Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is made by and
between LiqTech International, Inc. a Nevada corporation (the “Company”), and
the undersigned (“Subscriber”) as of the date this Subscription Agreement is
accepted by the Company, as set forth on the Company’s signature page hereto.

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), Rule 506 promulgated thereunder and/or Regulation S under the
Securities Act, the Company desires to issue and sell to the Subscriber, and the
Subscriber desires to purchase from the Company, that number of shares of the
Company’s common stock, $0.001 par value per share (“Common Stock”) set forth on
the signature page hereto, to persons who are not U.S. persons under Regulation
S and persons who are “accredited investors” (as defined in Rule 501 of
Regulation D under the Securities Act), in a private placement (the “Offering”);
and

 

WHEREAS, the Subscriber understands that the Offering is being made without
registration of the Common Stock under the Securities Act of 1933, as amended
(the “Securities Act”), or any securities law of any state of the United States
or of any other jurisdiction, and is being made only to “accredited investors”
or non-U.S. persons.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

1.             Subscription for Shares.

 

(a)       Subscription for Shares. Subject to the terms and conditions
hereinafter set forth, Subscriber hereby irrevocably subscribes for and agrees
to purchase from the Company such amounts of Common Stock as is set forth on the
signature page hereof (the “Shares”) at a price per Share and for an aggregate
purchase price as set forth on the signature page hereof (the “Purchase Price”),
and the Company agrees to sell such Shares to Subscriber for the Purchase Price,
subject to the Company’s right, in its sole discretion, to reject this
subscription, in whole or in part, at any time prior to the Closing (as defined
below). Subscriber acknowledges that Subscriber is not entitled to cancel,
terminate or revoke this Subscription Agreement. Subscriber further acknowledges
that the Shares will be subject to restrictions on transfer as set forth in this
Subscription Agreement.

 

2.             Terms of Subscription.

 

(a)        Payment. Subscriber shall make payment for the Shares to an account
designated by the Company in an amount equal to the Purchase Price by wire
transfer of immediately available funds at or prior to the Closing.

 

(b)      Acceptance of Subscription and Issuance of Shares. It is understood and
agreed that the Company shall have the sole right, at its complete discretion,
to accept or reject this subscription, in whole or in part, for any reason and
that the same shall be deemed to be accepted by the Company only when it is
signed by a duly authorized officer of the Company and delivered to the
undersigned at the Closing (as defined below). Notwithstanding anything in this
Subscription Agreement to the contrary, the Company shall have no obligation to
issue any of the Shares to any person who is a resident of a jurisdiction in
which the issuance of Shares to such person would constitute a violation of the
securities, “blue sky” or other similar laws.

 

 

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(b)         Closing. The Offering may be consummated at such place (or by
electronic transmission) as may be mutually agreed upon by the parties at a
closing (the “Closing”) to occur on a date as may be determined by the Company,
at a time as may be determined by the Company. Subsequent closings may occur at
the discretion of the Company.

 

(c)         Closing Deliverables. At the Closing: Subscriber shall deliver the
Purchase Price; and the Company shall deliver a share certificate representing
the Shares to Subscriber that bears an appropriate legend referring to the fact
that the Shares are subject to transfer restrictions as set forth in the
Securities Act.

 

3.             Representations and Warranties of Subscriber.

 

Subscriber represents and warrants to the Company that:

 

(a)        Reliance on Exemptions. Subscriber understands that the Shares are
being offered and sold in reliance upon specific exemptions from registration
provided in the Securities Act, and upon exemptions from registration under
State securities laws, and acknowledges that the Offering has not been reviewed
by the Securities and Exchange Commission or any state agency because it is
intended to be a nonpublic offering exempt from the registration requirements of
the Securities Act and State securities laws. Subscriber understands that the
Company is relying upon, and intends that the Company rely upon, the truth and
accuracy of, and Subscriber’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of Subscriber set forth herein in
order to determine the availability of such exemptions and the eligibility of
Subscriber to acquire the Shares. The Company may only make offers to sell the
Shares to persons outside the United States in this Offering and, if applicable,
at the time any buy order is originated, the buyer is outside the United States.
The undersigned has not received an offer to purchase Shares inside the United
States and will not originate a buy order inside the United States.

 

(b)        Investment Purpose. The undersigned is either (i) an “accredited
investor” if a U.S. investor, or (ii) not a U.S. person as defined under Rule
902 of Regulation S, and the Shares are being purchased for Subscriber’s own
account, for investment purposes only and not for distribution or resale to
others in contravention of the registration requirements of the Securities Act.
Subscriber agrees that it will not sell or otherwise transfer the Shares unless
they are registered under the Securities Act or unless an exemption from such
registration is available under the Securities Act and permitted by the
certificate of incorporation of the Company. Subscriber has no contract,
undertaking, agreement, or arrangement with any person to sell, distribute,
transfer, or pledge to such person or anyone else the Shares which Subscriber
hereby subscribes to purchase, or any interest therein, and Subscriber has no
present plans to enter into any such contract, undertaking, agreement, or
arrangement. Subscriber agrees that the Company and its affiliates shall not be
required to give effect to any purported transfer of such Shares except upon
compliance with the foregoing restrictions.

 

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(c)          Accredited Investor. Subscriber, if a U.S. investor, is an
“accredited investor” as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act, as amended to date, a summary of which is
attached hereto as Exhibit B, and Subscriber is able to bear the economic risk
of any investment in the Shares and in the Company. Subscriber shall complete
and deliver to the Company prior to Closing an executed copy of the Accredited
Investor Questionnaire attached hereto as Exhibit A.

 

(d)        Risk of Investment. Subscriber recognizes that the purchase of the
Shares involves a high degree of risk in that: an investment in the Company is
highly speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Shares;
transferability of the Shares is limited; and the Company may require
substantial additional funds to operate its business and there can be no
assurance that the Offering will be completed.

 

(e)           Use of Proceeds. Subscriber understands that the net proceeds of
the Offering will be used for operations of the Company and general corporate
purposes.

 

(f)            Prior Investment Experience. Subscriber understands the business
in which the Company is engaged and has such knowledge and experience in
business and financial matters that Subscriber is capable of evaluating the
merits and risks of the investment in the Shares. Subscriber has prior
investment experience, and Subscriber recognizes the highly speculative nature
of this investment.

 

(g)           Information and Non-Reliance.

 

(i)     Subscriber acknowledges that Subscriber has carefully reviewed this
Subscription Agreement, which Subscriber acknowledges has been provided to
Subscriber. Subscriber has been given the opportunity to ask questions of, and
receive answers from, the Company concerning the terms and conditions of this
Offering and the Subscription Agreement and to obtain such additional
information, to the extent the Company possesses such information or can acquire
it without unreasonable effort or expense, necessary to verify the accuracy of
same as Subscriber reasonably desires in order to evaluate the investment.
Subscriber understands the Subscription Agreement, and Subscriber has had the
opportunity to discuss any questions regarding the Subscription Agreement with
Subscriber’s counsel or other advisor. Notwithstanding the foregoing, the only
information upon which Subscriber has relied is that set forth in the
Subscription Agreement and the results of independent investigation by
Subscriber. Subscriber has received no representations or warranties from the
Company, its employees, agents or attorneys in making this investment decision
other than as set forth in the Subscription Agreement. Subscriber does not
desire to receive any further information.

 

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(ii)     The Subscriber represents that it is not relying on (and will not at
any time rely on) any communication (written or oral) of the Company, as
investment advice or as a recommendation to purchase the Shares, it being
understood that information and explanations related to the terms and conditions
of the Shares and the Subscription Agreement shall not be considered investment
advice or a recommendation to purchase the Shares.

 

(iii)     The Subscriber confirms that the Company has not (i) given any
guarantee or representation as to the potential success, return, effect or
benefit (either legal, regulatory, tax, financial, accounting or otherwise) an
of investment in the Shares or (ii) made any representation to the Subscriber
regarding the legality of an investment in the Shares under applicable legal
investment or similar laws or regulations. In deciding to purchase the Shares,
the Subscriber is not relying on the advice or recommendations of the Company
and the Subscriber has made its own independent decision that the investment in
the Shares is suitable and appropriate for the Subscriber.

 

(h)         Tax Consequences. Subscriber acknowledges that the Offering may
involve tax consequences and that the contents of the Subscription Agreement do
not contain tax advice or information. Subscriber acknowledges that Subscriber
must retain Subscriber’s own professional advisors to evaluate the tax and other
consequences of an investment in the Shares. Subscriber intends to acquire the
Shares without regard to tax consequences.

 

(i)         Transfer or Resale. The Subscriber is acquiring the Shares solely
for the Subscriber’s own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of the
Shares. Subscriber understands that the Shares have not been registered under
the Securities Act or the securities laws of any state and, as a result thereof,
are subject to substantial restrictions on transfer. Subscriber acknowledges
that Subscriber may be precluded from selling or otherwise disposing of the
Shares for an indefinite period of time. Subscriber understands and hereby
acknowledges that the Company is under no obligation to register the Shares
under the Securities Act. Subscriber consents that the Company may, if it
desires, permit the transfer of the Shares out of Subscriber’s name only when
Subscriber’s request for transfer is accompanied by an opinion of counsel
reasonably satisfactory to the Company that neither the sale nor the proposed
transfer results in a violation of the Securities Act or any applicable state
“blue sky” laws.

 

(j)          No General Solicitation. Subscriber was not induced to invest in
the Company or in the Shares by any form of general solicitation or general
advertising including, but not limited to, the following: any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over the news or radio; any seminar or meeting whose
attendees were invited by any general solicitation or advertising; and any
solicitation within the United States.

 

(k)        Due Authorization; Enforcement. Subscriber has all requisite power
and authority (and in the case of an individual, capacity) to purchase and hold
the Shares, to execute, deliver and perform Subscriber’s obligations under this
Subscription Agreement and when executed and delivered by Subscriber, this
Subscription Agreement will constitute legal, valid and binding agreements of
Subscriber enforceable against Subscriber in accordance with their terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally, and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

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(l)         Address. The residence address of Subscriber furnished by Subscriber
on the signature page hereto is Subscriber’s principal residence if Subscriber
is an individual or its principal business address if it is a corporation,
partnership, trust or other entity.

 

(m)       Compliance with Laws. The Subscriber will comply with all applicable
laws and regulations in effect in any jurisdiction in which the Subscriber
purchases or sells Shares and obtain any consent, approval or permission
required for such purchases or sales under the laws and regulations of any
jurisdiction to which the Subscriber is subject or in which the Subscriber makes
such purchases or sales, and the Company shall have no responsibility therefore.

 

(n)       Accuracy of Representations and Warranties. The information set forth
herein concerning Subscriber is true and correct. The Subscriber understands
that, unless the Subscriber notifies the Company in writing to the contrary at
or before the Closing, each of the Subscriber’s representations and warranties
contained in this Subscription Agreement will be deemed to have been reaffirmed
and confirmed as of the Closing, taking into account all information received by
the Subscriber.

 

(o)         Entity Representation. If Subscriber is a corporation, partnership,
trust or other entity, such entity further represents and warrants that it was
not formed for the purpose of investing in the Company.

 

4.            Representations and Warranties of the Company.

 

The Company represents and warrants to Subscriber that:

 

(a)          Organization. The Company is organized and validly existing in good
standing under the laws of the state of Nevada.

 

(b)        Due Authorization, Enforcement and Valid Issuance. The Company has
all requisite power and authority to execute, deliver and perform its
obligations under this Subscription Agreement, and when executed and delivered
by the Company, this Subscription Agreement will constitute legal, valid and
binding agreements of the Company enforceable against the Company in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally, and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The Shares have been duly authorized and, when issued and paid for in accordance
with the terms of this Subscription Agreement, will be duly and validly issued,
fully paid and nonassessable.

 

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(c)           Noncontravention. The execution and delivery of this Subscription
Agreement and the consummation of the transactions contemplated hereby will not
conflict with or constitute a violation of, or default under any material
agreement to which the Company is a party or by which it or any of its
properties are bound or the organizational documents of the Company.

 

5.            Conditions to Obligations of the Subscriber and the Company.

 

The obligations of the Subscriber to purchase and pay for the Shares specified
on the signature page hereof and of the Company to sell the Shares are subject
to the satisfaction at or prior to the Closing of the following conditions
precedent:

 

(a)          Representations and Warranties. The representations and warranties
of the Subscriber contained in Section 3 hereof and of the Company contained in
Section 4 hereof shall be true and correct as of the Closing in all respects
with the same effect as though such representations and warranties had been made
as of the Closing.

 

6.             Legends.

 

The certificates representing the Shares sold pursuant to this Subscription
Agreement will be imprinted with legends in substantially the following form:

 

“THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.”

 

and other legend language that may be determined by the Company and its counsel
from time to time.

 

7.           United States Anti-Money Laundering Program. The Subscriber
understands that the Company’s Board of Directors is required to comply with
applicable anti-money laundering provisions under the United States PATRIOT Act
of 2001, as amended (the “USA PATRIOT Act”). As a condition to acceptance of the
Subscriber’s investment in the Company, the Subscriber makes the representations
and agreements set forth on Annex A attached hereto, and agrees to provide to
the Company true and correct copies of the applicable documentation pursuant to
the requirements of Annex B, attached hereto. The Company reserves the right to
request such additional information as is necessary to verify the identity of
the Subscriber and the underlying beneficial owner of the Subscriber’s interest
in the Company. In the event of delay or failure by the Subscriber to produce
any information required for verification purposes, the Company may refuse to
accept a subscription or may cause the withdrawal of the Subscriber from the
Company.

 

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8.             Miscellaneous

 

(a)           Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Subscription Agreement
must be in writing and will be deemed to have been delivered: upon receipt, when
delivered personally; upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or one (1) business day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

 

If to the Company:

 

 

LiqTech International, Inc.

Industriparken 22C, DK

2750 Ballerup, Denmark

Phone: +45 44986000

E-mail: ap@liqtech.com

Attention: Aldo Petersen, Chairman of the Board

 

 

with a copy to:

K&L Gates LLP

200 South Biscayne Boulevard

Suite 3900

Miami, FL 33131

Facsimile:     (305) 359-3306

E-mail: clayton.parker@klgates.com

Attention:     Clayton E. Parker, Esq.

 

If to Subscriber, to its residence address (or mailing address, if different)
and facsimile number set forth at the end of this Subscription Agreement, or to
such other address and/or facsimile number and/or to the attention of such other
person as specified by written notice given to the Company five (5) calendar
days prior to the effectiveness of such change.

 

(b)       Entire Agreement; Amendment. This Subscription Agreement, which
includes the exhibits referred to herein, supersedes all other prior oral or
written agreements between Subscriber, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and
constitutes the entire understanding of the parties with respect to the matters
covered herein. No provision of this Subscription Agreement may be amended or
waived other than by an instrument in writing signed by the Company and
Subscriber.

 

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(c)          Severability. If any provision of this Subscription Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Subscription Agreement in that jurisdiction or the validity or
enforceability of any provision of this Subscription Agreement in any other
jurisdiction.

 

(d)          Governing Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the state of Nevada, without giving
effect to any choice of law or conflict of law provision or rule.

 

(e)          Successors and Assigns. This Subscription Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns. Subscriber shall not assign its rights hereunder without
the prior written consent of the Company.

 

(f)           No Third Party Beneficiaries. This Subscription Agreement is
intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.

 

(g)         Notification of Changes. The Subscriber hereby covenants and agrees
to notify the Company upon the occurrence of any event prior to the closing of
the purchase of the Shares pursuant to this Subscription Agreement which would
cause any representation, warranty or covenant of the Subscriber contained in
this Subscription Agreement to be false or incorrect.

 

(h)         Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Subscription Agreement and the consummation of
the transactions contemplated hereby.

 

(i)           Legal Representation. Subscriber acknowledges that: Subscriber has
read this Subscription Agreement and the exhibits referred to herein; Subscriber
understands that the Company has been represented in the preparation,
negotiation and execution of the Subscription Agreement; and Subscriber
understands the terms and conditions of the Subscription Agreement and is fully
aware of their legal and binding effect.

 

(j)         Expenses. Each party will bear its own costs and expenses (including
legal and accounting fees and expenses) incurred in connection with this
Subscription Agreement and the transactions contemplated hereby.

 

(k)        Counterparts. This Subscription Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement. The
exchange of signature pages by facsimile transmission, by electronic mail in
“portable document format” (“.pdf”) form or by any other electronic means
intended to preserve the original graphic and pictorial appearance of a document
shall constitute effective execution and delivery of this Agreement as to the
parties.

 

[SIGNATURE PAGES FOLLOW]

 

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SUBSCRIBER SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

 

IN WITNESS WHEREOF, and intending to be legally bound hereby, Subscriber has
caused this Subscription Agreement to be duly executed and, by executing this
signature page, hereby executes, adopts and agrees to all terms, conditions, and
representations contained in the foregoing Subscription Agreement and hereby
subscribes for the Shares offered by the Company in the amount set forth below.

 

SUBSCRIBER:

 

 

 

 

 

 

Signature

 

Social Security Number (if any)

 

 

 

 

 

 

 

 

Print Name                              

Signature of joint investor, if applicable

 

Social Security Number (if any)

 

                        Print name of joint investor, if applicable            
  Check one (if applicable)    [ ] Tenants in Common               [ ] JTWROS  
            [ ] Tenants by Entirety          

 

Date:                                                       , 2017

 

Shares (number of shares of Common Stock subscribed for):                      
             

 

Purchase Price (number of Shares x $                     ): $                  
                       

 

 

 

Residence Address:

 

Mailing Address, if different from Residence Address:

                       

 

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COMPANY SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

 

– PLEASE DO NOT WRITE BELOW THIS LINE –

 

COMPANY USE ONLY

 

Accepted and Agreed:

 

LIQTECH INTERNATIONAL, INC.

 

By:                                                                             
             

Name:                                       

Title:                                         

      

As of: ____________ ____, 2017

 

 

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Exhibit A

 

Confidential Accredited Investor Questionnaire

 

To:     LiqTech International, Inc.

 

LiqTech International, Inc., a Nevada corporation (the “Company”), is offering
in a private placement (“Offering”) pursuant to an accompanying subscription
agreement, including, without limitation, all exhibits and annexes made a part
thereto (collectively, the “Subscription Agreement”) shares of its Common Stock,
par value $0.001 per share (the “Shares”). The undersigned Subscriber is
purchasing Shares pursuant to the Offering and acknowledges that all capitalized
terms not otherwise defined herein have the meanings set forth in the
Subscription Agreement.

 

I.     The Subscriber represents and warrants that he or it comes within one
category marked below, and that for any category marked, he or it has truthfully
set forth, where applicable, the factual basis or reason the Subscriber comes
within that category. ALL INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT
STRICTLY CONFIDENTIAL EXCEPT AS NECESSARY FOR THE COMPANY TO COMPLY WITH LAW
AND/OR ANY RULES PROMULGATED BY ANY REGULATORY AGENCY. The undersigned shall
furnish any additional information which the Company deems necessary in order to
verify the answers set forth below.

 

Category A                 The undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth, or joint net worth with his or
her spouse, presently exceeds $1,000,000.           Explanation. In calculating
net worth you may include equity in personal property and real estate (other
than the value, after deducting mortgage obligations, of Subscriber’s principal
residence which may not be included in such net worth calculation), cash,
short-term investments, stock and securities. Equity in personal property and
real estate should be based on the fair market value of such property less debt
secured by such property.       Category B                 The undersigned is an
individual (not a partnership, corporation, etc.) who had an individual income
in excess of $200,000 in each of the two most recent years, or joint income with
his or her spouse in excess of $300,000 in each of those years (in each case
including foreign income, tax exempt income and full amount of capital gains and
losses but excluding any income of other family members and any unrealized
capital appreciation) and has a reasonable expectation of reaching the same
income level in the current year.       Category C                The
undersigned is a director or executive officer of the Company which is issuing
and selling the Shares.       Category D                The undersigned is a
bank; a savings and loan association; insurance company; registered investment
company; registered business development company; licensed small business
investment company (“SBIC”); or employee benefit plan within the meaning of
Title 1 of ERISA and (a) the investment decision is made by a plan fiduciary
which is either a bank, savings and loan association, insurance company or
registered investment advisor, or (b) the plan has total assets in excess of
$5,000,000 or is a self directed plan with investment decisions made solely by
persons that are accredited investors.

 

 

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                                                           (describe entity)    
       

 

Category E             The undersigned is a private business development company
as defined in section 202(a)(22) of the Investment Advisors Act of 1940.

 

                                    (describe entity)            

 

Category F             

The undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the
Internal Revenue Code, in each case not formed for the specific purpose of
acquiring the Shares and with total assets in excess of $5,000,000.

 

                          (describe entity)  

 

Category G               The undersigned is a trust with total assets in excess
of $5,000,000, not formed for the specific purpose of acquiring the Shares,
where the purchase is directed by a “sophisticated person” as defined in
Regulation 506(b)(2)(ii) under the Securities Act of 1933.       Category H     
         The undersigned is an entity (other than a trust) all the equity owners
of which are “accredited investors” within one or more of the above categories.
If relying upon this Category alone, each equity owner must complete a separate
copy of this Agreement.

 

                          (describe entity)  

 

Category I               The undersigned is not within any of the categories
above and is therefore not an accredited investor.      

 

For purposes hereof, “individual income” means adjusted gross income less any
income attributable to a spouse or to property owned by a spouse, increased by
the following amounts (but not including any amounts attributable to a spouse or
to property owned by a spouse): (i) the amount of any interest income received
which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as
amended (the “Code”), (ii) the amount of losses claimed as a limited partner in
a limited partnership (as reported on Schedule E of Form 1040), (iii) any
deduction claimed for depletion under Section 611 et seq. of the Code, and (iv)
any amount by which income from long-term capital gains has been reduced in
arriving at adjusted gross income pursuant to the provisions of Section 12.02 of
the Code.

 

The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the execution of the Subscription Agreement or this Questionnaire
in the event that the representations and warranties in the Subscription
Agreement or in this Questionnaire shall cease to be true, accurate and
complete.

 

 

--------------------------------------------------------------------------------

 

 

II.            Disqualification Events.

 

1.             Certain Criminal Convictions.

Have you been convicted, within the past ten (10) years (or five (5) years, in
the case of the Company, its predecessors and affiliated issuers), of any felony
or misdemeanor involving:

 

☐

in connection with the purchase or sale of any security;

 

☐

involving the making of any false filing with the SEC; or

 

☐

arising out of the conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment advisor or paid solicitor of purchasers
of securities?

☐ Yes. If yes, please explain:

 

_____________________________________________________________________________________________

_____________________________________________________________________________________________

_____________________________________________________________________________________________

 

☐ No.

 

2.             Certain Court Injunctions and Restraining Orders.

Are you subject to any order, judgment or decree of any court of competent
jurisdiction that was entered within the past five (5) years and currently
restrains or enjoins you from engaging in any conduct or practice:

 

 

☐

in connection with the purchase or sale of any security;

 

☐

involving the making of any false filing with the SEC; or

 

☐

arising out of the conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, investment adviser or paid solicitor of purchasers
of securities?

 

☐ Yes. If yes, please explain:

 

_____________________________________________________________________________________________

_____________________________________________________________________________________________

_____________________________________________________________________________________________

 

☐ No.

 

3.             Final Orders of Certain State and Federal Regulators.

Are you subject to a Final Order (as defined below) of state regulators of
securities, insurance, banking, savings associations or credit unions; federal
banking agencies; the Commodity Futures Trading Commission; or the National
Credit Union Administration that:

 

☐     bars you from:

☐     associating with an entity regulated by any of the aforementioned
regulators;

☐     engaging in the business of securities, insurance or banking; or

☐     engaging in savings association or credit union activities; or

 

 

☐

constitutes a Final Order based on a violation of any law or regulation that
prohibits fraudulent, manipulative, or deceptive conduct entered within the past
ten (10) years?

 

☐ Yes. If yes, please explain:

 

_____________________________________________________________________________________________

_____________________________________________________________________________________________

_____________________________________________________________________________________________

 

☐ No.

 

 

--------------------------------------------------------------------------------

 

 

The term “Final Order” means a written directive or declaratory statement issued
by a federal or state agency described in Rule 506(d)(1)(iii) under the
Securities Act of 1933 under applicable statutory authority that provides for
notice and an opportunity for a hearing, which constitutes a final disposition
or action by that federal or state agency.

 

4.             SEC Disciplinary Orders.

Are you subject to any order of the Securities and Exchange Commission (“SEC”)
that currently:

 

☐

suspends or revokes your registration as a broker, dealer, municipal securities
dealer or investment adviser;

 

☐

places limitations on the activities, functions or operations of, or imposes
civil money penalties on, such person; or

 

☐

bars you from being associated with any entity or from participating in the
offering of any penny stock?1

 

☐ Yes. If yes, please explain:
______________________________________________________________________

_____________________________________________________________________________________________

_____________________________________________________________________________________________

 

☐ No.

_______________________________

1 A disqualification based on a suspension or limitation of activities expires
when the suspension or limitation expires.

 

5.             SEC Cease-and-Desist Orders.

Are you subject to any order of the SEC that was entered within the past five
(5) years and currently orders you to cease and desist from committing or
causing a future violation of:

 

☐

any scienter-based (intent-based) anti-fraud provision of the federal securities
laws (including, for example, but not limited to):

 

☐

Section 17(a)(1) of the Securities Act of 1933,

 

☐

Section 10(b) of the Exchange Act and Rule 10b-5, and

 

☐

Section 15 (c) (1) of the Securities Exchange Act); or

 

 

☐

Section 5 of the Securities Act, of 1933, which generally requires that
securities be registered and prohibits the sale of unregistered securities.

 

☐ Yes. If yes, please explain:
______________________________________________________________________ 

_____________________________________________________________________________________________

_____________________________________________________________________________________________

 

☐ No.

 

 

--------------------------------------------------------------------------------

 

 

6.             SRO Suspension/Expulsion.

Have you been suspended or expelled from membership in, or suspended or barred
from association with a member of, a securities self-regulatory organization
(“SRO”, such as a registered national securities exchange or a registered
national or affiliated securities association, including FINRA) for any act or
omission to act constituting conduct inconsistent with just and equitable
principles of trade?

 

☐ Yes. If yes, please explain:
______________________________________________________________________

_____________________________________________________________________________________________

_____________________________________________________________________________________________

 

☐ No.

 

7.             SEC Stop Orders.

Have you filed (as a registrant or issuer), or were you named as an underwriter
in any registration statement or Regulation A offering statement filed with the
SEC that, within the past five (5) years, was the subject of a refusal order,
stop order, or order suspending the Regulation A exemption, or is currently the
subject of an investigation or proceeding to determine whether a stop order or
suspension order should be issued?

 

☐ Yes. If yes, please explain:
_________________________________________________________________________

________________________________________________________________________________________________

________________________________________________________________________________________________

________________________________________________________________________________________________

 

☐ No.

 

8.             USPS False Representations Order.

Are you subject to a United States Postal Service (“USPS”) false representation
order entered within the past five (5) years, or are you currently subject to a
temporary restraining order or preliminary injunction with respect to conduct
alleged by the USPS to constitute a scheme or device for obtaining money or
property through the mail by means of false representations?

 

☐ Yes. If yes, please explain:
_________________________________________________________________________

________________________________________________________________________________________________

________________________________________________________________________________________________

________________________________________________________________________________________________

 

☐ No.

 

 

--------------------------------------------------------------------------------

 

 

III.       The undersigned is informed of the significance to the Company of the
foregoing representations and answers contained in this Questionnaire contained
herein and such answers have been provided under the assumption that the Company
will rely on them.

 

IV.       In furnishing the above information, the undersigned acknowledges that
the Company will be relying thereon in determining, among other things, whether
there are reasonable grounds to believe that the undersigned qualifies as a
Purchaser under Section 4(a)(2) and/or Regulation D of the Securities Act of
1933 and applicable state securities laws for the purposes of the proposed
investment.

 

V.        The undersigned understands and agrees that the Company may request
further information of the undersigned in verification or amplification of the
undersigned’s knowledge of business affairs, the undersigned’s assets and the
undersigned’s ability to bear the economic risk involved in an investment in the
securities of the Company.

 

VI.     The undersigned represents to you that (a) the information contained
herein is complete and accurate on the date hereof and may be relied upon by
you, (b) the undersigned will notify you immediately of any change in any such
information occurring prior to the acceptance of the subscription and will
promptly send you written confirmation of such change. The undersigned hereby
certifies that he, she or it has read and understands the Subscription Agreement
related hereto and (c) the undersigned acknowledges that you may be required to
publicly disclose the information provided in this Questionnaire and that he or
it consents to such public disclosure.

 

VII.        INFORMATION VERIFICATION CONSENT.

 

BY SIGNING THIS QUESTIONNAIRE, SUBSCRIBER HEREBY GRANTS THE COMPANY PERMISSION
TO REVIEW ALL PUBLICLY AVAILABLE INFORMATION REGARDING SUBSCRIBER, INCLUDING,
BUT NOT LIMITED TO INFORMATION PROVIDED BY THE OFFICE OF FOREIGN ASSETS CONTROL
(“OFAC”) FOR THE PURPOSE OF VERIFYING INFORMATION PROVIDED BY SUBSCRIBER HEREIN.

 

[SIGNATURE PAGE FOLLOWS]

 

 

--------------------------------------------------------------------------------

 

 

INVESTOR QUESTIONNAIRE EXECUTION PAGE

 

 

 

 

 

 

Signature    Signature (if purchasing jointly)                   Name Typed or
Printed   Name Typed or Printed                   Entity Name   Entity Name    
             

Address

 

Address

 

                City, State and Zip Code   City, State and Zip Code            
     

 

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT B

 

Definition of Accredited Investor

 

“Accredited investor” means any person who comes within any of the following
categories, or who the Company reasonably believes comes within any of the
following categories, at the time of the sale of the Shares to that person:

 

 

1.

Any bank as defined in Section 3(a)(2) of the Securities Act, or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act whether acting in its individual or fiduciary capacity; any
broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934; any insurance company as defined in Section 2(13) of the Securities
Act; any investment company registered under the Investment Company Act of 1940
or a business development company as defined in Section 2(a)(48) of that Act;
any Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; any 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, if such plan has total assets in
excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if 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 if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decisions made solely
by persons that are accredited investors;

 

 

2.

Any private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;

 

 

3.

Any organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the Shares offered, with total assets in
excess of $5,000,000;

 

 

4.

Any director, executive officer, or general partner of the issuer of the
Company, or any director or executive officer of the Company;

 

 

5.

Any natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of his purchase exceeds $1,000,000, provided that
for purposes of this item 5, “net worth” means the excess of total assets at
fair market value (including personal and real property, but excluding the value
of a person’s primary home) over total liabilities (excluding any mortgage on
the primary home in an amount of up to the home’s fair market value, but
including any mortgage amount in excess of the home’s fair market value);

 

 

--------------------------------------------------------------------------------

 

 

 

6.

Any natural person who had an individual income in excess of $200,000 in each of
the two most recent years or joint income with that person’s spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching the
same income level in the current year, provided that for purposes of this item
6, “income” means annual adjusted gross income, as reported for federal income
tax purposes, plus the amount of any tax-exempt interest income received; the
amount of losses claimed as a limited partner in a limited partnership; any
deduction claimed for depletion; amounts contributed to an IRA or Keogh
retirement plan; alimony paid; and any amount by which income from long-term
capital gains has been reduced in arriving at adjusted gross income pursuant to
the provisions of Section 1202 of the Internal Revenue Code of 1986, as amended;

 

 

7.

Any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares offered, whose purchase is directed by
a sophisticated person as described in Rule 506(b)(2)(ii); and

 

 

8.

Any entity in which all of the equity owners are accredited investors.

