A standard YC-style SAFE with a $73M cap and a 15% discount, converting at the lower of the two — one instrument that keeps everyone on the same footing.
| Instrument | SAFE (Simple Agreement for Future Equity), YC-style, cap + discount, redrafted for E4L. |
|---|---|
| Round size | $5 million (no minimum; not escrowed, not tranched — funds are available as received). |
| Valuation cap | $73,000,000 post-money — a negotiated term of this round. |
| Discount | 15% (discount rate 85%). Conversion is at the lower of the cap price or the discounted round price — the discount governs for any Series A below ~$86M, so the effective entry likely sits between ~$60M and $73M. |
| Conversion | Automatically converts into Class A Preferred at the next priced equity round (the "Equity Financing," intended within ~18 months), at the lower of the cap price or 85% of the round price. $5M is at least ~6.85% of the company (the $73M cap — the floor); the discount gives more below a ≈$86M round (~8.1% at a $73M round, ~10% at ≈$59M). |
| Voting | None before conversion. A SAFE is not stock; holders have no voting, dividend or board rights until it converts. |
| Liquidity / dissolution | On a sale before conversion, the investor receives the greater of the purchase amount back or conversion at the lower of the cap or the 15% discount applied to the event price; on a dissolution, the purchase amount is repayable before common — operating like standard non-participating preferred. |
| Interest / maturity | None. The SAFE bears no interest and has no maturity date. |
| Pro-rata rights | Offered optionally via side letter (kept out of the base instrument, per the YC SAFE convention). |
| MFN | Not included — all SAFEs in this round are issued on identical cap-plus-discount terms, so there is nothing to level up to. |
| Eligibility | Accredited investors only, mainly family offices. Reg D Rule 506(c); each investor's accredited status is verified before closing. |
| Disclosure | Every investor must receive and acknowledge the Disclosure Memorandum before, or at the same time as, signing. |
| Optional covenant | A side-letter election allowing repayment if the transferred IP is not securely vested in the Company, free of challenge, within 6 months of first close. The IP assigns immediately at closing, so six months is ample to confirm the assignment is complete and unchallenged. |
When E4L raises its next priced round — intended within ~18 months — your SAFE converts into shares of that round's Class A Preferred stock. The number of shares is your purchase amount divided by the SAFE price: the lower of the $73M-cap price or 85% of the per-share price the Series A investors pay. Two protections in one: whatever the round prices at, you pay 15% less per share than the new money — and if the round prices high, the cap guarantees your entry never implies more than the $73M the last investment transacted at. If the company is sold before any priced round, you receive the greater of your money back or conversion on the same lower-of terms applied to the sale price; if no round or sale happens, the SAFE simply waits, with no interest and no maturity date.
There is no founder seller note and no founder debt ahead of the SAFE — the founder's contribution of the acquired assets and IP was made as equity, not a repayment stream. The founder's economics sit in ordinary Founder Common, which carries no liquidation preference and ranks alongside common (one vote per share, no economic preference); the founder's control comes from his majority ownership plus a board director-designation right, not enhanced or multiple-vote stock. The only potential senior claim is a contingent legacy share-buyback (the Stoneburner Put), disclosed in full in the Disclosure Memorandum: it applies only if that investor elects it in September 2026, is personally guaranteed and funded by the founder as a backstop, and is absorbed by base-case cash.
The complete legal SAFE is provided at signature, and the executable version is on the SAFE signing page. This summary is provided for convenience only — where it differs from the executed SAFE and the Disclosure Memorandum, those documents govern.
Confidential. For accredited investors only. Securities offered under Rule 506(c) of Regulation D; accredited status is verified before any subscription is accepted. This summary does not constitute an offer or the terms of any security; the definitive SAFE and Disclosure Memorandum govern. Company name to be conformed to the name on the Company’s filed Nevada charter.
E4L, Inc. · Salt Lake City, Utah · harry.massey@e4l.com · © 2026