Document:

EX-10.17

  Exhibit 10.17
 

  Form of Officer Employment Agreement 
(Non-NEO, Pre-Merger)

  EMPLOYMENT AGREEMENT

  Terran Orbital Corporation (the “Company”) and [●] (“Executive”) (collectively, the “Parties”) agree to enter into this Employment Agreement (“Agreement”), effective as of [●] (“Effective Date”), as follows:

  1.Employment

  The Company hereby agrees to employ Executive, and Executive hereby agrees to be employed by the Company, upon the terms and subject to the conditions set forth in this Agreement.

  2.Term of Employment

  This Agreement shall become effective, if at all, only upon the Effective Date.  The period of Executive’s employment under this Agreement shall begin upon the Start Date (as defined below) and shall continue for a period of five (5) years following the Start Date (the “Expiration Date”), unless terminated in accordance with Section 5 below.  As used in this Agreement, (i) “Start Date” means [●] and (ii) the phrase “Employment Term” refers to Executive’s period of employment from the Start Date until the date Executive’s employment is terminated or terminates.  Notwithstanding the foregoing, if Executive fails to commence Executive’s employment by the Start Date, this Agreement shall be null and void and the Company will have no obligations to Executive under this Agreement.

  3.Duties and Responsibilities

  (a)The Company will employ Executive during the Employment Term as [●].  In such capacity, Executive shall perform the customary duties and have the customary responsibilities of such positions and such other duties as may be assigned to Executive from time to time by the [●].

  (b)Executive’s primary work location will be in the Company’s offices in Boca Raton, Florida.

  (c)Executive agrees to faithfully serve the Company, devote Executive’s full working time, attention and energies to the business of the Company and its subsidiaries, and perform the duties under this Agreement to the best of Executive’s abilities.  Executive may participate in other outside business, charitable and/or civic activities, if Executive provides advance written notice to [●], and [●] consents to such activities in writing and provided they do not interfere with Executive’s duties under this Agreement and will not be disadvantageous to the Company.  Executive may also act as an agent of the U.S. government or provide advisory services to the U.S. government, as may be required in Executive’s agreements, if any, with the U.S. Government.

  (d)Executive agrees (i) to comply with all applicable laws, rules and regulations; (ii) to comply with the Company’s rules, procedures, policies, requirements, and directions; and (iii) not to engage in any other business, self-employment or employment, whether a competing 

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  business or otherwise, without the advanced written consent of [●], except as may be otherwise specifically provided for herein.

  4.Compensation and Benefits

  (a)Base Salary.  During the Employment Term, the Company shall pay Executive a base salary at the annualized rate of [●] or such higher rate as may be determined from time to time by the Company (“Base Salary”).  Such Base Salary shall be paid in accordance with the Company’s standard payroll practice for executives, which may change prospectively from time to time as may be determined by the Company.

  (b)Annual Bonus.  During the Employment Term, Executive shall be eligible to earn an annual performance-based bonus for each calendar year based on the achievement of goals set by [●] for each calendar year.  Executive’s target annual bonus will be in an amount up to [●] of Base Salary (“Target Annual Bonus”).  To earn an annual bonus Executive must remain employed by the Company through December 31st of the applicable performance year.  Any annual bonus will be paid in the calendar year immediately following the end of the applicable performance year, but in no event later than March 15th of such year.  The bonus (if any) earned for calendar year [●] will be pro-rated based on the number of months that the Executive was actually employed during such year.

  (c)Expense Reimbursement.  The Company shall promptly reimburse Executive for the ordinary and necessary business expenses reasonably incurred by Executive in the performance of Executive’s duties under this Agreement in accordance with the Company’s customary practices applicable to executives, including but not limited to business related travel expenses.  Executive will be permitted to fly business class or better, if business class is not available, and Executive will be permitted to stay in non-leisure class hotels for business travel.  Such expenses are incurred and accounted for in accordance with the Company’s policy and applicable laws.

