THE SECURITIES TO WHICH THIS SUBSCRIPTION AGREEMENT (THE “SUBSCRIPTION AGREEMENT”) RELATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR ANY SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND WILL BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS PROVIDED BY RULE 506(c) OF REGULATION D UNDER THE U.S. SECURITIES ACT. ACCORDINGLY, THESE SECURITIES MAY NOT BE OFFERED OR SOLD, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
Q5ID, Inc.
SUBSCRIPTION AGREEMENT FOR UNITS
(SUBSCRIBERS RESIDENT IN THE U.S., CANADA, AND CERTAIN JURISDICTIONS
OUTSIDE OF NORTH AMERICA)
This Subscription Agreement (“Agreement”) is made by the undersigned subscriber (“Subscriber”) to subscribe for shares of Q5ID, Inc., an Oregon corporation (the “Company”), and is to confirm the Subscriber’s agreement to purchase from the Company, subject to the terms and conditions set forth herein, that number of Units of the Company (each, a “Unit”) set out above the Subscriber’s name on the execution pages hereof at the price of $2.80 per Unit (the “Purchase Price”). Subject to section 1.9, each Unit consists of one share of the Company’s common stock, priced at $2.80 per share (each a “Unit Share”) and two common share purchase warrants: (i) one warrant (the “$6.00 Warrant”) which shall entitle the holder thereof to acquire one share of the Company’s common stock (each a “Warrant Share”) at a price of $6.00; and (ii) one warrant (the “$4.00 Warrant”) which shall entitle the holder thereof to acquire one Warrant Share at a price of $4.00. Each of the $6.00 Warrants and $4.00 Warrants, (each a “Warrant”) will be issued to Subscriber for no additional consideration, and shall be exercisable as follows: (i) the $6.00 Warrants shall be exercisable until the date which is two years from the Initial Closing Date (as defined below) (the “$6.00 Expiry Date”); and (ii) the $4.00 Warrants shall be exercisable until the date which is one year Initial Closing Date (as defined below) (the “$4.00 Expiry Date”). The provisions of the Warrants and the attributes and characteristics of the Warrants will be substantially as described herein and, otherwise will be set out in the Warrant Certificates (as defined herein) and contain such terms and provisions (including standard adjustment provisions).
Castle Placement, LLC (“Castle”) is acting as one of the placement agents in connection with this Offering (as defined herein). In connection with Subscriber’s purchase hereunder, Castle will be acting as placement agent, and will be referred to herein as the “Agent”. This subscription is part of a larger offering (the “Offering”) of up to 7,500,000 Units for gross proceeds of up to $21,000,000. The Company has granted the agents in the Offering an option to increase the size of the Offering by up to an additional 1,125,000 Units (the “Additional Securities”) at the Purchase Price, exercisable no later than two (2) Business Days prior to the Initial Closing Date or in the event of an Additional Closing Date, such Additional Closing Date, subject to a maximum of 1,125,000 Units.
In the event a Liquidity Event (as defined herein) has not occurred on or before June 30, 2025, the Company hereby agrees to issue to the Subscribers, for no additional consideration, such number of Common Shares equal to 10% of the aggregate number of Units issued hereunder (the “Penalty Securities”).
The Subscriber agrees to be bound by the terms and conditions set forth in this Subscription Agreement including without limitation the terms, representations, warranties, covenants, certifications and acknowledgements set forth in the applicable schedules attached thereto. The Subscriber further agrees, without limitation, that the Company may rely upon the Subscriber’s representations, warranties, covenants, certifications and acknowledgments contained in such documents.
- SUBSCRIPTION
- Irrevocable Commitment to Purchase Units. Subject to the conditions set forth in Section 1.6 below, Subscriber irrevocably commits to purchase from the Company the number of Units set out above the Subscriber’s name on the execution pages hereof.
- Purchase Price. The purchase price for the Units is $2.80 per Unit for an aggregate purchase price set out above the Subscriber’s name on the execution pages hereof.
- Stock Purchase Warrants. Each Warrant shall entitle the holder thereof to acquire one Warrant Share (as defined herein). Each Unit includes two Warrants: one $6.00 Warrant and one $4.00 Warrant, each exercisable prior to the $6.00 Expiry Date or the $4.00 Expiry Date, as applicable (and as each such term is defined herein). The provisions of the Warrants and the attributes and characteristics of the Warrants will be substantially as described herein and, otherwise will be set out in the Warrant Certificates (as defined herein) and contain such terms and provisions (including standard adjustment provisions), in substantially the form attached as Exhibit A-1 and Exhibit A-2. In this Agreement, the Shares and the Warrants are collectively referred to as the “Offered Securities” and/or “Securities” and “Purchased Securities” refers to Offered Securities purchased by a Subscriber.
- Early Exercise Incentive. Each Warrant will include a provision which will provide for the issuance of additional Common Shares for exercises of such Warrant at any time prior to 6 months before the applicable Expiry Date (the “Early Exercise Incentive”). This Early Exercise Incentive will operate to award an additional number of Common Shares equal to 20% of the number of Common Shares underlying the Warrant. The Early Exercise Incentive will only be available to holders who exercise the Warrants by paying the exercise price in cash, and not for exercises pursuant to the net exercise provisions of such Warrants. The Early Exercise Incentive is more specifically described in the form of Warrants attached as Exhibit A-1 and Exhibit A-2.
- Issuance of Purchased Securities. Subject to the satisfaction of the conditions set forth in Section 1.6 below, the Company will issue the Purchased Securities to Subscriber.
- Conditions to Purchase. The purchase of the Shares by Subscriber and the issuance of the Shares and Warrant by the Company is conditioned on the following:
- Subscriber has fully and accurately completed and signed the following documents (the “Subscription Documents”) which are included in this Agreement:
- Accredited Investor Representation and Verification Letter (Schedule 2.5);
- Spousal Consent (Exhibit B) (if Subscriber is an individual and is married or a member of a domestic partnership); and
- Joinder Agreement (Exhibit C) (if Subscriber is a New Shareholder pursuant to Section 4 of this Agreement).
- Subscriber has complied with such other accredited investor verification processes as specified by the Agent.
- The Company’s acceptance, in its sole discretion, of this Agreement and the Subscription Documents by providing Subscriber with a countersigned copy of this Agreement.
- Closing. The Offered Securities are being offered as part of the Offering that has an initial closing date of October 31, 2022 (the “Initial Closing Date”) or such other initial closing date as may be agreed to by the Agent and the Company, and other subsequent closing dates thereafter as determined by the Company and the Agent (each, an “Additional Closing” at an “Additional Closing Date”), with such Additional Closings taking place no later than December 31, 2022. No minimum amount is required to be raised on the Initial Closing Date or on Additional Closing Dates. Each closing (a “Closing”) will be held at the offices of Schwabe Williamson & Wyatt PC, 1211 SW Fifth Avenue, Suite 1900, Portland, OR 97204 or such other location as determined by the Company and the Agent. Provided the conditions in Section 1.6 are satisfied, closing of the Offering and issuance of Purchased Securities to Subscriber will occur simultaneously with each Closing, as applicable, and issuance of the Purchased Securities to Subscribers for which the Company has accepted signed subscription agreements.
