APPENDIX “F” EXAMPLE OF SHARE SUBSCRIPTION AGREEMENT FOR PROSPECTUS EXEMPTION

APPENDIX “F”
EXAMPLE OF SHARE SUBSCRIPTION AGREEMENT FOR
CORPORATION ISSUING SHARES IN RELIANCE ON
PROSPECTUS EXEMPTION
XYZ COMPANY INC.
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
TO:
XYZ COMPANY INC. ("XYZ")
100 Main St., Suite 100
Toronto, Ont., M4A 1X7
In this Subscription Agreement and Power of Attorney (the “Subscription”), unless
otherwise indicated all references to dollar amounts are in Canadian currency.
THE UNDERSIGNED (the “Subscriber”)
Subscriber:
John Doe
Address:
10 Smith St.,
Tel No.:
Fax No:
E-mail:
416 777-8888
416 888-9999
[email protected]
Toronto, Ont., M3Z 2A9
subscribes for 5,000 COMMON SHARES (the "Shares") of
XYZ COMPANY INC.
The subscription price for each Share is ONE ($1.00) DOLLAR (the "Subscription
Price").
The total Subscription Price is: $5,000.00.
XYZ WILL NOT ACCEPT PAYMENT IN ANY CURRENCY OTHER THAN
CANADIAN DOLLARS. THE SUBSCRIPTION PRICE MUST BE PAID IN
CANADIAN DOLLARS BY BANK WIRE TRANSFER TO XYZ’s LAWYER IN
ACCORDANCE WITH THE FOLLOWING WIRE TRANSFER INSTRUCTIONS:
Lawyer's Name, in Trust
Canadian Imperial Bank of Commerce
Account No.:
Institution No.: 010
Transit No.: 00612
Swift Code: CIBCCATT
Branch Address:
Branch Manager:
SUBSCRIBER’S REPRESENTATION AS TO EXEMPT STATUS
UNDER SECURITIES LAWS
THE SUBSCIBER REPRESENTS AND WARRANTS TO XYZ THAT THE
SUBSCRIBER IS PURCHASING AS PRINCIPAL AND IS ENTITLED TO
PURCHASE THE SHARES WITHOUT THE BENEFIT OF A PROSPECTUS FOR
ONE OR MORE OF THE FOLLOWING REASONS:
Please review and place a checkmark in the applicable paragraph or
paragraphs.
Accredited Investor Exemption: The Subscriber is an “accredited
investor” under National Instrument 45-106 (“Prospectus and Registration
Exemptions” – see paragraph0 below) because the Subscriber is [check
applicable box(es)]:
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an individual who, either alone or with my 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;
an individual whose net income before taxes exceeded $200,000 in
each of the 2 most recent calendar years or whose net income before
taxes combined with that of my spouse exceeded $300,000 in each of
the 2 most recent calendar years and who, in either case, reasonably
expects to exceed that net income level in the current calendar year;
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an individual who, either alone or with my spouse, has net assets of at
least $5,000,000;
a company entirely owned by accredited investors; and/or
a founder, an affiliate of a founder, a spouse, parent, brother, sister,
grandparent or child of an executive officer, director or a control person
of a founder.
Minimum amount investment Exemption: The Shares have an acquisition
cost of not less than $150,000 paid in cash at the time of the trade.
TERMS AND CONDITIONS OF SUBSCRIPTION
Subscription Subject to Acceptance by XYZ: Issuance of the Shares is subject
to the acceptance of this Subscription by XYZ and XYZ, at its sole option,
may refuse to accept all or any subscriptions received in which case the
Subscription Price received from the Subscriber will be returned to the
Subscriber without interest or deduction.
Articles of Incorporation, By-Laws and Unanimous Shareholder Agreement:
The Subscriber acknowledges that XYZ has made the following XYZ
documents available to the Subscriber either by hard copy or
online:
Articles of Incorporation;
By-Law One – General Business By-Law;
By-Law Two – Election and Term of Directors;
By-Law Three – Transactions Requiring a Supermajority of
Directors; and
Unanimous Shareholder Agreement (the “USA”).
The Subscriber irrevocably acknowledges, agrees to and accepts, without
limitation, the provisions of the documents listed in paragraph 0,
above.
In accordance with the Powers of Attorney Act and the Substitute
Decisions Act, 1992, the Subscriber hereby irrevocably
constitutes and appoints XYZ and any duly authorized officer of
XYZ as the Subscriber’s true and lawful attorney and agent, with
full power and authority in the Subscriber’s name, place and stead,
and for the Subscriber’s use and benefit to execute the USA on the
Subscriber’s behalf. The Subscriber acknowledges and agrees that
if this Subscription is accepted by XYZ the Subscriber will become
a party to and be bound by the USA among XYZ and each party
who, from time to time, becomes a Shareholder in accordance with
the terms of the USA.
In the event of a conflict between the provisions of this Subscription and
the USA, the provisions of the USA shall prevail.
Risk Acknowledgement: The Subscriber acknowledges that:
This is a risky investment.
The Subscriber is investing entirely at the Subscriber’s own risk.
No securities regulatory authority has evaluated or endorsed the merits of
the investment or the disclosure in any Offering Memorandum
issued by XYZ.
XYZ is not registered with a securities regulatory authority and has no
duty to tell the Subscriber whether this investment is suitable for
the Subscriber.
The Subscriber will not be able to sell the Shares except in accordance
with the USA and applicable securities laws. Without limiting the
generality of the foregoing, the Subscriber acknowledges that:
No market presently exists for the purchased Shares.
The Shares are being sold pursuant to exemptions contained in
National Instrument 45-106 (“Prospectus and Registration
Exemptions”) and any subsequent disposition of Shares will
require compliance with that Instrument including, but not
limited to, applicable “hold” periods.
XYZ is not and has no current intention of become a “reporting
issuer”, or its equivalent, in any jurisdiction and this could
result in the shareholders of XYZ having to hold their shares
for an indefinite period of time if no statutory exemption may
be relied upon or if no discretionary order or ruling is
obtained with respect to the resale of such shares.
The Subscriber could lose all the money the Subscriber has invested in
XYZ. The Subscriber should not invest in XYZ unless the
Subscriber can afford a complete loss of such investment and
believes that the investment in XYZ is not unreasonably large
when compared with the Subscriber's total financial capability.
Changes in Legislation: Existing securities and tax laws, rules,
regulations, by-laws, policies, guidelines, orders, decisions, rulings
and instruments may be amended, repealed or substituted in a
way that adversely affects the value of the Shares.
Share Issues and Options: Subject to the USA, XYZ has the right to
issue shares or grant options to third parties. XYZ also has the
right to enter into anti-dilution agreements. In the absence of an
anti-dilution agreement, the issuance of shares or granting of
options to third parties will have the effect of diluting the
Subscriber’s interest in XYZ. Such issues or options may include
parties not acting at arm’s length from XYZ including, but not
limited to, management.
OTHER PROVISIONS
Compliance with Securities Legislation: The Subscriber agrees to comply with
the applicable securities legislation in force and effect in the jurisdiction in
which the Subscriber is a resident concerning the purchase of and holding
of shares and concerning any resale or transfer of Shares.
Subscriber’s Further Representations and Warranties: The Subscriber
represents and warrants that:
If the Subscriber is an individual, the Subscriber is of the age of majority
and has the legal capacity and competence to execute and be
bound by this Subscription and to enter into and be bound by the
USA.
If the Subscriber is a corporation, partnership, unincorporated association
or other entity, the Subscriber has full power and authority and is
legally competent to execute and be bound by this Subscription
and to enter into and be bound by the USA, and to take all actions
required pursuant thereto, and that all necessary approvals of
directors, shareholders, partners, members, and otherwise have
been given or obtained.
No offer of Shares was made to the Subscriber in the United States (as
defined in Regulation S under the U.S. Securities Act of 1933),
the Subscriber is executing this Subscription outside of the United
States and the Subscriber has no intention to distribute, either
directly or indirectly, any shares to any person within the United
States except in compliance with the USA and applicable law.
Confidentiality: The Subscriber agrees to keep confidential all information
provided to the Subscriber relating to the business and affairs of XYZ and
not to distribute or otherwise make available any such information to any
other person or otherwise exploit any such information.
Statutory Right to Action for Damages or Rescission: This Subscription is not
intended to be an Offering Memorandum within the meaning Ontario Rule
14-501. If, notwithstanding the foregoing, this Subscription is deemed by
the Ontario Securities Commission or any court or tribunal of competent
authority to be an Offering Memorandum that contains a
misrepresentation, then the Subscriber will have the following rights
without regard to whether the Subscriber relied on the misrepresentation:
The Subscriber has a right of action for damages against XYZ.
The Subscriber may elect to exercise a right of rescission against XYZ. If
the Subscriber exercises this right, the Subscriber ceases to have
a right of action for damages against XYZ.
Notwithstanding the foregoing, XYZ is not liable if it proves that the
Subscriber purchased the Shares with knowledge of the
misrepresentation. In an action for damages XYZ is not liable for all or
any portion of the damages that XYZ proves do not represent the
depreciation in value of the Shares as a result of the misrepresentation
relied upon. In no case shall the amount recoverable exceed the price at
which the Shares were offered.
Subscription Not Revocable: Subject to paragraph0, this Subscription is nonrevocable.
Time of the Essence: Time shall be of the essence of this Subscription.
Severability: The invalidity of any provision of this Subscription shall not affect the
validity of any other provision of this Subscription.
Subscription Not Assignable: This Subscription is not assignable.
Successors: This Subscription shall enure to the benefit of and be binding upon
the Subscriber and XYZ and their respective heirs, personal
representatives and successors.
Entire Agreement and Exclusion of Collateral Agreements, Representations
and Understandings:
(a)
This Subscription together with the USA constitute the entire
agreement with respect to its subject matter and supersedes all
prior agreements, understandings, negotiations and discussions,
written or oral, with respect to that subject matter.
(b)
There are no conditions, representations, warranties or other
agreements between the Subscriber and XYZ or any of its
directors, officers, shareholders or agents in connection with the
subject matter of this Subscription, whether written or oral, express
or implied, statutory or otherwise, except as specifically set out in
this Subscription.
(c)
This Subscription may not be amended or modified in any respect
except by further agreement in writing.
(d)
The Parties irrevocably agree that this paragraph0 is intended to
exclude tort liability including, without limitation, liability for
representations and/or misrepresentations that may otherwise
have given rise to a claim under tort law independent of this
Subscription.
Governing Law: This Subscription shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws of
Canada which apply within the Province of Ontario (excluding any conflict
of laws, rule or principle which might refer such interpretation to the laws
of another jurisdiction). Any proceedings relating to the subject matter of
this Subscription shall be brought in the City of Toronto.
Contra Proferentem Rule: Notwithstanding any rule of construction to the
contrary, the Subscriber agrees that should any court or tribunal of
competent jurisdiction make a finding that a provision of this Subscription
is ambiguous or uncertain, and then such ambiguity or uncertainty shall
not be construed against XYZ by reason only of the authorship of this
Subscription.
Independent Professional Advice: The Subscriber hereby acknowledges that the
Subscriber has been advised and encouraged to seek independent legal,
accounting and financial advice with respect to this transaction to
determine the appropriateness of the investment in relation to the
Subscriber’s own financial objectives.
DATED ________.
SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF
______________________________
Witness to Signature of Subscriber
PRINT NAME:
______________________________
Address and telephone number of
Witness:
______________________________
______________________________
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_______________________________
Signature of Subscriber or authorized
officer of Subscriber
IF AUTHORIZED OFFICER - PRINT
NAME AND POSITION:
_______________________________
I have authority to bind the corporation
ACCEPTANCE OF SUBSCRIPTION
The foregoing Subscription Agreement is hereby accepted by XYZ effective as of
[Date].
XYZ COMPANY INC.,
Per:
________________________________
Authorized Signatory
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