Liquidity Capitalization definition

Liquidity Capitalization means the number, as of immediately prior to the Liquidity Event, of shares of the Company’s capital stock (on an as-converted basis) outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding: (i) shares of Common Stock reserved and available for future grant under any equity incentive or similar plan; (ii) any SAFEs; and (iii) convertible promissory notes.

Liquidity Capitalization means the number, as of immediately prior to the Liquidity Event, of shares of the Company’s capital stock (on an as-converted basis) outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding: (i) shares of Common Stock reserved and available for future grant under any equity incentive or similar plan; (ii) any Safes; and (iii) convertible promissory notes.

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 Common Stock basis): Includes all shares of Capital Stock 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 Preferred Stock) 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.

Examples of Liquidity Capitalization in a sentence

• The Liquidity Capitalization also excludes Converting Securities that will be cashed out based on their Purchase Amounts (and thus no longer treated as outstanding securities in the Liquidity Event) and Promised Options that will not be receiving any proceeds from the transaction.

• The primary difference between the Company Capitalization and the Liquidity Capitalization is that the Liquidity Capitalization excludes the Unissued Option Pool, because the acquirer in a Liquidity Event only buys the company’s outstanding equity, and equity that isn’t actually issued and outstanding, like the Unissued Option Pool, is simply not part of the equation.

• The “Liquidity Capitalization” is the denominator used in calculating the Liquidity Price, which is the price used to calculate the Conversion Amount payable to the investor in a Liquidity Event (i.e., the Liquidity Price equals the Post-Money Valuation Cap divided by the Liquidity Capitalization).

• Subject to the liquidation priority set forth in Section 1(d) below, the amount payable in the event of a Liquidity Event shall be equal to the amount payable on the number of shares of Common Stock equal to the Pro Rata Share of the product of multiplying (x) the CAFE Equity Percentage and (y) the Liquidity Capitalization (the “Conversion Amount”).

• Subject to the liquidation priority set forth in Section 1(d) below, the amount payable in the event of a Liquidity Event shall be equal to the greater of (A) the Purchase Amount and (B) the amount payable on the number of shares of Common Stock equal to the Pro Rata Share of the product of multiplying (x) the Rolling SAFE Equity Percentage and (y) the Liquidity Capitalization (the “Conversion Amount”).

More Definitions of Liquidity Capitalization

Liquidity Capitalization means the number, as of immediately prior to the Liquidity Event, of units of the Company’s Equity Interests (on an as-converted basis) outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding: (i) units of Equity Interests reserved and available for future grant under any equity incentive or similar plan; (ii) any SAFEs; (iii) convertible promissory notes; and (iv) any equity securities that are issuable upon conversion of any outstanding convertible promissory notes or SAFEs.

Liquidity Capitalization is calculated as of immediately prior to the Liquidity Event or Dissolution Event, and (without double- counting): ● Includes all shares of Capital Stock 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 Converting Securities and other convertible securities (including without limitation shares of Preferred Stock) where the holders of such securities are receiving their original purchase amounts or similar liquidation preference payments in lieu of Conversion Amounts or similar “as-converted” payments; and

Liquidity Capitalization is a company’s fully diluted outstanding capitalization as calculated at the time of a Liquidity Event. This calculation includes outstanding options (vested and unvested) under an equity incentive plan, but excludes all unissued shares in the plan. • What happens to a safe if the company goes public? If a company goes public, a safe will convert into shares of common stock calculated based on the Valuation Cap (or the safe holder can cash out the safe). • Does a safe ever expire? A safe has no maturity date. A safe is designed to expire and terminate only when a safe holder has received stock or cash, in an equity financing, change of control transaction, IPO or dissolution – whichever occurs first. In theory, a safe could remain outstanding for a long time without the need to “extend” any dates or time periods. A safe can be amended by the company and the safe holder, if necessary. See Example 6 in Appendix II. • What happens to a safe if the company shuts down and goes out of business? In a dissolution, any money that the company has to distribute would be distributed to safe holders before any money is allocated to holders of common stock. • Can a safe have a discount, or a “Most Favored Nation” provision? Yes. This Primer describes a safe with a Valuation Cap only (a “Standard Safe”). Other versions of the safe are described in Appendix I. Appendix I Alternative Versions of a Safe (“Standard” version of a safe is Valuation Cap only)

Liquidity Capitalization is calculated as of immediately prior to the Liquidity Event, and (without double- ● Includes all shares of Capital Stock 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 Preferred Stock) 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 Capitalization means the number, as of immediately prior to the Liquidity Event, of shares of Capital Stock (on an as-converted basis) outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding: (i) this Agreement; (ii) other Investment Instruments issued after the Effective Date; and (iii) convertible promissory notes issued after the Effective Date.

Liquidity Capitalization is calculated as of immediately prior to the Change of Control or Public Offering, as applicable, and (without double-counting, in each case calculated on an as-converted-to-Common-Stock basis):

Liquidity Capitalization is calculated as of immediately prior to the Liquidity Event (or, solely for purposes of determining the Liquidity Price in connection with a Safe Expiration Conversion, as of immediately prior to such Safe Expiration Conversion), and (without double- counting): ● Includes all shares of Capital Stock 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 Preferred Stock) where the holders of such securities are receiving cash-out amounts or liquidation preference payments in lieu of conversion amounts or similar “as-converted” payments; and ● Excludes the Unissued Option Pool.