The following is an overview of the typical types of terms and subjects involved in an investment agreement. The current specifics may vary with the type of investment, interest payment method, principal repayment schedule, and the individual goals of the investor. Only the written investment agreement provides the complete binding details.
Type of investment: This investment is a type of debt instrument variously called a "loan", "note", or "bond". This investment is unsecured and relies on the good faith and credit of the company. As do all investments, this type of investment has risks -- be sure to read the Risk Statement.
Repayment: The company is borrowing a sum which it promises to repay to the investor. Small invested amounts will repaid on a specific date. However, larger amounts of more than a few thousand dollars will be repaid in monthly payments, starting after the end of the intial term. (Interest is still earned and paid on any amount yet to be repaid.) [Only a limited number of investments will be scheduled to be repaid in each time period, thus limiting the total amount of investments that can be accepted. The monthly repayment method is the result of a desire to be conservative so that I can ensure that payments can be made from our normal operations cash flow, thus not relying any hoped-for future source of funds.]
Choices of types of interest: The company promises to pay either a) cash interest paid on scheduled dates or b) compounded interest paid as part of monthly payments after the initial term of the loan (investor's choice). Compounded interest that is paid as part of monthly payments after the the end of the initial term, will be compounded quarterly and accrued (added into the amount of the loan; interest is then paid on the interest, thus increasing the total yield). (Income tax is typically payable on interest as it accrues.) Any necessary interest calculations shall be calculated per day at 1/365th of the annual rate.
Choices of interest payment methods: At the time the investment is made, the client-lender has the choice of whether the interest is to be paid a) completely in cash, b) in a combination of cash and merchandise credit, or c) completely in merchandise credit. There may be only very exceptional limitations on the usage of merchandise credit: the merchandise credit usually may not be used toward a) certain private treaty sales; and b) certain commission or consignment sales arrangements made on behalf of sellers. Otherwise merchandise credit can be used toward all types of normal purchases. This is not a permanent decision; the merchandise-credit method can later fall-back to a money-payment method OR money-payment interest can be used instead as merchandise credit to purchase items at a discount.
Method of interest compounding: If a client chooses compounded interest (i.e. payment of interest starting at the end of the initial term instead of during the term), at the end of the first month or quarter, the interest earned on the investment balance will be added to the investment balance. At the end of each following month or quarter, interest will be calculated on the previous balance (which includes previously earned interest). However, for simplicity, if there is to be a change in the investment balance other than at the end of a month or quarter (i.e. funds are either added or paid out), the interest compounding calculation will be done prior to the change in the balance. (This results in a slightly higher yield for the investor.)
Change in interest payment method -- From merchandise credit interest changed TO money payment of interest: There are situations, such as incapacity or death of the client/lender or the client/lender ceasing to collect stamps, or simply because client/lender wishes to make a change, in which the client/lender no longer has use for interest being paid in the form of merchandise credit (if that method was originally selected). In such cases, the interest payment method can be changed to quarterly payment by check at the appropriate lower interest rate for that method. Additionally, already-accumulated merchandise credit can be recalculated at the money payment interest rate and then paid by monthly checks.
Change in interest payment method -- From money payment of interest or compounded interest TO merchandise credit: If a client/lender is normally receiving interest payment by check or is accruing compounded interest, it is still possible to instead use interest amounts to pay for purchases. This is done by applying a pre-arranged discount on the purchase that reflects a savings closer to that of the higher merchandise credit interest rate.
Additional investments: Investors may, with the company's approval, invest additional funds either regularly or occasionally. The repayment date(s) for the additional funds may or may not be the same as the previously invested funds and will be scheduled by the company, with the approval of the investor. The applicable interest rates on the additional investment(s) will be proposed by the company and will be based on a combination of the total amount invested and the length of the investment(s).
Renewal or extension of length of investment: The investor may at any time apply to renew or extend the length of the investment. Approval of renewal or extension is not guaranteed, however, the company will give preference to existing investors who wish to renew or extend. Investment lengths that are increased may result in a higher rate of interest being paid.
Early repayment: The company may, at its sole option, prepay any portion or all of any investment at any time without any premium, fee, or penalty. An investor who encounters hardship may apply to the company for early repayment of an investment. Such early repayment is not automatic or guaranteed and, if granted, may result in an interest penalty.
Transfer: This investment is not negotiable and may not be transferred, pledged, assigned, or otherwise disposed of without prior written consent of the company, except through inheritance in the case of the death of the investor. If there is a transfer by inheritance, the company will fulfill all obligations to the heir just as it would to the original client/investor. Additionally, the company will endeavor to be cooperative in any potential transfer situation to a family member that might arise for other reasons.
Entire agreement: The investment document signed by the parties shall be the entire and exclusive agreement between the parties. No verbal agreements or email correspondence are recognized; if there are to be additional agreements, such should be in writing and signed by both parties. This web page is only a summary of key features and may not be complete and/or current.
Amendments and modifications: If both parties agree to amend or modify the investment terms or agreement, such amendment or modification must be in writing and be signed by both parties.
Jurisdiction: This agreement shall be governed by the laws of the United States of America and the of State of North Carolina, and any disputes shall be under the legal jurisdiction of North Carolina.
There are usually other minor details in the Terms; this web page is just a summary of key features. The various options and details of these Terms are to be agreed upon at the time the investment is made. Only that written agreement shall be final and binding. The Terms information presented on this web page may not be complete or current, and are subject to change or correction. |
