Neighbor Capital, a California Public Benefit Corporation (“Neighbor Capital”) operates this website, neighborcapital.org (the “Site”). The Site facilitates offerings (“Offerings”) by early stage companies or small businesses (“Issuers”) made under Title III, section 4(a)(6) of the Securities Act of 1933 (“Regulation Crowdfunding”).
1. General Terms; Incorporation by Reference
Neighbor Capital may update this Agreement at any time without providing you prior notice and you agree to be bound by this Agreement as modified. The version of this Agreement in effect on the date you use the Site shall govern. It is your responsibility to understand the contents of this Agreement and to visit the tab under “Policy Updates” from time to time to review this Agreement for changes.
The following agreements are incorporated into this Agreement by reference:
- The Issuer’s information as posted on this Site;
- Any investment commitment, subscription agreement, promissory note, or investment contract that You submit with respect to a particular Offering;
- The Offering terms as provided to you in the offering documents, including the Issuer’s Form C, offering memorandum, and Issuer profile; and
- Any information on this Site regarding an Offering on the Site or the Site itself.
You should carefully review each of the documents above before deciding to invest in an Offering. You are responsible for understanding the contents of those agreements and any other agreements you have with Neighbor Capital.
2. Agreements with Respect to the Site and Its Offerings
2.1 General Acknowledgments
You understand and acknowledge that:
- Third parties, including Issuers will provide content on the Site, and Neighbor Capital may distribute such content to you. Neighbor Capital shall not be responsible for such information and shall not be responsible for any loss or damage associated with your use of the Site.
- The Site does not contain any type of investment advice, including, but not limited to recommendations to invest in any Offering. You, and you alone, take the sole risk of any investment you make on this Site.
- Except for due diligence required by Regulation Crowdfunding, Neighbor Capital does not independently verify Issuer information or endorse any Issuer.
- You have been provided with information regarding your investment in the Offering, including the Issuer’s Form C, offering memorandum, Issuer profile, and investment contract.
- You have been provided the opportunity, through this Site, to ask questions about and receive answers from the Issuer about the terms of its Offering.
- Your eligibility to invest is subject to your annual income, net worth, and investments previously made under Regulation Crowdfunding in the prior twelve months. Neighbor Capital may rely on your representations of such information in determining whether you are eligible to invest. Our site contains a tool to help you calculate your investment limits based on the information that you input in the calculator. The accuracy of the calculator depends on the accuracy and truthfulness of the information that you input. Thus, it is important that you enter the information as truthfully and as accurately as possible. However, you and you alone are responsible for complying with all investment limits that you are subject to.
- Neighbor Capital does not set the terms of any offering on this Site nor has any control over the Issuer’s management. The investment you make is a purchase of the securities of the Issuer and only the Issuer has control over its offering terms or management.
- You have received and will review the Educational Materials that Neighbor Capital has provided you before you invest in any Offering on this Site. The latest copy of Neighbor Capital’s Educational Materials can be found at http://neighborcapital.org/education. You are encouraged to review this page if you have a question about making an investment on the Site.
2.2 Investor Representations
You represent and warrant the following:
- The answers you provided in the Investor Questionnaire are true, correct, and complete and Neighbor Capital and Issuers may rely on such answers to determine whether you are eligible to invest in the Issuers or Offerings listed on the Site. If your annual income or net worth is materially affected, you agree to fill out a new Investor Questionnaire to determine if you are still eligible to invest in the Offerings on the Site.
- You are using the Site to make investments for yourself or the entity that you represent and not with the view to sell or otherwise distribute your investment.
- You have read and understand the risks of investing contained in the Issuer’s offering materials, in the Educational Materials provided to you, in this Agreement, and in all other relevant documents and information throughout this Site.
2.3 Choosing and Making Investments
2.3.1 Limited Review Based on Predetermined Criteria
Neighbor Capital reviews the Issuer’s offering documents, including its Form C and information that the Issuer posts on its profile to determine whether the Issuer complies with Regulation Crowdfunding and whether the Offering should be allowed to be posted on the Site. Neighbor Capital does not verify any information that the Issuer provides regarding its operation or management, make any judgments on its likelihood of success, ability to generate investment returns or advisability of investment.
2.3.2 No Advice or Endorsement
Neighbor Capital does not provide any investment, legal, or tax advice or advice of any kind. In addition, it does not endorse any Issuer or Offering. You agree to exercise independent judgment when using the materials, information, and services provided to you on the Site and seek professional advice from financial advisors, tax advisors, or attorneys.
2.3.3 Information about Investing in a Regulation Crowdfunding Offering
- Limits on Amounts Raised In a Twelve-Month Period: Under Regulation Crowdfunding, an Issuer can raise up to $1.07 million in a twelve-month period.
- Limits on Amounts Invested in a Twelve-Month Period: Regulation Crowdfunding also limits the amount that an investor can invest in a twelve-month period. The total amount that you can invest in Regulation Crowdfunding investments, in the aggregate, during a twelve-month period is dependent on your annual income or net worth. If your annual income or net worth is less than $107,000, you can invest up to $2,200 or 5 percent of your annual income or net worth, whichever is less. If both your annual income and net worth is equal to or more than $107,000, you may invest up to 10 percent of your annual income or net worth, whichever is less, up to $107,000.
- Type of Security and the Investment Contract: The Offerings on Neighbor Capital may consist of debt or equity securities. The types of rights an investor has will vary depending on the type of security purchased. Information about the types of securities are available in Neighbor Capital’s Educational Materials, which are provided to all investors before making an investment commitment. You are encouraged to review such materials. Keep in mind that these materials only give you general information. The specific terms of your investment are provided in the Issuer’s offering memorandum and/or Form C and governed by the subscription agreement, promissory note, and/or any other investment contract between you and the Issuer. The Issuer may reject your investment for any reason or for no reason at all.
- Transfer of Funds: Once you complete and submit your investment contract, you will be asked to transfer funds into an escrow account for the purpose of raising funds in the Offerings provided on the Site. Neighbor Capital does not take physical custody of your funds. You agree to submit the amount of funds requested of you in order to complete the transaction. Your transaction may not be processed if you fail to submit the required funds. Investors who have submitted investment contracts and funds may be given priority over those investors who have submitted investment contracts only. Your funds will be returned without interest if your investment is rejected.
- Funding Target and Target Deadline: Each offering (investment opportunity) will specify a targeted offering amount and a deadline for meeting this amount (“Target Deadline”). The targeted offering amount is the amount that investors, in aggregate, must commit to the offering before your investment can be processed. In addition, your investment will not be processed unless the targeted offering amount is reached by the Target Deadline. If the targeted offering amount is not met by the Target Deadline, you will be notified and your funds will be returned to you without interest within 7 days after the Offering is terminated.
If the targeted offering amount is received by the Target Deadline, the Offering will close, you will be notified and your funds will be transmitted from the escrow agent to the Issuer(s).
- Targeted Offering Amount Reached Before Target Deadline: If the targeted offering amount is reached before the Target Deadline and the Issuer wants to move the Target Deadline to an earlier date, Neighbor Capital will notify you at least five business days before the new Target Deadline.
- Funding Exceeding the Targeted Offering Amount: An Issuer may accept amounts exceeding the Targeted Offering Amount. If this is the case, the Issuer will provide you with information on the maximum amount they will accept and how they will allocate excess subscriptions.
- Your Cancellation Rights: You may cancel your investment commitment up to 48 hours before a Target Deadline. If you miss this cancellation window, your investment may be processed and your funds transferred to the Issuer.
2.3.4 Right to Reject or Accept Any or All of Your Investment Amount
An Issuer, in its sole discretion, may accept some or all of your investment or reject your investment in its entirety, for any reason or no reason at all. Any rejected funds will be returned to you without interest.
2.3.5 Limitation of Liability and Indemnification
- Neighbor Capital, its affiliates, employees, directors, or any agent shall not be liable for any information that an Issuer provides or fails to provide to or for information a third party creates in reliance on such information. Information includes all material available on the Site or distributed to Investors by Neighbor Capital, its affiliates, employees, directors, or any agent.
- The information regarding an Issuer or its Offering is provided by the Issuer and not by Neighbor Capital, its affiliates, directors, employees, or agents.
- Neither Neighbor Capital, its affiliates, directors, employees, or agents reviews or approves any information submitted by an Issuer or takes any due diligence with respect to any Issuer or Offering and shall not be liable for any past, present future performance or non-performance of activities that an Issuer describes in such information.
- The information any Issuer provides to you regarding the Issuer or its Offering may not be suitable or sufficient for supporting an informed investment decision.
Neighbor Capital does not charge the investor any fees for using the Site. However, when the investor makes an investment commitment, the Issuer may charge the investor a non-refundable transaction fee to cover processing expenses related processing the investor’s investment commitment and/or investment.
Although the Issuer(s) will disclose the risks of investing in their Offering(s), there is no guarantee that these disclosures are complete or accurate. Before investing in an Offering, you should consult with your legal, tax, and financial advisors.
2.4.1 Significant Risk of Loss
The Offerings on this Site are only suitable for investors with a limited need for liquidity in their investments and can bear the loss of their entire investment. An investment in the Offerings on this site should only represent a small portion of a potential investor’s investment portfolio, as it does not a complete or diversified investment portfolio.
2.4.2 High Risk of Failure
The Issuers represent small businesses and early stage companies, both which involve a high degree of risk and failure. You may receive cash, stock, or a combination of both (the “Securities”). In some cases, you may not receive anything. Your investment returns depend on the liquidity of an investment. A liquidity event may not occur for many years or at all. This is beyond Neighbor Capital’s or your control. The Securities are highly illiquid, cannot be publicly traded, and may not have any significant value.
2.4.3 Restrictions on Resale or Transfer
The securities offered on this Site are issued under the Regulation Crowdfunding exemption from registration under the 1933 Act. The securities may not be transferred for at least one year after the date of purchase unless they are transferred:
- to the issuer of the securities;
- to an accredited investor;
- as part of an offering registered with the Commission; or
- to a family member of the purchaser or the equivalent, to a trust controlled by the purchaser, to a trust created for the benefit of the family member of the purchaser or the equivalent, or in connection with the death or divorce of the purchaser or other similar circumstance.
2.4.4 Limited Liquidity
In addition to the Restrictions on Transfer above, a market does not currently exist for the sale of Regulation Crowdfunding securities and a market may never develop. Thus, investors with need for liquidity should not invest in the Offerings on this Site.
2.4.5 Lack of Operational Record
The Issuers on this Site, particularly early stage companies, may have limited or no operational record.
2.4.6 No Control in Management
In many or most cases, you will have no influence or control over an Issuer’s management or operations. Any influence is limited to your voting rights, which is controlled by the relevant provisions of the investment contract controlling your investment. Keep in mind that the right to vote may not provide you with any influence or control over an Issuer’s management, operations, or decision-making of any kind.
2.4.7 No Control Over Future Valuation
The price you pay for an Issuer’s securities may have limited or no bearing to any future valuations of such securities, if any private or public market should develop for the offer and sale of such securities.
2.4.8 Limited Information
The Issuers represented on this Site are private companies. Thus, there is limited information, including financial and operating information, about each company. Each Issuer will provide financial information, risk factors, and other disclosures about an investment in its Offering. You can find this in the Form C as well as the Issuer’s other offering documents. You should read and understand these documents before you make an investment decision.
2.4.9 No Guarantee of Profit
Your investment in any Offering on this Site may not generate any profits for you. Generally, you will not receive returns, if any, on your investment until a liquidity event, which may not occur for many years or at all. These factors are out of Neighbor Capital’s and your control. You should not invest unless your investment can remain illiquid for an indefinite time and you can bear the risk of loss of your entire investment.
2.4.10 Lack of Regulatory Oversight
Neighbor Capital is a Securities Exchange Commission (“SEC”) registered funding portal and a member of Financial Industry Regulatory Authority (“FINRA”) and is subject to their oversight and examination. FINRA and the SEC require that Neighbor Capital submit certain information and materials to them.
Issuers are required to file a Form C with the SEC in addition to updates and amendments and provide these documents to investors. However, the SEC and FINRA’s oversight of Regulation Crowdfunding Offerings may not be as comprehensive as their oversight of offerings registered under the 1933 Act (“Registered Offering”). In addition, an Issuer’s disclosure in Form C may not be as comprehensive as disclosures required in a Registered Offering.
2.4.11 Review is Not an Indicator of Success or Advisibility of Investment
As noted above, Issuers are required to file a Form C, and any updates and amendments thereto, to the SEC. However, the SEC may or may not review such documents and in no way endorses the Issuer or the advisibility of investing in such Issuer.
Neighbor Capital only allows Issuers that have worked with an attorney to post their Offerings on the Site and conducts a limited review of the Issuer’s Offering materials. However, this is in no way an endorsement of an Issuer or Offering, or with a view to determine likelihood of success, or the ability to generate a return on investment.
Neither the SEC nor Neighbor Capital endorses any Issuer on this Site, determines the likelihood of success of an investment, nor guarantees any investment returns.
2.4.12 Possibility of Phantom Income
It is possible that you may be liable for taxes on phantom income, income reported to the IRS that you do not actually receive. Thus, even if the Issuer distributes no income or insufficient income to pay the taxes, you may still be required to pay taxes on such phantom income.
2.4.13 Not All Risk Factors May Be Disclosed
Although Issuers disclose risk factors related to an investment in their company or Offering, not all risk factors may be disclosed.
2.4.14 Limitation on Liability; Indemnification
You agree to indemnify, defend and hold harmless, Neighbor Capital and its affiliates, assignees, counsel and their respective officers, directors, managers, shareholders, members, agents, partners, and employees (collectively, the “Indemnified Parties”, for and against all liabilities, losses, damages, penalties, actions, judgments, costs, expenses or disbursements of any kind or nature (including reasonable attorneys’ fees) that may be imposed on, incurred by, or asserted against the Indemnified Parties, in any way relating to or arising out of the execution, delivery or performance of this agreement or the consummation of the transactions contemplated hereby.
2.5 Use of Name
You consent to Neighbor Capital to use your name on the Site, including that You have made an investment commitment, submitted a subscription agreement, or in connection with your postings on the Site.
2.6 Electronic Communications
You must consent to electronic delivery of all communications. Neighbor Capital’s Consent to Electronic Communication is incorporated into this Agreement.
Last updated: August 28, 2017
I AGREE: By making an investment commitment and/or investing any of the offerings on our funding portal, you are stating that: I agree to be bound to all of the terms in this Agreement.
I DO NOT AGREE: IF YOU DO NOT AGREE TO BE BOUND BY THE TERMS OF THIS AGREEMENT, YOU ARE NOT ALLOWED to access this site or use the services and you must immediately stop doing so.
 The one-year resale restriction will apply to any purchaser during the one-year period beginning when the securities were first issued, not just to the first purchaser.
 Date of Purchase is defined as the date the offering is closed.
 The person selling the securities must have a reasonable belief that the purchaser qualifies as an accredited investor.