NEO AERONAUTICS PTE LTD
Exhibit 10.4
NEO AERONAUTICS PTE LTD
UEN 201811847K
THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAW OF ANY COUNTRY. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED IN THIS SAFE AND UNDER SECURITIES LAWS IN THE COUNTRY IN WHICH SUCH TREATMENT IS BEING COMTEMPLATED
(Simple Agreement for Future Equity)
THIS CERTIFIES THAT in exchange for the payment by ▇▇▇ ▇▇▇▇ ▇▇▇▇ (the “Investor”) of SGD50,000 dollar (the “Purchase Amount”) on or about 12 Jun 2024, NEO AERONAUTICS PTE LTD, a Singapore corporation (the “Company”), issues to the Investor the right to certain shares of the Company’s Capital Share, subject to the terms described below.
The “Pre-Money Valuation Cap” is USD$30,000,000 dollar.
The “Discount Rate” is 50%.
See Section 2 for certain additional defined terms.
| 1. | Events |
(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 Share equal to the Purchase Amount divided by the Conversion Price.
In connection with the automatic conversion of this Safe into shares of Safe Share, the Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing; provided, that such documents (i) are the same documents to be entered into with the purchasers of Standard Share, with appropriate variations for the Safe Share if applicable, and (ii) have customary exceptions to any drag-along applicable to the Investor, including (without limitation) limited representations, warranties, liability and indemnification obligations for the Investor.
(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 Section 1(d) below) 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 Ordinary Share equal to the Purchase Amount divided by the Liquidity Price (the “Conversion Amount”). If any of the Company’s securityholders are given a choice as to the form and amount of Proceeds to be received in a Liquidity Event, the Investor will be given the same choice, provided that the Investor may not choose to receive a form of consideration that the Investor would be ineligible to receive as a result of the Investor’s failure to satisfy any requirement or limitation generally applicable to the Company’s securityholders, or under any applicable laws.
(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) below) 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 shares. The Investor’s right to receive its Cash-Out Amount is:
(i) Junior to payment of outstanding indebtedness and creditor claims, including contractual claims for payment and convertible promissory notes (to the extent such convertible promissory notes are not actually or notionally converted into Capital Share);
(ii) On par with payments for other Safes and/or Preference Share, and if the applicable Proceeds are insufficient to permit full payments to the Investor and such other Safes and/or Preference Share, the applicable Proceeds will be distributed pro rata to the Investor and such other Safes and/or Preference Share in proportion to the full payments that would otherwise be due; and
(iii) Senior to payments for Ordinary Share.
PRE-MONEY VALUATION CAP WITH DISCOUNT
The Investor’s right to receive its Conversion Amount is (A) on par with payments for Ordinary Share and other Safes and/or Preference Share who are also receiving Conversion Amounts or Proceeds on a similar as-converted to Ordinary Share basis, and (B) junior to payments described in clauses (i) and (ii) above (in the latter case, to the extent such payments are Cash-Out Amounts or similar liquidation preferences).
(e) Termination. This Safe will automatically terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with this Safe) immediately following the earliest to occur of: (i) the issuance of Capital Share to the Investor pursuant to the automatic conversion of this Safe under Section 1(a); or (ii) the payment, or setting aside for payment, of amounts due the Investor pursuant to Section 1(b) or Section 1(c).
| 2. | Definitions |
“Capital Share” means the capital share of the Company, including, without limitation, the “Ordinary Share” and the “Preference Share.”
“Change of Control” means (i) a transaction or series of related transactions in which any “person” or “group” becomes the “beneficial owner”, directly or indirectly, of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of members of the Company’s board of directors, (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company.
“Company Capitalization” is calculated as of immediately prior to the Equity Financing and (without double-counting, in each case calculated on an as-converted to Ordinary Share basis):
| ● | Includes all shares of Capital Share issued and outstanding; |
| ● | Includes all Converting Securities; |
| ● | Includes all (i) issued and outstanding Options and (ii) Promised Options; and |
| ● | 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 the either: (1) the Safe Price or (2) the Discount Price, whichever calculation results in a greater number of shares of Safe Share.
“Converting Securities” includes this Safe and other convertible securities issued by the Company, including but not limited to: (i) other Safes; (ii) convertible promissory notes and other convertible debt instruments; and (iii) convertible securities that have the right to convert into shares of Capital Share.
