Document:

Exhibit 10.1

 

Exhibit 10.1

[IFF LETTERHEAD]

June 27, 2006

Robert M. Amen

451 Michigan Road

New Canaan, CT  06840

 

	
             
 	
            Re:
 	
            Employment Terms
 

Dear Rob:

On behalf of the Board of Directors (the “Board”) of International Flavors & Fragrances Inc. (the “Company”), I am pleased to offer you employment with the Company on the following terms:

1.            COMMENCEMENT DATE; TERM:  Your employment with the Company will commence on July 1, 2006 (your “Commencement Date”). The term of this letter agreement will continue for four years and end on the fourth anniversary of the Commencement Date; provided, however, that either party may terminate this letter agreement on or after the fourth anniversary of the Commencement Date by giving the other party one-year’s written notice of such termination. If the term of this letter agreement expires, your employment with the Company will continue on an “at will” basis.

2.            POSITION; PRINCIPAL PLACE OF EMPLOYMENT: You will be employed as the Chief Executive Officer of the Company (“CEO”). Your principal place of employment will be at the Company’s headquarters in New York, New York.

3.            BOARD MEMBERSHIP; CHAIRMANSHIP:  The Board shall take such action as may be necessary to appoint or elect you as a member of the Board and as Chairman of the Board as of your Commencement Date. Thereafter, during your employment with the Company, the Board shall nominate you for re-election as a member of the Board at the expiration of your then-current term. You agree to serve without additional compensation as an officer and director of any of the Company’s subsidiaries. You may, with the Board’s approval, serve on outside boards of directors so long as your duties as a board member do not interfere with your performance as Chairman and CEO.

4.            BASE SALARY:  You will be paid a base salary (the “Base Salary”) at an annual rate of not less than one million dollars ($1,000,000), payable in accordance with the regular payroll practices of the Company. Your Base Salary shall be reviewed annually by the Board (or a committee thereof) beginning after the first anniversary of your Commencement Date and may be increased, but not decreased, from time to time by the Board.

 

 

 

 

5.            ANNUAL BONUS:  You will be eligible to participate in the Company’s Annual Incentive Plan (the “AIP”) at a level commensurate with your position. You will have the opportunity to earn a target annual AIP bonus measured against objective criteria to be determined by the Board (or a committee thereof) of one hundred twenty percent (120%) of Base Salary (“Target AIP Bonus”) and a maximum annual AIP bonus of one hundred eighty percent (180%) of Base Salary. Your 2006 annual AIP bonus shall be not less than one-half of your Target AIP Bonus.

6.            LONG TERM INCENTIVE:  You will participate in the Company’s current Long-Term Incentive (LTI) Plan Cycles as follows:

(a)          2004 – 2006 Cycle:  You will participate on a pro-rata basis assuming that your LTI target was $2,000,000. You will be guaranteed a payment equal to not less than your pro-rata LTI target, based on the number of days you are employed during the cycle divided by 1096.

(b)          2005 – 2007 Cycle:  You will participate on a pro-rata basis assuming that your LTI target was $2,000,000. Your LTI payout will be based on Company performance, with no guaranteed minimum. Your pro-rated award will be based on the number of days you are employed during the cycle divided by 1095.

(c)          2006 – 2008 Cycle:  You will receive a full (i.e., not pro-rated) award with an LTI target of $2,000,000. Your LTI payout will be based on Company performance, with no guaranteed minimum.

7.            INITIAL EQUITY CHOICE AWARD:  You will receive an initial Equity Choice Award with a face value of $1,500,000. You may elect to receive such Award in the form of stock settled stock appreciation rights (“SARs”), purchased restricted stock and/or RSUs, with the value of the equity awarded based on the form of equity elected, all in accordance with the Equity Choice Program, and such award shall be granted at the regularly scheduled July 2006 Board meeting (or at such future meeting as shall be agreed between the parties). The Award will cliff vest on the third anniversary of the grant date.

8.            SIGN ON EQUITY AWARD:  On your Commencement Date, you shall be granted 150,000 stock settled SARs, with each SAR having a 7-year term and a strike price equal to the fair market value of the Company’s common stock on the grant date. SARs will cliff vest on the third anniversary of the Commencement Date.

9.            FUTURE EQUITY GRANTS:  Beginning in 2007, you will participate in all Company equity and LTI programs at levels commensurate with your position.

10.          EMPLOYEE BENEFITS; PERQUISITES; VACATION: You will be entitled to participate in all employee and executive benefit plans, programs and arrangements that the Company has adopted or may adopt, maintain or contribute to for the benefit of its senior executives at a level commensurate with your position, subject to satisfying the applicable eligibility requirements. You will be entitled to annual paid vacation in accordance with the Company’s policy applicable to senior executives, but in no event less than four (4) weeks per calendar year (as prorated for partial years). The Company shall provide to you all 

 

 

perquisites which other senior executives of the Company are generally entitled to receive in accordance with Company policy as set by the Board from time to time, including, but not limited to, dues for a luncheon club in Manhattan, a Company-owned automobile, access to a Company provided car and driver, and a $25,000 aggregate allowance per calendar year for financial planning, tax preparation and estate planning services.

11.          TERMINATION:  Your employment may be terminated by either party at any time, and shall terminate on the first of the following to occur:  your death, Disability, termination by the Company for Cause, termination by the Company without Cause, termination by you for Good Reason or termination by you without Good Reason (Disability, Cause and Good Reason are each defined on Attachment A).

(a)          DEATH OR DISABILITY. In the event that your employment terminates on account of your death or Disability, the Company shall pay or provide you (or your estate) (i) any unpaid Base Salary through the date of termination and any accrued but unused vacation in accordance with Company policy; (ii) any unpaid bonus earned with respect to any fiscal year ending on or preceding the date of termination; (iii) reimbursement for any unreimbursed expenses incurred in accordance with Company policy through the date of termination; and (iv) all other payments, benefits or perquisites to which you may be entitled under the terms of any applicable compensation arrangement or benefit, equity or perquisite plan or program or grant or this Agreement
(collectively, “Accrued Amounts”). You (or  your estate) will also receive a pro rata AIP bonus for the year of termination (based on actual performance and payable when bonuses are paid to other senior executives). Your outstanding equity and LTI awards will be treated in accordance with the plans under which they are granted.

(b)          TERMINATION FOR CAUSE OR WITHOUT GOOD REASON. If your employment should be terminated (i) by the Company for Cause, or (ii) by you without Good Reason, the Company will pay you only the Accrued Amounts (not including the unpaid bonus described in Section 11(a)(ii) above). Your outstanding equity and LTI awards will be treated in accordance with the plans under which they are granted.

(c)          TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If your employment is terminated by the Company without Cause (other than a termination due to Disability or death) or by you for Good Reason, the Company shall pay or provide you with the Accrued Amounts and severance benefits under the Company’s Executive Separation Policy. The severance benefits described in the preceding sentence shall in no event be less than (i) a pro rata AIP bonus for the year of termination (based on actual performance and payable when bonuses are paid to other senior executives); (ii) an amount equal to the product of (A) the sum of (1) your then Base Salary and (2) your average AIP bonus (Target AIP Bonus if your termination date occurs before the 2006 AIP bonus
is paid) multiplied by (B) two, payable in substantially equal installments in accordance with the Company’s regular payroll cycle over a period of twenty-four (24) months from your date of termination (with such payments commencing on the earliest payroll date that does not result in adverse tax consequences you under Section 409A of the Internal Revenue Code, and with the initial payment, including any payments that have been delayed because of Code Section 409A); and (iii) subject to your continued co-payment of premiums, continued participation for two years in all welfare benefit plans 

 

 

which cover you (and eligible dependents) upon the same terms and conditions
(except for the requirements of your continued employment) in effect for active employees of the Company; provided that if such benefits are not available to former employees of the Company you will receive the value thereof. In the event you obtain other employment that offers comparable benefits as to any particular welfare plan, the coverage by the Company for such welfare plan under this subsection shall be reduced by such comparable subsequent employer benefits. The continuation of health benefits under this subsection shall reduce and count against your rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). In addition, equity and LTI awards will be treated in accordance with the Company’s Executive Separation Policy.

12.          CONDITIONS:  Any payments or benefits made or provided pursuant to Section 11 (other than Accrued Amounts) are subject to your:

	
             
 	
            (a)
 	
            compliance with the restrictive covenant provisions of Section 14 hereof;
 

(b)          delivery to the Company of an executed General Release (the “General Release”), which shall be substantially in the form attached hereto as Attachment B (with such changes therein or additions thereto as needed under then applicable law to give effect to its intent and purpose) within twenty-one (21) days of presentation thereof by the Company to you; and

(c)          delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans.

13.          CHANGE IN CONTROL:  You will receive Change in Control benefits under the Executive Separation Policy that are no less favorable than those provided to senior executives generally; provided that, in the event of a termination of your employment by the Company without Cause or by you for Good Reason in contemplation of or within two years after a Change in Control (as defined in Attachment A), the severance multiplier set forth in Section 11(c)(ii) above will be three rather than two, and the benefits continuation period set forth in Section 11(c)(iii) above will be three years rather than two years.

	
             
 	
            14.
 	
            RESTRICTIVE COVENANTS.
 

(a)          NON-COMPETITION. During the Non-Competition Period (defined below), you will not, acting alone or with others, directly or indirectly, either as employee, employer, consultant, advisor, or director, or as an owner, investor, partner, or shareholder unless your interest is insubstantial, engage in or become associated with a “Competitive Activity.”  For this purpose, (A) the “Non-Competition Period” means the period of time during which you are employed by the Company and the two-year period following your termination date; and (B) the term “Competitive Activity” means any business or other endeavor that engages in a line of business in any geographic location that is substantially the same as either (1) any line of
operating business which the Company or a subsidiary engages in, conducts, or to your knowledge, has definitive plans to engage in or conduct, or (2) any operating business that has been engaged in or conducted by the Company or a subsidiary and as to which, to your knowledge, the Company or subsidiary has covenanted in writing, in connection with the disposition of such business, not to compete therewith. The Compensation Committee of 

 

 

the Board (the “Committee”) shall, in the reasonable exercise of its discretion, determine which lines of business the Company and its subsidiaries conduct as of your termination date and which third parties may reasonably be deemed to be in competition with the Company and its subsidiaries. For purposes of this Section 14(a), your interest as a shareholder is insubstantial if it represents beneficial ownership of less than five (5%) percent of the outstanding stock, and your interest as an owner, investor, or partner is insubstantial if it represents ownership, as determined by the Committee in its discretion, of less than five (5%) percent of the outstanding equity of the entity.

(b)          NON-SOLICITATION. During the Non-Competition Period, you, acting alone or with others, directly or indirectly, shall not (A) induce any customer or supplier of the Company or a subsidiary or affiliate, or other company with which the Company or a subsidiary or affiliate has a business relationship, to curtail, cancel, not renew, or not continue his or her or its business with the Company or any subsidiary or affiliate; or (B) induce, or attempt to influence, any employee of or service provider to the Company or a subsidiary or affiliate to terminate such employment or service.

(c)          CONFIDENTIALITY. You shall not disclose, use, sell, or otherwise transfer any confidential or proprietary information of the Company or any subsidiary or affiliate, including but not limited to information regarding the Company’s current and potential customers, organization, employees, finances, and methods of operation and investments, so long as such information has not otherwise been disclosed to the public or is not otherwise in the public domain, except as required by law or pursuant to legal process.

(d)          COOPERATION. You shall provide reasonable cooperation with the Company or any subsidiary or affiliate by making yourself available (consistent with your reasonable commitments) to testify on behalf of the Company or such subsidiary or affiliate in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and otherwise to assist the Company or any subsidiary or affiliate in any such action, suit, or proceeding by providing information and meeting and consulting with members of management of, other representatives of, or counsel to, the Company or such subsidiary or affiliate, as reasonably requested. The Company shall reimburse you for any out-of-pocket expenses which you incur in connection with such cooperation; provided that if
such cooperation requires your time commitment of more than 3 days (8 hours per day) within a 30 days rolling period, the Company will pay you a per diem amount equal to the daily amount of your annual base salary.

(e)          NON-DISPARAGEMENT. Each of you and the Company agrees that at no time will either you or any officer, director, employee or other representative of the Company in any way denigrate, demean or otherwise say or do anything, whether in oral discussions or in writing, that would cause any third party, including but not limited to suppliers, customers and competitors of the Company, to lower its perception about the integrity, public or private image, professional competence, or quality of products or service, of the other or, in the case of the Company, of any officer, director, employee or other representative of the Company. 

(f)           EFFECT OF YOUR FAILURE TO COMPLY WITH OBLIGATIONS. The Company shall have no obligations to make payments or provide benefits to you under this Agreement if your employment terminates before a Change in Control and if you have failed or fail to comply with the obligations set forth in Sections 14(a) through 14(e) during the relevant time periods set forth therein, other than inadvertent and inconsequential events constituting non-compliance.

 

 

 

(g)          CLAWBACK PROVISION. If your employment terminates before a Change in Control, and if you have failed to comply with the obligations under Sections 14(a), 14(b), 14(c) or 14(d) (other than an inadvertent and inconsequential event constituting non-compliance) during your employment with the Company or the two-year period following your date of termination, all of the following forfeitures will result:

(i)           The unexercised portion of any option or SAR, whether or not vested, and any other award not then vested will be immediately forfeited and canceled.

(ii)          You will be obligated to repay to the Company, in cash, within ten (10) business days after demand is made therefor by the Company,

(A)         the total amount of any cash payments made to you under Section 11(c) or under the Executive Separation Policy other than Accrued Amounts;

(B)         other cash amounts paid to you under any AIP and LTI awards since the date two years prior to your date of termination; and

(C)         the Award Gain (as defined below) realized by you upon each exercise of an option or SAR or settlement of a restricted stock unit award (regardless of any elective deferral) since the date two years prior to your termination date. For purposes of this Section 14, the term “Award Gain” shall mean (1), in respect of a given option exercise, the product of (X) the fair market value per share of stock at the date of such exercise (without regard to any subsequent change in the market price of shares) minus the exercise price times (Y) the number of shares as to which the option was exercised at that date, and (2), in respect of any other settlement of an award granted to you, the fair market value of the cash or stock paid or payable to you (regardless of any
elective deferral) less any cash or the fair market value of any stock or property (excluding any payment of tax withholding) paid by you to the Company as a condition of or in connection with such settlement.

(h)          EQUITABLE RELIEF AND OTHER REMEDIES. You acknowledge and agree that the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section would be inadequate and, in recognition of this fact, the parties agree that, in the event of such a breach or threatened breach, in addition to any remedies at law, the other party, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

(i)           REFORMATION. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 14 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

 

 

(j)           SURVIVAL OF PROVISIONS. The obligations contained in this Section 14 shall survive the termination or expiration of your employment with the Company and shall be fully enforceable thereafter.

15.          INDEMNIFICATION; LIABILITY INSURANCE:  The Company agrees to indemnify you and hold you harmless to the fullest extent permitted by applicable law and under the by-laws of the Company against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses, and damages resulting from your good faith performance of your duties and obligations with the Company. The Company shall cover you under directors and officers liability insurance both during and, while potential liability exists, after the term of this Agreement in the same amount and to the same extent as the Company covers its other officers and directors.

16.          GOVERNING LAW:  The validity, construction and enforceability of this letter agreement shall be governed in all respects by the laws of the State of New York, without regard to its conflicts of laws rules.

17.          RESOLUTION OF DISPUTES:  Any disputes under or in connection with this letter agreement shall be resolved by arbitration, to be held in New York, New York in accordance with the rules and procedures of the American Arbitration Association then in effect. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction. The Company shall pay for the cost of the arbitrator. Otherwise, each party shall bear its own costs, including but not limited to attorneys’ fees, of the arbitration or of any litigation arising out of this letter agreement; provided that the Company shall pay your reasonable attorneys fees if you prevail on a material issue in dispute in the arbitration. Pending the resolution of any
arbitration or litigation, the Company shall continue payment of all amounts due you under this letter agreement and all benefits to which you are entitled at the time the dispute arises.

18.          CONTROLLING DOCUMENT:  If there is a conflict between any provision of this letter agreement and any provision of any other agreement, policy, plan or other document, the provision of this letter agreement will control.

19.          COUNTERPARTS:  This letter agreement may be executed in two counterparts, each of which shall be deemed to be an original and which together shall constitute one and the same instrument. Signatures delivered by facsimile (including scanned signatures delivered by e-mail) shall be considered for all purposes under this letter agreement to be original signatures.

 

 

 

 

On behalf of the Board, I am excited to offer you employment with the Company and look forward to a mutually rewarding relationship.

	
             
 	
            Very truly yours,
 
 /s/ Arthur Martinez      
 Arthur Martinez
 Chairman of the Board
 

	
            Agreed and Accepted
 
 
 /s/ Robert M. Amen                                          

Robert M. Amen

Dated: June 28, 2006
 	
             

 

 

 

 

ATTACHMENT A

DEFINITIONS

“Cause” shall mean 

(i)           you being indicted for or convicted of (or a pleading guilty or nolo contendere to) a felony or any crime involving moral turpitude, dishonesty, fraud, theft or financial impropriety; 

(ii)          your willful and continued failure to perform substantially your duties with the Company (other than any such failure resulting from your incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which you have not substantially performed your duties;

(iii)        your willful engagement in conduct which is not authorized by the Board or within the normal course of your business decisions and is known by you to be materially detrimental to the best interests of the Company or any of its subsidiaries, including any misconduct that results in material noncompliance with any financial reporting requirement under the Federal securities laws if such noncompliance results in an accounting restatement (as these terms are used in Section 304 of the Sarbanes-Oxley Act of 2002); or

(iv)         your willful engagement in illegal conduct or any act of serious dishonesty which adversely affects, or in the reasonable estimation of the Board, could in the future adversely affect, your value, reliability or performance to the Company in a material manner. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests the Company. Notwithstanding for foregoing, you shall not be deemed to have been terminated for Cause unless and until there have been delivered to you a copy of the resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership
of the Board of Directors after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before finding that, in the good faith opinion of the Board, you were guilty of the conduct set forth above in (i), (ii) or (iii) of this definition and specifying the particulars thereof in detail.

“Change in Control” shall have the meaning defined under the Company’s Executive Separation Policy.

“Disability” shall (i) have the meaning defined under the Company’s then-current long-term disability insurance plan, policy, program or contract as entitles you to payment of disability benefits thereunder, or (ii) if there shall be no such plan, policy, program or contract, mean permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).

“Good Reason” shall mean, without your express written consent, the occurrence of any of the following events:

 

 

	
             
 	
            A-1
 	
             
 

 

 

 

 

(a)          an adverse change in your status or positions as Chief Executive Officer and Chairman of the Company (including as a result of a material diminution in your duties or responsibilities), or any removal of you from or any failure to reappoint or reelect you to such positions (except in connection with the termination of your employment for Cause or Disability, as a result of your death or by you other than for Good Reason);

	
             
 	
            (b)
 	
            any reduction in your Base Salary or Target AIP Bonus;
 

(c)          you being required to relocate to a principal place of employment outside of the New York City metropolitan area; or

(d)          the failure by the Company to elect or to reelect you as a director or the removal of you from such position.

ATTACHMENT B

GENERAL RELEASE

In consideration for the severance benefits described in Section 11(c) of the letter agreement to which this General Release is an Attachment, I hereby irrevocably and unconditionally release, acquit and forever discharge the Company, its successors, assigns, agents, directors, officers, executives, representatives, subsidiaries, divisions, parent corporations and affiliates, and all other persons acting by, through or in concert with any of them (collectively,  the “Releasees”) from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, actions, damages, expenses (including attorneys’ fees and costs actually incurred), or any rights of any and every kind or nature, accrued or unaccrued, known or unknown, which I have or claim to have arising out of facts and circumstances which have occurred or existed
prior to, or which are occurring and do exist as of, the date of my execution of this Agreement against each or any of the Releasees. This release (the “Release”) pertains to but is in no way limited to all matters relating to or arising out of my employment and the cessation of my employment with the Company and all claims for severance benefits or other payments which are not express obligations of the Company under this Agreement, or otherwise. The Release further pertains to, but is in no way limited to, rights and claims under the Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights Act, as amended, the Americans With Disabilities Act, the Family Medical Leave Act, and all other state, local or municipal fair employment and discrimination laws, and all claims under common law, whether based in tort or contract, law or equity.

Notwithstanding anything herein to the contrary, this General Release does not apply to:  (i) claims that arise after my termination date; (ii) my rights under any tax-qualified pension or claims for accrued vested benefits under any other employee benefit plan, policy or arrangements maintained by the Company or under COBRA; (iii) worker’s compensation claims and any other claims that cannot be waived by law; (iv) my rights to enforce the letter agreement; or (v) my rights as a stockholder.

This Agreement is not intended to and does not interfere with the Equal Employment Opportunity Commission’s right to enforce anti-discrimination laws or to seek relief that will benefit the public and any 

 

	
             
 	
            A-2
 	
             
 

 

 

 

victim of unlawful employment practices who have not waived their claims. Therefore, by signing this Agreement, I waive any right to personally recover against the Company, but I am not prevented from filing a charge with, or testifying, assisting, or participating in any proceeding brought by the EEOC, concerning an alleged discriminatory practice of the Company.

	
            IN WITNESS WHEREOF, I have executed this General Release this ____ day of
______20__.
 	
             	
             

 

	
             
 	
                                                                    
 Robert M. AmenForm of Subscription Agreement for Series I Convertible Secured Debenture

    

    EXHIBIT
      4.21

     

    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) 640-0412) by no later than 12:00
      noon (Toronto time) on September 9, 2005 to ADB Systems International Ltd.
      (Attention: Mike
      Robb).

     

    
      	
              TO:

            	
              ADB
                Systems International Ltd. (the “Corporation”)

            
	
              AND
                TO:

            	
              PowerOne
                Capital Markets Limited (the “Agent”)

            
	
              RE:

            	
              Sale
                of secured subordinate convertible debentures convertible into units
                consisting of one common share in the capital of the Corporation
                and one
                common share purchase warrant exercisable into one common share in
                the
                capital of the Corporation.

            

    

     

    Details
      of Subscription

     

    The
      undersigned (the “Subscriber”)
      hereby irrevocably subscribes, subject to the terms and conditions set forth
      in
      this subscription agreement, for secured subordinate convertible debentures
      (the
“Debentures”)
      of the Corporation with the following specific purchase instructions. The
      particulars of the Debentures and the securities issuable upon conversion of
      the
      Debentures (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 form part of and are
      hereby incorporated as part of this subscription agreement.

     

    Ontario
      Subscribers:

     

    Complete
      and sign both the Ontario Resident Exemption Certificate and the Ontario
      Accredited Investor Certificate - Schedule “D”.

     

    Alberta
      and British Columbia Subscribers:

     

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

    OR

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

     

    Non
      Canadian and Non U.S. Subscribers:

     

    Complete
      and sign the Offshore Subscriber Certificate - Schedule “F”.

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

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

     

    
      	
              Principal
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                par):____________________________________________________________________________________________

            
	 	 	 
	
              Subscriber
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                of Subscriber

               

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              Delivery
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              box
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              Disclosed
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                and Province)

               

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                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 Debentures 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                                 
      ,
      2005.

     

    
      	
               

               

            	 	
               

               

            
	
              Signature
                of Subscriber (if an individual)

            	 	
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                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                                 
      ,
      2005.

     

    
      	
              ADB
                SYSTEMS INTERNATIONAL LTD.

            
	 
	
              Per:

            	 

    

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULE
      “A”

     

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

     

    TERMS
      OF THE OFFERING

     

    1.          Offering.
      Secured subordinate convertible debentures (the “Debentures”)
      of the Corporation subscribed for hereunder form part of a larger sale by the
      Corporation (the “Offering”)
      of a maximum of $1,120,000 principal amount of Debentures. The Offering is
      being
      effected contemporaneously with a non-brokered offering of up to $80,000
      principal amount of Debentures to purchasers in the United States. The Offering
      is being made on a best efforts private placement basis.

     

    The
      Debentures will bear simple interest at an annual rate of 11% of the principal
      amount of the Debentures outstanding from time to time, payable (i) for interest
      owing in respect of the first 12 months following the Closing Date (as defined
      herein) (the “Initial
      Period”)
      calculated and payable in arrears upon the earlier of Conversion (as defined
      below) of the Debentures or the date which is 12 months following the Closing
      Date; and (ii) on the earlier of Conversion of the Debentures or the fifth
      anniversary of the Closing Date (the “Maturity Date”)
      for interest owing in respect of the period commencing on the date that is
      twelve months and one day following the Closing Date, and ending on the fifth
      anniversary of the Closing Date (the “Subsequent
      Period”).
      Interest owing in respect of the Initial Period is payable in full by the
      issuance of a number of Common Shares calculated pursuant to the following
      formula:

     

    A÷B,
      where:

     

    A=
      the accrued interest payable (in dollars); and

     

    B=
      the volume weighted average trading price of the Common Shares over the 20
      day
      trading period ending at the close of business on the day prior to the date
      on
      which the interest payment is due, reduced by the maximum percentage discount
      permitted by the Toronto Stock Exchange, 

     

    provided
      that the maximum aggregate number of Common Shares issuable pursuant to the
      above-noted calculation is 974,199 and in the event the Corporation is obligated
      to, and cannot, issue any further Common Shares over and above 974,199, it
      shall
      satisfy the balance of the interest payment owing in cash by paying the amount
      calculated as (i) the total amount of accrued interest payable, less (ii) the
      value of the Common Shares issued in satisfaction of interest
      payments.

     

    Interest
      owing in respect of the Subsequent Period is payable in cash upon the earlier
      of
      i) Conversion (as defined below); or ii) 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 Debentures outstanding
      from time to time will be convertible (“Conversion”),
      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 $0.15 per Unit (the “Conversion
      Price”),
      subject to adjustments for stock splits, consolidations, other capital
      reorganizations, extraordinary dividends or distributions among other
      anti-dilution provisions providing adjustments for events that will affect
      all
      security holders equally.

     

    Each
      Unit will consist of one common share in the capital of the Corporation (a
      “Common
      Share”)
      and one Common Share purchase warrant (a “Warrant”).
      Each Warrant will entitle the holder to acquire one Common Share at an exercise
      price of $0.20 per share, and will be exercisable at any time prior to the
      fifth
      anniversary of the Closing Date. 

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    The
      material terms of the Offering, the Debentures 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 Debentures is a summary only and the Subscriber
      acknowledges that the definitive terms and conditions of the Debentures sold
      under the Offering will be set forth in the Debenture 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:

     

    “Agency
      Agreement” means the agreement to be entered into between the Corporation and
      the Agent with regard to the terms of the Offering.

     

    “Applicable
      Securities Laws”
      means the applicable securities laws of the Provinces of Ontario, Alberta and
      British Columbia 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, the Alberta Securities Commission
      and the British Columbia 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 September 9, 2005, or such other date or dates as the
      Corporation and Agent may agree;

     

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

     

    “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;

     

    “Hold
      Period”
      means four months and one day from the Closing Date and in the case of a
      purchaser who is an insider of the Issuer for the purposes of the Securities
      Act (Ontario)
      means 6 months form the Closing Date;

     

    “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), and ADB Systems
      International Limited (Ireland); 

     

    

    
      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

    

    

    “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;

     

    “Debenture
      Certificates”
      means the definitive certificates representing the Debentures;

     

    “Purchasers”
      means those persons who subscribe for Debentures 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 Debentures;

     

    “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.
      By its execution of this agreement, the Corporation hereby agrees that the
      Purchasers shall have the benefit of the following provisions to be set forth
      in
      the Agency Agreement on the same basis as if the Purchasers were parties to
      the
      Agency Agreement and direct beneficiaries of such provisions:

     

    (a)    the
      representations and warranties made by the Corporation to the Agent and the
      Purchasers as purchasers of the Debentures;

     

    (b)    the
      covenants of the Corporation in favour of the Agent and the Purchasers as
      purchasers of the Debentures; and

     

    (c)    the
      conditions precedent to the Offering,

     

    to
      the extent that such representations, warranties, covenants and conditions
      precedent have not been varied, amended, altered or waived, in whole or in
      part,
      by the Agent in the manner provided for in the Agency Agreement, which
      representations, warranties, covenants and conditions are hereby incorporated
      by
      reference such that they form an integral part of this subscription agreement
      and all of which shall survive the Closing Date for a period of two years,
      notwithstanding the completion of the purchase of the Debentures. In the event
      of a conflict between the provisions of this subscription agreement and the
      provisions of the Agency Agreement, the provisions of the Agency Agreement
      shall
      prevail.

     

    In
      addition, the
      Corporation hereby represents and warrants for the benefit of the Purchasers
      as
      follows:

     

    (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;

     

    

    
      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

    

    

    

     

    (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 Debentures 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 Debentures, 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
      Debentures and the Warrant Shares, if and when issued in accordance with the
      Debentures and Warrants, as applicable, will be validly issued and outstanding
      as fully paid and non-assessable;

     

            
and
      the Warrants
      issuable upon exercise of the conversion rights under its Debentures, if and
      when issued, will be validly issued;

     

    (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;

     

    (j)    there
      has been no adverse material change in relation to the Corporation since June
      30, 2005, 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;

     

    

    
      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

    

    

    

     

    (k)    this
      subscription agreement and all other agreements required in connection with
      the
      issue and sale of the Debentures 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.

     

    (m)    Forthwith
      after the Closing, the Corporation shall file such forms and documents as may
      be
      required under the Applicable Securities Laws relating to the Offering and
      any
      further documents as may be required by any applicable regulatory authority
      which, without limiting the generality of the foregoing, shall include a Form
      45-501F1 as prescribed by the Securities
      Act
      (Ontario) and a Form 45-103F4 as prescribed by Multilateral Instrument
      45-103.

     

    5.       Reliance
      upon Representations, Warranties and Covenants of the
      Corporation.
      The Corporation further agrees that, by delivering the Debentures to the
      Subscriber, the Corporation will be representing and warranting that the
      representations, warranties and covenants contained in this subscription
      agreement and the Agency 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 Debentures
      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
      Debentures or the Underlying Securities or Warrant Shares.

     

    6.       Closing
      of Purchase.
      The Subscriber acknowledges and agrees that delivery of and payment for the
      Debentures will be completed at the offices of the
      Corporation at
      10:00 a.m. (Toronto time) on the Closing Date. On the Closing Date the gross
      proceeds from the Offering, less the commission payable to the Agent described
      in Section 16 of this subscription agreement and certain of the Agent’s costs
      and expenses, will be released to the Corporation.

     

    7.       Payment
      and Delivery.
      The Subscriber agrees to deliver, prior to the Closing Time, his or her duly
      completed and executed subscription agreement (including Schedule “D” and
      Schedules “E”or “F”); and payment for the principal amount of Debentures
      subscribed for under this subscription agreement, to either :

     

    (a)                
      the Corporation at 302 The East Mall, Suite 300, Toronto, Ontario M9B 6C7,
      (Attention: Mike Robb), (fax number: (416) 640-0412), in which case payment
      shall be made in in the form of either (i) a certified cheque or bank draft
      payable to “ADB Systems International Ltd.”; (ii) wire transfer in Canadian
      funds to the Corporation; or (iii) in the case of Subscribers that have
      entered into certain loan agreements with the Corporation and have deposited
      cheques in connection therewith, a direction to the Corporation and discharge
      of
      loan providing instructions to apply the specified amount of the loan held
      by
      the Corporation as payment; or

     

    (b)                 the
      Agent at The Exchange Tower, 130 King Street West, Suite 2810, PO Box 47,
      Toronto, Ontario  M5X 1A9 (Attention: Kris Volk) (fax number (416)
      941-1090), in which case payment shall be made in the form of a certified cheque
      or bank draft payable to "Goodman and Carr LLP in trust" or wire transfer of
      Canadian funds to “Goodman and Carr LLP in trust”.

     

    The
      Subscriber agrees to deliver, prior to the Closing Time, such other
      documents as may be required pursuant to the terms of this subscription
      agreement.

     

    8.       Conditions
      of Closing. This
      subscription is subject to acceptance by the Corporation (as described below)
      and the receipt of consents from certain prior investors. The Offering is
      conditional upon, among other things, the Corporation obtaining TSX approval
      and
      the Underlying Securities not being subject to a hold period of more than four
      months and one day from the Closing Date and the Common Shares being freely
      tradable on the TSX following the expiration of such hold period. 

     

    

    
      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

    

    

    

     

     

    The
      Subscriber acknowledges and agrees that the obligations of the Corporation
      hereunder are conditional on the accuracy of the representations and warranties
      of the Subscriber contained in this subscription agreement as of the date of
      this subscription agreement, and as of the Closing Time as if made at and as
      of
      the Closing Time, and the fulfillment of the following additional conditions
      as
      soon as possible and in any event not later than the Closing Time unless other
      arrangements acceptable to the Corporation have been made:

     

    (a)    the
      Corporation shall have received all necessary approvals and consents, including
      all necessary regulatory approvals and consents (including the approval of
      the
      TSX) required for the completion of the transaction contemplated by this
      subscription agreement;

     

    (b)    the
      representations and warranties of the Corporation contained herein being true
      and correct as of the Closing Time with the same force and effect as if made
      at
      and as of the Closing Time after giving effect to the transactions contemplated
      hereby;

     

    (c)    the
      Corporation having complied with all covenants, and satisfied all terms and
      conditions contained herein to be complied with and satisfied by the Corporation
      at or prior to the Closing;

     

    (d)    the
      Agent not having previously terminated its obligations in connection with the
      Offering pursuant to the Agency Agreement; and

     

    (e)    the
      Subscriber having completed this subscription agreement in full and having
      paid
      the principal amount of the Debentures subscribed for hereunder to the
      Corporation or the Agent in the manner contemplated in this subscription
      agreement.

     

    If,
      at the Closing Time, the terms and conditions contained herein have been
      complied with or waived by the Agent, this completed subscription agreement
      has
      been delivered to the Corporation and accepted by the Corporation and, unless
      other arrangements acceptable to the Corporation have been made, the
      aggregate subscription
      proceeds representing the principal amount of Debentures subscribed for
      hereunder have been paid in accordance with Section 7 hereof, unless other
      arrangements have been made with the Corporation, Debenture Certificates
      endorsed by the Corporation representing Debentures subscribed for hereunder
      will be available for delivery to the Subscriber in Toronto, Ontario at the
      Closing Time.. The Corporation will deliver such Debenture 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 its sole discretion
      (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 Purchaser
      less than the principal amount of Debentures subscribed for. If this
      subscription is rejected in whole, any cheques or other forms of payment
      delivered to the Corporation or the Agent representing the principal amount
      of
      the Debentures subscribed for will be promptly returned to the Subscriber
      without interest or deduction. If this subscription is accepted only in part,
      a
      cheque representing any refund of the principal amount of the Debentures for
      that portion of the subscription for the Debentures which is not accepted,
      will
      be promptly delivered to the Subscriber without interest or deduction. The
      Subscriber acknowledges and agrees that the acceptance of this subscription
      agreement will be conditional upon the sale of the Debentures to the Subscriber
      being exempt from any prospectus and registration requirements of Applicable
      Securities Laws. The Corporation or the Agent will be deemed to have accepted
      this subscription agreement upon the delivery at closing of the Debenture
      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 Debentures
      purchased hereunder or any of the Underlying Securities issued upon the exercise
      of the conversion rights under such Debentures and, if so required, the
      Subscriber, undertakes to file the required report. Neither the Corporation
      nor
      the Agent are in any way responsible for such filings or the payment of any
      related fees.

     

    

    
      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

        

      

    

    

    

     

    11.        Resale
      Restrictions.
      The Subscriber understands and acknowledges that the Debentures 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 and no representations have been made
      to
      the Subscriber by the Corporation or the Agent with respect to such matters.
      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 (the Corporation and the Agent
      are not in any manner responsible for ensuring compliance by the Subscriber
      with
      such restrictions). 

     

    12.        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.

     

    13.        Indemnity.
      The Subscriber agrees to indemnify and hold harmless the Corporation, 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 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 Agent in connection
      herewith.

     

    14.      Authorizations.
      The
      Subscriber, on its behalf and (if applicable) on behalf of others for whom
      it is
      contracting hereunder (each of whom has provided all necessary authorizations),
      hereby:

     

    (a)    irrevocably
      authorizes the Agent to negotiate and settle the form of any agreement to be
      entered into in connection with the Offering and to vary, amend, alter or waive,
      on its own behalf and on behalf of the Purchasers of Debentures, in whole or
      in
      part, or extend the time for compliance with, any of the Closing conditions
      in
      such manner and on such terms and conditions as the Agent may determine, acting
      reasonably, without in any way affecting our obligations or the obligations
      of
      such others hereunder; provided, however, that the Agent shall not vary, amend,
      alter or waive any such condition where to do so would result in a material
      adverse change to any of the material attributes of the Debentures, Underlying
      Securities or the Warrant Shares described herein;

     

    (b)    irrevocably
      authorizes the Agent to negotiate, settle and enter into on behalf of the
      Subscriber a pari passu agreement (the "Pari Passu Agreement")
      to be entered into among the Agent (on behalf of
      all purchasers of Debentures, including the Subscriber (collectively,
      the "Purchasers")) and the Corporation pursuant to which, inter
      alia, (i) any security held in favour of and/or on behalf of
      the  Purchasers (the "Security") shall rank pari passu; and (ii) the
      Agent shall act for and on behalf of the Purchasers in respect of the
      Security.  The Subscriber further agrees to indemnify the Agent, and its
      directors and officers against all losses, claims, costs, expenses, damages
      or
      liabilities which any of them may suffer or incur arising out of or connected
      with the performance by the Agent of its duties under the Pari Passu Agreement,
      except to the extent that such losses, claims, costs, expenses, damages or
      liabilities are attributable to the gross negligence, fraud or wilful
      misconduct of the Agent. Notwithstanding any other provision hereof or of the
      Pari Passu Agreement, this indemnity shall survive any removal or resignation
      of
      the Agent as agent of the Purchasers under the Pari Passu Agreement, and
      the discharge and/or termination of any of its duties thereunder;
      and

     

    (c)    irrevocably
      authorize the Agent, in its sole discretion: (i) to act as its representative
      at
      the Closing and to execute on its behalf, and (if applicable) such others on
      whose behalf it is contracting hereunder, all Closing receipts and documents
      as
      may be required; (ii) to complete, or correct any errors or omissions in, any
      form or document provided by the Subscriber; (iii) to approve any opinions,
      certificates or other documents delivered at the Closing; (iv) to receive on
      the
      Subscriber’s behalf, and (if applicable) such others, Debenture Certificates;
      and (v) to exercise any rights of termination contained in the Agency
      Agreement.

     

    

    
      
        
          
          

        

        
          A-7

          
            

          

        

        
          
          

        

      

    

    

    

     

    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 aggregate commissions equal to 8% of the gross
      proceeds of the Offering. The Subscriber further understands that as additional
      compensation for its services in connection with the Offering, the Agent will
      receive a number of compensation warrants (the “Compensation Warrants”) that is
      equal to 10% of the total number of Units issuable upon conversion of the
      principal amount of Debentures sold under the Offering. Each Compensation
      Warrant is exercisable at a price of $0.15 for a period of five years from
      the
      Closing Date to acquire one Unit. 

     

    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.

     

    (f)    All
      costs and expenses (including, without limitation, the fees and disbursements
      of
      legal counsel) incurred in connection with this subscription agreement and
      the
      transactions herein contemplated shall be paid and borne by the party incurring
      such costs and expenses.

     

    (g)    This
      subscription agreement shall be construed and enforced in accordance with,
      and
      the rights of the parties shall be governed by, the laws of the province of
      Ontario and the laws of Canada applicable therein. Any and all disputes arising
      under this subscription agreement, whether as to interpretation, performance
      or
      otherwise, shall be subject to the non-exclusive jurisdiction of the courts
      of
      the province of Ontario and each of the parties hereto hereby irrevocably
      attorns to the jurisdiction of the courts of such province.

     

    18.    Notices.

     

    (a)    Any
      notice, direction or other instrument required or permitted to be given to
      any
      party hereto shall be in writing and shall be sufficiently given if delivered
      personally, or transmitted by facsimile tested prior to transmission to such
      party, as follows:

     

    (i)
      in the case of the Corporation to:

     

    ADB
      Systems International Ltd. 

    302
      The East Mall, Suite 300

    Toronto,
      Ontario

    M9B
      6C7

    

    

    
      
        
          
          

        

        
          A-8

          
            

          

        

        
          
          

        

      

    

    

    Attention:     Mike
      Robb

    Fax:                416-640-0412

     

    (ii)
      in the case of the Agent to:

    

    PowerOne
      Capital Markets Limited

    The
      Exchange Tower, 130 King Street West

    Suite
      2810, P.O. Box 47

    Toronto,
      Ontario

    M5X
      1A9

    

    Attention:        Pasquale
      DiCapo

    Fax:                 
416-941-1090

     

    (iii)
      in the case of the Subscriber, at the address specified on the face page
      hereof.

    

    (b)    Any
      such notice, direction or other instrument, if delivered personally, shall
      be
      deemed to have been given and received on the day on which it was delivered,
      provided that if such day is not a Business Day then the notice, direction
      or
      other instrument shall be deemed to have been given and received on the first
      Business Day next following such day and if transmitted by fax, shall be deemed
      to have been given and received on the day of its transmission, provided that
      if
      such day is not a Business Day or if it is transmitted or received after the
      end
      of normal business hours then the notice, direction or other instrument shall
      be
      deemed to have been given and received on the first Business Day next following
      the day of such transmission.

     

    (c)    Any
      party hereto may change its address for service from time to time by notice
      given to each of the other parties hereto in accordance with the foregoing
      provisions.

     

    
      
        
        

      

      
        A-9

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      “B”

     

    This
      is Schedule “B” to the subscription agreement relating to the purchase of
      Debentures 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 Secured Subordinate Convertible Debentures

    by
      way of Private Placement

     

    

      
        	
                Issuer:

              	
                ADB
                  Systems International Ltd.
                  (“ADB” or
                  the “Corporation”)

              
	 	 
	
                Offered
                  Securities:

              	
                Secured
                  subordinate convertible debentures (the “Debentures”) to be issued at par
                  in integral multiples of $1,000. At any time up to and including
                  the
                  Maturity Date (as defined below), all or any portion of the principal
                  amount of the Debentures will be convertible (“Conversion”) into one unit
                  (a “Unit”) at the option of the holder at a conversion price of $0.15 per
                  Unit, subject to adjustments for any stock splits, consolidations,
                  or
                  other capital reorganizations, extraordinary dividends or distributions
                  among
                  other anti-dilution provisions providing adjustment for events
                  that will
                  affect all security holders equally (the
                  “Conversion Price”). Each Unit is to consist of one common share (“Common
                  Share”) and one common share purchase warrant (“Warrant”). Each Warrant is
                  exercisable into one Common Share for a period of five years from
                  the
                  Closing Date at an exercise price of $0.20. 

              
	 	 
	
                Size
                  of Offering:

              	
                The
                  total funding size is expected to be $1,200,000, consisting of
                  the
                  following:

              
	 	 
	 	
                The
                  Offering of $1,120,000 principal amount of Debentures, or such
                  other
                  amount as shall be agreed upon by ADB and the Agent.

              
	 	 
	 	
                The
                  Offering shall be effected contemporaneously with a non-brokered
                  offering
                  of up to $80,000 principal amount of Debentures to purchasers resident
                  in
                  the United States (the “US Offering”).

              
	 	 
	
                Interest:

              	
                Interest
                  payable on the Debentures shall be simple interest calculated at
                  11% per
                  annum and payable as follows: 

              
	 	 
	 	
                (a)
                  interest owing in respect of the period commencing on the Closing
                  Date and
                  ending on the date that is twelve months following the Closing
                  Date shall
                  be calculated and payable in arrears upon the earlier of (i) Conversion;
                  and (ii) the date which is 12 months following the Closing Date,
                  and such
                  interest shall be satisfied by the issuance of the number of Common
                  Shares
                  calculated on the basis of: 

              
	 	 
	 	
                A÷B,
                  where: 

              
	 	
                A
                  = the amount of accrued interest payable, in dollars; and
                  

              
	 	
                B
                  = the volume weighted average trading price of the Common Shares
                  over the
                  20 day trading period ending at the close of business on the day
                  prior to
                  the date on which the interest payment is due, reduced by the maximum
                  percentage discount permitted by the Toronto Stock Exchange,
                  

              

      

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
 

    

      
        	 	
                provided
                  that the maximum aggregate number of common shares issuable pursuant
                  to
                  the above-noted calculation is 974,199 and in the event the Corporation
                  is
                  obligated to, and cannot, issue any further Common Shares over
                  and above
                  974,199, it shall satisfy the balance of the interest payment owing
                  in
                  cash by paying the amount calculated as (i) the total amount of
                  accrued
                  interest payable, less (ii) the value of the Common Shares issued
                  in
                  satisfaction of interest payments; and 

              
	 	 
	 	
                (b)
                  interest owing in respect of the period commencing on the date
                  that is
                  twelve months and one day following the Closing Date and ending
                  on the
                  date that is five years following the Closing Date shall be calculated
                  and
                  payable in cash upon the earlier of  (i) Conversion; or (ii) the
                  Maturity Date. 

              
	 	 
	
                Security:

              	
                The
                  Debentures will provide general security over the Corporation’s assets.
                  Such security will be subordinate to the liabilities of the Corporation
                  to
                  current secured creditors, but will rank in priority over all unsecured
                  liabilities of the Corporation.

              
	 	 
	
                Agreements:

              	
                Secured
                  Subordinate Convertible Debenture, Warrant Certificate, Agency
                  Agreement,
                  Security Agreement, Subscription Agreement.

              
	 	 
	
                Maturity
                  Date:

              	
                Five
                  years from the Closing Date (as defined below).

              
	 	 
	
                Resale
                  Restrictions:

              	
                The
                  Corporation will be a “reporting issuer” on the Closing Date, such that it
                  is expected that the Debentures, Common Shares, Warrants and common
                  shares
                  issuable upon the exercise of the Warrants, will be subject to
                  a
                  restricted period expiring four months and one day following the
                  Closing
                  Date.

              
	 	 
	
                Form
                  of Offering:

              	
                Best
                  efforts private placement to accredited investors in Ontario under
                  OSC
                  Rule 45-501 or in such other jurisdictions in Canada, and outside
                  North
                  America as the Corporation and the Agent shall agree, under equivalent
                  rules.

              
	 	 
	 	
                The
                  Offering shall be effected contemporaneously with the US
                  Offering.

              
	 	 
	
                Agent:

              	
                PowerOne
                  Capital Markets Limited. The Agent shall have the right to include
                  other
                  investment dealers in the selling group at the Agent's
                  discretion.

              
	 	 
	
                Conditions:

              	
                The
                  Agent’s obligation to proceed with the Offering is conditional on: (i)
                  the
                  Agent being satisfied, in its sole discretion, with its due diligence
                  review of the Corporation; (ii) execution of definitive documentation;
                  (iii) no material adverse change occurring in the business of the
                  Corporation; and (iv) satisfactory market conditions. The Corporation
                  shall allow the Agent and its representatives to conduct all due
                  diligence
                  investigations which the Agent may reasonably require to fulfil
                  its
                  obligations as agent.

              
	 	 
	
                Black-Out
                  Period:

              	
                Subject
                  to certain exceptions, ADB will not issue nor announce the issuance
                  of any
                  of its common shares or other securities at an effective price
                  below $0.15
                  per share for a period ending six months from the Closing Date,
                  and ADB’s
                  executive officers and directors and their respective associates
                  will
                  enter into standstill arrangements for a period ending six months
                  from the
                  Closing Date. 

              
	 	 
	
                Closing
                  Date:

              	
                September
                  9, 2005 or such other date or dates as the Agent and the Corporation
                  may
                  agree (the “Closing Date”). 

              

      

    

     

     

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

    
 

    

      
        	
                Agent’s
                  Commission:

              	
                8%
                  of gross proceeds of the Offering. For greater certainty, the parties
                  agree that the Agent is neither acting as agent nor entitled to
                  any
                  commission or Compensation Warrants (as defined below) in connection
                  with
                  the US Offering.

              
	 	 
	
                Compensation
                  Warrants:

              	
                The
                  Agent shall receive a number of compensation warrants (the “Compensation
                  Warrants”) that is equal to 10% of the total number of Units issuable upon
                  conversion of the principal amount of Debentures sold under the
                  Offering.
                  Each Compensation Warrant is exercisable at a price of $0.15 for
                  a period
                  of five years from the Closing Date to acquire one
                  Unit.

              
	 	 
	
                Right
                  of First Refusal:

              	
                The
                  Agent shall have a 6 month right of first refusal.

              
	 	 
	
                Agency
                  Agreement:

              	
                The
                  Agent and the Corporation shall prior to the Closing Date negotiate,
                  in
                  good faith, an agency agreement which shall incorporate the terms
                  and
                  conditions hereof and contain such additional representations,
                  warranties
                  and covenants and indemnity and contribution provision conditions
                  customary for transactions of this
                  nature.

              

      

    

     

     

     

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      “C”

     

    SUBSCRIBER’S
      REPRESENTATIONS AND WARRANTIES

     

    This
      is Schedule “C” to the subscription agreement relating to the purchase of
      Debentures 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, 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 or any beneficial purchaser on whose behalf the Subscriber
                is acting hereunder 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 or such beneficial purchaser
                and
                has not been created or used solely for the purpose of acquiring
                Debentures, and neither the Subscriber or such beneficial
                purchaser:

            

    

     

    
      	 	
              (i)

            	
              is
                (or is purchasing Debentures for the account or benefit of) a U.S.
                Person;

            

    

     

    
      	 	
              (ii)

            	
              was
                offered the Debentures in the United States;
                and

            

    

     

    
      	 	
              (iii)

            	
              executed
                or delivered this agreement in the United
                States.

