Exhibit 10.3
 
DIRECTOR AGREEMENT
 
THIS DIRECTOR AGREEMENT is made effective as of December 31, 2018 (the
“Agreement”), Blockchain Industries, Inc., a Nevada corporation with its
principal place of business at 720 Arizona Ave Suite 220 Santa Monica CA 90401
(the “Company”), and Kevin Hu (“Director”).
 
WHEREAS, it is essential to the Company to retain and attract as directors the
most capable persons available to serve on the board of directors of the Company
(the “Board”); and
 
WHEREAS, the Company believes that Director possesses the necessary
qualifications and abilities to serve as a director of the Company and to
perform the functions and meet the Company’s needs related to its Board,
 
WHEREAS, the Director shall be a Class 1 director whose term ends and are
subject to election at the annual meeting of shareholders in 2019, 2022 and each
third year thereafter.
 
NOW, THEREFORE, in consideration of the mutual promises contained herein, the
benefits to be derived by each party hereunder and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
 
1. Term. The Director shall hold office until such time that such Director’s
successor is duly elected and qualified, or until such Director’s death or
removal from office. The Director will be automatically removed from the Board
if such Director resigns his office by writing delivered to the Board, becomes
prohibited by law from acting as a director or commits a material breach of this
Agreement pursuant to Section 7 below.
 
2. Compensation and Expenses.
 
a. Stock Option. For the services provided to the Company as a director, the
Director shall receive a non-qualified stock option (“Option”) to purchase up to
Four Hundred Thousand (400,000) shares of the Company’s common stock (“Option
Shares”), pursuant and subject to the Company’s Equity Incentive Plan, a copy of
which has been delivered to the Director, at the following exercise prices and
vesting schedule:
 
Exercise Price
 
Quantity Vested
 
Vesting Date
 
Expiration Date
$1.75
 
150,000
 
1/1/2019
 
12/31/2023
 
 
 
 
   
 
 
$1.75
 
250,000
 
Sale Transaction
 
12/31/2023

 
 
 
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As used herein, “Sale Transaction” means any sale, exchange or merger of not
less than fifty percent (50%) of the Company’s outstanding shares at a price
that provides an aggregate company valuation of not less than Fifty Million
Dollars ($50,000,000).
 
In the event of the termination of the Director’s service relationship (whether
an as employee, director or consultant) with the Company (“Termination of
Service”) at any time for any reason (including, but not limited to,
resignation, withdrawal, death, disability, termination, with or without cause,
or any other reason) before the Director has exercised the Option in full, the
Option shall automatically expire, and cease to be exercisable immediately, with
respect to all of the Option Shares, whether vested or unvested. It being
understood and agreed that in no event will the Option become exercisable for
additional Options Shares upon a Termination of Service for any reason and such
outstanding and unexercised Option shall immediately lapse and Director shall
have no further rights with respect to it.
 
b. Expenses. Upon submission of appropriate receipts, invoices or vouchers as
may be reasonably required by the Company, the Company will reimburse Director
for all reasonable out-of-pocket travel expenses incurred in connection with the
performance of Director’s duties under this Agreement.
 
c. Taxes. The Director acknowledges that the exercise, transfer or other
disposition of the Option may give rise to significant U.S. income tax
consequences. Under Section 83 of the Internal Revenue Code and Treas. Reg.
section 1.83-7(b), upon the exercise of the Option, the Director will recognize
taxable ordinary income equal to the difference between the fair market value of
the common stock, determined as of the exercise date, and the Option exercise
price. When the Director sells the common stock, the Director will recognize
taxable gain or loss (long-term if the Director held the common stock for more
than one year; otherwise, short-term) equal to the difference between the amount
the Director receives from the sale and the tax basis of the common stock sold.
If the Company, in its discretion, determines that it is obligated to withhold
any tax in connection with the exercise of the Option, or in connection with the
transfer of any common stock acquired pursuant to the Option, the Director
hereby agrees that the Company may withhold from the Director’s compensation or
other remuneration the appropriate amount of tax. At the discretion of the
Company, the amount required to be withheld may be withheld in cash from such
compensation or other remuneration or in kind from the common stock otherwise
deliverable to the Director on exercise of this option. The Director further
agrees that, if the Company does not withhold an amount from the Director’s
compensation or other remuneration sufficient to satisfy the withholding
obligation of the Company, the Director will make reimbursement on demand, in
cash, for the amount underwithheld.
 
