Master Investor Agreement
This Master Investor Agreement (this “Agreement”) is made and effective as of [date] (“Agreement Date”), by and between the [investor name] (“Investor”) and Netcapital Systems LLC, a Delaware limited liability company (“Netcapital”).
- Netcapital, together with Netcapital Funding Portal Inc., a Delaware corporation, and their respective affiliates and any broker or dealer associated with any of such parties will be referred to in this Agreement as the “Netcapital Parties.”
- Investor desires to use the private securities platform (“Platform”) provided by Netcapital on the website netcapital.com (“Site”) to offer to purchase, offer to sell, purchase or sell (each, a “Transaction”), currently or in the future, beneficial interests in shares of stock or units of membership or partnership more specifically described in a transaction confirmation (each, a “Transaction Confirmation”) provided by a Netcapital Party to Investor (the “Securities”).
- In consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are acknowledged, the parties to this Agreement agree as follows:
1. Transactions on the Platform
- All Transactions on the Platform are subject to and governed by the terms and conditions of this Agreement. All Transactions on the Platform are irrevocable other than as required by applicable law.
- Each Transaction Confirmation shall incorporate by reference this Agreement and will generally include such information as the date of the Transaction, number, type, identity and price of the Securities, dollar amount of the investment commitment and name of the issuer of the Securities (“Issuer”) for each Transaction. For primary purchases of beneficial interests in Securities from the Issuer pursuant to Section 4(a)(6) (“Section 4(a)(6) Securities”) of the Securities Act of 1933 (“Securities Act”), the Transaction Confirmation shall also indicate the date and time by which the Investor may cancel the offer to purchase.
- When registering as a user on the Site and in order to pay the purchase price or receive the applicable sales proceeds for the Securities purchased or sold in a Transaction on the Site, Investor shall establish an account or “wallet” as described from time to time on the Site.
- Investor shall pay the purchase price for the Securities for any purchase on the Site. In addition, Investor shall pay any applicable transaction fees in connection with any Transaction on the Site. Investor agrees to buy the number or dollar amount of Securities that is entered by Investor and paid for on the Site. Once such purchase of securities by Investor can no longer be changed, cancelled or withdrawn pursuant to Section 4(a)(6) of the Securities Act and the rules adopted thereunder, such purchase is irrevocable by Investor and Investor unconditionally owes the purchase price relating to the Transaction. Any revocation of a payment made for a Transaction shall be deemed a breach of this Agreement; provided, however, an Investor exercising Investor’s right to cancel an offer to purchase Section 4(a)(6) Securities within the timeframe indicated in the Transaction Confirmation shall not be deemed a revocation of payment.
- For any Investor who chooses to use an ACH or wire transfer or credit and/or debit cards on the Site to fund any deposit or investment commitment on the Platform, Investor agrees that he, she or it will not request, submit, or otherwise seek to process or obtain nor shall be entitled to any refund of any amount charged or debited for the Transaction on the bank account upon which such ACH or wire transfer was made or such card commencing at the earlier to occur of the applicable deadline for an investor to withdraw from the offering or the closing of an offering.
2. Beneficial Ownership of Securities
Any transfer agent or successor record owner, selected by Netcapital in its sole discretion, will serve as record owner (“Record Owner”) for the Securities purchased and sold on the Platform pursuant to a Record Ownership and Voting Agreement, among Netcapital, Record Owner and each Investor (“Record Owner Agreement”). For any Securities purchased or sold on the Platform by Investor, the Record Owner will be the sole holder of legal title to and be the sole record holder of such Securities and Investor will have beneficial ownership of such Securities with no voting rights. The Record Owner will have and exercise all voting rights with respect to the Securities. The books and records of the issuer of the Securities (“Issuer”) will show the Record Owner as the sole legal and record owner of the Securities. The sole dispositive record of the Investor’s beneficial ownership of the Securities will be on the books and records of the active transfer agent or any successor transfer agent (“Transfer Agent”).
3. Platform Policies
4. Power of Attorney
The Investor, by executing this Agreement, hereby appoints Netcapital, with full power of substitution, as the Investor’s true and lawful representative and attorney-in-fact, and agent of the Investor, with full power and authority to make, execute, acknowledge, verify, swear to and deliver, in the Investor’s name, place and stead, the Record Owner Agreement. To the maximum extent permitted by law, this power of attorney (“Power of Attorney”) is coupled with an interest, will be irrevocable and will survive, and will not be affected by, the subsequent death, disability, incapacity, incompetency, termination, bankruptcy, insolvency or dissolution of the Investor. The Investor represents and warrants that the Power of Attorney granted by the Investor has been executed by it in compliance with the laws of the state or jurisdiction in which this Agreement was executed and to which the Investor is subject.
