irrevocably allot for issuance the Underlying
Securities and Warrant Shares;


 


(f)                 neither
the Corporation nor any of its
Material Subsidiaries is in default or in breach in any
material respect of, and the execution and delivery of this subscription
agreement by the Corporation, the performance and compliance with the terms of
this subscription agreement, the issue and sale of the Convertible Notes, and
the issue of the Underlying Securities and Warrant Shares will not result in
any breach of, or be in conflict with or constitute a default under, or create
a state of facts which, after notice or lapse of time, or both, would
constitute a default either directly or indirectly under any term or provision
of the constating documents, by-laws or resolutions of the Corporation or any of the Material Subsidiaries
or any material mortgage, note, indenture, contract, agreement,
instrument, lease or other document to which any of them is a party or by which
any of them is bound;


 


(g)                the
Common Shares issuable upon exercise of the conversion rights under its
Convertible Notes and the Warrant Shares, if and when issued in accordance with
the Convertible Notes and Warrants, as applicable, will be validly issued and
outstanding as fully paid and non-assessable;


 


(h)                no
approval, authorization, consent or other order of, and no filing, registration
or recording with, any governmental authority is required by the Corporation in
connection with the execution and delivery or with the performance by the
Corporation of this subscription agreement except in compliance with and the rules
of the TSX;


 


(i)                  to
the best of the Corporation’s knowledge, information and belief, no portion of
the Corporation’s Information Record contained a misrepresentation as at its
date of public dissemination;


 


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(j)                  there
has been no adverse material change in relation to the Corporation since
December 31, 2003, and no adverse material fact exists in relation to the
Corporation or its securities which, in either case, has not been generally
disclosed or disclosed in the Corporation’s Information Record;


 


(k)                 this
subscription agreement and all other agreements required in connection with the
issue and sale of the Convertible Notes have been or will be, at or prior to
the Closing Time, duly authorized, executed and delivered by the Corporation
and will be valid and binding obligations of the Corporation enforceable in
accordance with their respective terms (except as the enforceability thereof
may be limited by (i) bankruptcy, insolvency or similar laws affecting
creditors’ rights generally, (ii) general equitable principles or (iii)
limitations under applicable law in respect of rights of indemnity,
contribution and waiver of contribution); and


 


(l)                  the
Corporation intends that the net proceeds of the Offering will be used
substantially in the manner specified in Schedule “B” hereto.


 


5.             Reliance upon Representations, Warranties
and Covenants of the Corporation. 
The Corporation further agrees that, by delivering the Convertible Notes
to the Subscriber, the Corporation will be representing and warranting that the
representations, warranties and covenants contained in this subscription
agreement are true as at the Closing Time with the same force and effect as if
they had been made by the Corporation at the Closing Time and that they will
survive the purchase by the Subscriber of the Convertible Notes and continue in
full force and effect for a period of two (2) years following the Closing Date
notwithstanding any subsequent disposition by the Subscriber of the Convertible
Notes or the Underlying Securities.


 


6.             Closing of Purchase.  The Subscriber acknowledges and agrees that
delivery of and payment for the Convertible Notes will be completed at the
offices of the Corporation’s
legal counsel at 10:00 a.m. (Toronto time) on the Closing
Date which will be on or about June 8, 2004, or such earlier or later date or
time as may be determined by the Agent.


 


7.             Payment and Delivery.  The Subscriber agrees to deliver to the
Agent at 181 Bay Street, Suite 900, Toronto, Ontario M5J 2T3 (Attention:
Jennifer Li), (fax number: (416) 864-9151), prior to the Closing Time:


 


(a)                 his
or her duly completed and executed subscription agreement (including Schedule
“D” and Schedules E”, “F” or “G”);


 


(b)                a
certified cheque or bank draft payable to “First Associates Investments Inc.”,
or wire transfer in Canadian funds to the Agent for the principal amount of
Convertible Notes subscribed for under this subscription agreement or payment
of the same amount in such other manner as is acceptable to the Agent; and


 


(c)                 such
other documents as may be required pursuant to the terms of this subscription
agreement.


 


8.             Conditions of Closing.  If, by the Closing Time, the terms and
conditions contained in this subscription agreement have been complied with to
the satisfaction of the Corporation or waived by the Corporation, the Agent
shall deliver to the Corporation all completed subscription agreements,
including this subscription agreement, and deliver to the Corporation all
certified cheques or bank drafts representing subscription funds, including the
Subscriber’s subscription funds against delivery by the Corporation of the Note
Certificates and such other documentation as may be required.  This subscription is subject to acceptance
by the Corporation (as described below). 
Unless other arrangements have been made with the Agent, certificates
endorsed by the Corporation representing Convertible Notes will be available
for delivery to the Subscriber in Toronto, Ontario at the Closing Time against
payment of the aggregate purchase price for the Convertible Notes.  The Agent will deliver such certificates to
the address set out for delivery on page 2 of this subscription agreement
promptly after the closing of its Offering.


 


9.             Acceptance or Rejection.  The Corporation will have the right to
accept or reject (in whole or in part) this subscription at any time at or
prior to the Closing Time, and the right is reserved to the Corporation to
allot to any


 


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subscriber
less than the principal amount of Convertible Notes subscribed for.  The Subscriber acknowledges and agrees that
the acceptance of this subscription agreement will be conditional upon the sale
of the Convertible Notes to the Subscriber being exempt from any prospectus and
registration requirements of Applicable Securities Laws.  The Corporation will be deemed to have
accepted this subscription agreement upon the delivery at closing of the Note
Certificate referred to in Section 8 above in accordance with the provisions
hereof.


 


10.           Information and Documents.  The Subscriber acknowledges that pursuant to
Applicable Securities Laws, the Subscriber may be required to file a report
with a Securities Commission in the required form within 10 days of each
disposition of all or any of the Convertible Notes purchased hereunder or any
of the Underlying Securities issued upon the exercise of the conversion rights
under such Convertible Notes and, if so required, the Subscriber, undertakes to
file the required report.


 


11.           Resale Restrictions.  The Subscriber understands and acknowledges
that the Convertible Notes and in certain circumstances the Underlying
Securities and Warrant Shares will be subject to certain resale restrictions
under Applicable Securities Laws and the Subscriber agrees to comply with such
restrictions.  Subscribers are advised
to consult their own legal advisors in this regard. The Subscriber also
acknowledges that it has been advised to consult its own legal advisors with
respect to applicable resale restrictions and that it is solely responsible for
complying with such restrictions (and neither the Corporation nor the Agent is
in any manner responsible for ensuring compliance by the Subscriber with such
restrictions).


