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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 greater of: (1) the number of shares of Standard Preferred Stock equal to the Purchase Amount divided by the lowest price per share of the Standard Preferred Stock; or (2) the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Safe Price.
In connection with the automatic conversion of this Safe into shares of Standard Preferred Stock or Safe Preferred Stock, 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 Preferred Stock, with appropriate variations for the Safe Preferred Stock 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.
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This clause explains the specific process regarding the conversion of a Safe (a form of security held by an investor) into shares of Preferred Stock if there is an Equity Financing (the act of exchanging money for equity shares in a company) before the Safe is terminated. If Equity Financing takes place, the Safe will be converted into the greater of either the number of shares of Standard Preferred Stock equal to the Purchase Amount divided by the lowest price per share of the Standard Preferred Stock or the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Safe Price. The Investor must also provide the Company with transaction documents related to the Equity Financing, however with certain exceptions to the drag-along applicable to the Investor.
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