5. General Representations, Warranties and Covenants of the Investor
Investor represents, warrants and agrees to the following with respect to each Transaction on the Platform, as of the Agreement Date and as of the effective date of each Transaction by the Investor on the Platform:
- Investor has all requisite power, authority and capacity to agree to and comply with the Platform Policies and this Agreement. This Agreement constitutes a legal, valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms. If Investor is not a natural person, Investor is a duly incorporated business in a state or territory of the United States or a citizen or legal resident alien of the United States. This Agreement and all transactions contemplated by this Agreement will not result in any violation of any of the terms and provisions of any indenture or other agreement to which Investor is a party or by which Investor may otherwise be bound, or of any law, rule, license, regulation, judgment, order or decree governing or affecting Investor or relating to the Securities. All authorizations, approvals and consents necessary for execution and delivery by Investor of this Agreement and for the consummation by Investor of the transactions contemplated by this Agreement have been given, which if not given would not have a materially adverse effect on Investor or the Securities.
- The representations and warranties made by Investor in this Agreement and on the Site are true, correct and complete as of the Agreement Date and the effective date of each Transaction on the Platform, including without limitation, any offers to sell, offers to purchase, sales and purchases of any Securities. No representation or warranty made by Investor in this Agreement, and no statement or information furnished by the Investor on the Site or to any Netcapital Party in connection with this Agreement, or the transactions contemplated by this Agreement, contains or will contain any untrue statement of a material fact, or omits or will omit to state all material facts which are necessary in order to make the statements contained therein not misleading.
- The Investor will notify Netcapital immediately if any of the Investor’s representations in this Agreement (including those included by reference) become untrue or incomplete in any respect, or the Investor is otherwise unable to comply with the Platform Policies or this Agreement.
- The Investor is solely responsible for its compliance with all applicable laws, including without limitation all federal and state securities laws. The Investor is not relying on any Netcapital Party for any investment advice, or for advice regarding legal, accounting, business, investment, pension, tax or other economic considerations involved with the sale of the Securities. The Investor further acknowledges that it is selling or purchasing beneficial interests in the Securities without any representation or warranty, express or implied, at law or in equity, by any Netcapital Party, including without limitation with respect to (a) the Securities being merchantable or fit for any particular purpose, (b) the operation and financial condition of the Issuer and (c) the probability of success or profitability of the Issuer or an investment in the Securities.
- The Investor is not trading on material, non-public information regarding the Securities or the Issuer.
- The Investor understands and agrees that no Netcapital Party will be liable in connection with any information or omission of information regarding the Securities that is supplied or derived from information provided by any third party including the Investor or Issuer.
6. Representations, Warranties and Covenants of the Investor for all Rule 506(c) Purchases on the Platform
Investor represents, warrants and agrees to the following with respect to all purchases or offers to purchase on the Platform any beneficial interests in the Securities pursuant to Rule 506(c) of Regulation D under the Securities Act, as of the effective date of the offer to purchase such Securities and the effective date of purchase, if any, of such Securities:
- Investor (i) is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act (“Accredited Investor”) and (ii) is not an affiliate or entity or person controlled by or under common control with the Issuer as defined in Rule 405 under the Securities Act.
- The Investor has read all information available on the Site with respect to the Securities and the Issuer.
- The Investor has obtained, in the Investor’s judgment, sufficient information on the Platform to evaluate the merits and risks of investments in the Securities. The Investor has evaluated the risks of investing in the Securities, understands there are substantial risks of loss incidental to the purchase of the Securities, and has determined that the Securities are a suitable investment for the Investor and consistent with the general investment objectives of the Investor.
- The Investor acknowledges and understands that the Securities (i) have not been registered under the Securities Act, the securities laws of any state or the securities laws of any other jurisdiction, nor is that registration contemplated, and (ii) are being offered and sold under an exemption from registration provided in Section 4(a)(2) and Regulation D of the Securities Act.
- The Investor has sufficient knowledge and experience, either independently or together with his, her or its purchaser representative(s), in financial and business matters to enable the Investor to evaluate the merits and risks of an investment in the Securities.
- The Investor is acquiring the Securities for Investor’s own account, for investment purposes only and not with an intent to resell or distribute the Securities.
- Investor understands that it is offering to purchase or purchasing restricted securities within the meaning of Rule 144 under the Securities Act.
7. Representations, Warranties and Covenants of the Investor for all Transfers of Securities Originally Purchased under Rule 506(c)
Investor represents, warrants and agrees to the following with respect to all sales or offers to sell on the Platform any beneficial interests in the Securities initially purchased by Investor under Rule 506(c) of Regulation D under the Securities Act, as of the effective date of the offer to sell such Securities and the effective date of sale, if any, of such Securities:
- Investor is not an affiliate or an entity or person controlled by or under common control with the Issuer, as defined in Rule 405 under the Securities Act, or a subsidiary of the Issuer.
- Neither the Investor nor any person acting on Investor’s behalf, has offered or is selling the Securities by any form of general solicitation or general advertising.
- Except as otherwise previously disclosed in writing to Netcapital and as applicable, none of the Investor, any director, officer, general partner or managing member of the Investor, or a beneficial owner, as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of 20% or more of the Investor’s outstanding voting equity securities is subject to any “Bad Actor” disqualifier as described in Rule 506(d)(1) of Regulation D under the Securities Act or is subject to a statutory disqualification described under Section 3(a)(39) of the Exchange Act.
- Investor has held the Securities for at least 90 days.
8. Representations, Warranties and Covenants of the Investor for all Section 4(a)(7) Purchases on the Platform
Investor represents, warrants and agrees to the following with respect to all purchases or offers to purchase on the Platform any beneficial interests in the Securities pursuant to Section 4(a)(7) of the Securities Act, as of the effective date of the offer to purchase such Securities and the effective date of purchase, if any, of such Securities:
- Investor (i) is an Accredited Investor and (ii) is not an affiliate or entity or person controlled by or under common control with the Issuer as defined in Rule 405 under the Securities Act, or a subsidiary of the Issuer.
- Investor understands that it is offering to purchase or purchasing restricted securities within the meaning of Rule 144 under the Securities Act.
9. Representations, Warranties and Covenants of the Investor for all Section 4(a)(6) Purchases on the Platform
Investor represents, warrants and agrees to the following with respect to all sales or offers to sell on the Platform any beneficial interests in the Securities initially purchased by Investor under Section 4(a)(6) of the Securities Act, as of the effective date of the offer to sell such Securities and the effective date of sale, if any, of such Securities:
- For purchases or offers to purchase Securities in a Section 4(a)(6) offering from the Issuer:
- Investor satisfies the investment limitation requirements contained in Section 4(a)(6)(B) of the Securities Act.
- With respect to Securities being offered pursuant to Section 4(a)(6) Securities, Investor has reviewed the educational materials provided on the Site and understands that there are risks associated with the Securities, restrictions on resale of the Securities, the Issuer is required to deliver financial information annually and such information may cease to be provided in the future, limitations exist on the Investor’s right to cancel an offer to purchase the Securities, the Issuer may cancel an offer to purchase the Securities under certain circumstances and there might not be any ongoing relationship between the Issuer and Netcapital.
- Investor has considered and determined that an investment in the Securities is appropriate for the Investor and understands that the entire amount of the investment in the Securities is at risk and may be lost.
- For purchases or offers to purchase Section 4(a)(6) Securities from persons other than the Issuer who have not held such Securities for one year from the date of issuance of such Securities, Investor (i) is an Accredited Investor and (ii) is not an affiliate or entity or person controlled by or under common control with the Issuer as defined in Rule 405 under the Securities Act.
- The Investor acknowledges the availability and ability to use a communication channel on the Site in connection with the Securities offered for sale or purchase by the Investor on the Platform to discuss with other Investors and the Issuer the Transaction and other aspects of the Securities.
10. Representations, Warranties and Covenants of the Investor for all Regulation Crowdfunding Resales on the Platform
Investor represents, warrants and agrees to the following with respect to all purchases or offers to purchase on the Platform any beneficial interests in Section 4(a)(6) Securities initially purchased by Investor from the Issuer, as of the effective date of the offer to purchase such Securities and the effective date of purchase, if any, of such Securities:
- For sales or offers to sell Securities originally issued in a Section 4(a)(6) offering to a person who is not the Issuer or an Accredited Investor, Investor has held such Securities for longer than one year after the date of issuance of such Securities.
11. Compliance with Laws
Each party shall comply with all applicable U.S. and non-U.S. federal, state and local laws and regulations in connection with its activities pursuant to this Agreement.
12. Public Disclosure
Investor grants permission to the Netcapital Parties to publicly disclose its name and details of the purchase and sale of the beneficial interests in the Securities on the Platform and Site.
