Q4 2020 distribution for SAFT Exchange Offer Participants
Hedera will distribute approximately 142 million coins during Q4 2020
Early this year, Hedera provided a proposal to all existing SAFT holders, offering them the opportunity to exchange their outstanding SAFT for a new form of SAFT. Those who accepted tendered their original SAFT(s) in exchange for an Amended SAFT, which entitled them to the same number of hbars that remained unvested at the time of signing the new offer, plus additional distributions of hbars that would, over time, be equal in cumulative value to the Purchase Amount (in USD) of the canceled SAFT.
The SAFT Exchange Offer laid out the Bonus Allocations under the Amended SAFT, calculated as follows:
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, this includes coins sold between February — September 2020;
IPA = The Purchase Amount of the original SAFT;
TPA = Total Purchase Amount for all SAFTs exchanged by all eligible SAFT holders as part of the Offer; and
Hedera also reserved the right to make additional or larger Bonus Allocation distributions, potentially fulfilling its obligations under the Amended SAFTs earlier than contemplated.
As we enter Q4, Hedera is now sharing the actual PPS from February — September 2020, to provide Amended SAFT holders visibility into their Q4 distributions. As previously disclosed, Hedera raised funds this year by selling coins through hbar sale agreements that comply with both the requirements for “swaps” under the U.S. Commodities Exchange Act and the federal securities laws. Hedera raised $21.3M through September 2020 and the coins sold through those agreements form the basis for the Q4 Bonus Allocation to holders of the Amended SAFTs. The Q4 distributions will be distributed on or about October 16th, November 16th, and December 16th.
Q4 Distribution Details
PPS = ħ1,416,466,400
TPA = $75,295,076
The matrix provided here will be updated after each distribution.
Holders of Amended SAFTs can calculate the number of hbars they should expect to receive by entering the values above as well the Purchase Amount of their individual SAFT (the IPA), into the formula for the Bonus Allocation. In other words, an individual’s total Bonus Allocation for Q4 would be equal to (1,416,466,400 / 10) * (IPA / 75,295,076). Hedera will distribute this Q4 Bonus Allocation in the three monthly installments noted above.
As described in the SAFT Exchange Offer and the Amended SAFTs, Hedera will calculate the dollar value of the Bonus Allocations using the 30-day trailing average of the publicly-listed coin price on CoinMarketCap (or another third-party source that we deem to be reliable) at the time of each distribution. The USD value of each distribution will be recorded and will count toward the cumulative dollar value of the Bonus Allocations to be paid, in total, under the new SAFTs.
For example, at a 30-day trailing average coin price of $0.03, the total USD value of the coins distributed as Bonus Allocations to all Amended SAFT holders in Q4 (in aggregate) would be $4.25 M or approximately 5.64% of those SAFT holders’ original principal investment.
Please note that this distribution is not indicative in any way of future distributions. Currently, Hedera has no plans to sell additional coins in Q4, other than those withheld for tax purposes from employee distributions, which are not included in the calculation of Bonus Allocations for Amended SAFT holders. We are committed to ongoing transparency and open communication and will notify the public when the next distributions for Amended SAFT holders will happen.
Executive Coin Distributions
We noted in previous statements that Hedera would review a formal coin lockup program for co-founders Leemon Baird and Mance Harmon with the Board, and that even without such a program, the co-founders would give 30 days’ notice before selling any coins.
We and the Board ultimately determined that a formal lockup would not provide any benefit that could not be equally achieved through public notice and ongoing transparency. The co-founders’ prior commitment was that, absent a formal lockup, they would provide at least 30 days’ notice before they selling any coins and would disclose a reasonable selling plan. Today, they are giving that public notice even further in advance. Mance and Leemon have chosen not to sell any coins through the end of 2020, but they may begin selling in 2021. If Leemon and Mance decide to make any such sales, each will restrict his sale volume in any given day to no greater than 0.25% of the average daily hbar trading volume as measured over the trailing 30-day period. In addition, Mance and Leemon will not sell any coins when the price has declined appreciably over the preceding 7-day period. To provide transparency to the community, all their hbars are currently in accounts 0.0.54795 through 0.0.54990, and 0.0.1. All their future SAFT and RCU distributions will be to those accounts. They will provide at least 30 days notice before changing the policy outlined above. (For clarity, if the co-founders give away any coins, the policy set forth above will also restrict the subsequent sale of such coins.)
Hedera’s other 2017 senior executives who had committed to providing at least 30 days’ notice before selling coins received through their employee grants are similarly providing notice to the community through this blog post that they may begin selling coins from their employee grants after October 31, 2020. Accordingly, their granted coins that vested through 2019 (net of taxes), which have been held in the common multi-signature account with the co-founder’s granted coins, will all be moved out of that common account (account number 0.0.29255) to individually owned accounts. For greater clarity, the co-founders and 2017 senior executives will be under no obligation to provide additional notice prior to commencing coin sales as set forth above, and any such sales, if made, will not be included in calculations of future SAFT Bonus Allocations, as they will be made by individuals, rather than Hedera.
Originally published at https://hedera.com on October 2, 2020.