- Payment. Subscriber will pay the aggregate Purchase Price for the Purchased Securities by delivering to the Agent a certified check or wire transfer or other form of payment acceptable to the Agent.
- Change in Terms in Connection with Additional Closing(s). It is a term and condition of the issuance of Units that in the event that the Company sells Units to any other purchaser as part of the Offering at a subsequent Additional Closing, and the pricing or other terms of such sale are more favorable from an economic standpoint as compared with the terms of the sale of Units to Subscriber hereunder, the Company will make an adjustment or adjustments to the subscription evidenced hereby to provide for equivalent terms in favor of Subscriber. By way of example, such adjustments may include: (a) in the event that the price per Unit Share in such Additional Closing is lower than the price per Unit Share set forth herein, the Company shall automatically issue, for no additional consideration, to Subscriber such additional number of Unit Shares necessary to achieve the same overall price per Unit Share as the price per Unit Share used in such subsequent sale to such other purchaser or purchasers; or (b) in the event that the number or terms of Warrants issued in connection with such Additional Closing are more favorable than the number or terms of Warrants issued in connection with this Agreement, the Company will, for no additional consideration, provide for the exchange of the Warrants issued to Subscriber for replacement Warrants in an additional proportional amount and/or on such equivalent more favorable terms as the issuance to such other purchaser or purchasers. In all such cases, the Company shall exercise its reasonable good faith discretion with the input of the Agent in determining whether the terms of any such subsequent sale of Units in the Offering is more favorable from an economic standpoint than the terms of the sale of Units to Subscriber hereunder. For the avoidance of doubt, the Company shall have no obligation to Subscriber to make adjustments to account for non-economic terms that may be offered to other investors, such as a right to nominate board members or the granting of board observer rights to certain investors.
- Definitions. For the purposes of this Agreement:
“Canadian Purchaser” shall mean any purchaser of Offered Securities that is subject to the securities laws of any province or territory of Canada.
“Common Shares” or “Shares” means the shares of common stock of the Company.
“Liquidity Event” means the occurrence of a financing to raise minimum gross proceeds of $10,000,000 together with one of the following:
- the Company completing a Public Offering Transaction; or
- the Company completing an RTO/Merger Transaction.
“Public Offering Transaction” means a bona-fide public offering of Common Shares or comparable equity securities by the Company or an affiliated entity pursuant to a prospectus or registration statement filed with one or more securities commissions in Canada, the United States and/or the United Kingdom and resulting in the listing of such securities on (i) a recognized stock exchange in Canada, (ii) a national United States stock exchange or (iii) a recognized stock exchange in the United Kingdom.
“Resulting Issuer” means the listed corporation resulting from the completion of an RTO/Merger Transaction.
“Resulting Issuer Securities” means any equity security of a Resulting Issuer that is comparable to the Common Shares.
“RTO/Merger Transaction” means a reverse takeover, statutory amalgamation, merger, statutory arrangement, business combination, share exchange, qualifying transaction or similar transaction involving the Company or an affiliated entity and a reporting issuer in a province of Canada or a public company in any jurisdiction and in which, in all cases, results in a class of Common Shares or equity securities of the Company or an affiliated entity (or the equity securities of a successor issuer) being listed and posted for trading on (i) a recognized stock exchange in Canada, (ii) a national United States stock exchange or (iii) a recognized stock exchange in the United Kingdom.
“U.S. Securities Act” means the United States Securities Act of 1933, as amended.
- REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SUBSCRIBER
Subscriber (whether such Subscriber is a U.S. Purchaser or a Canadian Purchaser) represents, warrants, and covenants to the Company as follows:
- Status.
- If Subscriber is an individual, Subscriber is the age of majority in the jurisdiction where the Subscriber is resident and in any event, at least 18 years of age.
- If Subscriber is an individual, Subscriber is a bona fide resident and domiciliary of the State or Province specified on the signature page of this Agreement and has no present intention of becoming a resident of any other State, Province or jurisdiction.
- If Subscriber is a business entity or trust, Subscriber is duly organized and validly existing under the laws of the State, Province or jurisdiction specified on the signature page of this Agreement.
- Authority. Subscriber has full power and authority to sign and deliver this Agreement and to perform all of Subscriber’s obligations under this Agreement.
- Binding Obligation. This Agreement is the legal, valid, and binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, or other similar laws of general application or by general principles of equity.
- No Conflicts. The signing and delivery of this Agreement by Subscriber and the performance by Subscriber of all of Subscriber’s obligations under this Agreement will not:
- if Subscriber is a business entity or trust, conflict with Subscriber’s articles of incorporation, bylaws, articles of organization, operating agreement or trust documents (as applicable);
- breach any agreement to which Subscriber is a party, or give any person the right to accelerate any obligation of Subscriber;
- violate any law, judgment, or order to which Subscriber is subject; or
- require the consent, authorization, or approval of any person, including but not limited to any governmental body.
- Accredited Investor. Subscriber is an “accredited investor” as defined in Rule 501(a) of Regulation D under the U.S. Securities Act. Subscriber has completed the Accredited Investor Representation and Verification Letter in the form attached as Schedule 2.5, which indicates which category of accredited investor that Subscriber comes within. The information on Schedule 2.5, and all information provided to the Agent in connection with the accredited investor verification process is accurate in all material respects as of the date hereof.
- Private Placement Memorandum. Subscriber has received a copy of, has had a reasonable time to review, and has reviewed, the Confidential Private Placement Memorandum dated August 15, 2022, including all risk factors contained therein and all exhibits thereto (the “PPM”). Subscriber has had an opportunity to consult with legal counsel regarding this document.
- Speculative Investment. Subscriber understands that:
- the Securities are a speculative investment and involve a high degree of risk of loss of Subscriber’s investment;
- Subscriber may be unable to liquidate Subscriber’s investment in the Securities because the Securities are subject to substantial transfer restrictions and because no public market exists for the Securities; and
- there is a risk that insufficient funds may be raised on the Closing to fund the Company’s objectives and that further closings may or may not take place after the Closing. Subscriber further acknowledges that the Company may complete additional financings at prices, on terms and in amounts as may be determined by the Company, from time to time in the future and that such future financings may have a dilutive effect on current shareholders, including the Subscriber but there is no assurance that such financings will be available on reasonable terms or at all.
- Sophistication.
- Subscriber has the knowledge and experience in financial and business matters necessary to make Subscriber capable of evaluating the merits and risks of an investment in the Securities.
- Subscriber has had the opportunity to ask questions and receive answers concerning the Company and the terms and conditions of the purchase of the Securities, and to obtain any additional information deemed necessary by Subscriber to evaluate the merits and risks of an investment in the Securities. Subscriber has obtained all of the information desired in connection with the Securities.
- Non-Reliance. In deciding whether to enter into this Agreement, Subscriber has relied solely on the information, statements, and representations contained in this Agreement and in the PPM. Subscriber has not relied on any information provided by, or on any statements or representations made by, the Company or any officer or authorized representative of the Company, other than the information, statements, and representations contained in this Agreement and in the PPM.