 


12.           Legend.  The Subscriber acknowledges that the
following legend is to be placed on the Note Certificate (and the certificates
evidencing Underlying Securities and Warrants Shares, if issued during the four
month period referred to in such legend) being acquired:


 


“UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE
                    ”
(four months and one day from the Closing Date.)


 


13.           No Revocation.  The Subscriber agrees that this offer is
made for valuable consideration and may not be withdrawn, cancelled, terminated
or revoked by the Subscriber.


 


14.           Indemnity.  The Subscriber agrees to indemnify and hold
harmless the Corporation and the Agent and their respective directors,
officers, employees, agents, advisers and shareholders from and against any and
all loss, liability, claim, damage and expense whatsoever (including, any and
all fees, costs and expenses whatsoever reasonably incurred in investigating,
preparing or defending against any claim, lawsuit, administrative proceeding or
investigation whether commenced or threatened) arising out of or based upon any
representation, warranty or covenant of the Subscriber contained herein or in
any document furnished by the Subscriber to the Corporation or the Agent in
connection herewith being untrue in any material respect or any breach or
failure by the Subscriber to comply with any covenant or agreement made by the
Subscriber herein or in any document furnished by the Subscriber to the
Corporation or the Agents in connection herewith.


 


15.           Modification.  Neither this subscription agreement nor any
provision hereof shall be modified, changed, discharged or terminated except by
an instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.


 


16.           Compensation, Expenses and Reimbursement
Entitlements of Agent.  The
Subscriber understands that, in connection with the Offering, the Agent will
receive from the Corporation (i) aggregate commissions equal to 8% of the gross
proceeds of the Offering; and (ii) subject to the terms of the Agency
Agreement, reimbursement for the Agent’s reasonable out-of-pocket expenses and
the reasonable fees and disbursements of its legal counsel incurred in
connection with the Offering.


 


The Subscriber
further understands that as additional compensation for its services in
connection with the Offering, the Agent will receive an option, exercisable
until the second anniversary of the Closing Date, to purchase that number of
Units as is equal to 10% of the Units issuable upon full conversion of the
Convertible Notes sold under the Offering, at an exercise price equal to the
Conversion Price.


 


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17.           Miscellaneous.


 


(a)                 The
agreement resulting from the acceptance of this subscription agreement by the
Corporation contains the whole agreement between the parties hereto in respect
of the subject matter hereof and there are no warranties, representations,
terms, conditions or collateral agreements, express, implied or statutory,
other than as expressly set forth herein and in any amendments hereto.


 


(b)                All
representations, warranties, agreements and covenants made or deemed to be made
by the Subscriber in this subscription agreement will survive the execution and
delivery, and acceptance, of this subscription agreement and the closing of the
Offering.


 


(c)                 Time
shall be of the essence of this subscription agreement.


 


(d)                This
subscription agreement and the rights and obligations of the parties hereunder
will be governed by and construed according to the laws of the Province of
Ontario and the laws of Canada applicable therein.


 


(e)                 This
subscription agreement may be executed in any number of counterparts, each of
which when delivered, either in original or facsimile form, shall be deemed to
be an original and all of which together shall constitute one and the same
document.


 


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SCHEDULE “B”


 


This is Schedule “B” to the subscription
agreement relating to the purchase of Convertible Notes of ADB Systems
International Ltd. (the “Corporation”). Capitalized terms used but
not defined in this schedule are intended to have the meanings ascribed
thereto, as applicable, on the first page of this subscription agreement and
sections 1 and 2 of Schedule “A” to this subscription agreement


 


ADB SYSTEMS INTERNATIONAL LTD.


 


Summary of Proposed Terms


 


Offering of Convertible Notes


 


by way of Private Placement


 


	
  Issuer:

  	
  ADB Systems
  International Ltd. 

  
	
   

  	
   

  
	
  Issue:

  	
  Up to $5,000,000
  principal amount of Convertible Notes, to be issued by way of private
  placement exemptions from prospectus and registration requirements, subject
  to the receipt of any applicable regulatory and stock exchange approvals.

  
	
   

  	
   

  
	
  Issue Price:

  	
  The Convertible
  Notes will be issued at par in integral multiples of $1,000.

  
	
   

  	
   

  
	
  Convertible Notes:

  	
  The
  Convertible Notes will have the following material terms:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  The Convertible Notes will bear interest at an
  annual rate of 7% of the principal amount of the Convertible Notes
  outstanding from time to time, payable on the earlier of the conversion of
  the Convertible Notes or the Maturity Date (as defined below).  Interest will continue to accrue until
  paid;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  The Convertible Notes will mature and be payable on
  the date that is the third anniversary of the Closing Date (the “Maturity Date”)

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  At any time up to and including the Maturity Date,
  all or any portion of the principal amount of the Convertible Notes
  outstanding from time to time will be convertible, at the option of the
  holder, provided that the holder complies with the notice provisions
  therefor, into units of securities of the Corporation (“Units”) at a conversion price
  of $0.31 per Unit (the “Conversion Price”), subject to adjustments for stock splits, consolidations, other
  capital reorganizations, extraordinary dividends or distributions;

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Each Unit will consist of one common share in the
  capital of ADB (a “Common Share”) and one-half of one Common Share purchase warrant (a “Warrant”).  Each whole Warrant will entitle the holder
  to acquire one Common Share at an exercise price of $0.50 per share, and will
  be exercisable at any time prior to the fourth anniversary of the Closing
  Date; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  In the event that at any time from and after the
  first anniversary of the Closing Date the volume weighted average trading
  price of the Common Shares through its principal trading market for a 20
  consecutive trading day period is $0.70 or more, all then outstanding
  Convertible Notes, including any accrued interest thereon, will be
  automatically converted into Units at the Conversion Price.

  
	
   

  	
   

  
	
  Use of Proceeds:

  	
  For working
  capital and general corporate purposes.

  



 

















 


	
  Minimum Subscription:

  	
  $10,000 or
  such other amount determined at the sole discretion of the Agent. The
  Offering will be marketed in such provinces of Canada as the Agent may
  designate and in which Multilateral Instrument 45-102 – Resale of Securities
  has been adopted.  Convertible Notes
  may also be offered to U.S. buyers under available exemptions from federal
  and state prospectus requirements in the U.S. and may also be offered in
  offshore jurisdictions.

  
	
   

  	
   

  
	
  Lock-Up:

  	
  Until 180
  days following the Closing Date, and except as provided herein, neither the
  Corporation nor any of its officers or directors may offer or announce the
  offering of, or make or announce any agreement to issue, sell or exchange
  Common Shares, warrants or securities convertible into Common Shares, except
  the grant of stock options or the issuance of Common Shares pursuant to
  exercise of any purchase warrants existing on the date hereof, without the
  prior written consent of the Agent, such consent not to be unreasonably
  withheld.

  
	
   

  	
   

  
	
  Security:

  	
  The
  Convertible Notes will provide general security over the Corporation’s
  assets.  Such security will be
  subordinate liabilities of the Corporation to current secured creditors. 

  
	
   

  	
   

  
	
  Hold Period:

  	
  The
  Corporation will be a “reporting issuer” on the Closing Date, such that it is
  expected that the Convertible Notes, the securities comprising the Units (and
  the Common Shares issuable upon exercise of the Warrants) will have a
  restricted period of four months from the Closing Date

  
	
   

  	
   

  
	
  Listing:

  	
  The Common
  Share component of the Units (and the Common Shares issuable upon exercise of
  the Warrants) will be listed on the TSX. 

  
	
   

  	
   

  
	
  Commission:

  	
  8% of the
  gross proceeds of the Offering.  In
  addition, the Agent will receive an option, exercisable until the second
  anniversary of the Closing Date, to purchase that number of Units as is equal
  to 10% of the Units issuable upon full conversion of the Convertible Notes
  sold under the Offering, at an exercise price equal to the Conversion Price.

  
	
   

  	
   

  
	
  Agent:

  	
  First
  Associates Investments Inc.

  
	
   

  	
   

  
	
  Closing Date:

  	
  On or about
  June 8, 2004.  The Offering may be
  completed through one or more closings.

  



 


B-2

















 


SCHEDULE “C”


 


SUBSCRIBER’S REPRESENTATIONS
AND WARRANTIES


 


This is Schedule “C” to the subscription
agreement relating to the purchase of Convertible Notes of ADB Systems
International Ltd. (the “Corporation”). Capitalized terms used but
not defined in this schedule are intended to have the meanings ascribed
thereto, as applicable, on the first page of this subscription agreement and
sections 1 and 2 of Schedule “A” to this subscription agreement.


 


By executing this subscription
agreement, the Subscriber represents and warrants to the Corporation and the
Agent, which representations and warranties are true as of the date of this
subscription agreement and will be true as of the Closing Date, that:


 


1.                                       Representations and Warranties


 


(a)                                  Authorization
and Effectiveness.  If the Subscriber is a corporation, the Subscriber is a valid and
subsisting corporation, has the necessary corporate capacity and authority to
execute and deliver this subscription agreement and to observe and perform its
covenants and obligations hereunder and has taken all necessary corporate
action in respect thereof.  If the
Subscriber is a partnership, syndicate or other form of unincorporated
organization, the Subscriber has the necessary legal capacity and authority to
execute and deliver this subscription agreement and to observe and perform its
covenants and obligations hereunder and has obtained all necessary approvals in
respect thereof.  If the Subscriber is a
natural person, he or she has obtained the age of majority and is legally
competent to execute this subscription agreement and to take all actions
required pursuant thereto.


 


Whether the
Subscriber is a natural person or a corporation, partnership or other entity,
upon acceptance by the Corporation, this subscription agreement will constitute
a legal, valid and binding contract of the Subscriber, and any beneficial
purchaser for whom it is purchasing, enforceable against the Subscriber and any
such beneficial purchaser in accordance with its terms.


 


(b)                                 Residence.  The Subscriber is a
resident of, or otherwise subject to, the jurisdiction referred to under “Name
and Address of Subscriber” on the first page of this subscription agreement,
which address is the residence or place of business of the Subscriber not
created or used solely for the purpose of acquiring Convertible Notes, and:


 


(i)                                     is
not (and is not purchasing Convertible Notes for the account or benefit of) a U.S.
Person;


 


(ii)                                  was
not offered the Convertible Notes in the United States; and


 


(iii)                               did not
execute or deliver this agreement in the United States.


 


(c)                                  Investment
Intent. 
The Subscriber is acquiring Convertible Notes to be held for investment
only and not with a view to resale or distribution.


 


(d)                                 Prospectus
Exemptions. 
The Subscriber acknowledges and agrees that the sale and delivery of the
Convertible Notes to the Subscriber is conditional upon such sale being exempt
from the requirements under Applicable Securities Laws requiring the filing of
a prospectus in connection with the distribution of the Convertible Notes.


 


(e)                                  Offering
Documents. 
The Subscriber has not received, nor does the Subscriber need to
receive, any document purporting to describe the business and affairs of the
Corporation that has been prepared for delivery to and review by prospective
investors so as to assist those investors to make


 

















 


an
investment decision in respect of securities being sold in a distribution of
securities of the Corporation.


 


(f)                                    No
Solicitation or Advertising.  The Subscriber acknowledges that it has not
purchased the Convertible Notes as a result of any general solicitation or
general advertising, including advertisements, articles, notices or other communications
published in any newspaper, magazine or similar media or broadcast over radio
or television, or any seminar or meeting whose attendees have been invited by
any general solicitation or general advertising.


 


(g)                                 No
Undisclosed Information.  The Convertible Notes are not being
purchased by the Subscriber as a result of any material information concerning
the Corporation that has not been publicly disclosed and the Subscriber’s
decision to tender this offer and acquire Convertible Notes has not been made
as a result of any verbal or written representation as to fact or otherwise
made by or on behalf of the Corporation, or any other person and is based
entirely upon the currently available public information concerning the
Corporation.


 


(h)                                 Investment
Suitability.  The Subscriber has such knowledge and experience in financial and
business affairs as to be capable of evaluating the merits and risks of the
investment hereunder in Convertible Notes (and the Underlying Securities in
respect thereof) and is able to bear the economic risk of loss of such
investment.  The Subscriber acknowledges
and agrees that the Subscriber is responsible for obtaining such legal advice
as the Subscriber considers appropriate in connection with the execution,
delivery and performance by the Subscriber of this agreement and the
transactions contemplated hereunder.


 


(i)                                     Subscription
Agreement. 
The Subscriber has read and understands the contents of this agreement
and agrees to be legally bound hereby.


 


(j)                                     No
Conversion or Transfer of Convertible Notes, Underlying Securities or Warrant
Shares in U.S.  The Subscriber acknowledges that the Convertible Notes,
Underlying Securities and Warrant Shares may not be offered, sold or otherwise
transferred to persons in the United States or to U.S. Persons and may not be
exercised in the United States or by or on behalf of a U.S. Person and the
Subscriber understands that certificates representing the Convertible Notes,
Underlying Securities and Warrant Shares issued to it will so indicate.