  (d)Restricted Stock Unit Grant.  Subject to the approval of the Board, Executive shall be granted, within [●] days following the Start Date, [●] Restricted Stock Units (“RSUs”) under and subject to the terms and conditions of the Amended and Restated Terran Orbital Corporation 2014 Equity Incentive Plan (as may be amended, the “Equity Plan”) and the Restricted Stock Unit Agreement attached hereto as Exhibit A, and a notice of grant (including the vesting schedule to be set forth therein) which will be provided to Executive at the time of grant, based on the representative form attached hereto as Exhibit B (but with such other and further terms and conditions as the Board shall determine), which Executive will be required to sign.

  (e)Other Benefit Plans, Fringe Benefits and Vacations.  During the Employment Term, Executive shall be eligible to participate in or receive benefits under any 401(k) savings plan, nonqualified deferred compensation plan, supplemental executive retirement plan, medical and dental benefits plan, life insurance plan, short-term and long-term disability plans, supplemental and/or incentive compensation plans, or any other employee benefit or fringe benefit plan, generally made available by the Company to executives in accordance with the eligibility and participation requirements of such plans, as well as 

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  vacation and sick time in accordance with Company policy, and to the extent that there is any variance between the language of the relevant plan and this Agreement, the plan language shall control.

  5.Termination of Employment

  Executive’s employment under this Agreement may be terminated under any of the circumstances set forth in this Section 5.  Upon termination, Executive (or Executive’s beneficiary or estate, as the case may be) shall be entitled to receive the compensation and benefits described in Section 6 below, and, if applicable, Section 7 below.  Upon any termination of employment hereunder, the Company’s acting Facilities Security Officer shall notify Executive’s security clearance sponsor, if any, of Executive’s change in status.

  (a)Death.  Executive’s employment shall terminate upon Executive’s death.

  (b)Total Disability.  The Company may terminate Executive’s employment upon Executive’s becoming “Totally Disabled.”  For purposes of this Agreement, the term “Totally Disabled” means the Executive is unable to perform the normal duties and responsibilities Executive was performing prior to the onset of any sickness, injury or disability, with or without reasonable accommodation, for a period of one hundred eighty (180) consecutive days with no reasonable prospect of returning to a normal work schedule within a reasonable period of time.  A determination of whether the Executive is Totally Disabled shall be made by the Company in its sole discretion, based on then-available information provided by Executive.  If the Company has short-term and long-term disability plans, then the Executive’s compensation during the period in which Executive is Totally Disabled shall be exclusively governed by such plans.

  (c)Termination by the Company for Cause.  The Company may terminate Executive’s employment for Cause at any time after providing written notice to Executive, if after providing Executive with notice of the breach, Executive fails to cure the breach, if curable, within seven (7) days after receipt of the notice of breach.  For purposes of this Agreement, the term “Cause” shall mean:

  (i)conviction or plea of no lo contendere of any felony;

  (ii)deliberate and repeated refusal to perform the customary and legal employment duties reasonably related to Executive’s Position (other than as a result of vacation, sickness, illness or injury);

  (iii)in the good faith judgment of the Company, fraud or embezzlement of Company property or assets;

  (iv)willful misconduct or gross negligence with respect to the Company or any of its subsidiaries that may, in the good faith judgment of the Company, result in a breach of trust or have a material adverse effect on the Company; or

  (v)a breach or violation of any provision of this Agreement.

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  (d)Termination by the Company without Cause.  The Company may terminate Executive’s employment without Cause at any time after providing written notice to Executive.  A termination of employment upon the Expiration Date shall not be deemed to be a termination without Cause.

  (e)Termination by Executive without Good Reason.  Executive may terminate Executive’s employment under this Agreement without Good Reason after providing not less than sixty (60) days’ advance written notice to the Company.

  (f)Termination by Executive with Good Reason.  Executive may terminate Executive’s employment under this Agreement for Good Reason.  For purposes of this Agreement, “Good Reason” shall mean termination by the Executive within ninety (90) days of the initial existence of one of the conditions described below which occurs without the Executive’s consent:  (i) a material diminution in the Executive’s Base Salary; (ii) material diminution in the Executive’s authority, duties, or responsibilities as compared to those on the date of this Agreement; (iii) a change of more than 75 miles in the geographic location at which the Executive must perform the services under this Agreement; (iv) any other action or inaction that constitutes a material breach of the Agreement by the Company.  In order to terminate for Good Reason, the Executive must provide notice to the Company of the existence of the applicable condition described above within thirty (30) days of the initial existence of the condition, upon the notice of which the Company must be provided a period of sixty (60) days during which it may remedy the condition and not be required to pay any amounts as set forth in Section 6 below for a Termination by Executive with Good Reason.  A termination of employment upon the Expiration Date shall not be deemed to be a termination by Executive for Good Reason.

  (g)Termination Upon Expiration of the Agreement.  Unless terminated earlier pursuant to this Agreement, this Agreement shall automatically expire on the Expiration Date and Executive’s employment shall terminate as of such date.  For the avoidance of doubt, no severance or other termination benefits shall be payable to Executive in connection with termination of Executive’s employment or expiration of this Agreement, in either case, as of the Expiration Date, except for those payments and benefits set forth in Section 6 below.

  6.Compensation Following Termination of Employment

  Upon termination of Executive’s employment under this Agreement, Executive (or Executive’s designated beneficiary or estate, as the case may be) shall be entitled to receive the following compensation:

  (a)Earned but Unpaid Compensation, Expense Reimbursement.  The Company shall pay Executive any accrued but unpaid Base Salary for services rendered to the date of termination, any accrued but unpaid expenses required to be reimbursed under this Agreement, and any vacation accrued but unused to the date of termination.

  (b)Other Compensation and Benefits.  Except as may be provided under this Agreement,

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  (i)any benefits to which Executive may be entitled pursuant to the plans, policies and arrangements referred to in Section 4 above shall be determined and paid in accordance with the terms of such plans, policies and arrangements, and

  (ii)Executive shall have no right to receive any other compensation, or to participate in any other plan, arrangement or benefit, with respect to future periods after such termination or resignation.

  7.Additional Compensation Payable Following Termination Without Cause or by Executive for Good Reason Prior to the Expiration Date

  (a)Requirements for Additional Compensation.  In addition to the compensation set forth in Section 6 above, Executive will receive the additional compensation set forth in subsection (b) below, if the following requirements are met:

  (i)Executive’s employment is terminated prior to the Expiration Date by the Company without Cause pursuant to Section 5(d) or prior to the Expiration Date Executive terminates employment for Good Reason pursuant to Section 5(f);

  (ii)Executive strictly abides by the restrictive covenants set forth in Section 8 below; and

  (iii)Executive executes (and does not revoke) a separation agreement and release in a form satisfactory to the Company on or after Executive’s employment termination date, but no later than the date required by the Company (which shall not be later than 60 days following Executive’s termination).

  (b)Additional Compensation.  The Company shall provide Executive with the following compensation and benefits:

  (i)An amount equal to [●] months of Executive’s then current Base Salary, paid in a lump sum within seventy (70) days following Executive’s termination;

  (ii)An amount equal to Executive’s Target Annual Bonus for the year in which the termination occurs, paid in a lump sum within seventy (70) days following Executive’s termination;

  (iii)All the outstanding equity awards granted to Executive by the Company or any affiliates shall become immediately vested in full as of the date of Executive’s termination, provided that this acceleration provision shall not apply to any equity award that has not been outstanding for at least twelve (12) months as of the date of Executive’s termination of employment; plus

  (iv)Subject to (x) Executive’s timely election of continuation coverage under COBRA, and (y) Executive’s continued copayment of premiums at the same level and cost to Executive as if Executive were an employee of the Company (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars), continued payment by the Company of Executive’s health, dental, and 

