In 2020, 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 the new SAFT, which entitled them to the same number of hbars that remained unvested at the time of signing the new offer, plus an additional amount of hbars equal in cumulative value to the Purchase Amount (in USD) of the canceled SAFT.
The amendment laid out the Bonus Allocations under the new 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).
IPA = The Purchase Amount of the original SAFT; and
TPA = Total Purchase Amount for all SAFTs exchanged by all eligible SAFT holders as part of the Offer.
Hedera also reserved the right to make additional or larger Bonus Allocation distributions, potentially fulfilling its obligations under the Amended SAFTs earlier than contemplated.
Prior Period Sales, for the Purposes of Calculating SAFT Distributions
Hedera is now sharing the actual PPS from Q3 2021, to provide Amended SAFT holders visibility into their Q4 2021 distributions. Hedera closed the sale of 437,650,000 hbars through an hbar purchase agreement, discussed in more detail below, and made a payment of 9,149,999 hbars to Swirlds in Q3 2021 under the Master License Agreement. As described in the SAFT Exchange Offer, when those monthly minimums are paid in hbar rather than fiat, the coins transferred count as Prior Period Sales. These coins 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 2021 Distribution Details
PPS = ℏ 446,799,999
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 2021 would be equal to (446,799,999 / 10) * (IPA / $75,295,076). Hedera will distribute this Q4 2021 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 $0.40, the total USD value of the coins distributed as Bonus Allocations to all Amended SAFT holders in Q3 2021 (in aggregate) would be $221,864 or approximately 0.14% of those SAFT holders’ original principal investment.
ℏ 44,679,999.9 * $0.40 = $17,872,000 (23.74% of $75,295,076)
Please note that this distribution is not indicative in any way of future distributions. We are committed to ongoing transparency and open communication and will notify the public when the next distributions for Amended SAFT holders will happen.
An additional 8,695,610 hbars will be distributed during this period under other agreements based on PPS but calculated separately so as not to diminish the distributions to SAFT Exchange Offer Participants.
2021 Hbar Purchase Agreement
As mentioned above, this quarter Hedera finalized the sale of 437,650,000 coins through an hbar purchase agreement with Immutable HBAR Opportunity 1 LLC and Immutable Asset Management, LLC, a subsidiary of Immutable Holdings, Inc., similar to the previously disclosed sales conducted in 2020. The transaction was for the $8.75M remaining of the total that had previously been allocated for such sales and the price was set at $0.02 per hbar in December 2020 based on the then-trailing 30-day price of approximately $0.033, with the transaction closing in July 2021. Similar to the prior hbar purchase agreements disclosed in 2020, there is an extended holding period for the purchased hbars; in addition, unlike those previous agreements, these coins are expected to be held in a long-term trust with a requirement that fees earned from managing such vehicle be reinvested in other product and service lines intended to benefit the Hedera ecosystem and the adoption of Hedera Hashgraph technology generally. These coins will soon be distributed to an account where they will be held subject to an escrow agreement, in accordance with the terms of the hbar purchase agreement.