Investor shall indemnify, defend and hold harmless each Netcapital Party, the Issuer, the Record Owner and any of their respective subsidiaries, affiliates, licensors and assignees and their respective officers, directors, managers, stockholders, members, agents, partners and employees (each, an “Indemnified Party”) from and against any and all loss, claim, damage, liability or expense whatsoever (including reasonable attorneys’ fees and disbursements) due to or arising out of or based upon (i) any inaccurate representation or warranty made by the Investor, or breach or failure by the Investor to comply with any covenant or agreement made by the Investor in this Agreement or in any other document furnished by the Investor to any Indemnified Party in connection with this Agreement or any Transaction (including without limitation the Account Opening Form), (ii) any action for securities law violations instituted by the Investor that is finally resolved by judgment against the Investor, (iii) any action instituted by or on behalf of the Investor against an Indemnified Party that is finally resolved by judgment against the Investor or in favor of an Indemnified Party or (iv) any failure to pay with respect to a Transaction on the Site. The remedies provided in this Section 13 shall be cumulative and shall not preclude the assertion by any Indemnified Party of any other rights or the seeking of any other remedies against the Investor.
14. Third Party Beneficiary
The Investor acknowledges that the Netcapital Parties and each Indemnified Party are intended third party beneficiaries of this Agreement and, as such, shall have the right to enforce directly, and bring any actions, suit, claim or proceeding in law or at equity for damages or otherwise in their own name and for their own benefit relating to a breach of, inaccuracy in, or failure to perform by Investor, any of the representations, warranties, covenants and agreements made by Investor in this Agreement as if they had been original parties to this Agreement.
This Agreement can be amended at any time by Netcapital without prior notice to Investor and Investor’s initiation of any Transaction in any beneficial interests in the Securities on the Platform shall constitute Investor’s acceptance of the terms of this Agreement, as amended.
This Agreement cannot be assigned or transferred, except that Netcapital may assign this Agreement to any affiliate.
17. Survival of Representations
The representations and warranties contained in this Agreement shall survive the execution and delivery of this Agreement.
18. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to its choice of law rules.
The article and paragraph headings in this Agreement are for administrative convenience only and shall not be construed in interpreting this Agreement.
20. Electronic Signature
This Agreement may be executed by electronic signature and an electronic signature shall constitute an original for all purposes.
In the event that any provision or term of this Agreement is deemed to be invalid, illegal or unenforceable for any reason, then the parties to this Agreement hereby mutually acknowledge and agree that it is their intention to have any such invalid, illegal or unenforceable provision or part thereof be deleted from this Agreement as if it had never been included in this Agreement, so that the remainder of this Agreement is valid, binding and enforceable in accordance with its terms.
22. Binding Nature
This Agreement shall be binding on and shall inure to the benefit of the successors of the parties to this Agreement, such that nothing contained in this paragraph shall be construed as consent to any assignment of this Agreement or the duties and obligations under this Agreement by either party.
23. Successors and Assigns
This Agreement (i) shall be binding upon the Investor and the heirs, legal representatives, successors and permitted assigns of the Investor and shall inure to the benefit of Netcapital and its successors and assigns and (ii) shall, if the Investor consists of more than one person, be the joint and several obligation of each.
24. No Waiver
The failure of any party to exercise or enforce any right or provision of this Agreement shall not constitute a waiver of such right or provision. A waiver on any one occasion shall not be construed as a bar to, or waiver of, any right or remedy on any future occasion.
25. Force Majeure
No Netcapital Party will be held liable for any delays or failure to perform its obligations under this Agreement, from any cause beyond its control. This includes, but is not limited to, changes to law or regulations, embargoes, war, terrorist acts, riots, fires, earthquakes, floods, nuclear accidents, strikes, power blackouts, volcanic action, unusually severe weather conditions, and acts of hackers or third-party internet service providers.
26. Further Assurances
Investor agrees that he, she or it will do any and all things reasonably necessary without undue burden or expense after the date of this Agreement in order to effectuate all the terms and conditions of this Agreement.
27. Entire Agreement
This Agreement contains the entire understanding between the parties with respect to its subject matter and supersedes all prior or contemporaneous agreements, representations, warranties and understandings of such parties (whether oral or written) relating to such subject matter. No promise, inducement, representation or agreement other than as expressly set forth herein, has been made to or by the parties to this Agreement.
The parties have caused this Master Investor Agreement to be duly executed as of the date set forth on this page.
Last updated July 10, 2020