Each new SAFT granted will entitle its holder to the same number of hbars that remained unvested and subject to the Use Restriction under the original SAFT which was canceled in the exchange (the “Original Allocation), plus an additional number of hbars that will be equal in cumulative value to the Purchase Amount (in USD) of the canceled SAFT (the “Bonus Allocation”). The Bonus Allocation will be partially paid out in quarterly installments, expected to begin in the fourth quarter of 2020. The total number of hbars paid out each quarter to the group of participating SAFT holders as a whole will equal 10% of the total number of hbars that Hedera sold over the prior quarter (for the Q4 2020 distribution, this will include all coins sold from February 1 through September 30, 2020), whether those sales are of coins received as network transaction fees or coins sold from Hedera’s treasury (the “Prior Period Sales”). Coins withheld from employee coin distributions and sold to cover Hedera’s tax withholding obligations are not included when calculating this figure.
That pool of coins, equaling 10% of the coins sold by Hedera in the prior period, will then be allocated to the participating SAFT holders pro rata based on the amount (in USD) that each SAFT holder invested (as shown in the “Purchase Amount” field of the original SAFT). The coins allocated will be distributed to the participating SAFT holders in one or more distributions over the quarter.
Number of hbars paid each quarter as part of the Bonus Allocation =
(PPS / 10) * (IPA / TPA), until the cumulative dollar value equals IPA
Where:
PPS = Prior Period Sales, i.e. coins sold by Hedera in the prior quarter (including sale of coins received through network transaction fees and sale of coins from Treasury, but excluding sale of coins withheld from employee distributions) (for the first allocation, in Q4 2020, this would include coins sold from February – September 2020),
IPA = Individual SAFT holder’s Purchase Amount for the original SAFT(s), and
TPA = Total Purchase Amount for all SAFTs exchanged by all eligible SAFT holders as part of the Offer.
For purposes of calculating the dollar value of those allocations, Hedera will use the 30-day trailing average of the publicly-listed price on CoinMarketCap.com, or another third-party source that we determine to be reliable, to determine the coin conversion rate at the time of each distribution, unless Hedera begins making the distributions on a daily basis, in which case Hedera will use the publicly-listed spot price on CoinMarketCap or other third-party source that we determine to be reliable. The USD value of each distribution will be recorded and will count towards the cumulative dollar value of the Bonus Allocation. When the cumulative value of all distributions, each measured at the time made, equals the original investment amount for the participating SAFT holder(s), the Bonus Allocation “cap” will have been met and there will be no further distributions under the SAFT.