(Post-Money Valuation Cap)
THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE OFFERED, SOLD, OR TRANSFERRED ABSENT REGISTRATION OR AN APPLICABLE EXEMPTION.
THIS CERTIFIES THAT in exchange for the payment by (the “Investor”) of (the “Purchase Amount”) on or about , ACME Resources LLC, a TX LLC (the “Company”), issues to the Investor the right to certain shares of the Company’s capital stock, subject to the terms set forth below.
The “Post-Money Valuation Cap” is . See Section 2 for definitions.
(a) Equity Financing. If there is an Equity Financing before the termination of this SAFE, on the initial closing of such Equity Financing, this SAFE will automatically convert into the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Conversion Price.
In connection with the automatic conversion of this SAFE into shares of Safe Preferred Stock, the Investor will execute and deliver to the Company all transaction documents related to the Equity Financing; provided, that such documents are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock, and provided further, that such documents have customary exceptions to any drag-along applicable to the Investor.
(b) Liquidity Event. If there is a Liquidity Event before the termination of this SAFE, the Investor will automatically be entitled (subject to the liquidation priority set forth in Section 1(d)) to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with, the consummation of such Liquidity Event, equal to the greater of (i) the Purchase Amount (the “Cash-Out Amount”) or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price (the “Conversion Amount”). If the Investor elects the Cash-Out Amount, the Purchase Amount will be due and payable to the Investor immediately prior to the Liquidity Event.
(c) Dissolution Event. If there is a Dissolution Event before the termination of this SAFE, the Investor will automatically be entitled (subject to the liquidation priority set forth in Section 1(d)) to receive a portion of Proceeds equal to the Cash-Out Amount, due and payable to the Investor immediately prior to the consummation of the Dissolution Event.
(d) Liquidation Priority. In a Liquidity Event or Dissolution Event, this SAFE is intended to operate like standard non-participating Preferred Stock. The Investor’s right to receive its Cash-Out Amount is (i) junior to payment of outstanding indebtedness and creditor claims, including convertible promissory notes; (ii) on par with payments for other SAFEs and/or Preferred Stock; and (iii) senior to payments for Common Stock.
“Conversion Price” means the price per share equal to the Post-Money Valuation Cap divided by the Company Capitalization.
“Company Capitalization” is calculated as of immediately prior to the Equity Financing and (without double-counting) includes all shares of Capital Stock issued and outstanding, all Converting Securities, all (issued and promised) Options under the Company’s equity incentive plan (the “Unissued Option Pool”), but excludes this SAFE, all other SAFEs, and convertible promissory notes.
“Equity Financing” means a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells Preferred Stock at a fixed valuation, including a pre-money or post-money valuation.
“Liquidity Event” means a Change of Control or an Initial Public Offering. “Dissolution Event” means (i) a voluntary termination of operations, (ii) a general assignment for the benefit of creditors, or (iii) any other liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (excluding a Liquidity Event), in each case in connection with which the Company will pay the Cash-Out Amount.
“Liquidity Price” means the price per share equal to the Post-Money Valuation Cap divided by the Liquidity Capitalization. “Safe Preferred Stock” means the shares of the series of Preferred Stock issued to the Investor in an Equity Financing, having the identical rights, privileges, preferences, and restrictions as the Standard Preferred Stock, other than with respect to the per-share liquidation preference and conversion price (which equal the Conversion Price).
The Company is duly organized, validly existing, and in good standing under the laws of TX and has the power and authority to own and operate its properties, to carry on its business, and to execute, deliver, and perform its obligations under this SAFE. The execution and delivery of this SAFE and the performance of the Company’s obligations have been duly authorized by all necessary corporate action.
The Investor has full legal capacity, power, and authority to execute and deliver this SAFE and to perform its obligations hereunder. The Investor is an accredited investor as defined in Rule 501 of Regulation D under the Securities Act and is purchasing this SAFE for its own account for investment, not with a view to distribution, and not for any other person.
If the Investor’s SAFE converts in an Equity Financing, the Investor will, at the closing of such Equity Financing, be entitled to a Pro Rata Right to participate in subsequent rounds, subject to entering into a customary side letter or as set forth in the Equity Financing transaction documents.
Any provision of this SAFE may be amended, waived, or modified only by written consent of the Company and the Investor. This SAFE and all rights and obligations hereunder are governed by and construed in accordance with the laws of the State of TX, without regard to conflict-of-law principles. This SAFE may be executed in counterparts, including by electronic signature.
By: Michael Yuan
Title: General Manager
Email:
Date:
By:
Name:
Title:
Email:
Date: