Exhibit 10.03

 

AGREEMENT

 

This Agreement (as amended, modified or supplemented from time to time, this
“Agreement”) is made and entered into as of July 26, 2018, between LONG
BLOCKCHAIN CORP., a Delaware corporation having an address at 12-1 Dubon Court,
Farmingdale, New York 11735 (“LBCC”), STRAN LOYALTY GROUP INC., a Delaware
corporation and wholly-owned subsidiary of LBCC having an address at 12-1 Dubon
Court, Farmingdale, New York 11735 (“SLG”), and STRÄN & COMPANY, INC., a
Massachusetts corporation having an address at 2 Heritage Drive, Quincy,
Massachusetts 02171 (“Stran”).

 

WHEREAS, LBCC is engaged in the exploration of, and investment in, opportunities
that leverage the benefits of Blockchain technology; and

 

WHEREAS, Stran provides promotional marketing, branded merchandise, loyalty,
incentive and reward solutions to its customers; and

 

WHEREAS, the parties desire to develop a loyalty program infrastructure based on
Blockchain technology, on the terms and conditions set forth in this Agreement;

 

IT IS AGREED:

 

1. The Services.

 

(a) Stran shall provide to SLG management, sales, accounting, operations,
administrative and other services, and access to office space, equipment,
software and utilities for employees of SLG, as necessary for the operation by
SLG of the loyalty program described in Schedule A hereto (the “Program”),
including without limitation the services and access described in Schedule A
hereto (the “Services”). Stran shall provide the Services (i) in accordance with
the terms and subject to the conditions set forth in Schedule A hereto; (ii)
using personnel of required skill, experience, and qualifications; (iii) in a
timely, workmanlike, and professional manner; and (iv) in accordance with
generally recognized industry standards in the applicable field.

 

(b) Stran shall pay to SLG all amounts collected by Stran (other than amounts
representing loyalty card balances) during the Term (as defined below) from the
loyalty clients of Stran listed on Schedule A as of the date hereof or
subsequently added thereto upon the written consent of the Parties (the “Stran
Loyalty Clients”) in connection with the Program (the “Program Revenue”).
Program Revenue collected by Stran in each calendar month or portion thereof
during the term of this Agreement shall be paid to SLG within 15 days after the
end of such calendar month or portion thereof.

 

 

   

 

(c) Stran hereby grants SLG an option, exercisable at any time during the Term,
to purchase from Stran the assets set forth on Schedule A hereto at a purchase
price equal to the cost thereof to Stran, without premium or interest.

 

2. Compensation. As compensation for the Services:

 

(a) Upon the execution of this Agreement, LBCC shall issue to Stran 2,500,000
shares of common stock of LBCC, par value $0.0001 per share (the “LBCC Common
Stock”).

 

(b) Within 30 days after LBCC’s receipt of a statement that has been certified
by FCS Financial Services LLC (or another third party upon the consent of Stran
and the independent directors of LBCC) setting forth in reasonable detail the
calculation SLG’s net revenue as calculated in accordance with Schedule B hereto
(“Net Revenue”) and SLG’s EBITDA margin as calculated in accordance with
Schedule B hereto (“EBITDA Margin,” and such statement, an “Earnings Statement”)
for the twelve months ending July 31, 2019 (“Year One”), LBCC shall issue to
Stran the number of shares of LBCC Common Stock as calculated by section (i),
(ii) or (iii) below, as applicable:

 

  (i) if either SLG’s Net Revenue for Year One is less than $1,250,000 or SLG’s
EBITDA Margin for Year One is less than 20%, the number of shares of LBCC Common
Stock equal in value to SLG’s Net Revenue for Year One, based on the average
closing share price of LBCC Common Stock over the last 30 business days of Year
One, but in any event not more than 1,750,000 shares of LBCC Common Stock;      
  (ii) if SLG’s Net Revenue for Year One is equal to or greater than $1,250,000
and SLG’s EBITDA Margin for Year One is equal to or greater than 20%, 1,750,000
shares of LBCC Common Stock; or         (iii) if SLG’s Net Revenue for Year One
is equal to or greater than $1,500,000 and SLG’s EBITDA Margin for Year One is
equal to or greater than 25%, 2,250,000 shares of LBCC Common Stock plus the
number of shares of LBCC Common Stock equal in value to 1.25 times the amount of
SLG’s Net Revenue for Year One that is greater than $1,500,000, based on the
average closing share price of LBCC Common Stock over the last 30 business days
of Year One.

 

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(c) Within 30 days following LBCC’s receipt of an Earnings Statement for the
twelve months ending July 31, 2020 (“Year Two”), LBCC shall issue to Stran the
number of shares of LBCC Common Stock as calculated by section (i), (ii) or
(iii) below, as applicable:

 

  (i) if SLG’s Net Revenue for Year Two is less than $1,750,000 or SLG’s EBITDA
Margin for Year Two is less than 20%, the number of shares of LBCC Common Stock
equal in value to SLG’s Net Revenue for Year Two, based on the average closing
share price of LBCC Common Stock over the last 30 business days of Year Two, but
in any event not more than 2,000,000 shares of LBCC Common Stock;         (ii)
if SLG’s Net Revenue for Year Two is equal to or greater than $1,750,000 and
SLG’s EBITDA Margin for Year Two is equal to or greater than 20%, 2,000,000
shares of LBCC Common Stock; or         (iii) if SLG’s Net Revenue for Year Two
is equal to or greater than $2,250,000 and SLG’s EBITDA Margin for Year Two is
equal to or greater than 25%, 2,500,000 shares of LBCC Common Stock plus the
number of shares of LBCC Common Stock equal in value to 1.25 times the amount of
SLG’s Net Revenue for Year Two that is greater than $2,250,000, based on the
average closing share price of LBCC Common Stock over the last 30 business days
of Year Two.

 

(d) Stran shall execute a lockup agreement in the form attached as Exhibit A
hereto, pursuant to which Stran will agree not transfer, assign or sell (subject
to the exceptions set forth in the lockup agreement) any of the shares issued or
issuable pursuant to Section 2(a) and 2(b) until July 31, 2019 and January 31,
2020, respectively. If SLG’s Net Revenue for Year One as set forth in the
Earnings Statement for Year One is less than $625,000, Stran shall forfeit the
shares issued pursuant to Section 2(a). The certificates for the shares issuable
pursuant to Sections 2(a) and 2(b) shall bear legends reflecting the foregoing
restrictions and the certificates for the shares issuable pursuant to Section
2(a) shall be retained by LBCC until the Earnings Statement for Year One is
received by LBCC.

 

(e) SLG shall reimburse Stran for the reasonable out-of-pocket costs and
expenses incurred by Stran during the Term in connection with the provision of
the Services (the “Reimbursable Expenses”), which may include an equitable
portion of costs and expenses for office space, equipment, software, utilities,
salaries, employee benefits and other overhead incurred by Stran in connection
with providing the Services. The Reimbursable Expenses for each calendar month
or portion thereof during the Term shall be paid to Stran within 45 days of
receipt by SLG of an invoice from Stran for such month, accompanied by receipts
and supporting documentation reasonably acceptable to SLG.

 

3. Representations and Warranties of SLG and LBCC. SLG and LBCC represent and
warrant that:

 

(a) Organization. Each of SLG and LBCC is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization.

 

(b) Power and Authorization. Each of SLG and LBCC has all requisite power and
authority necessary for the execution, delivery and performance by it of this
Agreement. This Agreement has been duly authorized, executed and delivered by
each of SLG and LBCC and is a legal, valid and binding obligation of each of SLG
and LBCC in accordance with its terms.

 

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4. Representations and Warranties of Stran. Stran represents and warrants that:

 

(a) Organization. Stran is duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization.

 

(b) Power and Authorization. Stran has all requisite power and authority
necessary for the execution, delivery and performance by it of this Agreement.
This Agreement has been duly authorized, executed and delivered by Stran and is
a legal, valid and binding obligation of Stran in accordance with its terms.

 

(c) Intellectual Property. Stran owns, or has a valid and enforceable license or
legal right to use, all intellectual property rights necessary for the
performance of the Services without any conflict with, or infringement or
misappropriation of, the intellectual property rights of others. To Stran’s
knowledge, (i) the conduct of the business of Stran has not interfered with,
infringed upon, diluted, misappropriated, or violated, and does not interfere
with, infringe upon, dilute, misappropriate or violate, any intellectual
property rights of any person, and (ii) Stran has not received any charge,
complaint, claim, demand, or notice alleging interference, infringement,
dilution, misappropriation, or violation of the intellectual property rights of
any person. To Stran’s knowledge, no person has interfered with, infringed upon,
diluted, misappropriated, or violated, and is not interfering with, infringing
upon, diluting, misappropriating or violating, any Stran intellectual property
rights, and Stran has not sent any charge, complaint, claim, demand or notice
alleging thereof to any person.