            

    

     

    
      	 	
              (c)

            	
              Investment
                Intent.
                The Subscriber on its own behalf and on behalf of any beneficial
                purchaser
                on whose behalf the Subscriber is acting hereunder is acquiring Debentures
                to be held for investment only and not with a view to resale or
                distribution.

            

    

     

    
      	 	
              (d)

            	
              Prospectus
                Exemptions.
                The Subscriber or any beneficial purchaser on whose behalf the Subscriber
                is acting hereunder acknowledges and agrees that the sale and delivery
                of
                the Debentures 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
                Debentures and as a result, certain rights and remedies provided
                by
                Applicable Securities Laws (including statutory rights of rescission
                or
                damages) will not be available to the Subscriber or any beneficial
                purchaser on whose behalf the Subscriber is acting
                hereunder.

            

    

     

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

     

    
      	 	
              (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 (including a prospectus or offering memorandum)
                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 on its own behalf and on behalf of any beneficial
                purchaser
                on whose behalf the Subscriber is acting hereunder acknowledges that
                it
                has not purchased the Debentures 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 other telecommunications
                (including electronic display), or any seminar or meeting whose attendees
                have been invited by any general solicitation or general
                advertising.

            

    

     

    
      	 	
              (g)

            	
              No
                Undisclosed Information.
                The Debentures 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 Debentures 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 the Agent, or any other person and is based entirely
                upon
                the currently available public information concerning the
                Corporation.

            

    

     

    
      	 	
              (h)

            	
              Investment
                Suitability.
                The Subscriber and any beneficial purchaser on whose behalf the Subscriber
                is acting hereunder have such knowledge and experience in financial
                and
                business affairs as to be capable of evaluating the merits and risks
                of
                the investment hereunder in Debentures (and the Underlying Securities
                and
                Warrant Shares in respect thereof) and are able to bear the economic
                risk
                of loss of such investment. The Subscriber and any beneficial purchaser
                on
                whose behalf the Subscriber is acting hereunder acknowledge and agree
                that
                the Subscriber and such beneficial purchaser are responsible for
                obtaining
                such legal advice as the Subscriber or such beneficial purchaser
                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 on its own behalf and on behalf of any beneficial
                purchaser
                on whose behalf the Subscriber is acting hereunder has read and
                understands the contents of this agreement (including the Schedules
                hereto) and agrees to be legally bound
                hereby.

            

    

     

    
      	 	
              (j)

            	
              No
                Conversion or Transfer of Debentures, Underlying Securities or Warrant
                Shares in U.S.
                The Subscriber on its own behalf and on behalf of any beneficial
                purchaser
                on whose behalf the Subscriber is acting hereunder acknowledges that
                the
                Debentures, 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 and such beneficial purchaser
                understand that certificates representing the Debentures, Underlying
                Securities and Warrant Shares issued to it will so
                indicate.

            

    

     

    
      	 	
              (k)

            	
              Ontario
                Subscriber.
                If the Subscriber or any beneficial purchaser on whose behalf the
                Subscriber is acting hereunder 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 “D” hereto or is purchasing
                pursuant to paragraph (b) of Schedule D, and the Subscriber or such
                beneficial purchaser has concurrently executed and delivered to the
                Corporation a certificate in the form attached as Appendix I to Schedule
                “D” (the Subscriber having checked the applicable
                subparagraph(s)).

            

    

     

    
      	 	
              (l)

            	
              Alberta
                or British Columbia Subscriber.
                If the Subscriber or any beneficial purchaser on whose behalf the
                Subscriber is acting hereunder 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 

            

    

     

    

    
      
        
          
          

        

        
          C-2

          
            

          

        

        
          
          

        

      

    

    

     

    
      	 	 	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 “E” 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 “E” (the
              Subscriber having checked the applicable
              subparagraph(s)).

      	 	 	 

      	 	
              (m)

            	
              If
                the Subscriber, or any beneficial purchaser for whom it is acting,
                is not
                a person resident in Canada, the subscription for the Debentures
                by the
                Subscriber, or such beneficial purchaser, does not contravene any
                of the
                applicable securities legislation in the jurisdiction in which the
                Subscriber or such beneficial purchaser resides and does not give
                rise to
                any obligation of the Corporation or the Agent to prepare and file
                a
                prospectus or similar document or to register the Debentures or to
                be
                registered with or to file any report or notice with any governmental
                or
                regulatory authority.

            

    

     

    
      	 	
              (n)

            	
              The
                execution and delivery of this subscription agreement, the performance
                and
                compliance with the terms hereof, the subscription for the Debentures
                and
                the completion of the transactions described herein by the Subscriber
                will
                not result in any material breach of, or be in conflict with or constitute
                a material default under, or create a state of facts which, after
                notice
                or lapse of time, or both, would constitute a material default under
                any
                term or provision of the constating documents, by-laws or resolutions
                of
                the Subscriber, the Applicable Securities Laws or any other laws
                applicable to the Subscriber, any agreement to which the Subscriber
                is a
                party, or any judgment, decree, order, statute, rule or regulation
                applicable to the Subscriber.

            

    

     

    
      	 	
              (o)

            	
              The
                Subscriber is subscribing for the Debentures as principal for its
                own
                account and not for the benefit of any other person (within the meaning
                of
                Applicable Securities Laws) and not with a view to the resale or
                distribution of all or any of the Debentures, Underlying Securities
                or
                Warrant Shares or if it is not subscribing as principal, it acknowledges
                that the Corporation and/or the Agent may be required by law to disclose
                to certain regulatory authorities the identity of each beneficial
                purchaser of the Debentures for whom it is
                acting.

            

    

     

    
      	 	
              (p)

            	
              In
                the case of a subscription for the Debentures by the Subscriber acting
                as
                trustee or agent (including, for greater certainty, a portfolio manager
                or
                comparable adviser) for a principal, the Subscriber is duly authorized
                to
                execute and deliver this subscription agreement and all other necessary
                documentation in connection with such subscription on behalf of each
                such
                beneficial purchaser, each of whom is subscribing as principal for
                its own
                account, not for the benefit of any other person and not with a view
                to
                the resale or distribution of the Debentures, Underlying Securities
                or
                Warrant Shares, and this subscription agreement has been duly authorized,
                executed and delivered by or on behalf of and constitutes a legal,
                valid
                and binding agreement of, such principal, and the Subscriber acknowledges
                that the Corporation and/or the Agent may be required by law to disclose
                the identity of each beneficial purchaser for whom the Subscriber
                is
                acting.

            

    

     

    
      	 	
              (q)

            	
              In
                the case of a subscription for the Debentures by the Subscriber acting
                as
                principal, this subscription agreement has been duly authorized,
                executed
                and delivered by, and constitutes a legal, valid and binding agreement
                of,
                the Subscriber. This subscription agreement is enforceable in accordance
                with its terms against the Subscriber and any beneficial purchasers
                on
                whose behalf the Subscriber is
                acting.

            

    

     

    
      	 	
              (r)

            	
              Other
                than the Agent, there is no person acting or purporting to act in
                connection with the transactions contemplated herein who is entitled
                to
                any brokerage or finder’s fee. If any person establishes a claim that any
                such fee or other compensation is payable in connection with this
                subscription for the Debentures, the Subscriber covenants to indemnify
                and
                hold harmless the Corporation and the Agent with respect thereto
                and with
                respect to all costs reasonably incurred in the defence
                thereof.

            

    

     

    
      	 	
              (s)

            	
              The
                Subscriber is not, with respect to the Corporation or any of its
                affiliates, a control person (as defined in Applicable Securities
                Laws).

            

    

     

    

    
      
        
          
          

        

        
          C-3

          
            

          

        

        
          
          

        

      

    

    

    

     

    
      	 	
              (t)

            	
              If
                required by Applicable Securities Laws or the Corporation, the Subscriber
                will execute, deliver and file or assist the Corporation in filing
                such
                reports, undertakings and other documents with respect to the issue
                of the
                Debentures, Underlying Securities or Warrant Shares as may be required
                by
                any securities commission, stock exchange or other regulatory
                authority.

            

    

     

    
      	 	
              (u)

            	
              The
                Subscriber acknowledges that no representation has been made respecting
                the applicable hold periods imposed by the Applicable Securities
                Laws or
                other resale restrictions applicable to the Debentures, Underlying
                Securities or Warrant Shares which restrict the ability of the Subscriber
                (or others for whom it is contracting hereunder) to resell such
                securities, that the Subscriber (or others for whom it is contracting
                hereunder) is solely responsible to find out what these restrictions
                are
                and the Subscriber is solely responsible (and neither the Corporation
                nor
                the Agent is in any way responsible) for compliance with applicable
                resale
                restrictions and the Subscriber is aware that it (or beneficial purchasers
                for whom it is contracting hereunder) may not be able to resell such
                securities except in accordance with limited exemptions under the
                Applicable Securities Laws and other applicable
                laws.

            

    

     

    
      	 	
              (v)

            	
              No
                person has made any written or oral
                representations:

            

    

     

    
      	 	
              (i)

            	
              that
                any person will resell or repurchase the Debentures, Underlying Securities
                or the Warrant Shares;

            

    

     

    (ii)         
that
      any person will refund the purchase price of the Debentures; or

     

    
      	 	
              (iii)

            	
              as
                to the future price or value of the Debentures, Underlying Securities
                or
                the Warrant Shares.

            

    

     

    
      	 	
              (w)

            	
              The
                Subscriber, on its own behalf and, if applicable, on behalf of others
                for
                whom it is acting hereunder, acknowledges and agrees as
                follows:

            

    

     

    
      	 	
              (i)

            	
              No
                securities commission, agency, governmental authority, regulatory
                body,
                stock exchange or other regulatory body has reviewed or passed on
                the
                merits of the Debentures, Underlying Securities or the Warrant
                Shares.

            

    

     

    
      	 	
              (ii)

            	
              The
                Subscriber’s ability to transfer the Debentures, Underlying Securities and
                Warrant Shares is limited by, among other things, Applicable Securities
                Laws.

            

    

     

    
      	 	
              (iii)

            	
              The
                certificates representing the Debentures will bear, as of the Closing
                Date, legends substantially in the following form and with the necessary
                information inserted:

            

    

     

    UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1)
      DAY AFTER CLOSING DATE>.”

     

    
      	 	
              (iv)

            	
              In
                the event that holders of Debentures convert such Debentures and/or
                exercise the Warrants prior to the expiry of the hold periods applicable
                to the Underlying Securities, the Underlying Securities and/or Warrant
                Shares, as applicable, will bear legends substantially in the following
                form and with the necessary information
                inserted:

            

    

     

    “UNLESS
      PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
      TRADE THE SECURITY BEFORE <INSERT DATE THAT IS FOUR (4) MONTHS AND ONE (1)
      DAY AFTER CLOSING DATE>.

     

    
      	 	
              (v)

            	
              In
                addition, the Common Shares (and Warrant Shares, if applicable) will
                also
                bear a legend substantially in the following
                form:

            

    

     

    

    
      
        
          
          

        

        
          C-4

          
            

          

        

        
          
          

        

      

    

    

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
      EXCHANGE (THE “TSX”); HOWEVER THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
      FACILITIES OF THE TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY
      ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN
      SETTLEMENT OF TRANSACTIONS ON THE TSX.”

     

    
      	 	
              (vi)

            	
              There
                is no government or other insurance covering the Debentures, Underlying
                Securities or the Warrant Shares.

            

    

     

    
      	 	
              (vii)

            	
              There
                are risks associated with the purchase of the Debentures, Underlying
                Securities and/or the Warrant
                Shares.

            

    

     

    
      	 	
              (viii)

            	
              the
                Agent and its directors, officers, employees, agents and representatives
                do not assume any responsibility or liability of any nature whatsoever
                for
                the accuracy or adequacy of the Corporation’s Information Record or as to
                whether all information concerning the Corporation required to be
                disclosed by it has been generally
                disclosed;

            

    

     

    
      	 	
              (ix)
                

            	
              Goodman
                and Carr LLP is acting as counsel to the Agent and not as counsel
                to the
                Purchasers.

            

    

     

    
      	
              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 Debentures under Applicable Securities Laws.
                The
                Subscriber agrees that by accepting delivery of the Debentures 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 Debentures and will continue in full force and
                effect
                notwithstanding any subsequent disposition by the Subscriber of such
                Debentures.

            

    

     

    
      	
              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 and/or
                the
                Agent 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-5

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      “D”

     

    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 the Agent and acknowledges that the Corporation
      and the Agent, and their 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)]:

     

    
      	
              ⁫

            	
              (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:

            
	 	 	 	 
	 	
              ⁫

            	
              (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

            
	 	 	 	 
	 	
              ⁫

            	
              (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

            
	 	 	 	 
	
              ⁫

            	
              (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:

            
	 	 	 	 
	 	
              ⁫

            	
              (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

            
	 	 	 	 
	 	
              ⁫

            	
              (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 and the
      Agent 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

     

    
      	
              ⁫

            	
              (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);

            
	 	 	 
	
              ⁫

            	
              (b) 

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

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (e) 

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

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (h) 

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

            
	 	 	 
	
              ⁫

            	
              (i) 

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

            
	 	 	 
	
              ⁫

            	
              (j) 

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

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (l) 

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

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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) 

            	
              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;

            

    

    

    
      
        
          
          

        

        
          D-2

          
            

          

        

        
          
          

        

      

    

    

    

     

    
      	 	 	 
	
              ⁫

            	
              (p) 

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

            
	 	 	 
	
              ⁫

            	
              (q) 

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

            
	 	 	 
	
              ⁫

            	
              (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);

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (u) 

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

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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

            
	 	 	 
	
              ⁫

            	
              (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).

     

    

    
      
        
          
          

        

        
          D-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.

     

    

    
      
        
          
          

        

        
          D-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.

     

    

    
      
        
          
          

        

        
          D-5

          
            

          

        

        
          
          

        

      

    

    

    EXECUTED
      by the Subscriber at                                       
      this               
      day of                                
      ,
      2005.

     

    
      	
              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)

            

    

    

     

    

    
      
        
          
            

          

          
          

        

        
          D-6

          
            

          

        

        
          
          

          
          

        

      

    

    

    SCHEDULE
      “E”

     

    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 and the Agent 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]

     

    
      	
              ⁫

            	
              (a) 

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

            
	 	 	 
	
              ⁫

            	
              (b) 

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

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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);

            
	 	 	 
	
              ⁫

            	
              (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);

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (h) 

            	
              a
                municipality, public board or commission in Canada;

            
	 	 	 
	
              ⁫

            	
              (i) 

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

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            

    

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

     

    
      	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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) 

            	
              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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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;

            
	 	 	 
	
              ⁫

            	
              (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

            
	 	 	 
	
              ⁫

            	
              (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

     

    

    
      
        
          
          

        

        
          E-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.

     

    

    
      
        
          
          

        

        
          E-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 and the Agent that the Subscriber (and, if applicable, any
      disclosed principal for whom it is acting) is either:

     

    [Check
      appropriate item]

     

    
      	
              ⁫

            	
              (a) 

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

            
	 	 	 
	
              ⁫

            	
              (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

            
	 	 	 
	
              ⁫

            	
              (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

            
	 	 	 
	
              ⁫

            	
              (d) 

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

            
	 	 	 
	
              ⁫

            	
              (e) 

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

            
	 	 	 
	
              ⁫

            	
              (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 

            
	 	 	 
	
              ⁫

            	
              (g) 

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

            
	 	 	 
	
              ⁫

            	
              (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

            
	 	 	 
	
              ⁫

            	
              (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 

     

    

    
      
        
          
          

        

        
          E-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.

     

    

    
      
        
          
          

        

        
          E-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                                  
      ,
      2005.

     

    
      	
              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”

     

    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 Debentures 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 Debentures pursuant to an exemption
                from
                any prospectus or securities registration requirements (particulars
                of
                which are enclosed herewith) available to the Corporation, 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 such further particulars of the exemption and our
                qualification thereunder as the Corporation may reasonably
                request;

            

    

     

    
      	 	
              (b)

            	
              the
                purchase of Debentures 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; and

            

    

     

    
      	 	
              (c)

            	
              we,
                and (if applicable) any other subscriber for whom we are contracting
                hereunder will not sell or otherwise dispose of any Debentures, 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 Debentures, 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                                      
      ,
      2005.

     

    
      	 	
              
                ______________________________________________________________________________

              

            
	 	
              (Signature
                of Subscriber)

            
	 	 
	 	
              
                ______________________________________________________________________________

              

            
	 	
              (Print
                Name)

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