This Simple Agreement for Future Equity (this “SAFE”) is entered into on or about ____________ by and between {{ company_name }}, a {{ incorporation_state }} corporation (the “Company”), and ______________ (the “Investor”) in connection with the Investor’s purchase of certain rights to the Company’s Capital Stock pursuant to the terms set forth below.
In consideration of the Investor’s payment to the Company of ${{ '{:,}'.format(investment_amount) }} (the “Purchase Amount”) on or about ____________, the Company hereby issues to the Investor the right to certain shares of the Company’s Capital Stock, subject to the terms set forth below.
Capital Stock means the capital stock of the Company, including, without limitation, the “Common Stock” and the “Preferred Stock.”
Company Capitalization is calculated as of immediately prior to the Equity Financing and (without double-counting): (i) includes all shares of Capital Stock issued and outstanding; (ii) includes all Converting Securities; (iii) includes all issued and outstanding Options and (to the extent receiving Promised Options) Promised Options; and (iv) includes the Unissued Option Pool, except that any increase to the Unissued Option Pool in connection with the Equity Financing shall only be included to the extent that the number of Promised Options exceeds the Unissued Option Pool prior to such increase.
Conversion Price means either (a) the SAFE Price or (b) the Discount Price, whichever calculation results in a greater number of shares of SAFE Preferred Stock. Because this SAFE has a Discount Rate of 0%, the Conversion Price is the SAFE Price.
Converting Securities includes this SAFE and other convertible securities issued by the Company, including but not limited to: (i) other Simple Agreements for Future Equity; (ii) convertible promissory notes and other convertible debt instruments; and (iii) convertible securities that have the right to convert into shares of Capital Stock.
Discount Rate means 0% (no discount; valuation cap only).
Direct Listing means the Company’s initial listing of its Common Stock (other than shares of Common Stock not eligible for resale under Rule 144 under the Securities Act) on a national securities exchange by means of an effective registration statement on Form S-1 filed by the Company with the SEC.
Dissolution Event means (i) a voluntary termination of operations, (ii) a general assignment for the benefit of creditors of the Company, or (iii) any other liquidation, dissolution or winding up of the Company.
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.
Initial Public Offering means the closing of the Company’s first firm commitment underwritten initial public offering of Common Stock pursuant to a registration statement filed under the Securities Act.
Liquidity Capitalization is calculated as of immediately prior to the Liquidity Event and includes all shares of Capital Stock issued and outstanding, all Converting Securities, and all issued and outstanding vested Options.
Liquidity Event means a Change of Control, a Direct Listing, or an Initial Public Offering.
Liquidity Price means the price per share equal to the Post-Money Valuation Cap divided by the Liquidity Capitalization.
Options includes options, restricted stock awards or purchases, RSUs, SARs, warrants or similar securities, vested or unvested.
Post-Money Valuation Cap means ${{ '{:,}'.format(valuation_cap) }}.
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 shares of Standard Preferred Stock, other than with respect to: (i) the per share liquidation preference and the initial conversion price for purposes of price-based anti-dilution protection, which will equal the Conversion Price; and (ii) the basis for any dividend rights, which will be based on the Conversion Price.
SAFE Price means the price per share equal to the Post-Money Valuation Cap divided by the Company Capitalization.
Standard Preferred Stock means the shares of the series of Preferred Stock issued to investors investing new money in the Company in connection with the initial closing of the Equity Financing.
Unissued Option Pool means all shares of Capital Stock that are reserved, available for future grant, and not subject to any outstanding Options or Promised Options (but in the case of a Liquidity Event, treating all such shares as issued and outstanding).
(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 Standard Preferred Stock (or, at the Investor’s election, 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 Standard Preferred Stock or SAFE Preferred Stock, the Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing, with the same rights, preferences and privileges as the other Standard Preferred Stock investors (modified only as set forth above for SAFE Preferred Stock holders).
(b) Liquidity Event. If there is a Liquidity Event before the termination of this SAFE, this SAFE will automatically be entitled (subject to the liquidation priority set forth in the certificate of incorporation) 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”).
(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 the certificate of incorporation) 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) Termination. This SAFE will automatically terminate immediately following the earliest to occur of: (i) the issuance of Capital Stock to the Investor pursuant to the automatic conversion of this SAFE under Section 2(a); or (ii) the payment, or setting aside for payment, of amounts due the Investor pursuant to Section 2(b) or Section 2(c).
The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of {{ incorporation_state }} (upon completion of incorporation). The execution, delivery and performance by the Company of this SAFE is within the power of the Company and has been duly authorized by all necessary actions on the part of the Company.
The Investor has full legal capacity, power and authority to execute and deliver this SAFE and to perform its obligations hereunder. The Investor is purchasing this SAFE solely for its own account, for investment purposes, and not with a view to the public resale or distribution of all or any part thereof. The Investor acknowledges that this is an early-stage investment involving substantial risk, including the possibility of total loss of the Purchase Amount.
For so long as this SAFE remains outstanding, the Company will deliver to the Investor: (i) monthly business updates covering platform metrics, user growth, revenue, and deployment progress against agreed milestones; and (ii) annual unaudited financial statements within 120 days after the close of each fiscal year.
In connection with each Equity Financing following the conversion of this SAFE, the Investor shall have the right to participate in such financing on the same terms and conditions as other investors in such financing, in an amount sufficient to maintain the Investor’s ownership percentage in the Company.
If the Company issues any SAFE or convertible instrument with terms more favorable to the holder than those set forth herein prior to the termination of this SAFE, the Company shall promptly notify the Investor and offer to amend this SAFE to match such more favorable terms.
(a) Governing Law. This SAFE shall be governed by and construed in accordance with the laws of the State of {{ incorporation_state }}.
(b) Entire Agreement. This SAFE constitutes the entire agreement between the parties with respect to its subject matter.
(c) Amendment. Any provision of this SAFE may be amended only with the written consent of the Company and the Investor.
(d) Notice. All notices required hereunder shall be in writing and delivered to the addresses on file with the Company.
IN WITNESS WHEREOF, the undersigned have caused this SAFE to be duly executed and delivered as of the date first written above.