 

(d) Compliance. In performing its obligations under this Agreement, Stran will
comply with all applicable laws. Stran has and shall maintain in effect all the
licenses, permissions, authorizations, consents, and permits that it needs to
carry out its obligations under this Agreement.

 

(e) Client Contracts. The contracts between Stran and the Stran Loyalty Clients
(the “Client Contracts”) are enforceable in all material respects, and are in
full force and effect in all material respects. Neither Stran nor, to Stran’s
knowledge, any such Stran Loyalty Client is, or as a result of this Agreement
will be, in material breach or violation of, or default under, or has repudiated
any material provision of, any Client Contract.

 

(f) The Services. Stran will perform the Services using personnel of required
skill, experience, and qualifications and in a professional and workmanlike
manner in accordance with generally recognized industry standards for similar
services and will devote adequate resources to meet its obligations under this
Agreement.

 

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(g) Securities Matters.

 

  (i) Stran is an “accredited investor” within the meaning of Rule 501(a) of
Regulation D under the Securities Act of 1933, as amended (the “Securities
Act”).         (ii) Stran is aware and acknowledges that the LBCC Common Stock
issued pursuant to this Agreement has not been registered under the Securities
Act and may not be offered or sold unless registered under the Securities Act,
or unless offered and sold pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act.        
(iii) LBCC has made available to Stran a copy of LBCC’s Annual Report on Form
10-K for the fiscal year ended December 31, 2017 and the Company’s Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K filed since such date, as
well as the other filings made by the Company pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended, as of the execution date of this
Agreement (together the “Disclosure Documents”). Stran has read the Disclosure
Documents, including the “Risk Factors” set forth in the Annual Report on Form
10-K, together with this Agreement, and fully understands the information set
forth therein and herein.         (iv) Stran hereby confirms that the LBCC
Common Stock to be acquired by Stran under this Agreement will be acquired for
investment for Stran’s own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and that Stran has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, Stran further represents
that Stran does not presently have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the LBCC Common Stock.
Stran has not been formed for the specific purpose of acquiring the LBCC Common
Stock.         (v) Stran has had a reasonable opportunity to discuss LBCC’s
business, management, financial affairs and the terms and conditions of the
offering of the LBCC Common Stock with LBCC’s management and has had an
opportunity to review LBCC’s facilities.

 

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5. LBCC Investment.

 

(a) Upon the execution of this Agreement, Stran, or its affiliates, shall enter
into a subscription agreement with LBCC in the form attached as Exhibit B hereto
(a “Subscription Agreement”) to purchase 1,500,000 shares of LBCC Common Stock
in the aggregate, at a price of $0.40 per share, for a total purchase price of
$600,000. Upon consummation of such purchase, in accordance with such
Subscription Agreement, Stran shall receive a warrant, with substantially the
terms and conditions set forth in the form of warrant attached as an exhibit to
such Subscription Agreement (a “Warrant”), to purchase 450,000 shares of LBCC
Common Stock.

 

(b) Stran and its affiliates shall have the option to purchase, at any time
prior to July 31, 2019, up to an additional 1,500,000 shares of LBCC Common
Stock in the aggregate, at a price of $0.40 per share, for a total additional
purchase price of up to $600,000. In connection with such additional purchase,
Stran or its affiliate shall enter into a Subscription Agreement to purchase the
number of shares of LBCC Common Stock as to which such option is exercised. Upon
consummation of such additional purchase, in accordance with such Subscription
Agreement, Stran or its affiliate shall receive a Warrant to purchase 30% of the
number of shares of LBCC Common Stock subscribed for.

 

6. Employment Agreement. In connection with this Agreement, LBCC shall enter
into an employment agreement with Andrew Shape in the form attached as Exhibit C
hereto.

 

7. Term; Termination.

 

(a) The term of this Agreement shall commence on the date hereof and shall
continue until July 31, 2020, unless terminated earlier as hereinafter provided
in this Agreement, or unless extended, on these or different terms, by mutual
written agreement of the parties hereto (“Term”); provided, however, that the
Term shall automatically be extended for additional successive one-year periods
(each, an “Extension Period”), unless either party shall have provided notice to
the other 60 days prior to the end of the then-current Term that such party does
not desire to extend the Term, in which case no further extension of the Term
shall occur pursuant hereto but all previous Extension Periods of the Term shall
continue to be given full force and effect. For the avoidance of doubt, the
“Term” of this Agreement shall include any Extension Periods.

 

(b) Either party may terminate this Agreement, effective upon written notice to
the other party, if the other party materially breaches this Agreement, and: (i)
such breach is incapable of cure; or (ii) such breach is capable of cure but
remains uncured 30 days after the non-breaching party gives the breaching party
written notice thereof.

 

(c) Section 1(b) (to the extent it relates to Program Revenue collected by Stran
prior to the expiration or termination of this Agreement), Section 2(b) and (c)
(to the extent Year One and Year Two, respectively, are completed prior to the
expiration or termination of this Agreement) and Section 2(e) (to the extent it
relates to Reimbursable Expenses incurred by Stran prior to the expiration or
termination of this Agreement) and Sections 8 to 22 shall survive any expiration
or termination of this Agreement.

 

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8. Audit Right. During the Term and for 6 months after the expiration thereof,
Stran shall: (i) keep complete and accurate books and records regarding its
business operations relevant to the calculation of Program Revenue and
Reimbursable Expenses; and (ii) make available during normal business hours such
books and records for audit by SLG or its representative to verify all Program
Revenue and Reimbursable Expenses. Stran shall provide cooperation and
assistance in connection with all such audits and make appropriate Stran
personnel available for this purpose.

 

9. Independent Contractor Status. Stran shall provide perform the Services
hereunder as an independent contractor and not as an employee or agent of SLG or
LBCC or any affiliate thereof. Stran shall not have authority to act for,
represent or bind SLG or LBCC or any affiliate thereof in any manner, except as
may be expressly agreed to by such party in writing from time to time.

 

10. Indemnification.

 

(a) Stran shall indemnify, defend, and hold harmless SLG, LBCC and their
respective officers, directors, employees, agents, successors, and assigns
(each, an “Indemnified Party”) from and against all losses, damages,
liabilities, deficiencies, actions, judgments, interest, awards, penalties,
fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees
and the cost of enforcing any right to indemnification hereunder and the cost of
pursuing any insurance providers, arising out of or resulting from any claim,
suit, action, or proceeding (each, an “Action”) related to or arising out of:

 

  (i) Stran’s breach of any representation, warranty, covenant, or obligation of
Stran under this Agreement; or         (ii) any action or failure to act by
Stran in connection with providing the Services under this Agreement.

 

(b) The Indemnified Party shall promptly notify Stran in writing of any Action
for which it believes it is entitled to be indemnified under this Agreement.
Stran shall immediately take control of the defense and investigation of such
Action and shall employ counsel reasonably acceptable to the Indemnified Party
to handle and defend the same, at Stran’s sole cost and expense. The Indemnified
Party shall cooperate with Stran at Stran’s sole cost and expense. Stran shall
not settle any Action in a manner that adversely affects the rights of the
Indemnified Party without the Indemnified Party’s prior written consent, which
shall not be unreasonably withheld or delayed. The Indemnified Party’s failure
to perform any obligations under this Section 9(b) will not relieve Stran of its
obligations under this Section 9 except to the extent that Stran can demonstrate
that it has been materially prejudiced as a result of such failure. The
Indemnified Party may participate in and observe the proceedings at its own cost
and expense with counsel of its own choosing.

 

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11. Confidentiality. Each Party acknowledges that it may have access to certain
confidential and proprietary information of the other Party. No Party, or their
directors, officers, employees or agents, will publicize, disclose or use
(except as provided in this Agreement) any such confidential or proprietary
information of the other Party that is disclosed to that Party pursuant to this
Agreement. It is agreed that neither Party will be under any obligation not to
publicly disclose or use any information that: (i) was already known to the
recipient at the time of its receipt; (ii) was publicly known or becomes so
through no fault of the recipient; (iii) is required to be disclosed by law,
including pursuant to the requirements of the securities laws and the rules and
regulations thereunder; (iv) was received from third party not in breach of a
confidentiality obligation; or (v) was independently developed by the recipient
without use of the disclosing party’s confidential information. Each Party may
make disclosure to attorneys, agents and accountants of each Party on a need to
know basis; provided that such Party shall remain liable for any breaches of
this Section 10 by any such persons. Upon the termination of this Agreement,
each Party will return to the other all confidential materials belonging to the
other Party that were delivered during the Contract Period.