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  vision insurance coverage during the eighteen (18) month period following the date of termination to the same extent that the Company paid for such coverage immediately prior to the date of termination, in a manner intended to avoid any excise tax under Section 4980D of the Internal Revenue Code, subject to the eligibility requirements and other terms and conditions of such insurance plans then in place.  Notwithstanding the foregoing, the Company’s obligation to pay for any portion of the cost of the premium for such COBRA coverage pursuant to this Section 7(b)(iv) shall not apply for any month during which Executive is eligible to receive subsidized COBRA continuation coverage pursuant to the requirements of the American Rescue Plan Act of 2021, or similar applicable legislation.

  8.Restrictive Covenants

  Concurrently with the execution of this Agreement, Executive shall execute a confidentiality agreement with the Company, in the form attached as Exhibit C hereto (the “Confidentiality Agreement”).  Executive agrees that during the course of employment with the Company, Executive has and will come into contact with and have access to various forms of confidential information and trade secrets, which are the property of the Company.  Executive agrees to comply with terms of any confidentiality, non-disclosure or similar agreements between Executive and the Company and any affiliates.

  9.Withholding of Taxes

  The Company shall withhold from any compensation and benefits payable under this Agreement all applicable federal, state, local, or other taxes.

  10.No Claim Against Assets

  Nothing in this Agreement shall be construed as giving Executive any claim against any specific assets of the Company or as imposing any trustee relationship upon the Company in respect of Executive.  The Company shall not be required to establish a special or separate fund or to segregate any of its assets in order to provide for the satisfaction of its obligations under this Agreement.  Executive’s rights under this Agreement shall be limited to those of an unsecured general creditor of the Company and its affiliates.

  11.Successors and Assigns

  Except as otherwise provided in this Agreement, this Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective heirs, representatives, successors and assigns.  The Company agrees that in the event the Company engages in any corporate transaction in which it is not the surviving entity, it will require any successor to the Company to be bound by this Agreement.  The rights and benefits of Executive under this Agreement are personal to Executive’s and no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; provided, however, that nothing in this Section 11 shall preclude Executive from designating a beneficiary or beneficiaries to receive any benefit payable on Executive’s death.

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  12.Entire Agreement; Amendment

  Other than the Confidentiality Agreement, the Equity Plan and Restricted Stock Unit Agreement and notice of grant of the RSUs, and any other agreements and plans related to any equity granted to Executive by the Company or an affiliate, all of which shall remain in full force and effect, this Agreement, together with all exhibits hereto, shall supersede any and all existing oral or written agreements, representations, or warranties between Executive and the Company or any of its subsidiaries or affiliated entities relating to the terms of Executive’s employment.  This Agreement may not be amended except by a written agreement signed by both Parties and, in the case of the Company, signed by an officer or director of the Company.

  13.Governing Law

  This Agreement shall be governed by and construed in accordance with the domestic substantive laws of the State of Florida, without giving effect to any conflicts or choice of laws rule or provision that would result in the application of the domestic substantive laws of any other jurisdiction.  Any dispute under this Agreement shall be brought in state or federal court in Palm Beach County, Florida.  Executive agrees and acknowledges that this is a proper and convenient forum and will not raise objections to this venue based on inconvenient forum, improper venue or similar grounds.

  14.Section 409a

  (a)Although the Company does not guarantee the tax treatment of any payments under the Agreement, the intent of the Parties is that the payments and benefits under this Agreement be exempt from, or comply with, Section 409A of the Internal Revenue Code of 1986, as amended, and all Treasury Regulations and guidance promulgated thereunder (“Code Section 409A”) and to the maximum extent permitted the Agreement shall be limited, construed and interpreted in accordance with such intent.  In no event whatsoever shall the Company or its affiliates or their respective officers, directors, employees or agents be liable for any additional tax, interest or penalties that may be imposed on Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

  (b)Notwithstanding any other provision of this Agreement to the contrary, to the extent that any reimbursement of expenses constitutes “deferred compensation” under Code Section 409A, such reimbursement shall be provided no later than December 31 of the year following the year in which the expense was incurred.  The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year.  The amount of any in-kind benefits provided in one year shall not affect the amount of in-kind benefits provided in any other year.

