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EXHIBIT 10-11
 

 
THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR UNDER THE SECURITIES LAWS OF CERTAIN STATES.  THESE SECURITIES MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS
PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.

Gardedam Therapeutics Inc.

SAFE
(Simple Agreement for Future Equity)

July 21st 2015

THIS CERTIFIES THAT in exchange for the payment by Max Zhu (the “Investor”) of
$100,000 (the “Purchase Amount”), to be paid within 21 days of signing of this
SAFE into the bank account detailed in appendix A of this document, Gardedam
Therapeutics Inc., a Delaware corporation (the “Company”), hereby issues to the
Investor the right to certain shares of the Company’s capital stock, subject to
the terms set forth below.
 
The “Valuation Cap” is $4,000,000.  See Section 2 for certain additional defined
terms.
 
1.      Events
 
(a)      Equity Financing. If there is an Equity Financing or before the
expiration or termination of this instrument, the Company will automatically
issue to the Investor a number of shares of Common Stock in the resulting legal
entity equal to the Purchase Amount divided by the price per share of the Common
Stock, if the pre-money valuation is less than or equal to the Valuation Cap.
 
In connection with the issuance of Common Stock by the Company to the Investor
pursuant to this Section 1(a):
 
(i)      The Investor will execute and deliver to the Company all transaction
documents related to the Equity Financing; provided, that such documents are the
same documents to be entered into with the purchasers of Common Stock, and
provided further, that such documents have customary exceptions to any
drag-along applicable to the Investor, including, without limitation, limited
representations and warranties and limited liability and indemnification
obligations on the part of the Investor; and
 
(ii)      The Investor and the Company will execute a Pro Rata Rights Agreement,
unless the Investor is already included in such rights in the transaction
documents related to the Equity Financing.
 
(b)      Merger. If there is an Merger, comprising either a Reverse Takeover or
an IPO, or before the expiration or termination of this instrument, the Company
will automatically issue to the Investor a number of shares of Common Stock of
the merged or public entity equal to the Purchase Amount divided by the price
per share of the Common Stock, if the pre-money valuation is less than or equal
to the Valuation Cap.
 
(c)      Liquidity Event.  If there is a Liquidity Event before the expiration
or termination of this instrument, the Investor will, at its option, either (i)
receive a cash payment equal to the Purchase Amount (subject to the following
paragraph) or (ii) automatically receive from the Company a number of shares of
Common Stock equal to the Purchase Amount divided by the Liquidity Price, if the
Investor fails to select the cash option.
 

 
EXHIBIT 10.11, 1

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In connection with Section (b) (i), the Purchase Amount will be due and payable
by the Company to the Investor immediately prior to, or concurrent with, the
consummation of the Liquidity Event. If there are not enough funds to pay the
Investor and holders of other Safes (collectively, the “Cash-Out Investors”) in
full, then all of the Company’s available funds will be distributed with equal
priority and pro rata among the Cash-Out Investors in proportion to their
Purchase Amounts, and the Cash-Out Investors will automatically receive the
number of shares of Common Stock equal to the remaining unpaid Purchase Amount
divided by the Liquidity Price.  In connection with a Change of Control intended
to qualify as a tax-free reorganization, the Company may reduce, pro rata, the
Purchase Amounts payable to the Cash-Out Investors by the amount determined by
its board of directors in good faith to be advisable for such Change of Control
to qualify as a tax-free reorganization for U.S. federal income tax purposes,
and in such case, the Cash-Out Investors will automatically receive the number
of shares of Common Stock equal to the remaining unpaid Purchase Amount divided
by the Liquidity Price.
 
 
(d)      Dissolution Event. If there is a Dissolution Event before this
instrument expires or terminates, the Company will pay an amount equal to the
Purchase Amount, due and payable to the Investor immediately prior to, or
concurrent with, the consummation of the Dissolution Event. The Purchase Amount
will be paid prior and in preference to any Distribution of any of the assets of
the Company to holders of outstanding Capital Stock by reason of their ownership
thereof. If immediately prior to the consummation of the Dissolution Event, the
assets of the Company legally available for distribution to the Investor and all
holders of all other Safes (the “Dissolving Investors”), as determined in good
faith by the Company’s board of directors, are insufficient to permit the
payment to the Dissolving Investors of their respective Purchase Amounts, then
the entire assets of the Company legally available for distribution will be
distributed with equal priority and pro rata among the Dissolving Investors in
proportion to the Purchase Amounts they would otherwise be entitled to receive
pursuant to this Section 1(c).
 
 
                        (e)      Termination.  This instrument will expire and
terminate (without relieving the Company of any obligations arising from a prior
breach of or non-compliance with this instrument) upon either (i) the issuance
of stock to the Investor pursuant to Section 1(a) or Section 1(b)(ii); or (ii)
the payment, or setting aside for payment, of amounts due the Investor pursuant
to Section 1(b)(i) or Section 1(c).
 
2.      Definitions
 
“Capital Stock” means the capital stock of the Company, including, without
limitation, the “Common Stock” and the “Preferred Stock.”
 
“Change of Control” means (i) a transaction or series of related transactions in
which any “person” or “group” (within the meaning of Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), directly or indirectly, of more than 50% of the outstanding voting
securities of the Company having the right to vote for the election of members
of the Company’s board of directors, (ii) any reorganization, merger or
consolidation of the Company, other than a transaction or series of related
transactions in which the holders of the voting securities of the Company
outstanding immediately prior to such transaction or series of related
transactions retain, immediately after such transaction or series of related
transactions, at least a majority of the total voting power represented by the
outstanding voting securities of the Company or such other surviving or
resulting entity or (iii) a sale, lease or other disposition of all or
substantially all of the assets of the Company.
 
“Common Stock” means the shares of a series of Common Stock issued to the
Investor in an Equity Financing, having the identical rights, privileges,
preferences and restrictions as the shares of Common Stock issued to the
Founders and other Directors of the Company.
 

 
EXHIBIT 10.11, 2

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“Company Capitalization” means the sum, as of immediately prior to the Equity
Financing, of: (1) all shares of Capital Stock (on an as-converted basis) issued
and outstanding, assuming exercise or conversion of all outstanding vested and
unvested options, warrants and other convertible securities, but excluding (A)
this instrument, (B) all other Safes, and (C) convertible promissory notes; and
(2) all shares of Common Stock reserved and available for future grant under any
equity incentive or similar plan of the Company, and/or any equity incentive or
similar plan to be created or increased in connection with the Equity Financing.
 
 
“Distribution” means the transfer to holders of Capital Stock by reason of their
ownership thereof of cash or other property without consideration whether by way
of dividend or otherwise, other than dividends on Common Stock payable in Common
Stock, or the purchase or redemption of Capital Stock by the Company or its
subsidiaries for cash or property other than: (i) repurchases of Common Stock
held by employees, officers, directors or consultants of the Company or its
subsidiaries pursuant to an agreement providing, as applicable, a right of first
refusal or a right to repurchase shares upon termination of such service
provider’s employment or services; or (ii) repurchases of Capital Stock in
connection with the settlement of disputes with any stockholder.
 
“Dissolution Event” means (i) a voluntary termination of operations, (ii) a
general assignment for the benefit of the Company’s creditors or (iii) any other
liquidation, dissolution or winding up of the Company (excluding a Liquidity
Event), whether voluntary or involuntary.
 
 
“Equity Financing” means a bona fide transaction or series of transactions with
the principal purpose of raising capital, pursuant to which the Company issues
and sells Preferred Stock at a fixed pre-money valuation.
 
 
“Initial Public Offering” means the closing of the Company’s first firm
commitment underwritten initial public offering of Common Stock pursuant to a
registration statement filed under the Securities Act.
 
“Liquidity Capitalization” means the number, as of immediately prior to the
Liquidity Event, of shares of Capital Stock (on an as-converted basis)
outstanding, assuming exercise or conversion of all outstanding vested and
unvested options, warrants and other convertible securities, but excluding: (i)
shares of Common Stock reserved and available for future grant under any equity
incentive or similar plan; (ii) this instrument; (iii) other Safes; and (iv)
convertible promissory notes.
 
“Liquidity Event” means a Change of Control or an Initial Public Offering.
 
 
“Liquidity Price” means the price per share equal to the Valuation Cap divided
by the Liquidity Capitalization.
 
 
“Pro Rata Rights Agreement” means a written agreement between the Company and
the Investor (and holders of other Safes, as appropriate) giving the Investor a
right to purchase its pro rata share of private placements of securities by the
Company occurring after the Equity Financing, subject to customary
exceptions.  Pro rata for purposes of the Pro Rata Rights Agreement will be
calculated based on the ratio of (1) the number of shares of Capital Stock owned
by the Investor immediately prior to the issuance of the securities to (2) the
total number of shares of outstanding Capital Stock on a fully diluted basis,
calculated as of immediately prior to the issuance of the securities.
 
 
“Safe” means an instrument containing a future right to shares of Capital Stock,
similar in form and content to this instrument, purchased by investors for the
purpose of funding the Company’s business operations.
 
 
“Safe Price” means the price per share equal to the Valuation Cap divided by the
Company Capitalization.
 

 
EXHIBIT 10.11, 3

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3.      Company Representations
 
 
(a)      The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of its incorporation, and has the
power and authority to own, lease and operate its properties and carry on its
business as now conducted.
 
 
(b)      The execution, delivery and performance by the Company of this
instrument is within the power of the Company and, other than with respect to
the actions to be taken when equity is to be issued to the Investor, has been
duly authorized by all necessary actions on the part of the Company. This
instrument constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as limited
by bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and general principles
of equity.  To the knowledge of the Company, it is not in violation of (i) its
current certificate of incorporation or bylaws, (ii) any material statute, rule
or regulation applicable to the Company or (iii) any material indenture or
contract to which the Company is a party or by which it is bound, where, in each
case, such violation or default, individually, or together with all such
violations or defaults, could reasonably be expected to have a material adverse
effect on the Company.
 
(c)      The performance and consummation of the transactions contemplated by
this instrument do not and will not: (i) violate any material judgment, statute,
rule or regulation applicable to the Company; (ii) result in the acceleration of
any material indenture or contract to which the Company is a party or by which
it is bound; or (iii) result in the creation or imposition of any lien upon any
property, asset or revenue of the Company or the suspension, forfeiture, or
nonrenewal of any material permit, license or authorization applicable to the
Company, its business or operations.
 
(d)      No consents or approvals are required in connection with the
performance of this instrument, other than: (i) the Company’s corporate
approvals; (ii) any qualifications or filings under applicable securities laws;
and (iii) necessary corporate approvals for the authorization of Capital Stock
issuable pursuant to Section 1.
 
(e)      To its knowledge, the Company owns or possesses (or can obtain on
commercially reasonable terms) sufficient legal rights to all patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, processes and other intellectual property rights necessary for its
business as now conducted and as currently proposed to be conducted, without any
conflict with, or infringement of the rights of, others.
 
4.      Investor Representations
 
(a)      The Investor has full legal capacity, power and authority to execute
and deliver this instrument and to perform its obligations hereunder. This
instrument constitutes valid and binding obligation of the Investor, enforceable
in accordance with its terms, except as limited by bankruptcy, insolvency or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.
 
(b)      The Investor is an accredited investor as such term is defined in
Rule 501 of Regulation D under the Securities Act. The Investor has been advised
that this instrument and the underlying securities have not been registered
under the Securities Act, or any state securities laws and, therefore, cannot be
resold unless they are registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration requirements is
available. The Investor is purchasing this instrument and the securities to be
acquired by the Investor hereunder for its own account for investment, not as a
nominee or agent, and not with a view to, or for resale in connection with, the
distribution thereof, and the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. The Investor
has such knowledge and experience in financial and business matters that the
Investor is capable of evaluating the merits and risks of such investment, is
able to incur a complete loss of such investment without impairing the
Investor’s financial condition and is able to bear the economic risk of such
investment for an indefinite period of time.
 

 
EXHIBIT 10.11, 4

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5.      Miscellaneous
 
(a)      Any provision of this instrument may be amended, waived or modified
only upon the written consent of the Company and the Investor.
 
(b)      Any notice required or permitted by this instrument will be deemed
sufficient when delivered personally or by overnight courier or sent by email to
the relevant address listed on the signature page, or 48 hours after being
deposited in the U.S. mail as certified or registered mail with postage prepaid,
addressed to the party to be notified at such party’s address listed on the
signature page, as subsequently modified by written notice.
 
(c)      The Investor is not entitled, as a holder of this instrument, to vote
or receive dividends or be deemed the holder of Capital Stock for any purpose,
nor will anything contained herein be construed to confer on the Investor, as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action or to
receive notice of meetings, or to receive subscription rights or otherwise until
shares have been issued upon the terms described herein.
 
(d)      Neither this instrument nor the rights contained herein may be
assigned, by operation of law or otherwise, by either party without the prior
written consent of the other; provided, however, that this instrument and/or the
rights contained herein may be assigned without the Company’s consent by the
Investor to any other entity who directly or indirectly, controls, is controlled
by or is under common control with the Investor, including, without limitation,
any general partner, managing member, officer or director of the Investor, or
any venture capital fund now or hereafter existing which is controlled by one or
more general partners or managing members of, or shares the same management
company with, the Investor; and provided, further, that the Company may assign
this instrument in whole, without the consent of the Investor, in connection
with a reincorporation to change the Company’s domicile.
 
(e)      In the event any one or more of the provisions of this instrument is
for any reason held to be invalid, illegal or unenforceable, in whole or in part
or in any respect, or in the event that any one or more of the provisions of
this instrument operate or would prospectively operate to invalidate this
instrument, then and in any such event, such provision(s) only will be deemed
null and void and will not affect any other provision of this instrument and the
remaining provisions of this instrument will remain operative and in full force
and effect and will not be affected, prejudiced, or disturbed thereby.
 
(f)      All rights and obligations hereunder will be governed by the laws of
the State of [Governing Law Jurisdiction], without regard to the conflicts of
law provisions of such jurisdiction.
 
(Signature page follows)
 

 
EXHIBIT 10.11, 5

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IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly
executed and delivered.

COMPANY

By:                                                      
Name:  Gergely Toth, PhD, MBA
Title:    Chief Executive Officer
 
Address: 1597 Cross Way, San Jose, CA 95125
 

 
Email:
gtoth@gardedamtherapeutics.com                                                                    
 
INVESTOR:
 
By: /s/ Max Zho     
Name:  Max Zho                                                         
Title:                                                                    

Address:                                                                    
 

 
Email:                                                                

 
 
 
 
 
EXHIBIT 10.11, 6

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