3. Market Stand-Off Agreement. In the event of a public or private offering of
the Company’s securities and upon request of the Company, the underwriters or
placement agents placing the offering of the Company’s securities, the Director
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any of the Option Shares other than those
included in the registration, without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time from the
effective date of such registration as may be requested by the Company or such
placement agent or underwriter.
 
 
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4. Confidential Information. The Director recognizes and acknowledges that the
Director will have access to Confidential Information (as defined below)
relating to the business or interests of the Company or of persons with whom the
Company may have business relationships. The Director agrees that both during
and after his time as a director of the Company, the Director will not use for
the Director’s own, or for another’s benefit, or disclose or permit the
disclosure of any confidential information relating to the Company, including
without limitation any information about the deliberations of the Board. The
term “Confidential Information” means any non-public information that relates to
the actual or anticipated business and/or products, research or development of
the Company, its affiliates or subsidiaries, or to the Company’s, its
affiliates’ or subsidiaries’ technical data, trade secrets, or know-how,
including, but not limited to, research, product plans, or other information
regarding the Company’s, its affiliates’ or subsidiaries’ products or services
and markets therefor, customer lists and customers, prospective customers,
software, developments, inventions, processes, methodologies, algorithms,
know-how, procedures, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances, business plans, vendor
relationships, passwords, encryption coding, search technology, analytics,
transaction data, ledgers, and other business information disclosed by the
Company, its affiliates or subsidiaries, either directly or indirectly, in
writing, orally or by drawings or inspection of premises, parts, equipment,
programs, formulas, ledgers or other property of Company, its affiliates or
subsidiaries. The Director also agrees during his appointment that he will not,
other than for the benefit of the Company and in connection with his service as
a director, make any notes, memoranda, electronic records, tape records, films,
photographs, plans, drawings or any form of record relating to any matter within
the scope of the business or concerning the dealings or affairs of the Company
and will return any such items at any time at the request of the Board. The
Director confirms that he has notified the Board in writing of all other
directorships, appointments and interests, including any directorship,
appointment or interest in a company, business or undertaking which competes or
is likely to compete with the Company or which could otherwise potentially give
rise to a conflict with his duties with the Company.
 
5. Duties, Time and Commitment. The Director shall use reasonable best efforts
to attend all convened meetings of the Board. During the continuance of the
Director’s appointment, the Director will be expected to: (i) faithfully,
efficiently, competently and diligently perform his duties and exercise such
powers as are appropriate to his role as a director; (ii) in so far as
reasonably possible, attend all meetings of the Board and of any committees of
the Board of which he is a member; (iii) comply with all reasonable requests,
instructions and regulations made or given by the Board (or by any duly
authorized committee thereof) and give to the Board such explanations,
information and assistance the Board may reasonably require; (iv) act in the
best interests of the Company; and (v) use commercially reasonable efforts to
promote and extend the interests and reputation of the Company, including
assisting the Board in relation to public and corporate affairs and bringing to
bear for the benefit of the Board the Director’s particular knowledge and
experience.
 
 
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6. Business Opportunities & Conflicts Disclosure. The Company acknowledges and
agrees that the Director should be permitted to engage in, acquire or invest in
the same or similar activities or lines of business involving the provision of
services or products with respect to digital assets, cryptocurrency, alternative
distribution ledgers and/or blockchain technologies (each, a “Business
Opportunity”), provided that the Director fully complies with and adheres to the
following advance notice, standards of conduct and Disqualified Business
Opportunity (as hereinafter defined) restrictions:
 
a. Business Opportunity Notice. Within ten (10) business days of the Director’s
appointment to the Board, the Director shall inform the Board of any held
(direct or indirect) personal interests which may conflict with the Company and
its businesses. In the event that the Director becomes aware of a Business
Opportunity, the Director shall notify the Company in writing of such
opportunity (a “Disclosed Business Opportunity”) and deliver to the Company, or
provide the Company access to, all information prepared by or on behalf of, or
material information submitted or delivered to, the Director related to such
potential transaction (the “Business Opportunity Notice”). Following the
expiration of the thirty- (30-)-day period (“Business Opportunity Notice
Period”) after receipt of such Business Opportunity Notice, the Company shall be
deemed to have renounced any interest or expectancy in the Disclosed Business
Opportunity and the Director may pursue the Disclosed Business Opportunity,
provided that the Disclosed Business Opportunity is conducted by the Director in
accordance with the standard set forth in Section 6.c. below and that the
Disclosed Business Opportunity is not a Disqualified Business Opportunity. The
Company shall not be prohibited from pursuing any Business Opportunity with
respect to which it is deemed to have renounced any interest or expectancy as a
result of this Section 6.
 
b. Disqualified Business Opportunity. During the term of this Agreement and for
a period of twelve (12) months after the Director ceases to be a Director of the
Company, the Director shall not shall not, directly or indirectly, pursue,
become engaged in or have any ownership interest or become associated with in
any Person (as hereinafter defined) which directly or indirectly pursues or
becomes engaged in any Business Opportunity that (i) is first presented to the
Director solely in his capacity as a director or officer of the Company or its
affiliates or (ii) is identified by the Director solely through the disclosure
of information by or on behalf of the Company or its affiliates (each such
Business Opportunity referred to in clauses (i) and (ii), a “Disqualified
Business Opportunity”). The Director acknowledges that the foregoing
restrictions and time limitations with respect to a Business Opportunity and
Disqualified Business Opportunity are reasonable and properly required for the
adequate protection of the business interests of the Company.
 
c. Standards for Separate Conduct of Disclosed Business Opportunity. The
Director may pursue a Disclosed Business Opportunity following the expiration
Business Opportunity Notice Period if such Disclosed Business Opportunity is
developed and pursued solely through the use of personnel and assets of the
Director or jointly with the personnel and assets of any other “Person(s)” (as
hereinafter defined), provided that such Person(s) does not owe any fiduciary or
other duty to the Company. “Person” means an individual, corporation,
partnership, limited liability company, trust, joint venture, unincorporated
organization or other legal or business entity.
 
 
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7. Termination for Material Breach. The Director’s service on the Board may be
terminated by the Company pursuant to the provision of written notice to the
Director under Section 17 below in the event of a material breach by the
Director of any of the provisions of this Agreement, including but not limited
to Section 6 above; provided however, that the Director shall have been given
reasonable notice and an opportunity to promptly cure any such event of a
material breach (unless the event cannot be cured).
 
8. Limitation of Liability; Right to Indemnification. The Company shall
indemnify the Director in his capacity as director of the Company to the fullest
extent permitted by applicable law against all debts, judgments, costs, charges
or expenses incurred or sustained by the Director in connection with any action,
suit or proceeding to which the Director may be made a party by reason of his
being or having been a director of the Company. The Company shall have the right
to assume, with legal counsel of its choice, the defense of Director in any such
action, suit or proceeding for which the Company is providing indemnification to
Director. Should Director determine to employ separate legal counsel in any such
action, suit or proceeding, any costs and expenses of such separate legal
counsel shall be the sole responsibility of Director. If the Company does not
assume the defense of any such action, suit or other proceeding, the Company
shall, upon request of the Director, promptly advance or pay any amount for
costs or expenses (including, without limitation, the reasonable legal fees and
expenses of counsel retained by Director) incurred by Director in connection
with any such action, suit or proceeding. The Company shall not be obligated to
indemnify Director against any actions that constitute, in the reasonable
discretion of the Board of Directors, an act of gross negligence or willful
misconduct or contrary to the general indemnification provisions of the Nevada
Revised Statutes or the Company’s certificate of incorporation or bylaws.
 