  (c)For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), the right to receive payments in the form of installment payments shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment shall at all times be considered a separate and distinct payment.  Whenever a payment under this Agreement may be paid within a 

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  specified period, the actual date of payment within the specified period shall be within the sole discretion of the Company.

  (d)Notwithstanding any other provision of this Agreement to the contrary, if at the time of Executive’s separation from service (as defined in Code Section 409A), Executive is a “Specified Employee,” then the Company will defer the payment or commencement of any nonqualified deferred compensation subject to Code Section 409A payable upon separation from service (without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date that is six (6) months following separation from service or, if earlier, the earliest other date as is permitted under Code Section 409A (and any amounts that otherwise would have been paid during this deferral period will be paid in a lump sum on the day after the expiration of the six (6) month period or such shorter period, if applicable).  Executive will be a “Specified Employee” for purposes of this Agreement if, on the date of Executive’s separation from service, Executive is an individual who is, under the method of determination adopted by the Company designated as, or within the category of employees deemed to be, a “Specified Employee” within the meaning and in accordance with Treasury Regulation Section 1.409A-1(i).  The Company shall determine in its sole discretion all matters relating to who is a “Specified Employee” and the application of and effects of the change in such determination.

  (e)Notwithstanding anything in this Agreement or elsewhere to the contrary, a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that constitute “non-qualified deferred compensation” within the meaning of Code Section 409A upon or following a termination of the Employee’s employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service” and the date of such separation from service shall be the date of termination for purposes of any such payment or benefits.

  15.Limitation on Payments

  (a)In the event that any payments and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code, and (ii) but for this Section 15, would be subject to the excise tax imposed by Section 4999 of the Code, then any post-termination severance benefits payable under this Agreement or otherwise will be either:

  (i)delivered in full, or

  (ii)delivered as to such lesser extent which would result in no portion of such benefits being subject to excise tax under Section 4999 of the Code,

  (iii)whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, 

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  notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

  (b)If a reduction in severance and other benefits constituting “parachute payments” is necessary so that benefits are delivered to a lesser extent, reduction will occur in the following order: (i) reduction of cash payments; (ii) cancellation of accelerated vesting of equity awards (by cutting back performance-based awards first and then time-based awards, based on reverse order of vesting dates (rather than grant dates)), if applicable; and (iii) reduction of employee benefits.

  (c)Unless the Company and Executive otherwise agree in writing, any determination required under this Section 15 will be made in writing by the Company’s independent public accountants or by such other person or entity to which the parties mutually agree (the “Firm”), whose determination will be conclusive and binding upon Executive and the Company.  For purposes of making the calculations required by this Section 15, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section.  The Company will bear all costs the Firm may incur in connection with any calculations contemplated by this Section 15.

  16.Notices

  Any notice, consent, request or other communication made or given in connection with this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by nationally recognized overnight courier services, by registered or certified mail, return receipt requested, by facsimile or by hand delivery, to those listed below at their following respective addresses or at such other address as each may specify by notice to the others:

  To the Company:

  [●]

  To Executive:

  [●]

  17.Miscellaneous

  (a)Waiver.  The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

  (b)Separability.  If any term or provision of this Agreement above is declared illegal or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such term or provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect.

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  (c)Headings.  Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Agreement.

  (d)Rules of Construction.  Whenever the context so requires, the use of the singular shall be deemed to include the plural and vice versa.

  (e)Counterparts.  This Agreement may be executed via electronic signature, PDF, transmitted by hand delivery, regular or overnight mail, facsimile or e-mail, and in any number of counterparts, each of which so executed shall be deemed to be an original, and such counterparts will together constitute but one Agreement.

   

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  IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the day and year set forth below.

  						
	TERRAN ORBITAL CORPORATION
	 
	[●]

	By:
	 
	 
	By:
	 

	Name: [●]
Title:  [●]
	 
	Date:

	Date:
	 
	Address:
	 

	 
	 
	 

   

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PROMISSORY NOTE
	$250,000
	Miami, Florida

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	August 8, 2019

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FOR VALUE RECEIVED, the undersigned borrower (the “Borrower”) promises to pay to Lee Aerospace, Inc., a Kansas corporation (the “Lender”), at its principal office the principal sum of Two Hundred Fifty Thousand Dollars ($250,000), together with interest on the outstanding principal amount at the rate of Five Percent (5.0%) per annum (computed on the basis of actual calendar days elapsed and a year of three hundred sixty-five (365) days), or, if less, at the highest rate of interest then permitted under applicable law. Interest shall commence with the date hereof and shall continue to accrue on the outstanding principal until paid in accordance with the provisions hereof. If any interest is determined to be in excess of the then legal maximum rate, then that portion of each interest payment representing an amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied against the principal of the obligations evidenced by this Promissory Note (this “Note”).
1.Maturity. Unless sooner paid in accordance with the terms hereof, the entire unpaid principal amount and all unpaid accrued interest of this Note shall become fully due and payable on the earlier of (i) the one (1) year anniversary of the date hereof, or (ii) the acceleration of the maturity of this Note pursuant to Section 2.
2.Events of Acceleration.
(a)The entire unpaid principal amount of this Note and all then accrued and unpaid interest of this Note shall become fully due and payable upon the earliest of:

(i)the closing of aggregate proceeds of at least One Million Dollars ($1,000,000) in new equity financing by the Borrower;
(ii)(ii)immediately prior to the first filing by the Borrower of a registration statement under the Securities Act of 1933, as amended;
(iii)the filing of a petition by or against the Borrower under any provision of the Bankruptcy Reform Act (Title 11 of the United States Code), as amended or recodified from time to time, or under any other law relating to bankruptcy, insolvency, reorganization or other relief for debtors;
(iv)the appointment of a receiver, trustee, custodian or liquidator of or for any part of these assets or property of the Borrower;
(v)immediately prior to the closing of an acquisition of the Borrower, whether by merger or the purchase of all of its outstanding stock or all (or substantially all) of its assets, by an unrelated third party;

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(vi)the execution by the Lender of a general assignment for the benefit of creditors; or
(vii)the occurrence of an event of default under either of the Stock Pledge Agreements (as defined below).

3.Form of Payment; Prepayment. All payments of principal and interest on this Note shall be made without offset or deduction in lawful tender of the United States to the Lender. All payments on this Note shall be applied first to the payment of accrued and unpaid interest, and thereafter to the payment of principal. Prepayment of the principal balance of this Note, together with all accrued and unpaid interest, may be made in whole or in part at any time without penalty.
4.Security. The Borrower’s obligations under this Note shall be secured by a first-priority security interest in Fifty-Six Thousand Two Hundred Fifty (56,250) shares of the Lender’s Common Stock held and owned of record, respectively, by each of Paul Antonio Pereira and John M. Cook II (collectively, the “Shares”). The Shares shall be pledged pursuant to the Stock Pledge Agreements of even date herewith (in the form attached hereto as Exhibit A, collectively, the “Stock Pledge Agreements”), by and between, respectively, (i) the Borrower and Paul Antonio Pereira, and (ii) the Borrower and John M. Cook II, all terms of which are incorporated herein by this reference.
5.Default. For purposes of this Note, the failure of the Borrower to pay when due the principal balance and accrued interest under this Note shall constitute an “Event of Default.” If an Event of Default occurs, all indebtedness under this Note shall become immediately due and payable without any action on the part of the Lender, and the Borrower shall immediately pay to the Lender all such amounts.
6.Collection and Attorneys’ Fees. If any action is instituted to collect any indebtedness under this Note, then the Borrower promises to pay all reasonable costs and expenses, including reasonable attorneys’ fees, incurred by the Lender in connection with such action.
7.Assignment. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Notwithstanding the foregoing, neither the Lender nor the Borrower may assign, pledge or otherwise transfer this Note without the prior written consent of the other party.
8.Governing Law. This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of Delaware, without giving effect to principles of conflicts of law thereof.
9.Conflicting Agreements. In the event of any inconsistencies between the terms of this Note and the terms of any other document related to the loan evidenced by this Note, the terms of this Note shall prevail.