 

12. Intellectual Property. Stran assigns to SLG Stran’s entire right, title, and
interest in any invention, technique, process, device, discovery, improvement,
or know-how, whether patentable or not, hereafter made or conceived solely or
jointly by Stran while working for or on behalf of SLG, which results from the
Services. Stran shall disclose any such invention, technique, process, device,
discovery, improvement, or know-how promptly to SLG. Stran shall, upon request
of SLG, promptly execute a specific assignment of title to SLG, and do anything
else reasonably necessary to enable SLG to secure for itself, patent, trade
secret, or any other proprietary rights in the United States or other countries.
All writings or works of authorship, including, without limitation, program
codes or documentation, produced or authored by Stran in the course of
performing the Services, together with any associated copyrights, are works made
for hire and the exclusive property of SLG. To the extent that any writings or
works of authorship may not, by operation of law, be works made for hire, this
Agreement shall constitute an irrevocable assignment by Stran to SLG of the
ownership of and all rights of copyright in, such items, and SLG shall have the
right to obtain and hold in its own name, rights of copyright, copyright
registrations, and similar protections which may be available in the works.
Stran shall give SLG or its designees all assistance reasonably required to
perfect such rights. SLG hereby grants to Stran a nonexclusive license to use
such intellectual property rights in connection with performing the Services.

 

13. Binding Effect; Successors. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and, to the extent not prohibited herein,
their respective heirs, successors, assigns and representatives. Nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto and as provided above, their respective heirs, personal
representatives, executors, administrators, successors and assigns any rights,
remedies, obligations or liabilities.

 

14. Assignment. Stran shall not assign or otherwise transfer any of its rights,
or delegate or otherwise transfer any of its obligations or performance, under
this Agreement, in each case whether voluntarily, involuntarily, by operation of
law or otherwise, without SLG’s and LBCC’s prior written consent. Any purported
assignment, delegation, or transfer in violation of this Section 11 is void.

 

15. Further Acts. Upon the request of any of the parties hereto, the party or
parties so requested shall do such further acts and execute, acknowledge and
deliver all such further documents and agreements as may be reasonably necessary
or desired to further evidence or confirm the transactions contemplated herein
or any understanding or representation made by any such party hereto.

 

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16. Modification; Severability. This Agreement may not be modified, altered or
changed in any manner except by agreement in writing, signed by all parties
hereto, and supersedes all prior agreements by and among any of the parties
hereto with respect to the subject matter herein contained and all such prior
agreements are hereby canceled and of no further force and effect. In the event
that any provision of this Agreement shall be declared invalid or unenforceable,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions of this Agreement, it being hereby agreed
that such provisions are severable and that this Agreement shall be construed in
all respects as if such invalid or unenforceable provisions were omitted.

 

17. Counterparts. This Agreement may be executed simultaneously or in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one agreement.

 

18. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of Laws of
any jurisdiction other than those of the State of Delaware.

 

19. Submission to Jurisdiction. Each of the parties hereto irrevocably agrees
that any Action or proceeding with respect to this Agreement and the rights and
obligations arising hereunder, or for recognition and enforcement of any
judgment in respect of this Agreement and the rights and obligations arising
hereunder brought by any other party hereto or its successors or assigns shall
be brought and determined in the Delaware Court of Chancery, or in the event
(but only in the event) that such court does not have subject matter
jurisdiction over such action or proceeding, in the United States District Court
for the District of Delaware. Each of the parties hereto agrees that mailing of
process or other papers in connection with any such action or proceeding in the
manner provided in Section 17 or in such other manner as may be permitted by
applicable Laws, will be valid and sufficient service thereof. Each of the
parties hereto hereby irrevocably submits with regard to any such action or
proceeding for itself and in respect of its property, generally and
unconditionally, to the personal jurisdiction of the aforesaid courts and agrees
that it will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court or tribunal other than
the aforesaid courts.

 

20. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT
CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO
ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION; (B) SUCH PARTY HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY; AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION
16.

 

21. Notices. Notice given by one party to the other hereunder shall be in
writing and deemed to have been properly given or paid if deposited with the
United States Postal Service, registered or certified mail, addressed to either
party as set forth in the recitals of this Agreement.

 

22. Headings. The paragraph headings are inserted only as a matter of
convenience and for reference and in no way define, limit or describe the scope
or intent of this Agreement or in any way affect this Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the undersigned has executed this Agreement as of
the date first above written.

 

  LONG BLOCKCHAIN CORP.         By: /s/ Shamyl Malik   Name: Shamyl Malik  
Title: Chief Executive Officer         STRAN LOYALTY GROUP INC.         By: /s/
Shamyl Malik   Name: Shamyl Malik   Title: Chief Executive Officer         STRÄN
& COMPANY, INC.         By: /s/ Andrew Stranberg   Name: Andrew Stranberg  
Title: Chief Executive Officer

 

[Signature Page to Agreement]