Safe Note Template

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Safe Note Template

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This safe note document certifies that in exchange for the payment by [Investor.FirstName][Investor.LastName] hereinafter known as the “Investor” of (“investment amount in dollars”) hereinafter known as the “Purchase Price” on or about (“approximate or actual date of investment in MM/DD/YYYY”),

[Sender.Company], of [Sender.State] hereinafter known as the “Company” hereby supplies specific shares of the Company’s capital stock to the Investor.

The “Valuation Cap” of this SAFE is $(“valuation cap amount in dollars”).

1. Events

1.1 Equity financing

In the event of an Equity Financing agreement, which referred to a transaction or series of transactions with the principal purpose of raising capital, is reached before termination of this document, the Company will issue to the Investor either:

• Shares of Standard Preferred Stock sold in the Equity Financing equal to the Purchase Price divided by the price per share of the Standard Preferred Stock.

• Shares of SAFE Preferred Stock (shares issued to the Investor in an Equity Financing) equal to the Purchase Price divided by the SAFE Price (the price per share found by dividing the Valuation Cap by the capitalization of the Company).

The issuance of SAFE Preferred Stock, in a connection made both parties, hereinafter known as “Parties,” are pursuant to the following:

• The Investor will entrust to the Company any and all transaction documents regarding Equity Financing if said transaction documents are similar documents used by the purchasers included in the Standard Preferred Stock, with variants for the SAFE Preferred Stock;

• The Parties will create a Pro-Rata Rights Agreement (a written agreement between the Investor and Company that gives the Investor the right to purchase pro-rata share of the private placement of securities) except if the Investor is already included in the transaction documents involving Equity Financing; and this instrument will terminate, expire, and will be no longer usable.

1.2 Dissolution event

If a Dissolution event occurs, which refers to either a voluntary termination of the document, an agreement that benefits the Company’s creditors, or other liquidation (besides a Liquidation Event), before this document terminates or expires, the Company will refund the Investor the total Purchase Price, due payable to the Investor before or during the Dissolution Event.

1.3 Liquidity event

If a Liquidation Event occurs, which refers to a Change of Control (capital stock is issued to another) or an Initial Public Offering (closing the Company), the Investor is entitled to either:

• A cash payment equal to the Purchase Price (unless under a dissolution event)

• Shares of Common Stock equal to the Purchase Price divided by Liquidation Price

The Company will refund the Investor the total Purchase Price, due payable to the Investor before or during the Liquidity Event.

1.4 Liquidity and dissolution pay-out terms

If for any reasons the Company assets legally accessible for use of Investor distribution, including all purchasers of SAFEs, as determined by a group of trusted individuals in good faith, are insufficient to permit payment to all holders of SAFEs of their individual Purchase Prices, all Company assets become available for legal distribution and will be handed out based on priority. Priority is determined by the cost of the Dissolving or Liquidity Investors investments.

Amounts payable are subject to Change of Control terms in a Liquidity Event. To qualify as a tax-free reorganization for U.S. federal income tax purposes, the Company must also be determined by a group of trusted individuals in good faith as a tax-free entity before Liquidity.

After completing payment to the Investor, this document will terminate and expire.

2. Company legal rights

The Company is a corporation existing in good standing under the state of its incorporation and has authority and power to lease, own, and operate its properties.

The Company acknowledges that this document is a valid, legal, and binding obligation and is enforceable against them in accordance with its terms, except as limited by insolvency, bankruptcy, or other laws affecting the enforcement of creditors' rights.

As far as it knows, the Company isn’t in violation of any material statute, regulation or rule, the constitution, or any other contract in which the Company is bound. The Company also confirms that the consummation and performances of the transactions completed under this document do not violate any statute, judgment, or regulation, nor will it accelerate any contract or material indenture that could result in a lien being placed upon their assets or property.

As far as it knows, the Company possesses and owns sufficient legal rights to all trademarks, patents, trade names, service marks, processes, information, and any other intellectual property rights required for its business and doesn’t conflict with the rights of others.

3. Investor legal rights

The Investor has full legal authority, power, and capacity to deliver and execute this document and perform its obligations once signed. This document constitutes a binding and valid obligation between the Company and Investor.

The Investor confirms that they are the sole purchaser under this document and has no intention of distributing or selling off the Company’s assets.

The Investor has experience and knowledge of such business matters that they’re capable of evaluating the risks and merits of such investment and incurring a complete loss of such assets without impacting the Investor’s finances for an indefinite period.

4. Miscellaneous

1. Any notice must be delivered by courier, personally by hand, or sent via email to be considered relevant. Notices must include the full address of the sender, a signature, and be sent with prepaid postage, if applicable, to all notified parties.

2. This document may be amended, modified, or waived with written consent from both the Investor and the Company.

3. The Investor cannot, and will not, hold entitlement to vote, be deemed a holder of Capital Stock, or receive dividends. The Investor isn’t given the rights as a Company stockholder and, therefore, cannot vote for the election of directors.

4. If any provision in this document is held to be invalid or unenforceable, it shall not affect the enforceability or validity of other provisions.

5. Should a dispute occur from this document, the Company and Investor are entitled to seek legal action to enforce their rights. Any Party who raises a dispute must resolve it in the state of [Sender.State].

6. All obligations and rights, once signed, will be governed by the laws of the State of [Sender.State].

IN WITNESS WHEREOF, the undersigned has caused this document to be delivered by:











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