- Investment Intent.
- Subscriber is acquiring the Securities solely for Subscriber’s own account, for investment, and not with a view to or for resale in connection with any distribution of the Securities.
- Subscriber has no oral or written agreement or plan to sell, transfer, or pledge or otherwise dispose of the Securities to any person.
- Subscriber understands that Subscriber must bear the economic risk of owning the Shares for an indefinite period of time.
- Transfer and Securities Law Restrictions.
- Subscriber is aware that the Offered Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States and that the Offered Securities may not be offered or sold without registration under the U.S. Securities Act or compliance with the requirements of an exemption from such registration requirements and the applicable securities laws of any state of the United States and acknowledges that the Company has no present intention of filing a registration statement under the U.S. Securities Act in respect of the Offered Securities.
- The Purchased Securities will be “restricted securities” as defined in Rule 144 under the U.S. Securities Act and will bear the following legend:
“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ''U.S. SECURITIES ACT'') OR ANY APPLICABLE STATE SECURITIES LAWS, AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) AGREES THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER, DIRECTLY OR INDIRECTLY, THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE CORPORATION; (B) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER THE U.S. SECURITIES ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE U.S. SECURITIES ACT (IF AVAILABLE); OR (C) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, AND IN EACH CASE OF (B) OR (C) ABOVE PURSUANT TO ANY APPLICABLE STATE SECURITIES LAWS AND (2) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY PURSUANT TO SUBPARAGRAPH (B) ABOVE, FURNISH TO THE CORPORATION OR CORPORATION’S COUNSEL SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED BY THE CORPORATION TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT.”
- The Purchased Securities may not be resold unless registered under the U.S. Securities Act and applicable securities laws of any state of the United States or sold pursuant to an exemption from such registration requirements, including Rule 144, and an opinion letter of legal counsel is delivered to the Company and its transfer agent, if any; provided however that in connection with any sale or disposition of Purchased Securities pursuant to Rule 144 of the U.S. Securities Act or pursuant to any other exemption under the U.S. Securities Act such that the purchaser acquires freely tradable shares, the Company shall cause, at its sole expense, its legal counsel to issue appropriate opinion letters for the purposes of the Company or its transfer agent, if any, issuing replacement certificates representing such securities without restrictive legends.
- Subscriber understands and agrees that the Warrants may not be exercised unless (i) the Warrant Shares are registered under the U.S. Securities Act and any applicable securities laws of any state of the United States or (ii) the person seeking to exercise the Warrants was the original Purchaser of the Warrants (as part of the Units) under a Subscription Agreement and, at the time of such exercise, such person reaffirms the representations and warranties made by such person in the Subscription Agreement and herein, or (iii) exemptions from the registration requirements of the U.S. Securities Act and any applicable securities laws of any state of the United States are available and the person seeking to exercise the Warrants has delivered an opinion of counsel of recognized standing to such effect reasonably satisfactory to the Company.
- Subscriber understands that the Shares will be subject to certain transfer and other restrictions set forth in the Shareholders’ Agreement, dated May 1, 2019, between the Company and the Company’s Shareholders (the “Shareholders’ Agreement”). The Company may place conspicuously upon each certificate representing the Shares a legend substantially in the following form, the terms of which are agreed to by Subscriber:
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET FORTH IN A SHAREHOLDERS’ AGREEMENT DATED MAY 1, 2019 AMONG THE COMPANY AND ITS SHAREHOLDERS.”
- Tax Matters. Subscriber understands and agrees that there may be material tax consequences to the Subscriber of an acquisition, disposition, exercise, or conversion of any of the Offered Securities; the Company gives no opinion and makes no representation with respect to the tax consequences to the Subscriber under federal, state, local or foreign tax law of the Subscriber’s acquisition or disposition of Purchased Securities.
- No Assignment. Subscriber will not assign or delegate any of Subscriber’s rights or obligations under this Agreement to any person.
- Placement Agents.
(a) Castle. Subscriber understands and acknowledges that the Company and Agent have entered into a engagement letter agreement (the “Engagement Agreement”) in connection with the Offering and the Company will compensate Agent in the form of commissions and fees and expense reimbursement for its services in connection with the Offering. Pursuant to the terms of the Engagement Agreement, Agent will receive compensation in connection with the Offering as follows: (i) cash commissions equal to 4% of the amount invested by participants in the Offering identified by Agent (ii) cash commissions equal to 2% of the amount invested by new participants in the Offering identified by Agent and the Company; (iii) a one-time cash commission of $5,000 in connection with investments by certain shareholders of the Company; and (iv) share purchase warrants to acquire such number of Shares equal to 2% of the shares of Common Stock sold pursuant to the Offering to all participants (excluding certain shareholders of the Company.
(b) Other Placement Agents. Subscriber understands and acknowledges that the Company has entered into agreements with other placement agents in connection with the Offering and the Company will compensate such placement agents in the form of commissions and fees and expense reimbursement for its services in connection with the Offering. As part of such agreements, placement agents, other than Castle, may also be paid by the Company in connection with the Subscriber’s subscription hereunder. Such fees may include the issuance of share purchase warrants to acquire Shares.
- Sources of Funds. The funds representing the aggregate subscription price for the Purchased Securities which will be advanced by the Subscriber hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, and the Purchaser acknowledges that the Company and the Agent may in the future be required by law to disclose the Subscriber's name and other information relating to this Subscription Agreement and the Subscriber's subscription hereunder, on a confidential basis, pursuant to such legislation. To the best of the Subscriber’s knowledge, none of the subscription funds to be provided by the Subscriber (i) have been or will be derived from or related to any activity that is deemed criminal under the law of Canada, the United States, or any other jurisdiction, or (ii) are being tendered on behalf of a Person who has not been identified to the Subscriber. The Subscriber shall promptly notify the Company and the Agent if the Subscriber discovers that any of such representations ceases to be true, and shall provide the Company and the Agent with appropriate information in connection therewith. Notwithstanding that the Subscriber may be purchasing Purchased Securities as agent on behalf of an undisclosed principal, the Subscriber agrees to provide, on request, particulars as to the identity of such undisclosed principal as may be required by the Company or the Agent in order to comply with the foregoing.
- ADDITIONAL ACKNOWLEDGMENTS, REPRESENTATIONS, WARRANTIES AND COVENANTS OF CANADIAN PURCHASERS
If Subscriber is a Canadian Purchaser, Subscriber acknowledges, represents, warrants and covenants to the Company as follows:
- Accredited Investor. Subscriber has completed Schedule 3.1, and Subscriber’s representations, warranties and certifications in Schedule 3.1 are accurate in all material respects as of the date hereof.
- Not a Reporting Issuer. The Company is not a reporting issuer as that term is defined in applicable Canadian securities legislation nor will it become a reporting issuer in any jurisdiction of Canada or elsewhere following completion of this offering and, as a result:
- The Company will not be subject to the continuous disclosure requirements of such securities legislation, including the requirements relating to the production and filing of audited financial statements and other financial information, and
- any applicable hold periods under applicable Canadian securities legislation may never expire, and the Securities may be subject to restrictions on resale for an indefinite period of time.
- Restrictions on Resale. There are restrictions on the Subscriber’s ability to resell the Securities and it is the responsibility of the Subscriber to find out what those restrictions are and to comply with such restrictions before selling any of the Securities.
- Canadian Legend. Upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, any certificates representing the Securities will bear a legend pursuant to applicable Canadian securities legislation.
- Prospectus Exemption. The Company has advised the Subscriber that the Company is relying on an exemption from the requirements to provide the Subscriber with a prospectus and to sell the Securities through a person registered to sell securities, under Canadian provincial securities legislation, and as a consequence of acquiring the Securities pursuant to such exemption, certain protections, rights and remedies provided by the applicable securities legislation including the various provincial securities acts, including statutory rights of rescission or damages, will not be available to Subscriber.
- No Review. No securities commission or similar regulatory authority has reviewed or passed on the merits of any of the Securities.
- No Insurance. There is no government or other insurance covering any of the Securities.
- Not in the United States. The Subscriber is not in the United States.
- No Representations. No person has made to the Subscriber any written or oral representations:
- that any person will resell or repurchase any of the Securities,
- that any person will refund the purchase price of any of the Securities, or
- as to the future price or value of any of the Securities.
- SHAREHOLDERS’ AGREEMENT
Each Purchaser is required to be party to the Shareholders’ Agreement.
Please check the applicable option below:
____ New Shareholders: Subscriber hereby agrees to be a party to and be bound by the terms of the Shareholders’ Agreement with respect to the Shares. To further evidence this joinder and for inclusion with the Shareholders’ Agreement in the corporate records, Subscriber has executed the form of Joinder that is attached as Exhibit C hereto. Failure of Subscriber to execute such Joinder does not invalidate Subscriber’s joinder as a party to the Shareholders’ Agreement under this Section 4. If applicable, Subscriber’s spouse has also executed the form of Spousal Consent that is attached as Exhibit B hereto. Subscriber acknowledges that once Subscriber and other purchasers of common stock in the Offering complete their purchases of Shares, the Company may, in its discretion, have all shareholders sign an updated restatement of the Shareholders’ Agreement which reflects all new shareholders on the schedule of shareholders and which appropriately references the common stock. Subscriber agrees to sign such restated Shareholders’ Agreement presented by the Company provided that the provisions therein are substantially similar to those in the Shareholders’ Agreement provided to Subscriber in connection with Subscriber’s purchase.
____ Existing Shareholders: By executing this Agreement, Subscriber agrees to be bound by the terms of the Shareholders’ Agreement, to which Subscriber is a party, with respect to the Shares subscriber is acquiring by the execution of this Agreement. Subscriber further agrees that the Shares are subject to the Shareholder’s Agreement, to which Subscriber is a party. If applicable, Subscriber’s spouse has also executed the form of Spousal Consent that is attached as Exhibit B hereto. Subscriber acknowledges that once Subscriber and other purchasers of common stock in the Offering complete their purchases of Shares, the Company may, in its discretion, have all shareholders sign an updated restatement of the Shareholders’ Agreement which reflects all new shareholders on the schedule of shareholders and which appropriately references the common stock. Subscriber agrees to sign such restated Shareholders’ Agreement presented by the Company provided that the provisions therein are substantially similar to those in the existing Shareholders’ Agreement, to which Subscriber is a party.
- REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY
The Company hereby represents and warrants to, and covenants with the Subscriber as follows and acknowledges that the Subscriber is relying on such representations and warranties in connection with the transactions contemplated herein:
- The Company is a corporation duly incorporated and organized under the laws of the State of Oregon and is validly existing thereunder with full corporate power to own its properties and carry on its business as now being conducted.
- The Company has all requisite corporate power and authority to enter into this Agreement and the Warrant Certificates and perform the same and do all other acts which may be necessary to carry out its obligations under this Agreement.
- At the Closing Date, all necessary corporate action will have been taken by the Company to validly issue the Unit Shares and Warrants comprising the Purchased Securities and upon issuance the Unit Shares will be issued as fully paid and non-assessable Common Shares and the Warrants will be validly created and issued.
- At the Closing Date, all necessary corporate action will have been taken by the Company to validly authorize and allot the Warrant Shares and, upon exercise of the Warrants in accordance with their terms and when issued and delivered by the Company, against payment of the consideration therefor, the Warrant Shares will be validly issued as fully paid and non-assessable Common Shares.
- The authorization, execution and delivery of this Agreement and the Warrant Certificates, the performance by the Company of its obligations thereunder, the issue and sale of the Purchased Securities do not and will not conflict with or result in a breach of any of the terms, conditions or provisions of the Company’s constating documents or any agreement or instrument to which the Company is a party.
- At the Closing Date, this Agreement and the Warrant Certificates will have been duly executed and delivered by the Company, each of which is a valid agreement enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law.
- The Company shall not, from the Initial Closing Date until ninety (90) days after the Liquidity Event, (i) grant registration rights to any party unless the Purchasers are granted registration rights on terms at least as favorable as those proposed to be granted to such party; or (ii) prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the U.S. Securities Act of any of its equity securities, other than (A) a Registration Statement pursuant to the Most Favored Registration Rights, (B) any registration statement or post-effective amendment to a registration statement (or supplement thereto) relating to the Company’s employee benefit plans registered on Form S-8 or, in connection with an acquisition, on Form S-4, or (C) a registration statement covering a firm commitment underwritten public offering by the Company of its Common Shares in connection with a Liquidity Event.
- In the event a Liquidity Event (as defined herein) has not occurred on or before June 30, 2025, the Purchasers shall be issued, for no additional consideration, such number of Common Shares equal to 10% of the aggregate number of Units issued hereunder.
- Each Subscriber is entitled to rely upon the representations and warranties of the Company set forth in the Agency Agreement as if the Subscriber were a party to the Agency Agreement.
- RELEASE AND INDEMNIFICATION
Subscriber understands that the Company is relying on Subscriber’s representations, warranties, and covenants in this Agreement to issue the Securities pursuant to the exemption from the registration requirements of the U.S. Securities Act and applicable securities laws of any state of the United States provided by Rule 506(c) of Regulation D under the U.S. Securities Act. Subscriber releases and will defend and indemnify the Company and each present and future shareholder, director, officer, employee, and representative of the Company for, from, and against any and all claims, actions, proceedings, damages, liabilities, and expenses of every kind, whether known or unknown, including but not limited to reasonable attorney’s fees, resulting from or arising out of a breach by Subscriber of any representation, warranty, or covenant in this Agreement.
Subscriber acknowledges that the Agent is acting as agent in this transaction and that all warranties, conditions, representations or stipulations, other than those relating solely to the Agent, whether express or implied and whether arising hereunder or under prior agreement or statement or by statute or at common law are expressly those of the Company. Subscriber acknowledges that no information or representation concerning the Company has been provided to the Purchaser by the Company or the Agent other than those contained in this Agreement, the Agency Agreement and the PPM and that the Purchaser is relying entirely upon this Agreement, the Agency Agreement and the PPM. No Person in the employment of, or acting as agent of, the Agent or the Company has any authority to make or give any representation or warranty whatsoever in relation to the Company or the Offered Securities other than as provided in this Agreement, the Agency Agreement or the PPM. Any information given or statement made is given or made without liability or responsibility howsoever arising on the part of the Agent or the Company, except as provided herein, and Subscriber hereby releases the Agent and the Company from any claims that may arise in respect of any such information given or statement made.
- OREGON SECURITIES LAW WAIVER
To the fullest extent permitted by law, Subscriber irrevocably waives and releases all claims and rights of action (including, but not limited to, the right to seek rescission) that arise from or relate to the transactions contemplated by this Agreement (including, but not limited to, the issuance of the Shares and the issuance of any other securities), whether known or unknown, that Subscriber may have now or in the future under Oregon Revised Statutes (“ORS”) 59.115, ORS 59.137 or any other provision of the Oregon Securities Law. Those persons identified in ORS 59.115(3) and ORS 59.137(2) are intended third-party beneficiaries of the waiver and release set forth in this Section 8. Nothing in this Section 8 limits or restricts Subscriber from asserting claims under the federal securities laws or for breach of contract. Subscriber acknowledges and agrees that the protections afforded to Subscriber under the federal securities laws are adequate and appropriate given Subscriber’s level of sophistication.
- COLLECTION OF PERSONAL INFORMATION
The Subscriber acknowledges and consents to the fact that the Company is collecting the Subscriber’s personal information for the purpose of this Agreement and completing this Offering. Specifically, the Subscriber is hereby notified that:
- the Company may deliver to any securities commission having jurisdiction over the Company, the Subscriber or this subscription, including any Canadian provincial securities commissions and/or the U.S. Securities and Exchange Commission (collectively, the “Commissions”), certain personal information pertaining to the Subscriber, including such Subscriber’s full name, residential address and telephone number, the number of Shares or other securities of the Company owned by the Subscriber, the number of Securities purchased by the Subscriber and the total purchase price paid for such Securities, the prospectus or registration exemption relied on by the Company, and the date of distribution of the Securities;
- such information is being collected indirectly by the Commissions under the authority granted to them in securities legislation;
- such information is being collected for the purposes of the administration and enforcement of securities laws; and
- if the Subscriber has any questions about the collection and use of the personal information and/or the security regulatory authority’s or regulator’s indirect collection of the personal information, the Subscriber hereby acknowledges and agrees that he/she/it has been notified to contact the securities regulatory authority or regulator in the local jurisdiction of the Subscriber.
- GENERAL
- Authority to the Agent. Subscriber hereby irrevocably authorizes the Agent, in its sole discretion:
- to negotiate and settle the form of any certificates to be delivered and any agreement to be entered into in connection with the Purchased Securities, and to vary, amend, alter or waive, on its own behalf and on behalf of the Subscriber, in whole or in part, or extend the time for compliance with, any of the conditions for completing the sale of the Purchased Securities in such manner and on such terms and conditions as the Agent may determine, acting reasonably, without in any way affecting the Subscriber’s obligations or the obligations of any others hereunder;
- to act as its representative at the Closing with full power of substitution, as its true and lawful attorney and agent with the full power and authority in its place and stead to swear, execute, file and record any document necessary to accept delivery of, and, if applicable, to accept delivery of certificates representing, or evidence of electronic deposit of, the Purchased Securities on the Closing Date, to terminate this subscription on its behalf in the event that any condition precedent to the Offering has not been satisfied, to execute a receipt for such certificates and all other documentation, and to deliver such certificates to the Subscriber, as set out in this Agreement promptly after Closing;
- to approve any opinions, certificates or other documents addressed to the Subscriber; and
- to waive, in whole or in part, any representations, warranties, covenants or conditions for the benefit of the Subscriber contained in this Agreement or in any agreement or document ancillary or related to Offering.
- Amendment. This Agreement may be amended only by a written document signed by the party against whom enforcement is sought.
- Waiver. No waiver will be binding on a party unless it is in writing and signed by the party making the waiver. A party’s waiver of a breach of a provision of this Agreement will not be a waiver of any other provision or a waiver of a subsequent breach of the same provision.
- Severability. If a provision of this Agreement is determined to be unenforceable in any respect, the enforceability of the provision in any other respect and of the remaining provisions of this Agreement will not be impaired.
- Further Assurances. The parties will sign other documents and take other actions reasonably necessary to further effect and evidence this Agreement.
- Attachments. Any exhibits, schedules, and other attachments referenced in this agreement are part of this Agreement.
- Governing Law. This Agreement is governed by the laws of the State of Oregon, without giving effect to any conflict-of-law principle that would result in the laws of any other jurisdiction governing this Agreement.
- Venue. Any action, suit, or proceeding arising out of the subject matter of this Agreement will be litigated in courts located in Multnomah County, Oregon. Each party consents and submits to the jurisdiction of any local, state, or federal court located in Multnomah County, Oregon.
- English Language. The parties have requested and agree that this Agreement and all documents relating thereto be drawn up in English / Les parties ont demandé que cette convention ainsi que tous les documents qui s’y rattachent soient rédigés en anglais.
- Attorney’s Fees. If any arbitration, action, suit, or proceeding is instituted to interpret, enforce, or rescind this Agreement, or otherwise in connection with the subject matter of this Agreement, including but not limited to any proceeding brought under the United States Bankruptcy Code, the prevailing party on a claim will be entitled to recover with respect to the claim, in addition to any other relief awarded, the prevailing party’s reasonable attorney's fees and other fees, costs, and expenses of every kind, including but not limited to the costs and disbursements specified in ORCP 68 A(2), incurred in connection with the arbitration, action, suit, or proceeding, any appeal or petition for review, the collection of any award, or the enforcement of any order, as determined by the arbitrator or court.
- Entire Agreement; Signatures. This Agreement contains the entire understanding of the parties regarding the subject matter of this Agreement and supersedes all prior and contemporaneous negotiations and agreements, whether written or oral, between the parties with respect to the subject matter of this Agreement. The Company and the Agent may rely on delivery by fax machine or e‑mail of an executed copy of this subscription, and acceptance by the Company of such faxed or e‑mailed copy will be equally effective to create a valid and binding agreement between the Subscriber and the Company in accordance with the terms of this Agreement. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same document. An electronic transmission of a signature page will be considered an original signature page. At the request of a party, the other party will confirm an electronically-transmitted signature page by delivering an original signature page to the requesting party. If less than a complete copy of this Agreement is delivered to the Company at the Closing, the Company and the Agent shall be entitled to assume that the Subscriber accepts and agrees with all terms and conditions of this Agreement on the pages not delivered at the Closing, unaltered.
[signature page to follow]
This Agreement is dated effective as of the date first indicated above.
|
Subscriber:
|
|
FOR INDIVIDUAL SUBSCRIBER:
|
|
(sign name)
|
|
(print full legal name)
|
|
SSN:
|
|
|
Address, city, state/province, zip/postal code:
|
|
|
|
State/province of residence
|
|
|
|
FOR ENTITY/TRUST SUBSCRIBER:
Full legal name of entity:
|
|
By:
|
|
|
Its:
|
(sign name)
|
|
|
(print name and title)
|
|
EIN:
|
|
|
Address, city, state/province, zip/postal code:
|
|
|
|
State/province of residence
|
|
|
|
REGISTRATION AND DELIVERY INSTRUCTIONS
ALL SUBSCRIBERS
Delivery: Please deliver the certificates representing the Units and Warrants comprising the Purchased Securities to (unless otherwise directed by the Agent):
Name
Account reference, if applicable
Contact name
Address, including postal code
Telephone number
Registration: The certificates representing the Unit Shares and Warrants comprising the Purchased Securities which are to be delivered at Closing should be registered as follows (unless otherwise directed by the Agent):
Name
Account reference, if applicable
Address, including postal code
- Words and terms herein with the initial letter or letters thereof capitalized and defined in the Agreement shall have the meanings given to such capitalized words and terms in the Agreement.
-
COMPANY SUBSCRIPTION ACCEPTANCE
Q5ID, Inc. hereby accepts the subscription from the below Subscriber in the amount set forth below.
Subscriber: ___________________________________________________________
Subscription Amount: $_________________________________________________
Dated: ___________________________________
|
Company:
|
|
Q5ID, Inc.
|
|
By:
|
|
|
|
Steve Larson, President and CEO
|
SCHEDULE 2.5
Accredited Investor Representation and Verification Letter
Accredited Investor Questionnaire for U.S. Purchasers
To determine whether you are eligible to purchase Shares in Q5ID, Inc. (the “Company”), please complete the following questionnaire. Please indicate each of the following categories that apply to the person or entity that is seeking to make the investment. (please initial the appropriate line or lines):
|
1. _______
|
A bank, as defined in Section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the United States Securities Exchange Act of 1934; an investment adviser registered pursuant to section 203 of the Investment Advisers Act of 1940 or registered pursuant to the laws of a state; an investment adviser relying on the exemption from registering with the United States Securities and Exchange Commission (the “Commission”) under section 203(l) or (m) of the United States Investment Advisers Act of 1940; an insurance company as defined in Section 2(a)(13) of the U.S. Securities Act; an investment company registered under the United States Investment Company Act of 1940; a business development company as defined in Section 2(a)(48) of the United States Investment Company Act of 1940; a small business investment company licensed by the United States Small Business Administration under Section 301 (c) or (d) of the United States Small Business Investment Act of 1958; a rural business investment company as defined in section 384A of the United States Consolidated Farm and Rural Development Act; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with total assets in excess of US$5,000,000; or an employee benefit plan within the meaning of the United States Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment adviser, or an employee benefit plan with total assets in excess of US$5,000,000 or, if a self-directed plan, with investment decisions made solely by persons who are U.S. Accredited Investors; or
|
|
2. _______
|
A private business development company as defined in Section 202(a)(22) of the United States Investment Advisers Act of 1940; or
|
|
3. _______
|
An organization described in Section 501(c)(3) of the United States Internal Revenue Code, a corporation, a Massachusetts or similar business trust, a partnership, or a limited liability company, not formed for the specific purpose of acquiring the Purchased Securities, with total assets in excess of US$5,000,000; or
|
|
4. _______
|
A director or executive officer of the Corporation; or
|
|
5. _______
|
A natural person whose individual net worth, or joint net worth, with that person’s spouse or spousal equivalent (being a cohabitant occupying a relationship generally equivalent to that of a spouse), exceeds US$1,000,000 as determined on the following basis:
(i) the person’s primary residence shall not be included as an asset;
(ii) indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale and purchase of securities contemplated by the accompanying Subscription Agreement, shall not be included as a liability (except that if the amount of such indebtedness outstanding at such time exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability);
(iii) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence shall be included as a liability;
(iv) for the purposes of calculating joint net worth of the person and that person’s spouse or spousal equivalent, (A) joint net worth can be the aggregate net worth of the investor and spouse or spousal equivalent, and (B) assets need not be held jointly to be included in the calculation; and reliance by the person and that person’s spouse or spousal equivalent on the joint net worth standard does not require that the securities be purchased jointly); or
|
|
6. _______
|
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 or spousal equivalent in excess of US$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or
|
|
7. _______
|
A trust, with total assets in excess of US$5,000,000, not formed for the specific purpose of acquiring the securities offered under the accompanying Subscription Agreement, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D under the U.S. Securities Act; or
|
|
8. _______
|
An entity in which all of the equity owners are U.S. Accredited Investors; or
If you checked Category 8, please indicate the name and category of U.S. Accredited Investor (by reference to the applicable category number herein) of each equity owner:
|
|
|
Name of Equity Owner
|
Category of U.S. Accredited Investor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
It is permissible to look through various forms of equity ownership to natural persons in determining the U.S. Accredited Investor status of entities under this category. If those natural persons are themselves U.S. Accredited Investors, and if all other equity owners of the entity seeking U.S. Accredited Investor status are U.S. Accredited Investors, then this category will be available.
|
|
9. _______
|
An entity, of a type not listed in Categories 1, 2, 3, 7 or 8, not formed for the specific purpose of acquiring the Purchased Securities, owning investments in excess of US$5,000,000 (note: for the purposes of this Category 9, “investments is defined in Rule 2a51-1(b) under the United States Investment Company Act of 1940); or
|
|
10. _______
|
A natural person holding in good standing one or more of the following professional certifications or designations or credentials from an accredited educational institution that the Commission has designated as qualifying an individual for accredited investor status: The General Securities Representative license (Series 7), the Private Securities Offerings Representative license (Series 82), and the Licensed Investment Adviser Representative (Series 65); or
|
|
11. _______
|
Any “family office,” as defined in rule 202(a)(11)(G)-1 under the United States Investment Advisers Act of 1940: (i) with assets under management in excess of US$5,000,000, (ii) that is not formed for the specific purpose of acquiring the Purchased Securities, and (iii) whose prospective investment is directed by a person (a “Knowledgeable Family Office Administrator”) who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment; or
|
|
12. _______
|
A “family client,” as defined in rule 202(a)(11)(G)-1 under the United States Investment Advisers Act of 1940, of a family office meeting the requirements set forth in Category 11 above and whose prospective investment in the Company is directed by such family office with the involvement of the Knowledgeable Family Office Administrator.
|
SUPPORTING DOCUMENTATION
I understand that if I checked boxes 5 or 6 above, the Agent and/or its United States broker-dealer affiliate will be verifying my status as an accredited investor to the Company. In relation to assisting the Agent in the verification process, I will provide all supporting documentation as required by the Agent or deliver to the Agent a Verification Letter in substantially the form attached as Annex A hereto completed by either (a) a registered broker-dealer, (b) an SEC-registered investment advisor, (c) a licensed attorney who is in good standing under the laws of jurisdiction in which he or she is admitted to practice, or (d) a certified public accountant who is duly registered and in good standing under the laws of the pace of his or her residence or principal office. If I elect to deliver a Verification Letter, I hereby consent to the Agent contacting the person delivering the Verification Latter to answer any questions in relation thereto and to the delivery of the Verification Letter to the Company by the Agent at Closing.
I understand that the Company and the Agent may request additional supporting documentation from me in order to verify my status as an Accredited Investor and I hereby agree to promptly provide any such additional supporting documentation. In addition, the Company and the Agent reserve the right, in their sole discretion, to verify your status as an Accredited Investor using any other methods that they may deem acceptable from time to time.
I further understand that, even if I complete and execute this Letter and provide all additional supporting documentation requested by the Company and the Agent, the Company may, in its sole discretion, refuse to accept my subscription for the Securities for any reason or for no reason.
IN WITNESS WHEREOF, the undersigned has executed this Accredited Investor Representation and Verification Letter as of the ______ day of ______________, 2022.
|
FOR INDIVIDUAL SUBSCRIBER:
|
|
FOR ENTITY/TRUST SUBSCRIBER:
|
|
|
|
Entity/Trust:
|
|
|
(sign name)
|
|
|
|
|
|
|
By:
|
|
|
|
|
(sign name)
|
|
(print name)
|
|
|
|
|
|
(print name, title)
|
|
|
|
|
|
Annex A
Independent Third-Party Verification Letter
I, [Name of independent third-party], hereby hereby confirm that:
(Kindly check (a), (b) or (c) below and complete the blank, as applicable)
o (a) I am [a registered broker-dealer/an SEC-registered investment adviser/a licensed attorney in good standing under the laws of the jurisdictions in which I am admitted to practice/a certified public accountant duly registered and in good standing under the laws of the jurisdiction of my residence or principal office]. I have taken reasonable steps to verify that the Prospective Investor is an Accredited Investor based on [his/her] [income/net worth] (whether individual or together with [his/her] spouse) and, based on those steps, I have determined that the Prospective Investor is an Accredited Investor. The most recent date as of which I have made such determination is ______________________. To my knowledge after reasonable investigation, no facts, circumstances or events have arisen after that date that lead me to believe that the Prospective Investor has ceased to be an Accredited Investor. I acknowledge that the Company will rely on this letter in determining the Prospective Investor’s eligibility to participate in the Offering and I consent to such reliance.
o (b) I have taken reasonable steps to attempt to verify that the Prospective Investor is an Accredited Investor, and as a result of such process, I am unable to determine that the Prospective Investor is an Accredited Investor.
o (c) I have not taken reasonable steps to attempt to verify that the Prospective Investor is an Accredited Investor.
Countersigned:
[NAME OF INDEPENDENT THIRD-PARTY]
By: _____________________________
Name:
Title:
Date:
cc: [Name of prospective investor]
SCHEDULE 3.1
Accredited Investor Questionnaire for Canadian Purchasers
TO: Q5ID, INC. (the “Company”)
RE: Purchase of shares of common stock and stock purchase warrants of the Company
In connection with the purchase by the Subscriber (being the undersigned, the “Subscriber”) of the Securities, the Subscriber hereby represents, warrants and certifies to the Company that the Subscriber:
- is purchasing the Securities as principal (or deemed principal under the terms of National Instrument 45-106 - Prospectus Exemptions adopted by the Canadian Securities Administrators (“NI 45-106”));
- is an “accredited investor” within the meaning of NI 45-106 on the basis that the undersigned fits within the category of an “accredited investor” which the undersigned has indicated in Appendix A.
The Subscriber acknowledges that the foregoing representations and warranties are made by the undersigned with the intent that they be relied upon in determining the suitability of the Subscriber as a Subscriber for the Securities and that this certificate is incorporated into and forms part of the Agreement and the undersigned undertakes to immediately notify the Company of any change in any statement or other information relating to the Subscriber set forth herein which takes place prior to the closing time of the purchase and sale of the Securities.
By completing this certificate, the Subscriber authorizes the indirect collection of this information by each applicable regulatory authority or regulator and acknowledges that such information is made available to the public under applicable legislation.
Dated signed: ________________
|
FOR INDIVIDUAL SUBSCRIBER:
|
|
FOR ENTITY/TRUST SUBSCRIBER:
|
|
|
|
Entity/Trust:
|
|
|
(sign name)
|
|
|
|
|
|
|
By:
|
|
|
|
|
(sign name)
|
|
(print name)
|
|
|
|
|
|
(print name, title)
|
|
|
|
|
|
APPENDIX A TO SCHEDULE 3.1
CANADIAN ACCREDITED INVESTOR CATEGORIES
(CHECK TO INDICATE APPLICABLE CATEGORY)
|
£
|
(a) (i) except in Ontario, a Canadian financial institution, or a Schedule III bank; or
(ii) in Ontario, a financial institution described in paragraph 73.1(1) of the Securities Act (Ontario) (as detailed below);
|
|
£
|
(b) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);
|
|
£
|
(c) a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;
|
|
£
|
(d) a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);
|
|
£
|
(e) an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);
|
|
£
|
(f) 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;
|
|
£
|
(g) a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;
|
|
£
|
(h) any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;
|
|
£
|
(i) a pension fund that is regulated by the Office of the Superintendent of Financial Institutions (Canada), a pension commission or similar regulatory authority of a jurisdiction of Canada;
|
|
£
|
(j) an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;
IF THIS APPLIES, YOU MUST ALSO COMPLETE APPENDIX B
(Note: the value of your personal residence cannot be included in the calculation of financial assets.)
(Note: financial assets include cash, securities, or a contract of insurance, a deposit or an evidence of a deposit.)
(Note: if individual accredited investors wish to purchase through wholly-owned holding companies or similar entities, such purchasing entities must qualify under paragraph (t) below rather than this paragraph.)
|
|
£
|
(j.1) an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds $5,000,000, (Note: see definition of “financial assets” below.);
IF THIS APPLIES, YOU MUST ALSO COMPLETE APPENDIX B
(Note: the value of your personal residence cannot be included in the calculation of financial assets.)
(Note: financial assets include cash, securities, or a contract of insurance, a deposit or an evidence of a deposit.)
(Note: if individual accredited investors wish to purchase through wholly-owned holding companies or similar entities, such purchasing entities must qualify under paragraph (t) below rather than this paragraph.)
|
|
£
|
(k) an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
IF THIS APPLIES, YOU MUST ALSO COMPLETE APPENDIX B
(Note: if individual accredited investors wish to purchase through wholly-owned holding companies or similar entities, such purchasing entities must qualify under paragraph (t) below rather than this paragraph.)
|
|
£
|
(l) an individual who, either alone or with a spouse, has net assets of at least $5,000,000;
IF THIS APPLIES, YOU MUST ALSO COMPLETE APPENDIX B
(Note: for the net asset test (total assets minus total liabilities), the calculation of total assets includes the value of your primary residence and the calculation of total liabilities includes the amount of any liability, such as a mortgage or equity line of credit, on your primary residence.)
(Note: if individual accredited investors wish to purchase through wholly-owned holding companies or similar entities, such purchasing entities must qualify under paragraph (t) below rather than this paragraph.)
|
|
£
|
(m) a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements;
|
|
£
|
(n) an investment fund that distributes or has distributed its securities only to (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment], or 2.19 [Additional investment in investment funds] of NI 45-106, or (iii) a person described in paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106;
|
|
£
|
(o) an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;
|
|
£
|
(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, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;
|
|
£
|
(q) a person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund;
|
|
£
|
(r) a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give 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) to (d) or paragraph (i) in form and function;
|
|
£
|
(t) a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors;
IF THIS APPLIES, EACH OWNER OF INTEREST MUST COMPLETE AN INDIVIDUAL APPENDIX A AND IF APPLICABLE ALSO COMPLETE APPENDIX B
|
|
£
|
(u) an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser;
|
|
£
|
(v) a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as an accredited investor; or
|
|
£
|
(w) a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse..
|
For the purposes of this Appendix A, the following definitions are included for convenience:
- “Canadian financial institution” means (i) 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 (ii) a bank, loan corporation, trust company, trust corporation, insurance company, 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;
- “control person” has the same meaning as in securities legislation except in Manitoba, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island and Québec where control person means any person that holds or is one of a combination of persons that holds (i) a sufficient number of any of the securities of an issuer so as to affect materially the control of the issuer, or (ii) more than 20% of the outstanding voting securities of an issuer except where there is evidence showing that the holding of those securities does not affect materially the control of the issuer;
- “entity” means a company, syndicate, partnership, trust or unincorporated organization;
- “financial assets” means cash, securities, or any a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation;
- “fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction;
- “investment fund” means a mutual fund or a non-redeemable investment fund, and, for greater certainty in British Columbia, includes an employee venture capital corporation that does not have a restricted constitution, and is registered under Part 2 of the Employee Investment Act (British Columbia), R.S.B.C. 1996 c. 112, and whose business objective is making multiple investments and a venture capital corporation registered under Part 1 of the Small Business Venture Capital Act (British Columbia), R.S.B.C. 1996 c. 429 whose business objective is making multiple investments;
- “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;
- “Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada);
- “spouse” means an individual who (i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, (ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or (iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and
- “subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary.
APPENDIX B
Form for Individual Accredited Investors (Canadian Purchasers)
|
WARNING!
This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment.
|
|
SECTION 1 TO BE COMPLETED BY ISSUER OR SELLING SECURITY HOLDER
|
|
|
|
Type of securities:
Shares of common stock and a stock purchase warrants
|
Issuer:
Q5ID, Inc.
|
|
SECTIONS 2 TO 4 TO BE COMPLETED BY THE PURCHASER
|
|
|
|
This investment is risky. Initial that you understand that:
|
Your initials
|
|
Risk of loss – You could lose your entire investment of $________. [Please fill in amount]
|
|
|
Liquidity risk – You may not be able to sell your investment quickly – or at all.
|
|
|
Lack of information – You may receive little or no information about your investment.
|
|
|
Lack of advice – You may not receive advice from the salesperson about whether this investment is suitable for you unless the salesperson is registered. The salesperson is the person who meets with, or provides information to, you about making this investments. To check whether the salesperson is registered, go to www.aretheyregistered.ca.
|
|
- Accredited investor status
|
|
You must meet at least one of the following criteria to be able to make this investment. Initial the statement that applies to you. (You may initial more than one statement.) The person identified in section 6 is responsible for ensuring that you meet the definition of accredited investor. That person, or the salesperson identified in section 5, can help you if you have questions about whether you meet these criteria.
|
Your initials
|
- Your net income before taxes was more than $200,000 in each for the 2 most recent calendar years, and you expect it to be more than $200,000 in the current calendar year. (You can find your net income before taxes on your personal income tax return.)
|
|
- Your net income before taxes combined with your spouse’s was more than $300,000 in each of the 2 most recent calendar years, and you expect your combined net income before taxes to be more than $300,000 in the current calendar year.
|
|
- Either alone or with your spouse, you own more than $1 million in cash and securities, after subtracting any debt related to the cash and securities.
|
|
- Either alone or with your spouse, you may have net assets worth more than $5 million. (Your net assets are your total assets (including real estate) minus your total debt.)
|
|
|
|
|
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form.
|
|
First and last name (please print):
|
|
Signature:
|
Date:
|
|
SECTION 5 TO BE COMPLETED BY SALESPERSON
|
|
|
|
[Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.]
|
|
First and last name of salesperson (please print):
|
|
Telephone:
|
Email:
|
|
Name of firm (if registered):
|
|
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER
|
- For more information about this investment
|
|
Please contact:
Q5ID, Inc.
9525 SW Gemini Dr.
Beaverton, OR 97008
Attn: Dominic O'Dierno
Phone: +1 503-836-9551
Email: dod@q5id.com
For more information about prospectus exemptions, contact your local securities regulator. You can find contact information at www. securities-administrators.ca
|
|
Signature of executive officer of the issuer (other than the purchaser:
|
Date:
|
|
|
|
|
|
Form instructions:
1. This form does not mandate the use of a specific font size or style but the font must be legible.
2. The information in sections 1, 5 and 6 must be completed before the purchaser completes and signs the form.
3. The purchaser must sign this form. Each of the purchaser and the issuer or selling security holder must receive a copy of this form signed by the purchaser. The issuer or selling security holder is required to keep a copy of this form for 8 years after the distribution.
EXHIBIT A-1
Form of $6.00 Warrant
[Attached behind this cover page]
EXHIBIT A-2
Form of $4.00 Warrant
[Attached behind this cover page]
EXHIBIT B
Spousal Consent
- Spouse. I, ______________________________, certify to Q5ID, Inc., an Oregon corporation (the “Company”), and its shareholders that I am the spouse (or domestic partner) of ______________________________, a Subscriber of the Company.
- Shareholders’ Agreement. I have read and understood the Shareholders’ Agreement of the Company dated May 1, 2019 among the Company and the Company’s Shareholders (the “Shareholders’ Agreement”).
- Compliance. I agree to comply with the provisions of the Shareholders’ Agreement to the extent that I have or subsequently acquire any interest in my spouse’s Shares, and agree that any interest that I have or subsequently acquire in my spouse’s Shares is subject to the provisions of the Shareholders’ Agreement.
- Sale, Conversion, and Change of Rights. I understand that under the Shareholders’ Agreement: (a) my spouse may have the option or obligation to sell some or all of my spouse’s shares; (b) my spouse’s shares may be converted into shares, units, or other ownership interests of another business entity, with or without my spouse’s consent.
- Consent and Waiver. I consent to any sale, conversion, or change of rights of my spouse’s shares to the extent that the sale or conversion is not inconsistent with the Shareholders’ Agreement or applicable law. I waive any right that I may have to challenge any such sale or conversion.
Dated effective: __________________
___________________________________
Sign
____________________________________
Print Name
EXHIBIT C
Joinder Agreement
The undersigned agrees to become a party to and be bound by the provisions of the Shareholders’ Agreement dated May 1, 2019, among Q5ID, Inc. (the “Company”), and the Company’s Shareholders.
Dated effective: ____________________
Subscriber
|
FOR INDIVIDUAL SUBSCRIBER:
|
|
|
|
(sign name)
|
|
|
|
(print full legal name)
|
|
|
|
FOR ENTITY/TRUST SUBSCRIBER:
Full legal name of entity:
|
|
|
|
By:
|
|
|
|
(sign name)
|
|
|
|
(print name and title)
|
