MOBETIZE, CORP. PRIVATE PLACEMENT SUBSCRIPTIONAGREEMENT ACCREDITED INVESTORS INSTRUCTIONS TO PURCHASER

1.1 

In the Subscription Agreement (including the first (cover) page, the Terms on page 3 and 4, these General Provisions and the other schedules, questionnaires and appendices incorporated by reference), the following words have the following meanings unless otherwise indicated:

 

(a)

“1933 Act” means the United States Securities Act of 1933, as amended;

 

(b)

“Applicable Legislation” means the Securities Legislation Applicable to the Issuer (as defined on page 8) and all legislation incorporated in the definition of this term in other parts of the Subscription Agreement, together with the regulations and rules made and promulgated under that legislation and all administrative policy statements, blanket orders and rulings, notices and other administrative directions issued by the Commissions;

 

(c)

“Closing” means the completion of the sale and purchase of the Purchased Securities;

 

(d)

“Closing Date” means the date on which the Closing occurs, which shall be on or before September 3, 2013, or on such other date determined by the Issuer in its discretion;

 

(e)

“Closing Year” means the calendar year in which the Closing takes place;

 

(f)

“Commissions” means the Commissions with Jurisdiction over the Issuer (as defined below) and the securities commissions incorporated in the definition of this term in other parts of the Subscription Agreement;

 

(g)

“Final Closing” means the last Closing under the Private Placement;

 

(h)

“General Provisions” means those portions of the Subscription Agreement headed “General Provisions” and contained on pages 5 to 10;

 

(i)

“Private Placement” means the offering of the Units on the terms and conditions of this Subscription Agreement;

 

(j)

“Purchased Securities” has the meaning assigned in the Terms;

 

(k)

“Regulatory Authorities” means the Commissions;

 

(l)

“Securities” has the meaning assigned in the Terms;

 

(m)

“Subscription Agreement” means the first (cover) page, the Terms on pages 3 to 4, the General Provisions and the other schedules and appendices incorporated by reference; and

(n) 

“Terms” means those portions of the Subscription Agreement headed “Terms” and contained on pages 3 to 4.

1.2 

In the Subscription Agreement, the following terms have the meanings defined in Regulation S under the 1933 Act: “Directed Selling Efforts”, “Foreign Issuer”, “Offshore”, “Substantial U.S. Market Interest”, “U.S. Person” and “United States”.

1.3 

In the Subscription Agreement, unless otherwise specified, currencies are indicated in U.S. dollars.

1.4 

In the Subscription Agreement, other words and phrases that are capitalized have the meanings assigned to them in the body hereof.

2.1 

 

(a)

the Securities have not been registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and are being offered only in a transaction not involving any public offering within the meaning of the 1933 Act, and, unless so registered, may not be offered or sold in the United States or to U.S. Persons (as defined herein), except pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act, and in each case only in accordance with applicable state securities laws;

 

(b)

the Issuer will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act;

 

(c)

the Issuer has not undertaken, and will have no obligation, to register any of the Securities under the 1933 Act;

 

(d)

the decision to execute this Subscription Agreement and purchase the Units agreed to be purchased hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Issuer and such decision is based entirely upon a review of information (the “Issuer Information”) which has been provided by the Issuer to the Purchaser.  If the Issuer has presented a business plan or any other type of corporate profile to the Purchaser, the Purchaser acknowledges that the business plan, the corporate profile and any projections or predictions contained in any such documents may not be achieved or be achievable;

 

(e)

the Purchaser and the Purchaser’s advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Issuer regarding the Offering, and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information contained in the Issuer Information, or any business plan, corporate profile or any other document provided to the Purchaser;

 

(f)

the books and records of the Issuer were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Purchaser during reasonable business hours at its principal place of business and that all documents, records and books pertaining to this Offering have been made available for inspection by the Purchaser, the Purchaser’s attorney and/or advisor(s);

 

(g)

by execution hereof the Purchaser has waived the need for the Issuer to communicate its acceptance of the purchase of the Units pursuant to this Subscription Agreement;

 

(h)

the Issuer is entitled to rely on the representations and warranties and the statements and answers of the Purchaser contained in this Subscription Agreement and in the Questionnaire, and the Purchaser will hold harmless the Issuer from any loss or damage it may suffer as a result of the Purchaser’s failure to correctly complete this Subscription Agreement or the Questionnaire;

 

(i)

the Purchaser will indemnify and hold harmless the Issuer and, where applicable, its respective directors, officers, employees, agents, advisors and shareholders from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, 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 or warranty of the Purchaser contained herein, the Questionnaire or in any other document furnished by the Purchaser to the Issuer in connection herewith, being untrue in any material respect or any breach or failure by the Purchaser to comply with any covenant or agreement made by the Purchaser to the Issuer in connection therewith;

 

(j)

the issuance and sale of the Units to the Purchaser will not be completed if it would be unlawful or if, in the discretion of the Issuer acting reasonably, it is not in the best interests of the Issuer;

 

(k)

the Purchaser has been advised to consult its own legal, tax and other advisors with respect to the merits and risks of an investment in the Units and with respect to applicable resale restrictions and it is solely responsible (and the Issuer is in any way responsible) for compliance with applicable resale restrictions;

 

(l)

the Securities are not listed on any stock exchange or automated dealer quotation system and no representation has been made to the Purchaser that any of the Securities  will become listed on any stock exchange or automated dealer quotation system;

 

(m)

neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities ;

 

(n)

no documents in connection with this Offering have been reviewed by the SEC or any state securities administrators;

 

(o)

there is no government or other insurance covering any of the Securities ; and

 

(p)

this Subscription Agreement is not enforceable by the Purchaser unless it has been accepted by the Issuer, and the Purchaser acknowledges and agrees that the Issuer reserves the right to reject any Subscription for any reason..

2.2 

 

(a)

the Purchaser is resident at the address indicated on page 2 hereof;

 

(b)

the Purchaser has received and carefully read this Subscription Agreement;

 

(c)

the Purchaser has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Purchaser is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Purchaser;

 

(d)

the Purchaser (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Units for an indefinite period of time, and can afford the complete loss of such investment;

 

(e)

the Purchaser is aware that an investment in the Issuer is speculative and involves certain risks, including the possible loss of the investment;

 

(f)

the entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or, if applicable, the constating documents of, the Purchaser, or of any agreement, written or oral, to which the Purchaser may be a party or by which the Purchaser is or may be bound;

 

(g)

the Purchaser has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser;

 

(h)

the Purchaser has the requisite knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Units and the Issuer, and the Purchaser is providing evidence of such knowledge and experience in these matters through the information requested in the Questionnaire;

 

(i)

the Purchaser understands and agrees that the Issuer and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Subscription Agreement, and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Purchaser shall promptly notify the Issuer;

 

(j)

all information contained in the Questionnaire is complete and accurate and may be relied upon by the Issuer, and the Purchaser will notify the Issuer immediately of any material change in any such information occurring prior to the Closing of the purchase of the Securities ;

 

(k)

the Purchaser is purchasing the Units for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest is such Units, and the Purchaser has not subdivided his interest in the Units with any other person;

 

(l)

the Purchaser is not an underwriter of, or dealer in, the common shares of the Issuer, nor is the Purchaser participating, pursuant to a contractual agreement or otherwise, in the distribution of the Securities ;

 

(m)

the Purchaser has made an independent examination and investigation of an investment in the Units and the Issuer and has depended on the advice of its legal and financial advisors and agrees that the Issuer will not be responsible in anyway whatsoever for the Purchaser’s decision to invest in the Units and the Issuer;

 

(n)

if the Purchaser is acquiring the Units as a fiduciary or agent for one or more investor accounts, the investor accounts for which the Purchaser acts as a fiduciary or agent satisfy the definition of an “Accredited Investor”, as the term is defined under Regulation D of the 1933 Act;

 

(o)

if the Purchaser is acquiring the Units as a fiduciary or agent for one or more investor accounts, the Purchaser has sole investment discretion with respect to each such account, and the Purchaser has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account;

 

(p)

the Purchaser is not aware of any advertisement of any of the Units and is not acquiring the Units as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and

 

(q)

no person has made to the Purchaser any written or oral representations:

 

(i)

that any person will resell or repurchase any of the Securities ;

 

(ii)

that any person will refund the purchase price of any of the Securities ;

 

(iii)

as to the future price or value of any of the Securities; or

 

(iv)

that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Issuer on any stock exchange or automated dealer quotation system.

2.3 

2.4 

______ 

  Category 1

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

______ 

  Category 2

A natural person whose individual net worth, or joint net worth with that person’s spouse (excluding their primary residence), on the date of purchase exceeds US $1,000,000.

______ 

  Category 3

A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US $360,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

______ 

  Category 4

A “bank” as defined under Section (3)(a)(2) of the 1933 Act or savings and loan association or other institution as defined in Section 3(a)(5)(A) of the 1933 Act acting in its individual or fiduciary capacity; a broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934 (United States); an insurance Issuer as defined in Section 2(13) of the 1933 Act; an investment Issuer registered under the Investment Issuer Act of 1940 (United States) or a business development Issuer as defined in Section 2(a)(48) of such Act; a Small Business Investment Issuer licensed by the U.S. Small Business Administration under Section 361(c) or (d) of the Small Business Investment Act of 1958 (United States); a plan with total assets in excess of $5,000,000 established and maintained by a state, a political subdivision thereof, or an agency or instrumentality of a state or a political subdivision thereof, for the benefit of its employees; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (United States) whose investment decisions are made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance Issuer or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000, or, if a self-directed plan, whose investment decisions are made solely by persons that are accredited investors.

______ 

  Category 5

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

______ 

  Category 6

A director or executive officer of the Issuer.

______ 

  Category 7

A trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Securities, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the 1933 Act.

______ 

  Category 8

An entity in which all of the equity owners satisfy the requirements of one or more of the foregoing categories.

 

(a)

no agency, governmental authority, regulatory body, stock exchange or other entity has made any finding or determination as to the merit for investment of, nor have any such agencies or governmental authorities, regulatory bodies, stock exchanges or other entities made any recommendation or endorsement with respect to, the Securities;

 

(b)

the sale and delivery of the Securities is conditional upon such sale being exempt from the prospectus filing and registration requirements, and being exempt from the requirement to deliver an offering memorandum in connection with the distribution of the Securities under the applicable securities laws or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus or registration statement;

 

(c)

none of the Securities have been or will be registered under the 1933 Act or the securities laws of any state and the Securities may not be offered or sold, directly or indirectly, in the United States to, or for the account or benefit of, a U.S. Person or a person in the United States unless registered under the 1933 Act and the securities laws of all applicable states or unless an exemption from such registration requirements is available, and the Issuer has no obligation or present intention of filing a registration statement under the U.S. Securities Act in respect of any of the Securities ;

 

(d)

the Purchaser may not offer, sell or transfer the Securities within the United States or to, or for the account or benefit of, a U.S. Person, unless the Securities are registered under the 1933 Act and the securities laws of all applicable states or an exemption from such registration requirements is available;

 

(e)

the acquisition of the Securities  has not been made through or as a result of any “general solicitation or general advertising” (as such terms are used in Rule 502(c) of Regulation D) the distribution of the Securities has not been accompanied by any advertisement, including, without limitation, in printed public media, radio, television or telecommunications, including electronic display, or as part of a general solicitation;

 

(f)

the certificates evidencing the Securities will bear a legend, and the certificates evidencing the Warrant Shares may bear a legend, regarding restrictions on transfer as required pursuant to applicable Securities Laws, including applicable federal and state securities laws of the United States;

 

(g)

the Issuer is relying on an exemption from the requirements to provide the Purchaser with a prospectus or registration statement and to sell securities through a person or Issuer registered to sell securities under the securities laws or other applicable securities legislation and, as a consequence of acquiring Securities pursuant to this exemption, certain protections, rights and

 

remedies provided by the securities laws or other applicable securities legislation including statutory rights of rescission or damages, will not be available to the Purchaser; and

 

(h)

no person has made to the Purchaser any written or oral representations:

 

(i)

that any person will resell or repurchase the Securities ;

 

(ii)

that any person will refund the purchase price of the Securities ; or

 

(iii)

as to the future price or value of any of the Securities .

 

(a)

it acknowledges that the Issuer has not filed a prospectus or registration statement with any of the securities regulators or any other securities commission or similar authority in connection with the distribution of the Securities and that:

 

(i)

the Purchaser is restricted from using most of the civil remedies available under the applicable securities laws;

 

(ii)

the Purchaser may not receive information that would otherwise be required to be provided to him under the applicable securities laws;

 

(iii)

the Purchaser is relieved from certain obligations that it would otherwise be required to give if it provided a prospectus or registration statement under the applicable securities laws; and

 

(iv)

the issuance and sale of the Securities to the Purchaser is subject to the sale being exempt from the prospectus and registration requirements of the applicable securities laws.

 

(b)

the Purchaser further acknowledges that:

 

(i)

no securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities ;

 

(ii)

there is no government or other insurance covering the Securities ;

 

(iii)

there are risks associated with the purchase of the Securities ; and

 

(iv)

there are restrictions on the Purchaser’s (or beneficial purchaser’s, if applicable) ability to re-sell the Securities and it is the responsibility of the Purchaser to find out what those restrictions are and to comply with them before selling the Securities;

 

(c)

if required by applicable Securities Laws, and any other applicable law the Purchaser will execute, deliver, file and otherwise assist the Issuer in filing such reports, undertakings and other documents with respect to the issuance of the Securities as may be required.

 

(d)

The Purchaser understands that the Securities are restricted securities (as defined in Rule 144 under the 1933 Act) and agrees that if it decides to offer, sell or otherwise transfer the Securities, it will not offer, sell or otherwise transfer any of such securities directly or indirectly, unless:

 

(i)

the transfer is to the Issuer;

 

(ii)

The transfer is outside the United States in a transaction meeting the requirements of Rule 904 of Regulation S under the 1933 Act (“Regulation S”) and in compliance with applicable local laws and regulations of the jurisdiction(s) in which such sale is made;

 

(iii)

the transfer is made pursuant to the exemption from t he registration requirements under the 1933 Act provided by Rule 144 thereunder, if available, and in accordance with applicable state securities laws; or

 

(iv)

the Securities are transferred in a transaction that does not require registration under the 1933 Act or any applicable state securities laws, and the Purchaser has prior to such sale furnished to the Issuer an opinion of counsel of recognized standing or other evidence of exemption, in either case reasonably satisfactory to the Issuer; and

 

(e)

the Purchaser understands and acknowledges that upon the issuance thereof, and until such time as the same is no longer required under the applicable requirements of the 1933 Act or applicable U.S. state securities laws and regulations, the certificates representing the Securities, and all securities issued in exchange therefore or in substitution thereof, will bear a legend in substantially the following form:

☐  (a)

☐  (b)

☐  (c)

☐  (d)

☐  (e)

☐  (f)

☐  (g)

☐  (h)

☐  (i)

☐  (j)

☐  (k)

☐  (l)

 

☐  (m)

☐  (n)

☐  (o)

☐  (p)

☐  (q)

☐  (r)

☐  (s)

☐  (t)

☐  (u)

☐  (v)

 

 

(a)

an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or

 

(b)

a bank, loan corporation, trust Issuer, trust corporation, insurance Issuer, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

 

(a)

cash,

 

(b)

securities, or

 

(c)

a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;

 

(a)

an individual,

 

(b)

a corporation,

 

(c)

a partnership, trust, fund and an association, syndicate, organization or other organized group of persons, whether incorporated or not, and

 

(d)

an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative;

 

(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;

 

(a)

is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, or

 

(b)

is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender; or

 

(c)

in Alberta, is an individual referred to in paragraph (a) or (b), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta);

 

1.

has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the transactions detailed in the Subscription Agreement and the Purchaser is able to bear the economic risk of loss arising from such transactions;

 

2.

is (tick one or more of the following boxes):

a director, executive officer, employee or control person of the Issuer or an affiliate of the Issuer

☐

a spouse, parent, grandparent, brother, sister or child of a director, executive officer, founder or control person of the Issuer or an affiliate of the Issuer

☐

 

a parent, grandparent, brother, sister or child of the spouse of a director, executive officer, founder or control person of the Issuer or an affiliate of the Issuer

☐

 

a close personal friend of a director, executive officer, founder or control person of the Issuer

☐

 

a close business associate of a director, executive officer, founder or control person of the Issuer or an affiliate of the Issuer

☐

 

an accredited investor

☐

 

a company, partnership or other entity of which a majority of the voting securities are beneficially owned by, or a majority of the directors are, persons described in paragraphs A to F

☐

 

a trust or estate of which all of the beneficiaries or a majority of the trustees or executors are persons described in paragraphs A to F

☐

purchasing as principal Securities with an aggregate acquisition cost of not less than CDN$150,000

☐

 

3.

if the Purchaser or the Disclosed Principal, as applicable, has checked box B, C, D, E, G or H in Section 2 above, the director, executive officer, founder or control person of the Issuer with whom the undersigned has the relationship is:

 

4.

if the Purchaser or the Disclosed Principal, as applicable, is resident in Ontario, the Purchaser or the Disclosed Principal, as applicable, is (tick one or more of the following boxes):

(A)

a founder of the Issuer

☐

(B)

an affiliate of a founder of the Issuer

☐

(C)

a spouse, parent, brother, sister, grandparent or child of a director, executive officer or founder of the Issuer

☐

 

(D)

a person that is a control person of the Issuer

 

(E)

an accredited investor

 

(F)

purchasing as principal Securities with an aggregate acquisition cost of not less than CDN$150,000

 

 

5.

if the Purchaser or the Disclosed Principal, as applicable, has checked box A, B, C or D in Section 4 above, the director, executive officer, founder or control person of the Issuer with whom the undersigned has the relationship is:

 

6.

if the Purchaser or the Disclosed Principal, as applicable, has ticked box F in Section 2 or box E in Section 4 above, the Purchaser or the Disclosed Principal, as applicable, satisfies one or more of the categories of “accredited investor” (as that term is defined in NI 45-106) indicated in Category 1: Accredited Investor above.