This Lead Investor Agreement (this "Agreement") is made and entered into as of the date of electronic consent ("Effective Date") by the parties on the funding portal ("Portal") of Wefunder Portal, LLC ("Wefunder"), by and among XX Team LLC, a Delaware limited liability company, XX Investments, LLC, a Delaware limited liability company ("Custodian"), Wefunder, a Delaware limited liability company, and the undersigned issuer ("Issuer").
WHEREAS, XX Team LLC has been granted the power to make all voting determinations by investors ("Investors") that hold beneficial interests in the uncertificated securities ("Securities") of Issuer, which Securities are or have been offered through Portal;
WHEREAS, Custodian has agreed, pursuant to a Custodial and Voting Agreement by and among the Custodian, each of the Investors, and Wefunder (the "Custodian Agreement"), to vote Investors' Securities and take any actions in connection with such voting at the direction of XX Team LLC;
WHEREAS, XX Team LLC wishes to communicate its voting instructions to Custodian, and Custodian wishes to receive such voting instructions from XX Team LLC;
WHEREAS, XX Team LLC may in future be compensated for its voting services by Investors and, in such event, wishes to communicate to Investors the amount of its compensation from Investors with respect to Issuer’s Securities by means of disclosure provided by the Issuer through the Portal;
WHEREAS, Issuer wishes to appoint XX Team LLC as a consultant with respect to Issuer's business operations;
NOW, THEREFORE, in consideration of the mutual promises herein made and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1. Provision of Voting Decisions to Custodian
XX Team LLC, through a representative responsible for making voting decisions with respect to Issuer's Securities (the "Lead Investor"), agrees to provide voting instructions to the Custodian in connection with any voting determination XX Team LLC makes with respect to Issuer's Securities.
2. Communication of XX Team LLC Compensation to Investors
Upon the issuance of guidance from the Securities and Exchange Commission ("SEC") or the SEC staff that permits XX Team LLC to receive a percentage of distributions that Investors are entitled to receive with respect to the Securities (the "Guidance"), XX Team LLC's compensation from Investors with respect to Issuer’s Securities will be 10% of all distributions that Investors are entitled to receive with respect to the Securities (the "Specified Percentage"), which compensation will be paid to XX Team LLC by the Custodian pursuant to the Custodian Agreement. Upon the issuance of the Guidance, Issuer agrees to inform Investors about the Specified Percentage by including the information in Issuer’s Form C and posting the information on the Portal.
3. XX Team LLC as Consultant to Issuer
3.1 Appointment of XX Team LLC as Consultant to Issuer
Issuer hereby appoints X Team LLC as consultant to Issuer and XX Team LLC hereby accepts the appointment. In its capacity as Consultant, XX Team LLC, through the Lead Investor or other representatives, may provide Issuer with periodic advice about Issuer's business operations, upon request by issuer.
3.2 Compenation of XX Team LLC as Consultant
Wefunder will pay the Consultant Fee on behalf of the Issuer for the three-year period beginning at the execution of this Agreement.
4. Lead Investor
4.1 Designation of Lead Investor
The Lead Investor with respect to Issuer shall be designated by mutual agreement of Issuer and Wefunder. The designation of the Lead Investor must occur prior to the Issuer's filing of the Form C or before the Issuer's offering closes.
4.2 Communication to Investors about the Lead Investor
Issuer agrees to inform Investors about the identity of the Lead Investor by posting information about the Lead Investor on the Portal prior to the Issuer's filing of the Form C or before the Issuer's offering closes. If the latter, Issuer acknowledges and agrees that Investors will be able to cancel their commitments prior to the closing of the offering.
4.3 Voting and Consulting Services with respect to Issuer Provided by Same Lead Investor
The Lead Investor with respect to the voting services XX Team LLC provides to Investors with respect to Issuer's Securities shall be the same Lead Investor that XX Team LLC uses to provide consulting services to Issuer. The parties agree that this will be disclosed to Investors at the same time the identity of the Lead Investor is disclosed to Investors.
4.4 Disclosure of Lead Investor's Role in Connection with SPV Rights
The parties agree that the Lead Investor also may act as a portfolio manager for a SPV advised by Wefunder Advisors that invests in Issuer in a subsequent non-Regulation CF round of financing and may receive additional compensation in that capacity. The parties further agree that this will be disclosed to Investors at the same time as the identity of the Lead Investor is disclosed to Investors.
4.5 Removal of Lead Investor
XX Team LLC may remove the Lead Investor as set forth in the Independent Contractor Agreement, but agrees that it only will remove Lead Investor upon a vote by a majority of Investors in favor of such removal or upon the direction of Wefunder to remove the Lead Investor. XX Team LLC agrees to act as directed either by such vote of the Investors or by such direction by Wefunder.
4.6 Replacement of Lead Investor
In the event the Lead Investor is removed pursuant to Section 4.5, a new Lead Investor ("Replacement Lead Investor") shall be nominated by Issuer and must be confirmed by a vote of the majority of Investors who vote within 14 days of the nomination. The nomination and vote shall be conducted through the Portal and Investors will be notified using their contact information on the Portal.
5. Entire Agreement
This document represents the entire Agreement, and supercedes any previous agreements, among the parties relating to the subject matter of this Agreement.
6. Partial Invalidity
If any provisions of this Agreement are held for any reason to be unenforceable, the remainder of this Agreement shall nevertheless remain in full force and effect.
7. Assignment; Amendment
This Agreement may not be assigned or amended by any party without the consent of the other parties.
This Agreement may be terminated by any party upon 30 days' written notice to the other parties.
This Agreement is for the benefit of the parties and shall bind and inure to the benefit of their respective successors and permitted assigns.
10. Governing Law
This Agreement is governed by the laws of the State of Delaware without regard to its conflicts of laws principles.
Last updated April 7th, 2020
481 startups have raised $176,187,836 on Wefunder
Wefunder supports three different federal laws that allow startups to raise money legally. To comply with the law, Wefunder Advisors LLC and Wefunder Portal LLC (both owned by Wefunder Inc) also list startups depending on the regulation used.
Legal May 16th 2016
Wefunder Portal LLC
for 394 startups
Wefunder Advisors LLC
for 115 startups
for 3 startups
Curious how well the companies have done? Or how many raised follow-on financing?
Some fine print: 1) These numbers include startups currently live on Wefunder if they pass their minimum target. 2) Some startups use two different laws at the same time (i.e., Regulation D and Regulation Crowdfunding).
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