“Direct Listing” means the Company’s initial listing of its Ordinary Share on a national securities exchange by means of an effective registration statement by the Company that registers shares of existing capital share of the Company for resale, as approved by the Company’s board of directors. For the avoidance of doubt, a Direct Listing shall not be deemed to be an underwritten offering and shall not involve any underwriting services.
“Discount Price” means the price per share of the Standard Share sold in the Equity Financing multiplied by the Discount Rate.
“Dissolution Event” means (i) a voluntary termination of operations, (ii) a general assignment for the benefit of the Company’s creditors or (iii) any other liquidation, dissolution or winding up of the Company (excluding a Liquidity Event), whether voluntary or involuntary.
“Dividend Amount” means, with respect to any date on which the Company pays a dividend on its outstanding Ordinary Share, the amount of such dividend that is paid per share of Ordinary Share multiplied by (x) the Purchase Amount divided by (y) the Liquidity Price (treating the dividend date as a Liquidity Event solely for purposes of calculating such Liquidity Price).
2
PRE-MONEY VALUATION CAP WITH DISCOUNT
“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 Preference Share at a fixed valuation, including but not limited to, a pre-money or post-money valuation.
“Initial Public Offering” means the closing of the Company’s first firm commitment underwritten initial public offering of Ordinary Share pursuant to a registration statement filed under the Securities Act.
“Liquidity Capitalization” is calculated as of immediately prior to the Liquidity Event, and (without double- counting, in each case calculated on an as-converted to Ordinary Share basis):
| ● | Includes all shares of Capital Share issued and outstanding; |
| ● | Includes all (i) issued and outstanding Options and (ii) to the extent receiving Proceeds, Promised Options; |
| ● | Includes all Converting Securities, other than any Safes and other convertible securities (including without limitation shares of Preference Share) where the holders of such securities are receiving Cash- Out Amounts or similar liquidation preference payments in lieu of Conversion Amounts or similar “as- converted” payments; and |
| ● | Excludes the Unissued Option Pool. |
“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 Pre-Money Valuation Cap divided by the Liquidity Capitalization.
“Options” includes options, restricted share awards or purchases, RSUs, SARs, warrants or similar securities, vested or unvested.
“Preference Share” means the shares of the series of Preference Share issued to the investors investing new money in the Company in connection with the initial closing of the Equity Financing.
“Proceeds” means cash and other assets (including without limitation share consideration) that are proceeds from the Liquidity Event or the Dissolution Event, as applicable, and legally available for distribution.
“Promised Options” means promised but ungranted Options that are the greater of those (i) promised pursuant to agreements or understandings made prior to the execution of, or in connection with, the term sheet or letter of intent for the Equity Financing or Liquidity Event, as applicable (or the initial closing of the Equity Financing or consummation of the Liquidity Event, if there is no term sheet or letter of intent), (ii) in the case of an Equity Financing, treated as outstanding Options in the calculation of the Standard Share’s price per share, or (iii) in the case of a Liquidity Event, treated as outstanding Options in the calculation of the distribution of the Proceeds.
“Safe” means an instrument containing a future right to shares of Capital Share, similar in form and content to this instrument, purchased by investors for the purpose of funding the Company’s business operations. References to “this Safe” mean this specific instrument.
“Safe Share” means the shares of the series of Share issued to the Investor in an Equity Financing, having the identical rights, privileges, preferences and restrictions as the shares of Standard Share, 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 Pre-Money Valuation Cap divided by the Company Capitalization.
“Standard Share” means the shares of the series of Share issued to the 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 Share 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, only to the extent Proceeds are payable on such Promised Options) under any equity incentive or similar Company plan.
3
PRE-MONEY VALUATION CAP WITH DISCOUNT
| 3. | Company Representations |
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted.
(b) 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 (subject to section 3(d)). This Safe constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. To its knowledge, the Company is not in violation of (i) the Convertible Note Agreement, (ii) its current certificate of incorporation or bylaws, (iii) any material statute, rule or regulation applicable to the Company or (iv) any material debt or contract to which the Company is a party or by which it is bound, where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a material adverse effect on the Company.
(c) The performance and consummation of the transactions contemplated by this Safe do not and will not: (i) violate any material judgment, statute, rule or regulation applicable to the Company; (ii) result in the acceleration of any material debt or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien on any property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material permit, license or authorization applicable to the Company, its business or operations.
(d) No consents or approvals are required in connection with the performance of this Safe, other than: (i) the Company’s corporate approvals; (ii) any qualifications or filings under applicable securities provision; and (iii) necessary corporate approvals for the authorization of Capital Share issuable pursuant to Section 1.
