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Issuer Access Agreement

Issuer Access Agreement

Introduction

Backers Securities Inc., operating under the 45-110 Start-Up Crowdfunding Portal – Exemption (the “Funding Portal” or “Backers”), is pleased to act as a partner in connection with the proposed Initial Backers Offering of The Company’s (the “Issuer”) equity securities (the “Initial Backers Offering” or “IBO”). The IBO may be completed in a series of closings, each governed by the same terms and conditions specified herein. The purpose of this agreement is to set forth the terms of engagement between the Issuer and Backers, the Funding Portal (the “Agreement”).

Services

This Agreement outlines the terms and conditions for the various service options (“Service Options”) offered by Backers. The Service Options and associated pricing may vary based on selections made by the Issuer during the purchase or checkout process. By purchasing a Service Option, the Issuer agrees to these terms and conditions.

Backers offers a range of Service Options, which may include different combinations of services and features. Specific services, features, and pricing for each Service Option will be displayed during the purchase or checkout process. Pricing may change periodically based on factors such as promotional offers, seasonal discounts, or updates to available services.

Backers shall perform the services described in this Agreement on a “best efforts” basis, in good faith, and in a professional manner consistent with industry practice, with a view to furthering the best interests of the Issuer and its existing shareholders. It is understood that this Agreement does not represent a firm commitment by Backers to underwrite the IBO. Backers is entitled, subject to the terms herein, to appoint a selling group, consisting of other duly registered sub-Agents acceptable to the Issuer (collectively with Backers, the “Agent”).

Service Options and Pricing

Backers offers a variety of Service Options to support issuers at different stages of their Initial Backers Offering (IBO). The Issuer may select a service plan from the options available at backers.ca/plans, which provide structured packages tailored to issuers’ specific needs.

Additional Optional Services are also available to enhance the Issuer’s experience and the reach of the IBO. These optional services include:

The Issuer agrees to be bound by the terms associated with any selected Service Option or optional service package. Pricing and service details for each option will be provided at the time of selection and are subject to change. By selecting a Service Option or optional service, the Issuer authorizes Backers to proceed with the service as specified and agrees to any associated fees and conditions.

Information

The Issuer will provide Backers and their counsel with timely access to all necessary information (financial or otherwise), documents, opinions, appraisals, valuations, and any other relevant materials. The Issuer agrees to provide Backers with access to directors, officers, employees, independent auditors, consultants, and professional advisors, as reasonably required for Backers’ services.

Backers shall rely on this information and other filings made by the Issuer with regulators, with no obligation to independently verify the information provided. The Issuer will promptly advise Backers of any material change in its business or in any provided information concerning the IBO. Backers may assume no material change has occurred unless otherwise advised.

Backers reserves the right to conduct due diligence and terminate the IBO if necessary, based on the results.

Terms of Engagement

Backers will provide services to the Issuer until the earlier of (i) the closing or termination of the IBO, (ii) twelve months from the date of this Agreement, or (iii) termination of Backers’ engagement upon 30 days’ written notice by either party. The Issuer’s obligations related to compliance with the Funding Portal policies, information accuracy, securities legislation compliance, and advertising restrictions, as well as mutual confidentiality obligations, will survive termination.

Issuer Acknowledgements, Representations, Covenants, and Agreements

  1. Compliance with Funding Portal Policies: The Issuer agrees to comply with Backers’ policies regarding information posted on the Funding Portal.
  2. Information Accuracy: All information provided by the Issuer to Backers or posted on the Funding Portal will be accurate, substantiated, and free from misleading statements.
  3. Securities Legislation Compliance: The Issuer agrees to comply with all applicable securities legislation, including NI 45-110.
  4. Obligation to Terminate Distribution: Backers will terminate the Offering and notify regulators if it appears the Issuer’s business lacks integrity.
  5. Funding Portal Role as Agent: In certain jurisdictions, Backers is considered the agent of the Issuer for the purposes of the distribution.
  6. Offering Document: The Issuer agrees to provide an offering document (Form 45-110F1), along with any additional materials (e.g., term sheets, videos) as required.
  7. Advertising Restriction for IBO: The Issuer may not advertise the Offering but may direct prospective purchasers to the online portal.
  8. Limitations on Fundraising and Investment: Issuer acknowledges limits on funds raised and individual investment amounts under NI-45-110.
  9. IBO Duration: The IBO may remain open for a maximum of 90 days, with closing within 30 days after the end of the Offering. A shorter duration may be applied by Backers.

Fees

  1. Platform Access Fee: The Issuer shall pay in advance the Platform Access Fee, which corresponds to the pricing of the applicable Service Option chosen by the Issuer prior to the Initial Backers Offering (IBO). This fee is payable in advance of the IBO commencement.

  2. Success-Based Fee: If, during the period that Backers is retained by the Issuer, an IBO is completed or the Issuer enters into an agreement that results in an IBO or an equivalent equity crowdfunding, Backers shall be entitled to a Success-Based Fee. This fee is calculated as a specific percentage (%) of the capital raised during the IBO, with the exact percentage determined by the Service Option selected by the Issuer.

  3. Conversion Option: Backers reserves the right to convert any or all of the Platform Access Fee and/or the Success-Based Fee into the Issuer’s equity/securities at a premium of 300% of the original value under the following conditions:

    • If the IBO is completed, the conversion will occur at the same valuation as the IBO.
    • If the IBO is not completed, Backers may, at its discretion, choose to convert any outstanding amounts into the Issuer’s equity/securities at a 20% discount to the valuation of any subsequent round of equity/securities financing.

  4. Other Fees: The Issuer shall be responsible for all expenses related to the Offering, regardless of its completion. These expenses include, but are not limited to, all fees and disbursements of the Issuer’s legal counsel, reasonable expenses, background search fees, and filing fees.

Payment Terms: Payment for the selected Service Option is due in advance, either monthly or annually, as chosen by the Issuer. Payment may be made via eTransfer or EFT.

Modifications and Cancellations: Issuers may modify or cancel their Service Option by notifying Backers in writing at least 90 days before the next billing cycle. Fees or penalties may apply.

Service Limitations and Changes: Each Service Option may have usage limits. Exceeding limits may result in additional fees or require an upgrade. Backers may adjust services and pricing with 90 days’ notice.

Indemnification

The Issuer agrees to indemnify and hold harmless Backers and related parties from any losses, claims, or damages (excluding lost profits), unless such are due to Backers’ gross negligence or willful misconduct. If any such claim arises, the Issuer will assume defense responsibility, employing counsel acceptable to Backers.

Other Matters

  1. Jurisdiction and Governing Law: This Agreement is governed by Ontario law, with disputes under Ontario jurisdiction. All references to monetary amounts are in Canadian dollars.
  2. Validity of Provisions: If any provision is deemed invalid, it will not affect other provisions.
  3. Precedence: This Agreement supersedes prior agreements related to the issuance of securities.
  4. No Alternative Transactions: The Issuer will not pursue asset sales, mergers, or business combinations conflicting with the IBO without Backers’ consent. If a conflicting transaction occurs, the Issuer will pay Backers 3% of the contemplated maximum gross proceeds for the Equity Offering.
  5. First Opportunity for Future Financings: Subject to the closing of the IBO, Backers will have the right of first opportunity to lead future financings within 12 months after the IBO.

Advertisements

With the Issuer’s consent, Backers may publish advertisements regarding services provided hereunder. The Issuer agrees not to reference Backers publicly without prior written consent.

Acceptance

Please confirm agreement by signing below. Upon acceptance, this document will constitute a binding agreement between the Issuer and Backers.