Securities Purchase Agreement for 506(c)
The parties to this Securities Purchase Agreement (the “Agreement”) are NetCapital Systems, LLC (“Platform”), Livingston Securities, LLC (“Intermediary”), the company that is offering securities for sale to investors on the website provided by the Platform (“Seller”), and the investor who is buying securities through the Intermediary from the Seller (“Buyer”).
WHEREAS, Seller desires to sell shares of stock or units of membership interest (“Securities”) on Platform’s website (the “Site”);
WHEREAS, Buyer desires to buy some of the Securities from the Seller under the terms and conditions as hereinafter expressed;
WHEREAS, Intermediary is registered with the Securities and Exchange Commission (“SEC”) as a broker-dealer registered with the U.S. Securities and Exchange Commission and as a funding intermediary in the offer and sale of Securities in reliance on Rule 506(c) of the Regulation D safe harbor to the exemption under Section 4(a)(2) (“Regulation D”) of the Securities Act of 1933 (the “Act”);
NOW THEREFORE, for and in consideration of the mutual covenants as herein contained and based on the foregoing, the parties hereto agree as follows:
1. Total Consideration and Allocation; Accredited Investor Determination
Seller agrees to sell Securities at the price per share that is offered on the Site, subject to: (a) the maximum number of shares that are available for sale, and (b) a determination that any Buyer meets the applicable definition of an “accredited investor” under Rule 501(a) under Regulation D (“Accredited Investor”)s of Regulation D, as amended. Buyer agrees to buy the number of Securities that is entered by the Buyer and paid for on the Site. When Buyer indicates Buyer’s decision to purchase Securities on the Site, such purchase is irrevocable by the Buyer and the Buyer unconditionally owes the purchase price for such investment.
Buyer agrees to furnish and Intermediary agrees to determine the eligibility of each Buyer as an Accredited Investor eligible to purchase Securities in this Regulation D offering.
2. Agreements as to Closing Date
The Seller shall list a targeted offering amount on the Site, which shall be the minimum amount of dollars, in the aggregate, (the “Minimum Amount”) that the Seller will accept from investors in conjunction with the sale of the Securities. The parties intend that the “Closing Date” as that term is used in this Agreement and the effective date of the transfer and transactions contemplated by this Agreement shall be the date that the Seller has sold such number or dollar amount of Securities on the Site so that the Minimum Amount is reached.
3. Representations and Warranties of Seller
Seller hereby represents and warrants, jointly and severally, to Buyer as follows:
- a. The Seller is a duly incorporated business in a state or territory of the United States.
- b. This Agreement and all transactions contemplated hereby will not result in any violation of any of the terms and provisions of any indenture or other agreement to which Seller is a party or by which Seller may otherwise be bound, or of any law, rule, license, regulation, judgment, order or decree governing or affecting the operation of the Securities of Seller.
- c. All authorizations, approvals and consents necessary for execution and delivery by Seller of this Agreement and for the consummation by Seller of the transactions contemplated hereby have been given, which if not given would have a materially adverse effect on Seller and/or the Securities.
- d. This Agreement and the other agreements contemplated hereby are legal, valid and binding obligations of the Seller enforceable against it in accordance with their respective terms.
- e. No representation or warranty made by Seller in the offering statement of Securities, and no statement or information furnished by the Seller to the Site in connection with this Agreement, or the transactions contemplated hereby, on or before the Closing Date, 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.
- f. Based upon information furnished by the Buyer and other reasonable inquiries, Seller has taken reasonable steps to determine that Buyer is an Accredited Investor.
4. Representations and Warranties of Buyer
The Buyer hereby represents and warrants to Seller as follows:
- a. This Agreement and all transactions contemplated hereby will not result in any violation of any of the terms and provisions of any indenture, or other agreement to which Buyer is a party or to which Buyer may otherwise be bound, or of any law, rule, license, regulation, judgment, order or decree governing or affecting Buyer.
- b. Buyer understands and agrees that Seller has made no representations or warranties regarding future profitability of the Seller, future profitability of the Securities, general business prospects for the Securities, retention of customers, supply sources, business prospects in general or general economic conditions relative to the Securities.
- c. Buyer has read all Seller information available on the Site and the educational material provided by the Platform.
- d. Buyer understands and agrees that in addition to Buyer’s obligations to indemnify the Platform as provided in Section 6 below, in the event Buyer fails to pay for any Securities, such Securities may be registered or re-registered in the name of the Seller or other transferee and Buyer shall have no ownership rights in the Securities.
- e. Buyer is an Accredited Investor.
5. Required Information for Buyers who are Promoters and Disclosure of Compensation to Intermediary
In connection with the establishment of an account for a Buyer and as required by Regulation CF:
- a. The Intermediary hereby informs the Buyer that any person who promotes a Seller’s offering for compensation, whether past or prospective, or who is a founder or an employee of a Seller that engages in promotional activities on behalf of the Seller on the Intermediary’s Platform, must clearly disclose in all communications on the Intermediary’s Platform, respectively, the receipt of the compensation and that he or she is engaging in promotional activities on behalf of the Seller and
- b. The Seller pays the Intermediary a fee for its services equal to 4.9% of the amount raised by the Seller on the Platform.
The Seller and Buyer agree to and do indemnify and hold harmless the Platform, the Intermediary, and their officers, directors, employees, agents and third parties, for any losses, costs and expenses (including reasonable attorney’s fees) relating to or arising out of the use of the Site, including but not limited to, any breach by the Seller of Buyer of the terms of this Agreement, provided, however that this provision shall not apply to any losses, costs, liabilities and expenses relating to or arising out of Intermediary’s failure to comply with all applicable Securities Laws in connection with its role as an intermediary.
7. Nature and Survival of Representations
All statements contained in any certificates or other instrument delivered on behalf of any party hereto in connection with this Agreement, or in connection with the transactions contemplated herein shall be deemed representations and warranties by such party. All representations, warranties, agreements and covenants in this Agreement shall be deemed restated as of and shall survive the Closing Date, for a period of one year.
8. Terms of Service
The Terms of Service are incorporated by reference into this Agreement. The Seller and Buyer have read and agree to the Terms of Service, and understand that the Terms of Service govern the parties’ use of the Site and the Services (terms not defined herein are defined in the Terms of Service).
9. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware. The choice of law provision of this Agreement shall be applied with no effect given to the principles of conflicts of law, and without regard to the choice of law rules of the State of Delaware.
The article paragraph headings of this Agreement are for administrative convenience only and shall not be construed in interpreting this Agreement.
11. Counterparts; Electronic Signature
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. 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 part thereof 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.
This Agreement may not be assigned.
14. Binding Nature
This Agreement shall be binding on and shall inure to the benefit of the heirs, executors, administrators, and successors of the parties hereto, such that nothing contained in this paragraph shall be construed as a consent to any assignment of this Agreement or the duties and obligations under this Agreement by either Buyer or Seller.
15. Compliance with Laws
Each party shall comply with all applicable federal, state and local laws and regulations in connection with its activities pursuant to this Agreement.
16. 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.
17. Force Majeure
Netcapital will not 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.
18. Further Assurances
The parties to this Agreement agree that they will do any and all things reasonably necessary after the date of this Agreement in order to effectuate all the terms and conditions of this Agreement.
This Agreement shall not be modified or amended except by an instrument in writing signed by or on behalf of the parties hereto.
20. 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). No promise, inducement, representation or agreement other than as expressly set forth herein, has been made to or by the parties hereto.
IN WITNESS WHEREOF, the parties have signed this Agreement to be effective on the date that the Buyer acknowledges on the Site his or her acceptance of this Agreement.
Last updated August 25, 2017