(e) To its knowledge, the Company owns or possesses (or can obtain on commercially reasonable terms) sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights necessary for its business as now conducted and as currently proposed to be conducted, without any conflict with, or infringement of the rights of, others.
| 4. | Investor Representations |
(a) The Investor has full legal capacity, power and authority to execute and deliver this Safe and to perform its obligations hereunder. This Safe constitutes valid and binding obligation of the Investor, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.
(b) The Investor has been advised that this Safe and the underlying securities have not been registered under any securities provision in any country and, therefore, cannot be resold unless they are registered under the applicable state securities provision or unless an exemption from such registration requirements is available. The Investor is purchasing this Safe and the securities to be acquired by the Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing the Investor’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time.
| 5. | Miscellaneous |
(a) Any provision of this Safe may be amended, waived or modified by written consent of the Company and either (i) the Investor or (ii) the majority-in-interest of all then-outstanding Safes with the same “Pre$$$$-Money Valuation Cap” and “Discount Rate” as this Safe (and Safes lacking one or both of such terms will be considered to be the same with respect to such term(s)), provided that with respect to clause (ii): (A) the Purchase Amount may not be amended, waived or modified in this manner, (B) the consent of the Investor and each holder of such Safes must be solicited (even if not obtained), and (C) such amendment, waiver or modification treats all such holders in the same manner. “Majority-in-interest” refers to the holders of the applicable group of Safes whose Safes have a total Purchase Amount greater than 50% of the total Purchase Amount of all of such applicable group of Safes.
4
PRE-MONEY VALUATION CAP WITH DISCOUNT
(b) Any notice required or permitted by this Safe will be deemed sufficient when delivered personally or by overnight courier or sent by email to the relevant address listed on the signature page, or 48 hours after being deposited in the Singapore mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address listed on the signature page, as subsequently modified by written notice.
(c) The Investor is not entitled, as a holder of this Safe, to vote or be deemed a holder of Capital Share for any purpose other than tax purposes, nor will anything in this Safe be construed to confer on the Investor, as such, any rights of a Company shareholder or rights to vote for the election of directors or on any matter submitted to Company shareholders, or to give or withhold consent to any corporate action or to receive notice of meetings, until shares have been issued on the terms described in Section 1. However, if the Company pays a dividend on outstanding shares of Ordinary Share (that is not payable in shares of Ordinary Share) while this Safe is outstanding, the Company will pay the Dividend Amount to the Investor at the same time.
(d) Neither this Safe nor the rights in this Safe are transferable or assignable, by operation of law or otherwise, by either party without the prior written consent of the other; provided, however, that this Safe and/or its rights may be assigned without the Company’s consent by the Investor (i) to the Investor’s estate, heirs, executors, administrators, guardians and/or successors in the event of Investor’s death or disability, or (ii) to any other entity who directly or indirectly, controls, is controlled by or is under common control with the Investor, including, without limitation, any general partner, managing member, officer or director of the Investor, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, the Investor; and provided, further, that the Company may assign this Safe in whole, without the consent of the Investor, in connection with a reincorporation to change the Company’s domicile.
(e) In the event any one or more of the provisions of this Safe is for any reason held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Safe operate or would prospectively operate to invalidate this Safe, then and in any such event, such provision(s) only will be deemed null and void and will not affect any other provision of this Safe and the remaining provisions of this Safe will remain operative and in full force and effect and will not be affected, prejudiced, or disturbed thereby.
(f) All rights and obligations hereunder will be governed by the laws of Singapore, without regard to the conflicts of law provisions of such jurisdiction.
(Signature page follows)
5
IN WITNESS WHEREOF, the undersigned have caused this Safe to be duly executed and delivered.
| NEO AERONAUTICS PTE LTD | ||
| Signed by: | /s/ Dr. NEO KOK BENG | |
| Name: | Dr. ▇▇▇ ▇▇▇ ▇▇▇▇, Director & CEO | |
| Address: | ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇, #▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Email: | ▇▇▇▇▇@▇▇▇-▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ | |
| INVESTOR: | ||
| Signed by: | /s/ ▇▇▇ ▇▇▇▇ ▇▇▇▇ | |
| Name: | ▇▇▇ ▇▇▇▇ ▇▇▇▇ | |
| NRIC: | ▇▇▇▇▇▇▇▇▇ | |
| 14 Jun 2024 | ||
| Address: | ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇-▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Email: | ▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇ | |