(Valuation Cap, No Discount)
THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND 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 , Galaxy Holdings, a TX LLC (the “Company”), issues to the Investor the right to certain shares of the Company’s capital stock, subject to the terms below.
The “Valuation Cap” is . This SAFE converts using the Valuation Cap and does not include any conversion discount. See Section 2 for definitions.
(a) Equity Financing. If there is an Equity Financing before this SAFE terminates, 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. The Investor will execute the same transaction documents entered into by the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock and customary drag-along exceptions.
(b) Liquidity Event. If there is a Liquidity Event before this SAFE terminates, the Investor will automatically be entitled (subject to Section 1(d)) to receive a portion of Proceeds 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.
(c) Dissolution Event. If there is a Dissolution Event before this SAFE terminates, the Investor will automatically be entitled (subject to Section 1(d)) to receive the Cash-Out Amount, due and payable 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: junior to indebtedness and creditor claims; on par with other SAFEs and Preferred Stock; and senior to Common Stock.
“Conversion Price” means the Cap Price. The “Cap Price” means the price per share equal to the Valuation Cap divided by the Company Capitalization. Because this SAFE has no discount, the Conversion Price always equals the Cap Price (not the Discount Price).
“Company Capitalization” is calculated as of immediately prior to the Equity Financing and includes (without double-counting) all shares of Capital Stock issued and outstanding, all Converting Securities, and all issued and promised Options under the Company’s equity incentive plan, 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 pre-money valuation.
“Liquidity Event” means a Change of Control or an Initial Public Offering. “Dissolution Event” means a voluntary termination of operations, a general assignment for the benefit of creditors, or any other winding up of the Company (other than a Liquidity Event). “Liquidity Price” means the price per share equal to the Valuation Cap divided by the Liquidity Capitalization.
The Company is duly organized, validly existing, and in good standing under the laws of TX, and has the corporate power and authority to execute, deliver, and perform this SAFE. Such execution, delivery, and performance have been duly authorized by all necessary corporate action.
The Investor has full legal capacity, power, and authority to execute this SAFE; is an accredited investor within the meaning of Rule 501 of Regulation D; and is acquiring this SAFE for its own account for investment and not with a view to distribution.
Upon conversion in an Equity Financing, the Investor will be entitled to a Pro Rata Right to participate in the Equity Financing and subsequent rounds, subject to a customary side letter or the Equity Financing transaction documents.
Any provision of this SAFE may be amended or waived only by written consent of the Company and the Investor. This SAFE is governed by the laws of the State of TX, without regard to conflict-of-law principles, and may be executed in counterparts, including by electronic signature.
By: Michael Yuan
Title: General Manager
Email:
Date:
By:
Name:
Title:
Email:
Date: