Exhibit 10.3

 

EXECUTED COPY

 

LOCK-UP AND LEAK-OUT AGREEMENT

 

THIS DEBT SETTLEMENT LOCK-UP AND LEAK-OUT AGREEMENT (this “Agreement”) is
entered into and effective as of June 29, 2017 (the “Effective Date”) by and
between Gopher Protocol Inc., a Nevada corporation with an address at 2500
Broadway, Suite F-125, Santa Monica, CA 90404, (the “Company”) and Stanley
Hills, LLC, a Nevada limited liability company (hereinafter, the “Note Holder”)
(each a “Party” and collectively the “Parties”).

 

W I T N E S S E T H:

 

WHEREAS, on January 22, 2015, the Company issued that certain 10% Convertible
Debenture to GV Global Communications, Inc. (“GV Global”) with a face value of
$75,273.43 (the “Note”); and

 

WHEREAS, on December 1, 2015, the GV Global and the Note Holder entered into
that certain Irrevocable Sale and Assignment of Contract Rights Sale and
Assignment Agreement (the “Assignment”); and

 

WHEREAS, the current unpaid principal balance on the Note is $28,635.55 whereby
the Note Holder and the Company are negotiating in good faith to repay the Note
and cure any events of default under the Note; and

 

WHEREAS, by virtue of the Assignment, the Note Holder beneficially owns all of
the rights and privileges subscribed for in the Note under the terms and
conditions therein; and,

 

WHEREAS, the Note is convertible into shares of common stock, par value $0.00001
per share of the Company’s common stock (the “Common Stock”); and

 

WHEREAS, by virtue of the Note, if converted the Note Holder beneficially owns
shares of Common Stock pursuant to the right of conversion of the Note into
Common Stock under the terms and conditions therein; and,

 

WHEREAS, Company has required that the Note Holder agree to refrain from
conversion and then any sales of Common Stock of the Company, and the Note
Holder has agreed to so refrain, pursuant to the terms and conditions of this
Agreement; and

 

WHEREAS, the Note Holder understands that the Company may be seeking additional
capital or funding and believes that the lock-up and leak-out restrictions and
provisions, as further described herein, will improve the Company’s prospects
for obtaining additional financing and thus improving the overall financial
condition of the Company; and

 

WHEREAS, in consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Note Holder has agreed to enter into this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt of which
is hereby acknowledged it is hereby agreed as follows:

 

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1.       Lock-Up Provisions. Subject to the terms of this Agreement, the Note
Holder agrees that for a period of nine (9) months from the Effective Date of
this Agreement (the “Lock-Up Period”), the Note Holder shall not convert the
Note into Common Stock for safe keeping or, directly or indirectly, sell, offer
to sell, contract to sell, assign, pledge, hypothecate, encumber or otherwise
transfer, or enter into any contract, option or other arrangement or
understanding with respect to the sale, assignment, pledge or other disposition
of (each a “Transfer”) any beneficial rights with respect to the Note.

 

2.       Leak-Out Provisions. Subject to the terms of this Agreement, the Note
Holder agrees that for a period beginning immediately upon the end of the
Lock-Up Period and ending fifteen (15) months from the Effective Date of this
Agreement (the “Leak-Out Period”), the Note Holder shall have the right to sell
the lessor of (i) five (5%) percent of the previous day’s traded volume of the
Company’s Common Stock, or (ii) Five Thousand (5,000) shares of the Common Stock
on a per daily basis.

 

3.       Equitable Remedies. As an material inducement to enter into this
Agreement, the Note Holder expressly acknowledges and agrees that the Company’s
remedy at law for a breach or threatened breach of any of the provisions of this
Agreement would be inadequate and, in recognition of this fact, in the event of
a breach or threatened breach by the Note Holder of any of the provisions of
this Agreement, it is agreed that, in addition to any remedy at law, the Company
shall be entitled, without posting any bond, to equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available. Nothing
herein contained shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including,
without limitation, issuing stop transfer instructions to the Company’s transfer
agent in connection with any purported transfer of Locked-Up Note or the
beneficially owned Common Stock by the Note Holder in violation of the
provisions of this Agreement.

 

4.       Transfer Restrictions; Transfer Agent Instructions. The Note Holder
shall not transfer, assign, mortgage, hypothecate or otherwise encumber or
permit or suffer any encumbrance of all or any part of the Note Holder’s shares
derived under this Agreement unless prior written consent is obtained from the
Company, which may be granted or withheld in the Company’s sole discretion. Any
attempt so to transfer or encumber any such interest shall be null and void ab
initio. Note Holder understands and agrees that, in order to ensure compliance
with the restrictions and conditions referred to in this Agreement, the Company
may issue appropriate “stop-transfer” and other instructions to its transfer
agent (“Stop Transfer Instructions”) and that, if the Company transfers its own
securities, it may make appropriate notations to the same effect in its own
records. The Note Holder agrees and consents to the entry of any Stop Transfer
Instructions with the Company’s transfer agent against the Transfer of the Note
or the beneficially owned Common Stock held by the Note Holder except in strict
compliance with the terms and conditions of this Agreement. After the Lock-up
Period and Leak –out Period has lapsed, the Company shall direct its transfer
agent to release the Stop Transfer Instructions.

 

5.       Representations and Warranties. Each party hereto hereby represents and
warrants to the other party as follows:

 

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(a)      Authorization. Such party has the full right, power and authority to
enter into this Agreement and to perform the terms and provisions hereof. The
execution, delivery and performance of this Agreement by such party have been
duly authorized by all necessary action on the part of such party, and this
Agreement constitutes the valid and binding obligation of such party,
enforceable against such party in accordance with its terms.

 

(b)      No Conflicts. Neither the execution and delivery of this Agreement nor
compliance with the terms and provisions hereof on the part of such party shall
breach any statutes or regulations of any governmental authority, domestic or
foreign, or shall conflict with or result in a breach of such party’s
organizational document(s) (if applicable) or of any of the terms, conditions or
provisions of any judgment, order, injunction, decree, agreement or instrument
to which such party is a party or by which it or its assets are or may be bound,
or constitute a default thereunder or an event which with the giving of notice
or passage of time or both would constitute a default thereunder, or require the
consent of any person or entity.

 

(c)      Consents and Approvals. No consent, waiver, approval, order, permit or
authorization of, or declaration or filing with, or notification to, any person
or entity is required on the part of such party in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.

 

6.       Representations, Warranties and Covenants of the Note Holder.

 

The Note Holder represents, warrants and agrees with, the Company that:

 

(a)      This Agreement has been duly executed and delivered by the Note Holder
and constitutes a valid and binding obligation of the Note Holder enforceable in
accordance with its terms;

 

(b)      Transfer of the shares by Note Holder shall only be made in compliance
with all applicable securities laws and the terms of this Agreement. Except as
specifically provided in this Agreement, Note Holder represents, warrants and
agrees that Note Holder will not engage in short sales including, hypothecate,
sell or otherwise transfer the Securities unless registered under the Act or in
reliance upon an exemption there from, and fully understands and agrees that
Note Holder must bear the economic risk of his purchase for an indefinite period
of time because, among other reasons, the Securities or underlying securities
have not been registered under the Act or under the securities laws of certain
states and, therefore, cannot be resold, pledged, assigned or otherwise disposed
of unless they are subsequently registered under the Act. Note Holder also
understands that the Company is under no obligation to register the Securities
on its behalf or to assist Note Holder in complying with any exemption from
registration under the Act.

 

(c)      The Note Holder is not subject to or obligated under any provisions of
any law, regulation, order, judgment or decree which would be breached or
violated by the execution, delivery and performance of this Agreement by the
Note Holder and the consummation of the transactions contemplated hereby.

 

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7.       Miscellaneous.

 

(a)       Notices. All notices or other communications required or permitted by
this Agreement or by law to be served on or given to either party to this
Agreement by the other party shall be in writing and shall be deemed duly served
when personally delivered to the party at an address agreed upon by both
parties.

 

(b)       Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California, without giving effect to the principles of conflict of laws. Any
action brought by either party against the other concerning the transactions
contemplated by this Agreement shall be brought only in the state courts or in
the federal courts located in the county and state Los Angeles, California. The
parties to this Agreement hereby irrevocably waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum non conveniens. The
parties executing this Agreement and other agreements referred to herein or
delivered in connection herewith on behalf of the Company agree to submit to the
in personam jurisdiction of such courts and hereby irrevocably waive trial by
jury. If either party commences an action arising out of this Agreement, the
prevailing party shall, in addition to any other damages and costs awarded, be
entitled to reasonable legal fees incurred in connection with the prosecution or
defense of such action.

 

(c)       Headings. The headings preceding the text of the several sections of
this Agreement are inserted for convenience and shall not affect the meaning,
construction, scope or effect of this Agreement.

 

(d)       Assignment. This Agreement and all the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

 

(e)       Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such provision or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.

 

(f)       Amendment. The Board of Directors may amend the terms of the Agreement
if it determines it is in the best interest of the Company and its Note Holders.
In the event either party wishes to amend this Agreement, the Agreement may only
be amended or waived in a writing executed by the both parties.

 

(g)       Waiver; No Waiver of Rights. Any provision of this Agreement may be
waived however, no failure or delay on the part of any party in exercising any
right, power or privilege under this Agreement shall operate as waiver thereof
nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by applicable law.

 

(h)       Complete Agreement. This Agreement contains the complete agreement
between the parties hereto and supersedes any prior understandings, agreements
or representations by or between the parties, written or oral, which may have
related to the subject matter hereof in any way.

 

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(i)       Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format
(.pdf) file of an executed signature page, such signature page shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such signature page
were an original thereof.

 

(j)       Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN EXECUTING THIS
AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT
LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF
THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY
REASON OF THE DRAFTING OR PREPARATION HEREOF.

 

[ Remainder of Page Intentionally Left Blank; Signature Page to Follow ]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the Effective Date defined above.

 

 

company:

 

Gopher Protocol, INC. 

      By:  /s/ Michael Murray     Name: Michael Murray     Title: Chief
Executive Officer

 

 

NOTE HOLDER:

 

STANLEY HILLS, LLC 

      By:  /s/ Yossi Attia     Name: Yossi Attia     Title: Managing Member

 

[ Signature Page to Lock-Up Leak-Out Agreement ]

 

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