Black Ambition SAFE Summary of Terms
The following is a summary of the principal terms (“Summary of Terms”) with respect to the issuance of a “post-money” simple agreement for future equity by the Company (as defined below) to Black Ambition (as defined below) as part of your Black Ambition prize award (the “Black Ambition SAFE”). This Summary of Terms is for discussion purposes only and is not binding on the Company or Black Ambition or its affiliates until definitive documentation has been agreed to and executed by such parties. Capitalized terms not defined in the Summary of Terms shall have the meaning ascribed to them in the form of Black Ambition SAFE attached hereto as Exhibit A.
Issuer:
[COMPANY NAME], a [STATE OF INCORPORATION] [corporation/limited liability company] (the “Company”). If the Company is not currently organized as a corporation, the Company agrees as a condition to accepting its Black Ambition prize award to convert into a corporate entity at or prior to the Equity Financing referred to below.
Investors:
Black Ambition Opportunity Inc., a Delaware nonstock, nonprofit corporation recognized as a tax-exempt public charity under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (“Black Ambition”). The Company may assign the Black Ambition SAFE in whole, without the consent of Black Ambition, in connection with a conversion (if applicable)by the Company to a Delaware corporation or a reincorporation to change the Company’s domicile.
Black Ambition prize:
The Company has been awarded a Black Ambition prize equal to [INSERT AMOUNT OF AWARD] (the “Prize Amount”). In accordance with the Black Ambition prize award guidelines, fifty percent (50%) of the Prize Amount, up to a maximum of $250,000, shall be the “Investment Amount” in the Black Ambition SAFE.
Post-Money Valuation Cap^2:
$10,000,000
Discount Rate^3:
85%
Valuation Floor:
$4,000,000
Termination:
This Black Ambition SAFE will automatically terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with the terms therein) immediately following the earliest to occur of: (i) the issuance of Capital Stock to pursuant to an Equity Financing; or (ii) the payment, or setting aside for payment, of amounts due Black Ambition pursuant to a Liquidty Event or Dissolution Event.
Equity Financing:
In the event the Company consummates, an equity financing pursuant to which it sells shares of its equity securities (“Next Round Securities”) at a fixed money valuation with the principal purpose of raising capital (an “Equity Financing”), then the Investment Amount shall automatically convert into shares of a newly created series of preferred stock having the identical rights, privileges, preferences, seniority, liquididation multiple and restrictions as the Next Round Securities, and otherwise on the same terms and conditions, other than with respect to: (i) the per share liquidation amount and the initial conversion price; and (ii) the per share dividend amount, which will be based on the Conversion Price. The “Conversion Price” shall be the price obtained by the lesser of (i) 85% of the price paid by investors or (ii) dividing the Valuation Cap by the Company Capitalization, provided, however, that the number of shares of preferred stock received by Black Ambition in connection with the Equity Financing shall not exceed (x) the Investment Amount divided by (y) the price per share which shall equal (i) the Valuation Floor (ii) divided by the Company Capitalization.
Liquidity Event:
If the Company undergoes a Change of Control, Direct Listing or an Initial Public Offering prior to an Equity Financing, Black Ambition will be entitled to receive a portion of Proceeds, due and payable to Black Ambition immediately prior to, or concurrent with, the consummation of such Liquidity Event, equal to the greater of (i) the Investment Amount (the “Cash-Out Amount”) or (ii) the amount payable on the number of shares of Common Stock equal to the Investment Amount divided by the Liquidity Price.
Dissolution Event:
If there is a liquidation, dissolution or winding up of the Company before the termination of the Black Ambition SAFE, Black Ambition will automatically be entitled to receive a portion of Proceeds equal to the Cash-Out Amount due and payable prior to the consummation of the Dissolution Event.
Equity Treatment of the Black Ambition SAFE:
The entire Prize Amount is a Black Ambition mission-related investment. Thus, the entire Prize Amount will be considered an investment for equity interests in the Company pursuant to the terms of the Black Ambition SAFE, though only the Investment Amount will entitle Black Ambition to any equity interest in the Company.
Fees and Expenses:
The Company and Black Ambition will bear its own fees and expenses incurred with respect to the transactions contemplated by this Summary of Terms.
1 Note: The Company is the entity receiving the award.
2 Note: The valuation cap defines the maximum valuation at which the Black Ambition SAFE may convert into equity in an Equity Financing.
3 Note: The discount rate represents a 15% discount on the price per share that new investors will pay in the Equity Financing their shares of Next Equity Securities.
4 Note: If an Equity Financing takes place at a post-money valuation below the Valuation Floor, the calculation of the Black Ambition SAFE conversion shall be calculated as if the Equity Financing valuation equalled the Equity Floor.