 

 

--------------------------------------------------------------------------------

 

 

Annex A

 

UNITED STATES ANTI-MONEY LAUNDERING

REPRESENTATIONS AND WARRANTIES

 

In connection with the acquisition of the Company’s Shares, the Subscriber
hereby represents, warrants and covenants to the Company as follows:

 

1.     The Subscriber has reviewed the website of the U.S. Treasury Department’s
Office of Foreign Assets Control (“OFAC”), and conducted such other
investigation as Subscriber deems necessary or prudent, prior to making these
representations and warranties. The Subscriber acknowledges that U.S. federal
regulations and executive orders administered by OFAC prohibit, among other
things, engaging in transactions with, and the provision of services to, certain
foreign countries, territories, entities and individuals.

 

2.     All evidence of identity provided in connection with the Subscriber’s
acquisition of Shares is genuine and all related information furnished is
accurate.

 

3.     The Subscriber understands and agrees that the investment of funds is
prohibited by or restricted with respect to any persons or entities: (i) acting,
directly or indirectly, on behalf of terrorists or terrorist organizations,
including those persons, entities and organizations that are included on any of
the OFAC lists; (ii) residing or having a place of business in a country or
territory named on such lists or which is designated as a Non-Cooperative
Jurisdiction by the Financial Action Task Force on Money Laundering (“FATF”), or
whose subscription funds are transferred from or through such a jurisdiction;
(iii) (A) that are a “Foreign Shell Bank” within the meaning of the USA PATRIOT
Act or (B) that are a foreign bank other than a “Regulated Affiliate” that is
barred, pursuant to its banking license, from conducting banking activities with
the citizens of, or with the local currency of, the country that issued the
license or (C) whose subscription funds are transferred from or through the
entities listed in foregoing clauses (A) and (B); or (iv) residing in, or
organized under the laws of, a jurisdiction designated by the Secretary of the
Treasury under Sections 311 or 312 of the USA PATRIOT Act as warranting special
measures due to money laundering concerns. Such persons or entities in (i)
through (iv) are collectively referred to as “Restricted Persons.” Neither the
Subscriber, nor any person or entity controlling, controlled by, or under common
control with, the Subscriber, any investors in the Subscriber (if the Subscriber
is a pooled investment vehicle) or any person or entity for whom the Subscriber
is acting as agent, representative, intermediary, nominee or similar capacity
(each such investor in the Subscriber and each such person for whom the
Subscriber acts as agent, representative, intermediary, nominee or in a similar
capacity, an “Underlying Beneficial Owner”) in connection with the acquisition
of Shares is a Restricted Person.

 

4.     No funds tendered for the acquisition of Shares are directly or
indirectly derived from activities that may contravene U.S. federal, state or
non-U.S. laws and regulations, including anti-money laundering laws, rules and
regulations, and no capital contribution in relation to Shares acquired by the
Subscriber or, if applicable, any Underlying Beneficial Owner will be derived
from any illegal or illegitimate activities.

 

5.     To the extent the Subscriber has any Underlying Beneficial Owners, the
Subscriber: (i) has carried out thorough due diligence as to, and established
the identities of, the Underlying Beneficial Owners and any related persons to
the extent required by applicable law and regulations (“Related Persons”); (ii)
holds the evidence of such identities and will maintain all such evidence for at
least five years from the date of the completion of the liquidation of the
Company; and (iii) will make such information available to the Company upon the
Company’s request.

 

6.     The Subscriber acknowledges and understands that the Company, in its sole
discretion, may decline to accept any subscription for Shares by a person who is
a “Covered Person” within the meaning of the Guidance on Enhanced Scrutiny for
Transactions that May Involve the Proceeds of Foreign Official Corruption,
issued by the U.S. Department of the Treasury, et al., January, 2001.
Accordingly, the Subscriber agrees to inform the Company, prior to its
acquisition of Shares, if the Subscriber or any person controlling, controlled
by, or under common control with, the Subscriber, or for whom the Subscriber is
acting as agent or nominee in connection with the acquisition of Shares, is a
Covered Person.

 

 

--------------------------------------------------------------------------------

 

 

7.     The Subscriber agrees to provide any information (including confidential
information about the Subscriber and, if applicable, any Underlying Beneficial
Owner or Related Person) to any person deemed necessary by the Company, in its
sole and absolute discretion, to comply with its anti-money laundering
responsibilities and policies and any laws, rules and regulations applicable to
an investment held or proposed to be held by the Company.

 

8.      The Subscriber authorizes and permits the Company, using its own
reasonable business judgment, to report information about the Subscriber, or any
person controlling, controlled by, or under common control with the Subscriber,
to appropriate authorities, and the Subscriber agrees not to hold them liable
for any loss or injury that may occur as the result of providing such
information.

 

9.      The Subscriber agrees that, in the event of a material change with
respect to the information provided in connection with the purchase of the
Shares, the Subscriber will provide the Company promptly with updated
information affected by the material change.

 

10.   The Subscriber agrees that, notwithstanding any statement to the contrary
in any agreement into which it has entered that relates to the Company, or any
statement to the contrary in any private placement memorandum of the Company, if
the Company determines that the Subscriber has appeared on a list of known or
suspected terrorists or terrorist organizations compiled by any U.S. or non-U.S.
governmental agency, or that any information provided by the Subscriber in
connection with the acquisition of Shares is no longer true or accurate, the
Company, without limiting any other rights available under any agreement between
the Company and the Subscriber, shall be authorized to take any action it deems
necessary or appropriate as a result thereof. The Company may be obligated to
“freeze the account” of the Subscriber, either by prohibiting additional capital
contributions, restricting any distributions and/or declining any requests to
transfer the Subscriber’s Shares. In addition, in any such event, the Subscriber
may forfeit its Shares, may be forced to withdraw from the Company or may
otherwise be subject to the remedies required by law, and the Subscriber shall
have no claim against the Company nor its officers, directors, employees,
agents, control persons, affiliates and professional advisors and such parties
shall be held harmless and indemnified by the Subscriber in accordance with the
indemnification section of this Agreement for any form of damages as a result of
any of the actions described in this paragraph. The Company may also be required
to report such action and to disclose the Subscriber’s identity or provide other
information with respect to the Subscriber to OFAC or other governmental
entities.

 

11.     The Subscriber acknowledges and agrees that any distributions paid to it
by the Company will be paid to, and any contributions made by it to the Company
will be made from, an account in the Subscriber’s name unless the Company, in
its sole discretion, agrees otherwise.

 

12.     The Subscriber understands, acknowledges and agrees that the acceptance
of this Agreement, together with the appropriate remittance, will not breach any
applicable money laundering or related rules or regulations (including, without
limitation, any statutes, rules or regulations in effect under the laws of the
U.S.A. pertaining to prohibitions on money laundering or to transacting business
or dealing in property that may be blocked or may belong to Specially Designated
Nationals, as such term is used by OFAC).

 

 

--------------------------------------------------------------------------------

 

 

Annex B

 

ANTI-MONEY LAUNDERING DOCUMENTATION

 

The Subscriber has delivered, or is concurrently delivering herewith, the true,
correct and applicable documentation noted below that is applicable to the
Subscriber:

 

 

(i)

Individuals (each of the following):

 

 

(A)

Certified (notarized) copy of passport or other valid government identification
document displaying the true name, signature, date of birth and photograph of
the Subscriber (with certified English translation, if necessary); and

 

 

(B)

Copy of a recent bank statement or utility bill showing the Subscriber’s current
home address.

 

 

(ii)

Corporate (each of the following):

 

 

(A)

Certificate of Incorporation (or equivalent) with evidence of any name changes;

 

 

(B)

Certificate of Good Standing;

 

 

(C)

Director resolution authorizing the investment, if applicable;

 

 

(D)

Current list or register of Directors;

 

 

(E)

Specimen signatures of persons authorized to bind the Subscriber with regard to
its investments with name and office held printed underneath or Powers of
Attorney or Letters of Authority (if applicable);

 

 

(F)

Information on at least two Directors (see (i) above for individuals and (ii)
for all other entities);

 

 

(G)

Evidence of identity for authorized signatories and all beneficial owners of the
Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for
all other entities); and

 

 

(H)

Signed copy of the Subscriber’s latest available financial statements.

 

 

(iii)

Limited Partnership (or Limited Liability Company) (each of the following):

 

 

(A)

Certificate of Limited Partnership (or equivalent) (evidencing registered
address) with evidence of any name changes;

 

 

(B)

Certified copy of the limited partnership agreement (or equivalent);

 

 

(C)

Limited partnership mandate (or equivalent) for making the investment (if any);

 

 

(D)

Specimen signatures of persons authorized to bind the Subscriber with regard to
its investments with name and office held printed underneath or Powers of
Attorney or Letters of Authority (if applicable);

 

 

(E)

Information on the individual(s) that control the general partner (or managing
member, if applicable) (see (i) above for individuals and (ii) for all other
entities);

 

 

(F)

Evidence of identity for authorized signatories and all beneficial owners of the
Subscriber >25% OR comfort letter (see (i) above for individuals and (ii) for
all other entities); and

 

 

--------------------------------------------------------------------------------

 

 

 

(G)

Signed copy of the Subscriber’s latest available financial statements.

 

 

(iv)

Trust (each of the following):

 

 

(A)

Certified copy of Trust Deed/Agreement (including trust name, nature of trust,
trustees, authorizations, date of trust and principal address);

 

 

(B)

Information about the trustee(s) and settlor(s) (or beneficial owner(s), if
different than the settlor(s)) (see (i) above for individuals and (ii) for all
other entities); and

 

 

(C)

Signed copy of the Subscriber’s latest available financial statements.

 

 

(v)

Private Pension Plans or Not For Profit (including Foundations and Charities)
(each of the following):

 

 

(A)

Certified copy of the entity’s formation documents;

 

 

(B)

An explanation of the nature of the entity’s purpose and operations;

 

 

(C)

Evidence of identity for authorized signatories, anyone who gives instructions
on behalf of the entity and all beneficial owners of the Subscriber >25% OR
comfort letter (see (i) above for individuals and (ii) for all other entities);
and

 

 

(D)

Confirmation of not for profit designation from the applicable government
authority.

 

 

(vi)

Financial Institutions (additional requirements):

 

In addition to the applicable requirements above, banks, brokers and other
financial institutions must deliver a representation letter in the form
determined by the Company indicating that they have established and implemented
anti-money laundering procedures reasonably designed to achieve compliance with
the USA PATRIOT Act.

 

The Subscriber acknowledges that the Company and its affiliates may require
further identification of the Subscriber or source of funds before the
subscription can be processed, and the Company and its officers, directors,
employees, agents, control persons, affiliates and professional advisors shall
be held harmless and indemnified in accordance with the indemnification
provisions of the Agreement as a result of a failure to process the subscription
if such information as has been required by the Company has not been provided by
the Subscriber. The Subscriber agrees to provide any information deemed
necessary by the Company in its sole and absolute discretion to comply with its
anti-money laundering policies and obligations.