When you invest through Climatize, you provide capital in exchange for a financial stake in a climate project. That financial interest is bound by an agreement between you and the issuer – project raising money. The official term for this agreement is a security. Securities offered on Climatize are issued under Regulation Crowdfunding (Reg CF). 

The securities issued on Climatize are promissory notes. A promissory note is a financial document that outlines a formal promise made by one party (the issuer) to pay a specified sum of money to another party (the investor) at a predetermined future date, along with agreed-upon terms and conditions. This type of investment instrument falls somewhere between a basic IOU and a complex investment security. Here’s a breakdown of its key components:

Parties Involved

• Issuer: This is the party who promises to make the payment. In an investment context, the issuer is typically a company or individual seeking capital. In the case of Climatize, the issuer is a renewable energy project developer looking to raise capital for a renewble energy project. 

• Investor: This is the party who provides funds to the issuer in exchange for the promise of repayment. The investor is usually seeking a return on their investment. If you decide to make a contribution, you would be the investor. 

• Principal Amount: The principal amount is the initial sum of money that the issuer borrows from the investor. It represents the amount to be repaid at maturity.

• Interest Rate: The interest rate, also known as the coupon rate, is the rate at which the issuer agrees to pay interest on the principal amount over the term of the promissory note. This rate determines the income or return the investor will receive.

• Maturity Date: The maturity date is the date on which the issuer is obligated to repay the principal amount to the investor. It marks the end of the promissory note’s term.

• Term: The term is the duration for which the promissory note is issued and is typically measured in months or years. It indicates how long the investor’s funds will be tied up before repayment.

• Payment Terms: This section outlines how interest and principal payments will be made. It may specify whether payments are made periodically (e.g., monthly, quarterly) or as a lump sum at maturity.

• Security or Collateral: In some cases, a promissory note may be secured by specific assets or collateral provided by the issuer. This collateral serves as a form of security for the investor in case the issuer defaults.

• Default Terms: This section explains the consequences if the issuer fails to meet their payment obligations. It may include penalties, acceleration clauses, or other remedies available to the investor.

• Governing Law: The promissory note typically specifies the jurisdiction and laws that govern the agreement, which can be important if legal disputes arise. In the case of Climatize, all securities fall under US securities law. 

Climatize is registered with the Securities and Exchange Commission (SEC) and is a Financial Industry Regulatory Authority (FINRA) Member under Section 4(a)(6) of the United States Securities Act, SEC File No: 7-360. Climatize acts as an intermidiar between the issuer and the investor. 

Promissory notes are commonly used in various financial transactions, such as loans between individuals, business financing, and investments. Understanding the details of a promissory note is crucial as it helps assess the risks and potential returns associated with the investment. It’s advisable for investors at this level to seek legal and financial advice before entering into such agreements to ensure they make informed decisions.