 


(k)                                  Ontario
Subscriber.  If the Subscriber is a
resident of Ontario, the Subscriber or its disclosed principal is an
“accredited investor” within the meaning of Ontario Securities Commission Rule
45-501 – Exempt Distributions and falls within one or more of the
sub-paragraphs of the definition of “Accredited Investor” set out in Appendix I
to Schedule “E” hereto or is purchasing pursuant to paragraph (b) of Schedule
E, and the Subscriber has concurrently executed and delivered to the
Corporation a certificate in the form attached as Appendix I to Schedule “E”
(the Subscriber having checked the applicable subparagraph(s)).


 


(l)                                     Alberta
or British Columbia Subscriber.  If the Subscriber is a resident of Alberta
or British Columbia, the Subscriber or the disclosed principal for which it is
acting, as the case may be, is an “accredited investor” as defined in
Multilateral Instrument 45-103, by virtue of the fact that the Subscriber or
such disclosed principal, as the case may be, falls within one or more of the
subparagraphs of the definition of “accredited investor” set out in Schedule
“F” hereto (the Subscriber having checked the applicable subparagraph(s)) or
the Subscriber otherwise falls within one or more of the subparagraphs of the
“Family, Friends and Business Associates Certificate” attached as Appendix I to
Schedule “F” (the Subscriber having checked the applicable subparagraph(s)).


 


2.                                       Reliance
Upon Representations, Warranties and Covenants. The Subscriber acknowledges that the representations and warranties
contained herein are made by the Subscriber with the intention that they may be
relied upon by the Corporation in determining the Subscriber’s eligibility to
purchase Convertible Notes under Applicable Securities Laws.  The Subscriber agrees that by accepting
delivery of the Convertible


 


C-2

















 


Notes
on the Closing Date, the Subscriber will be representing and warranting that
the foregoing representations and warranties are true and correct as at the
Closing Time with the same force and effect as if they had been made by the
Subscriber at the Closing Time and that they will survive the purchase by the
Subscriber of Convertible Notes and will continue in full force and effect
notwithstanding any subsequent disposition by the Subscriber of such
Convertible Notes.


 


3.                                       Personal
Information.  The Subscriber acknowledges
and consents to the fact that the Corporation and the Agent are collecting the
Subscriber’s personal information for the purpose of fulfilling this
subscription agreement.  The subscriber
further acknowledges and consents to the fact that the Corporation may be
required by Applicable Securities Laws to provide the applicable regulatory
authorities with any personal information provided by the Subscriber in
accordance with and for the purposes required under Applicable Securities Laws.


 


C-3

















 


SCHEDULE “D”


 


THE TORONTO STOCK EXCHANGE


 


PRIVATE PLACEMENT QUESTIONNAIRE AND
UNDERTAKING


 


QUESTIONNAIRE


 


1.                                       DESCRIPTION OF TRANSACTION


 


(a)                                  Name
of Issuer of the Securities:


 


ADB Systems
International Ltd. (the “Issuer”)


 


(b)                                 Number
and Class of Securities to be Purchased:


 


$
                         
principal amount of convertible Notes of the Issuer (“Notes”).  The Notes are convertible, at the option of
the holder, into units of securities of the Issuer, (“Units”)
at conversion price of $0.31 (the “Conversion Price”). Each Unit
will be comprised of one common share in the capital of the Corporation (a “Common Share”)
and one-half of one Common Share purchase warrant (a “Warrant”).  Each whole Warrant will entitle the holder
to acquire one Common Share at an exercise price of $0.50 per share, and will
be exercisable at any time prior to the fourth anniversary of the Closing
Date.  In the event that at any time
from and after the first anniversary of the Closing Date the volume weighted
average trading price of the Common Shares through its principal trading market
for a 20 consecutive trading day period is $0.70 or more, all then outstanding
Convertible Notes, including any accrued interest thereon, will be
automatically converted into Units at the Conversion Price.


 


(c)                                  Purchase
Price: The Notes are being issued at par.


 


2.                                       DETAILS OF PURCHASER


 


(a)                                  Name
of Purchaser:


 


(b)                                 Address:



 


(c)                                  Names
and addresses of persons having a greater than 10% beneficial interest in the
purchaser:


 


 


 


3.                                       RELATIONSHIP TO ISSUER


 


(a)                                  Is
the purchaser (or any person named in response to 2(c) above) an insider of the
Issuer for the purposes of the Securities
Act (Ontario) (before giving effect to this private placement)? If so,
state the capacity in which the purchaser (or person named in response to 2(c))
qualifies as an insider.


 


 

















 


(b)                                 If
the answer to (a) is “no”, are the purchaser and the Issuer controlled by the
same person or company? If so give details


 


 


 


4.                                       DEALINGS OF PURCHASER IN SECURITIES OF THE ISSUER


 


Give details
of all trading by the purchaser, as principal, in the securities of the Issuer
(other than debt securities which are not convertible into equity securities),
directly or indirectly, within the 60 days preceding the date hereof.


 


 


 


 


D-2

















 


UNDERTAKING


 


TO:                                    THE TORONTO STOCK EXCHANGE


 


The
undersigned has subscribed for and agreed to purchase, as principal, the
securities described in Item 1 of this Private Placement Questionnaire and
Undertaking.


 


The
undersigned undertakes not to sell or otherwise dispose of any of the said
securities so purchased or any securities derived therefrom for a period of
four months from the date of the closing of the transaction herein or for such
period as is prescribed by applicable securities legislation, whichever is
longer, without the prior consent of the Toronto Stock Exchange and any other
regulatory body having jurisdiction.


 


DATED at
                                
this                
day of
                                
, 2004.


 


	
   

  	
   

  
	
   

  	
  (Name of
  Purchaser – please print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Authorized
  Signature)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Official Capacity
  – please print)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (please
  print here name of individual whose signature appears above, if different
  from name of purchaser printed above)

  



 

















 


SCHEDULE “E”


 


CERTIFICATES


 


ONTARIO RESIDENTS ONLY


 


Complete both of the two following certificates:


 


ONTARIO RESIDENT EXEMPTION CERTIFICATE


 


The Subscriber
(on its own behalf and, if applicable, on behalf of each person on whose behalf
the Subscriber is acting hereunder) represents, warrants and covenants to the
Corporation and acknowledges that the Corporation, and its counsel, are relying
thereon that: [Initial
or place a checkmark in the box to the left of each applicable item; choose
only one of item (a) or (b) below and choose only one sub item in (a) or (b)]:


 


	
  o

  	
  (a)

  	
  the
  Subscriber is resident in Ontario and falls within one or more of the
  categories described in the sub-paragraphs of the definition of “accredited
  investor” as such term is defined in Ontario Securities Commission Rule
  45-501 (“Rule 45-501”)
  and has completed the Ontario Accredited Investor Certificate attached hereto
  as Appendix I, and:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (i)

  	
  if
  purchasing the securities as principal, the Subscriber is an “accredited
  investor” (as such term is defined in Rule 45-501), is purchasing the
  securities as principal for its own account and not for the benefit of any
  other person, it is purchasing for investment only and not with a view to
  resale or distribution and no other person, corporation, firm or other
  organization has a beneficial interest in the said securities being purchased;
  or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (ii)

  	
  if
  purchasing the securities as agent for a principal disclosed on the cover
  page of this subscription agreement, the Subscriber is an agent or trustee of
  such disclosed principal and such disclosed principal for whom the Subscriber
  is acting is an “accredited investor”, is purchasing the securities as
  principal for its own account and not for the benefit of any other person,
  and is purchasing for investment only and not with a view to resale or
  distribution and no other person, corporation, firm or other organization has
  a beneficial interest in the said securities being purchased; OR

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  (b)

  	
  the
  Subscriber is resident in Ontario and is purchasing the securities for a
  principal or principals which is or are undisclosed or identified by account
  number only and the Subscriber is:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (i)

  	
  a portfolio
  adviser (as such term is defined in Rule 45-501) and is purchasing the
  securities for one or more managed accounts (as defined in Rule 45-501); or

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  (ii)

  	
  a trust
  corporation registered under the Loan
  and Trust Corporations Act (Ontario) or under the Trust and Loan Companies Act
  (Canada) or under comparable legislation in any jurisdiction and is
  purchasing the securities for an account that is fully managed by such trust
  company.

  
					



 

















 


APPENDIX I

ONTARIO ACCREDITED INVESTOR CERTIFICATE


 


The Subscriber
hereby represents, warrants and certifies to Corporation that the Subscriber
(or its disclosed principal) is an “accredited investor” as defined in Rule
45-501 by virtue of being: [check appropriate boxes]


 


Accredited
Investors


 


	
  o

  	
  (a)

  	
  a bank
  listed in Schedule I or II of the Bank
  Act (Canada), or an authorized foreign bank listed in Schedule III
  of the Bank Act (Canada);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (b)

  	
  the Business
  Development Bank incorporated under the Business Development Bank Act (Canada);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (c)

  	
  a loan
  corporation or trust corporation registered under the Loan and Trust Corporations Act
  (Ontario) or under the Trust and
  Loan Corporations Act (Canada), or under comparable legislation in
  any other jurisdiction;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (d)

  	
  a
  co-operative credit society, credit union central, federation of caisses
  populaires, credit union or league, or regional caisse populaire, or an
  association under the Cooperative
  Credit Associations Act (Canada), in each case, located in Canada;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (e)

  	
  a company
  licensed to do business as an insurance company in any jurisdiction of
  Canada;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (f)

  	
  a subsidiary
  of any company referred to in paragraph (a), (b), (c), (d) or (e), where the
  company owns all of the voting shares of the subsidiary;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (g)

  	
  a person or
  company registered under the Securities
  Act (Ontario) or securities legislation in another jurisdiction of
  Canada as an adviser or dealer, other than a limited market dealer;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (h)

  	
  the
  government of Canada or of any jurisdiction, or any crown corporation,
  instrumentality or agency of a Canadian federal, provincial or territorial
  government;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (i)

  	
  any Canadian
  municipality or any Canadian provincial or territorial capital city;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (j)

  	
  any
  national, federal, state, provincial, territorial or municipal government of
  or in any foreign jurisdiction, or any instrumentality or agency thereof;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (k)

  	
  a pension
  fund that is regulated by either the Office of the Superintendent of
  Financial Institutions (Canada) or a provincial pension commission or similar
  regulatory authority;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (l)

  	
  a registered
  charity under the Income Tax Act
  (Canada);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (m)

  	
  an
  individual who beneficially owns, or who together with a spouse beneficially
  own, financial assets having an aggregate realizable value that, before taxes
  but net of any related liabilities, exceeds $1,000,000;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (n)

  	
  an
  individual whose net income before taxes exceeded $200,000 in each of the two
  most recent years or whose net income before taxes combined with that of a
  spouse exceeded $300,000 in each of those years and who, in either case, has
  a reasonable expectation of exceeding the same net income level in the
  current year;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (o)

  	
  an
  individual who has been granted registration under the Securities Act (Ontario) or
  securities legislation in another jurisdiction of Canada as a representative
  of a person or company referred to in paragraph (g), whether or not the
  individual’s registration is still in effect;

  



 


E-2

















 


	
  o

  	
  (p)

  	
  a promoter
  of the Corporation or an affiliated entity of a promoter of the Corporation;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (q)

  	
  a spouse,
  parent, brother, sister, grandparent or child of an officer, director or
  promoter of the Corporation;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (r)

  	
  a person or company
  that, in relation to the Corporation, is an affiliated entity or a person or
  company referred to in clause (c) of the definition of distribution in
  subsection 1(1) of the Securities
  Act (Ontario);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (s)

  	
  a company,
  limited partnership, limited liability partnership, trust or estate, other
  than a mutual fund or non-redeemable investment fund, that had net assets of
  at least $5,000,000 as reflected in its most recently prepared financial
  statements;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (t)

  	
  a person or
  company that is recognized by the Ontario Securities Commission as an
  accredited investor, pursuant to a discretionary order of the Ontario
  Securities Commission;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (u)

  	
  a mutual
  fund or non-redeemable investment fund that, in Ontario, distributes its
  securities only to persons or companies that are accredited investors;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (v)

  	
  a mutual
  fund or non-redeemable investment fund that, in Ontario, distributes its
  securities under a prospectus for which a receipt has been granted by the
  Director as defined in the Securities
  Act (Ontario) or, if it has ceased distribution of its securities,
  has previously distributed securities in this manner;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (w)

  	
  a fully
  managed account if it is acquiring a security that is not a security of a
  mutual fund or non-redeemable investment fund;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (x)

  	
  an account
  that is fully managed by a trust corporation registered under the Loan and Trust Corporations Act
  (Ontario) or under the Loan and
  Trust Companies Act (Canada) or under comparable legislation in any
  other jurisdiction;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (y)

  	
  an entity
  organized outside of Canada that is analogous to any of the entities referred
  to in paragraphs (a) through (g) and paragraph (k) in form and function; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (z)

  	
  a person or
  company in respect of which all of the owners of interests, direct or indirect,
  legal or beneficial, are persons or companies that are accredited investors.

  



 


For the
purposes hereof, the following terms shall have the following meanings:


 


“company”
means any corporation, incorporated association, incorporated syndicate or
other incorporated organization.


 


“control person”
means any person, company or combination of persons or companies holding a
sufficient number of any securities of the Corporation to affect materially the
control of the Corporation, but any holding of any persons, company or
combination of persons or companies holding more than 20 per cent of the
outstanding voting securities of the Corporation, in the absence of evidence to
the contrary, shall be deemed to affect materially the control of the
Corporation.


 


“director”
where used in relation to a person, includes a person acting in a capacity
similar to that of a director of a company.


 


“entity”
means a company, syndicate, partnership, trust or unincorporated organization.


 


“financial assets”
means cash, securities, or any contract of insurance or deposit or evidence
thereof that is not a security for the purposes of the Securities Act (Ontario).


 


E-3

















 


“fully managed
account” means an investment portfolio account of a client
established in writing with a portfolio adviser who makes investment decisions
for the account and has full discretion to trade in securities of the account
without requiring the client’s express consent to a transaction.


 


“individual”
means a natural person, but does not include a partnership, unincorporated
association, unincorporated organization, trust or a natural person in his or
her capacity as trustee, executor, administrator or other legal personal
representative.


 


“mutual fund”
includes an issuer whose primary purpose is to invest money provided by its
security holders and whose securities entitle the holder to receive on demand,
or within a specified period after demand, an amount computed by reference to
the value of a proportionate interest in the whole or in a part of the net
assets, including a separate fund or trust account, of the issuer of the
securities.


 


“non-redeemable
investment fund” means an issuer


 


(a)                                  whose
primary purpose is to invest money provided by its securityholders;


 


(b)                                 that
does not invest for the purpose of exercising effective control, seeking to
exercise effective control, or being actively involved in the management of the
issuers in which it invests, other than other mutual funds or non-redeemable
investment funds; and


 


(c)                                  is
not a mutual fund.


 


“officer”
means the chair, any vice-chair of the board of directors, the president, any
vice-president, the secretary, the assistant secretary, the treasurer, the
assistant treasurer, and the general manager of a company, and any other person
designated an officer or a company by by-law or similar authority, or any
individual acting in a similar capacity on behalf of the Corporation.


 


“person”
means an individual, partnership, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, trustee, executor, administrator, or other
legal representative.


 


“portfolio adviser”
means (a) a portfolio manager; or (b) a broker or investment dealer exempted
from registration as an adviser under subsection 148(1) of the Regulation to
the Securities Act (Ontario) if that broker or investment dealer is not exempt
from the by-laws or regulations of the Toronto Stock Exchange or the Investment
Dealers’ Association of Canada referred to in that subsection.


 


“promoter”
means (a) a person or company who, acting alone or in conjunction with one or
more other persons, companies or a combination thereof, directly or indirectly,
has taken the initiative in founding, organizing or substantially reorganizing
the business of the Corporation, or (b) a person or company who, in connection
with the founding, organizing or substantial reorganizing of the business of
the Corporation, directly or indirectly, received in consideration of services
or property, or both services and property, 10 per cent or more of any class of
securities of the Corporation or 10 percent or more of the proceeds from the
sale of any class of securities of a particular issue, but a person or company
who receives such securities or proceeds either solely as underwriting
commissions or solely in consideration of property shall not be deemed a
promoter within the meaning of this definition if such person or company does
not otherwise take part in founding, organizing, or substantially reorganizing
the business.


 


“related liabilities”
means liabilities incurred or assumed for the purpose of financing the
acquisition or ownership of financial assets and liabilities that are secured
by financial assets.


 


“spouse”,
in relation to an individual, means another individual to whom that individual
is married, or another individual of the opposite sex or the same sex with whom
that individual is living in a conjugal relationship outside marriage.


 


E-4

















 


For the
purposes of the foregoing:


 


(a)                                  a person or company is considered to be an affiliated entity of
another person or company if one is a subsidiary entity of the other, or if
both are subsidiary entities of the same person or company, or if each of them
is controlled by the same person or company.


 


(b)                                 a person or company is considered to be controlled by a person or
company if


 


(i)                                     in the case of a person or company,


 


(A)                              voting securities of the first mentioned person or company carrying
more than 50 percent of the votes for the election of directors are held,
otherwise than by way of security only, by or for the benefit of the other
person or company, and


 


(B)                                the votes carried by the securities are entitled, if exercised, to
elect a majority of the directors of the first-mentioned person or company;


 


(ii)                                  in the case of a partnership that does not have directors, other
than a limited partnership, the second-mentioned person or company holds more
than 50 percent of the interests in the partnership; or


 


(iii)                               in the case of a limited partnership, the general partner is the
second-mentioned person or company; and


 


(c)                                  a person or company is considered to be a subsidiary entity of
another person or company if


 


(i)                                     it is controlled by,


 


(A)                              that other, or


 


(B)                                that other and one or more persons or companies each of which is
controlled by that other, or


 


(C)                                two or more persons or companies, each of which is controlled by
that other; or


 


(d)                                 it is a subsidiary entity of a person or company that is the other’s
subsidiary entity.


 


The foregoing
representations contained in this certificate are true and accurate as of the
date hereof and will be true and accurate as of the Closing Date. If any such
representations shall not be true and accurate prior to the Closing Date, the Subscriber
shall give immediate notice to the Corporation.


 


E-5

















 


EXECUTED by the Subscriber at
                                      
this
              
day of
                               
, 2004.


 


	
  If a corporation, partnership or other
  entity:

  	
   

  	
  If an individual:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print Name of Subscriber)

  	
   

  	
  (Print Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature of Authorized Signatory)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name and Position of Authorized Signatory)

  	
   

  	
  (Jurisdiction of Residence)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Jurisdiction of Residence)

  	
   

  	
  (Print Name of Witness)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Witness)

  



 


E-6

















 


SCHEDULE “F”


 


CERTIFICATE


 


ALBERTA AND BRITISH COLUMBIA
RESIDENTS ONLY


 


Complete one of the two following certificates
(as applicable):


 


ACCREDITED INVESTOR CERTIFICATE


 


If the
Subscriber is a resident of, or the purchase and sale of securities to the
Subscriber is otherwise subject to the securities legislation of, Alberta or
British Columbia, the Subscriber hereby represents, warrants and certifies to
the Corporation that the Subscriber (and, if applicable, any disclosed
principal for whom it is acting) is an “accredited investor” as defined in
Section 1.1 of Multilateral Instrument 45-103 (Capital Raising Exemptions), by
virtue of being:


 


[Check appropriate item]


 


	
  o

  	
  (a)

  	
  a Canadian
  financial institution, or an authorized foreign bank listed in Schedule III
  of the Bank Act (Canada);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (b)

  	
  the Business
  Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (c)

  	
  an
  association under the Cooperative
  Credit Associations Act (Canada) located in Canada or a central
  cooperative credit society for which an order has been made under subsection
  473(1) of that Act;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (d)

  	
  a subsidiary
  of any person or company referred to in paragraphs (a) to (c), if the person
  or company owns all of the voting securities of the subsidiary, except the
  voting securities required by law to be owned by directors of that
  subsidiary;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (e)

  	
  a person or
  company registered under the securities legislation of a jurisdiction of
  Canada, as an adviser or dealer, other than a limited market dealer
  registered under the Securities Act
  (Ontario) or the Securities Act
  (Newfoundland and Labrador);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (f)

  	
  an
  individual registered or formerly registered under the securities legislation
  of a jurisdiction of Canada, as a representative of a person or company
  referred to in paragraph (e);

  
	
   

  	
   

  	
   

  
	
  o

  	
  (g)

  	
  the
  government of Canada or a jurisdiction of Canada, or any crown corporation,
  agency or wholly owned entity of the government of Canada or a jurisdiction
  of Canada;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (h)

  	
  a
  municipality, public board or commission in Canada;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (i)

  	
  any
  national, federal, state, provincial, territorial or municipal government of
  or in any foreign jurisdiction, or any agency of that government;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (j)

  	
  a pension
  fund that is regulated by either the Office of the Superintendent of
  Financial Institutions (Canada) or a pension commission or similar regulatory
  authority of a jurisdiction of Canada;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (k)

  	
  an
  individual who, either alone or with a spouse, beneficially owns, directly or
  indirectly, financial assets having an aggregate realizable value that before
  taxes, but net of any related liabilities, exceeds $1,000,000;

  



 

















 


	
  o

  	
  (l)

  	
  an
  individual whose net income before taxes exceeded $200,000 in each of the two
  most recent years or whose net income before taxes combined with that of a
  spouse exceeded $300,000 in each of the two most recent years and who, in
  either case, reasonably expects to exceed that net income level in the
  current year;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (m)

  	
  a person or
  company, other than a mutual fund or non-redeemable investment fund, that,
  either alone or with a spouse, has net assets of at least $5,000,000, and
  unless the person or company is an individual, that amount is shown on its
  most recently prepared financial statements;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (n)

  	
  a mutual
  fund or non-redeemable investment fund that, in the local jurisdiction,
  distributes its securities only to persons or companies that are accredited
  investors;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (o)

  	
  a mutual
  fund or non-redeemable investment fund that, in the local jurisdiction, is
  distributing or has distributed its securities under one or more prospectuses
  for which the regulator has issued receipts;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (p)

  	
  a trust
  company or trust corporation registered or authorized to carry on business
  under the Trust and Loan Companies
  Act (Canada) or under comparable legislation in a jurisdiction of
  Canada or a foreign jurisdiction, trading as a trustee or agent on behalf of
  a fully managed account;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (q)

  	
  a person or
  company trading as agent on behalf of a fully managed account if that person
  or company is registered or authorized to carry on business under the
  securities legislation of a jurisdiction of Canada or a foreign jurisdiction
  as a portfolio manager or under an equivalent category of adviser or is
  exempt from registration as a portfolio manager or the equivalent category or
  adviser;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (r)

  	
  a registered
  charity under the Income Tax Act
  (Canada) that, in regard to the trade, has obtained advice from an
  eligibility adviser or other adviser registered to provide advice on the
  securities being traded;

  
	
   

  	
   

  	
   

  
	
  o

  	
  (s)

  	
  an entity
  organized in a foreign jurisdiction that is analogous to any of the entities referred
  to in paragraphs (a) through (e) and paragraph (j) in form and function; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (t)

  	
  a person or
  company in respect of which all of the owners of interests, direct or
  indirect, legal or beneficial, except the voting securities required by law
  to be owned by directors, are persons or companies that are accredited
  investors.

  



 


As used in
this certificate, the following terms have the following meanings:


 


“eligibility
adviser” means an investment dealer equivalent category of
registration, registered under the securities legislation of the jurisdiction
of a purchaser and authorized to give advice with respect to the type of
security being distributed;


 


“financial assets”
means cash and securities;


 


“fully
managed account”  means an
account for which a person or company makes investment decisions if that person
or company has full discretion to trade in securities for the account without
requiring the client’s express consent to a transaction;


 


“non-redeemable
investment fund” means an issuer


 


(a) where
contributions of security holders are pooled for investment,


 


(b) where
security holders do not have day-to-day control over the management and
investment decisions of the issuer, whether or not they have the right to be
consulted or to give directions, and


 


F-2

















 


(c) whose
securities do not entitle the security holder to receive on demand, or within a
specified period after demand, an amount computed by reference to the value of
a proportionate interest in the whole or in part of the net assets of the
issuer; and


 


“related liabilities”
means: (a) liabilities incurred or assumed for the purpose of financing the
acquisition or ownership of financial assets, or (b) liabilities that are
secured by financial assets.


 


F-3

















 


APPENDIX I


 


FAMILY, FRIENDS AND BUSINESS ASSOCIATES
CERTIFICATE


 


If the
Subscriber is a resident of, or the purchase and sale of securities to the
Subscriber is otherwise subject to the securities legislation of Alberta or
British Columbia, the Subscriber hereby represents, warrants and certifies to
the Corporation that the Subscriber (and, if applicable, any disclosed
principal for whom it is acting) is either:


 


[Check appropriate item]


 


	
  o

  	
  (a)

  	
  a director,
  senior officer or control person of the Corporation, or of an affiliate of
  the Corporation; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (b)

  	
  a spouse,
  parent, grandparent, brother, sister or child of a director, senior officer
  or control person of the Corporation, or of an affiliate of the Corporation;
  or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (c)

  	
  a parent,
  grandparent, brother, sister or child of a director, senior officer or
  control person of the Corporation, or of an affiliate of the Corporation; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (d)

  	
  a close
  business associate of a director, senior officer or control person of the
  Corporation, or of an affiliate of the Corporation; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (e)

  	
  a close
  personal friend of a director, senior officer or control person of the
  Corporation, or of an affiliate of the Corporation; or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (f)

  	
  a founder of
  the Corporation or a spouse, parent, grandparent, brother, sister, child,
  close personal friend or close business associate of a founder of the
  Corporation; or 

  
	
   

  	
   

  	
   

  
	
  o

  	
  (g)

  	
  a parent,
  grandparent, brother, sister or child of the spouse of a founder of the Corporation;
  or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (h)

  	
  a person or
  company of which a majority of the voting securities are beneficially owned by, as a majority of
  the directors are, persons or companies described in sections (a) to (g); or

  
	
   

  	
   

  	
   

  
	
  o

  	
  (i)

  	
  a trust or
  estate of which all of the beneficiaries or a majority of the trustees are
  persons or companies described in paragraphs (a) to (g).

  



 


As used in
this certificate, the following terms have the following meanings:


 


A “close personal
friend” is an individual who has known a director, senior officer or
control person of the Corporation for a sufficient period of time to be in a
position to assess the capabilities and trustworthiness of the director, senior
officer or control person.  An individual
is not a close personal friend solely because the individual is a member of the
same organization, association or religious group.  An individual is not a close personal friend solely because the
individual is a client, customer or former client or customer (e.g. an
individual is not a close personal friend of a registrant or former registrant
simply because the individual is a client or former client of that registrant
or former registrant).  The relationship
between the subscriber and the director, senior officer or control person of
the Corporation must be direct (e.g. the exemption is not available for a close
personal friend of a close personal friend of the director, senior officer or
control person of the Corporation); and


 


A “close business
associate” is an individual who has had sufficient prior business
dealings with a director, senior officer or control person of the Corporation
to be in a position to assess the capabilities and trustworthiness of the
director, senior officer or control person. 
A casual business associate or a person introduced or solicited for the
purpose of purchasing securities is not a close business associate.  An individual is not a close business
associate solely because the individual is a client, customer or former client
or customer (e.g. an individual is not a close business associate of a
registrant or former registrant simply because the individual is a client or
former client of that registrant or former registrant).  The relationship between the subscriber and
the director, senior officer or control


 


F-4

















 


person of the
Corporation must be direct (e.g. the exemption is not available for a close
business associate of a close business associate of the director, senior
officer or control person of the Corporation ).


 


A “founder”,
in respect of the Corporation, means a person or company who,


 


(a) acting
alone, in conjunction or in concert with one or more other persons or
companies, directly or indirectly, takes the initiative in founding, organizing
or substaintially reorganizing the business of the Corporation, and


 


(b) at the
time of the proposed trade, is actively involved in the business of the
Corporation.


 


F-5

















 


The foregoing
representations contained in this certificate are true and accurate as of the
date hereof and will be true and accurate as of the Closing Date. If any such
representations shall not be true and accurate prior to the Closing Date, the
Subscriber shall give immediate notice to the Corporation.


 


EXECUTED by the Subscriber at
                                     
this                   
day of
                                 
, 2004.


 


	
  If a corporation, partnership or other
  entity:

  	
   

  	
  If an individual:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print Name of Subscriber)

  	
   

  	
  (Print Name)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature of Authorized Signatory)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name and Position of Authorized Signatory)

  	
   

  	
  (Jurisdiction of Residence)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Jurisdiction of Residence)

  	
   

  	
  (Print Name of Witness)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Witness)

  



 


F-6

















 


SCHEDULE “G”


 


OFFSHORE SUBSCRIBER CERTIFICATE


 


NON-CANADIAN SUBSCRIBERS


 


(OTHER THAN U.S SUBSCRIBERS)


 


We, on our own
behalf and (if applicable) on behalf of others for whom we are contracting
hereunder, represent, warrant, covenant and certify to and with the Corporation
and the Agent (and acknowledge that the Corporation and the Agent are relying
thereon) that we are, and (if applicable) any beneficial subscriber for whom we
are contracting hereunder is, a resident of, or otherwise subject to, the
securities legislation of a jurisdiction other than Canada or the United States, and:


 


(a)                                  we
are, and (if applicable) any other subscriber for whom we are contracting
hereunder, is:


 


(i)                                     subscriber
that is recognized by the securities regulatory authority in the jurisdiction
in which we are, and (if applicable) any other subscriber for whom we are
contracting hereunder is resident or otherwise subject to the securities laws
of such jurisdiction, as an exempt subscriber and are purchasing the
Convertible Notes as principal for our, or (if applicable) each such other
subscriber’s, own account, and not for the benefit of any other person, for
investment only and not with a view to resale or distribution; or


 


(ii)                                  a
subscriber which is purchasing Convertible Notes pursuant to an exemption from
any prospectus or securities registration requirements (particulars of which
are enclosed herewith) available to the Corporation, the Agent, us and any such
other subscriber under Applicable Securities Laws of our jurisdiction of
residence or to which we and any such other subscriber are otherwise subject
to, and we and any such other subscriber shall deliver to the Corporation and
the Agent such further particulars of the exemption and our qualification
thereunder as the Corporation or the Agent may reasonably request;


 


(b)                                 the
purchase of Convertible Notes by us, and (if applicable) each such other
subscriber, does not contravene any of the Applicable Securities Laws in such
jurisdiction and does not trigger: (i) any obligation to prepare and file a
prospectus, an offering memorandum or similar document, or any other ongoing
reporting requirements with respect to such purchase or otherwise; or (ii) any
registration or other obligation on the part of the Corporation or the Agent;
and


 


we, and (if
applicable) any other subscriber for whom we are contracting hereunder will not
sell or otherwise dispose of any Convertible Notes, Underlying Securities or
Warrant Shares, except in accordance with applicable Canadian securities laws
and in accordance with the rules and regulations of the TSX, and if we, or (if
applicable) such beneficial subscriber sell or otherwise dispose of any
Convertible Notes, Underlying Securities or Warrant Shares to a person other
than a resident of Canada, we, and (if applicable) such beneficial subscriber,
will obtain from such subscriber representations, warranties and covenants in
the same form as provided in this Schedule “E” or “F” and shall comply with
such other requirements as the Corporation may reasonably require.


 


Dated at
                                    
this                 
day of
                                     
, 2004.


 


	
   

  	
   

  
	
   

  	
  (Signature of Subscriber)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Print Name)