9. Remedies. The Director agrees that any breach of the terms of Section 3 and
Section 6 of this Agreement would result in irreparable injury and damage to the
Company for which the Company would have no adequate remedy at law; the Director
therefore also agrees that in the event of said breach or any threat of breach,
the Company shall be entitled to an immediate injunction and restraining order
to prevent such breach and/or threatened breach and/or continued breach by the
Director and/or any and all entities acting for and/or with the Director,
without having to prove damages or paying a bond, in addition to any other
remedies to which the Company may be entitled at law or in equity. The terms of
this paragraph shall not prevent the Company from pursuing any other available
remedies for any breach or threatened breach hereof, including, but not limited
to, the recovery of damages from the Director. The Director acknowledges that
the Company would not have entered into this Agreement had the Director not
agreed to the provisions of this Section 8.
 
10. Amendments and Waiver. No supplement, modification or amendment of this
Agreement will be binding unless executed in writing by both parties. No waiver
of any provision of this Agreement on a particular occasion will be deemed or
will constitute a waiver of that provision on a subsequent occasion or a waiver
of any other provision of this Agreement.
 
 
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11. Binding Effect. This Agreement will be binding upon and inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.
 
12. Severability. The provisions of this Agreement are severable, and any
provision of this Agreement that is held by a court of competent jurisdiction to
be invalid, void, or otherwise unenforceable in any respect will not affect the
validity or enforceability of any other provision of this Agreement.
 
13. Arbitration. Any disputes arising from this Agreement not resolved by the
parties in a good faith, timely manner shall be arbitrated within Los Angeles
County, California under the rules and procedures of the American Arbitration
Association. Attorney fees and costs are to be awarded to the prevailing party.
 
14. Governing Law. This Agreement will be governed by and construed and enforced
in accordance with the laws of the State of Nevada applicable to contracts made
and to be performed in that state without giving effect to the principles of
conflicts of laws.
 
15. Entire Agreement. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and understanding relating
to such subject matter.
 
16. Notices. Every notice relating to this Agreement shall be in writing and
shall be given by personal delivery or by registered or certified mail, postage
prepaid, return receipt requested; to:
 
If to the Company, to:
720 Arizona Ave
Suite 220
Santa Monica, CA 90401
Attention: President
 
If to the Director, to the address for notice on the signature page to this
Agreement or, if no such address is provided, to the last address of the
Director provided by the Director to the Company.
 
Either of the parties may change their address for purposes of notice hereunder
by giving notice in writing to such other party pursuant to this Section 16.
 
17. Miscellaneous. This Agreement may be executed by the Company and Director in
any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument. Any party may execute this Agreement by facsimile signature and the
other party will be entitled to rely on such facsimile signature as evidence
that this Agreement has been duly executed by such party.
 
 
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18. Definitions. As used in this Agreement, the following definitions shall
apply:
 
a. The “Board” shall have the meaning set forth in the preamble.
b. “Business Opportunity” shall have the meaning set forth in Section 6.
c. “Business Opportunity Notice” shall have the meaning set forth in Section 6.
d. “Business Opportunity Notice Period” shall have the meaning set forth in
Section 6.
e.  “Company” shall have the meaning set forth in the preamble.
f. “Confidential Information” shall have the meaning set forth in Section 4.
g. “Dollars” and the sign “$” mean the lawful money of the United States of
America.
h.  “Director” shall have the meaning set forth in the preamble.
i. “Disqualified Business Opportunity” shall have the meaning set forth in
Section 6.
j.  “Option” shall have the meaning set forth in Section 2.
k.  “Option Shares” shall have the meaning set forth in Section 2.
l. “Termination of Service” shall have the meaning set forth in Section 2.
m.  “Person(s)” shall have the meaning set forth in Section 6.
 
 
 
 
 
 
 
 
 
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The Parties have executed this Agreement as of the date first written above.
 
 
DIRECTOR     
 
BLOCKCHAIN INDUSTRIES, INC.
 
 
 
 
 
 
 
By: 
/s/  Kevin Hu 
 
By:
/s/ Patrick Moynihan
 
 
Name:  Kevin Hu 
 
 
Name: Patrick Moynihan
 
 
 
 
 
Title: CEO

 

 
 
Address for Notice:
 
5 St. Andres Ct
Thornhill, Toronto, L3T 2N3
 
 
 
 
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