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10.Amendment. Any term of this Note may be amended and the observance of any term of this Note may be waived only with the written consent of the Lender and the Borrower.

[Signature Page Follows.]
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IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed and delivered as of the date first above written.
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	BORROWER

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	LECTREFY, INC.

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	By: /s/ Paul Antonio Pereira

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	Name: Paul Antonio Pereira

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	Title: Chief Executive Officer

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	Acknowledged and Agreed:
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	LENDER
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	LEE AEROSPACE, INC.
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	By:/s/ James Lee
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	Name: James Lee
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	Title: Chief Executive Officer
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EXHIBIT A
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this “Pledge Agreement”) is made by [Paul Antonio Pereira / John M. Cook II] (“Pledgor”), in favor of Lee Aerospace, Inc., a Kansas corporation (“Pledgee”), with its principal place of business at 9323 E. 34th St. N., Wichita, Kansas 67226.
WHEREAS, Lectrefy, Inc., a Delaware corporation (the “Borrower”), has concurrently herewith executed that certain Promissory Note, dated August 8 (the “Note”), in favor of Pledgee in the amount of Two Hundred Fifty Thousand Dollars ($250,000); and
WHEREAS, Pledgee is willing to accept the Note from Borrower, but only upon the condition, among others, that Pledgor shall have executed and delivered to Pledgee this Pledge Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, Pledgor hereby agrees as follows:
1.As security for the full and prompt payment when due (whether by stated maturity or otherwise) of all indebtedness of the Borrower to Pledgee created under the Note, Pledgor hereby pledges to Pledgee, and grants to Pledgee, a security interest in Fifty-Six Thousand Two Hundred Fifty (56,250) shares of the Borrower’s Common Stock, which are held and owned of record by Pledgor (the “Pledged Shares”), and all dividends, cash, instruments and other proceeds from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares (the “Pledged Collateral”). Pledgor represents and warrants that, except as provided for herein, the Pledged Shares have not been, and will not be, pledged or used as collateral for any other purpose.
2.At any time a default exists under the Note, Pledgee in its name or in the name of its nominee or of Pledgor may: (i) collect by legal proceedings or otherwise all dividends (except cash dividends), interest, principal payments and other sums now or hereafter payable upon or on account of the Pledged Collateral; (ii) enter into any extension, reorganization, deposit, merger or consolidation agreement, or any agreement relating to or affecting the Pledged Collateral, and in connection therewith may deposit or surrender control of the Pledged Collateral thereunder, accept other property in exchange for the Pledged Collateral and do and perform such acts and things as it may deem proper, and any money or property received in exchange for the Pledged Collateral shall be applied to the indebtedness or thereafter held by it pursuant to the provisions hereof; and (iii) insure, process and preserve the Pledged Collateral.

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3.At the option of Pledgee, and without necessity of demand or notice, all or any part of the indebtedness of the Borrower under the Note shall immediately become due and payable irrespective of any agreed maturity, upon the happening of any of the following events: (i) material failure to keep or perform any of the terms or provisions of this Pledge Agreement; (ii) the Borrower’s failure to pay any installment of principal or interest on the Note when due; (iii) the levy of any attachment, execution or other process against the Pledged Collateral; or (iv) the insolvency, commission of an act of bankruptcy, general assignment for the benefit of creditors, filing of any petition in bankruptcy or for relief under the provisions of Title 11 of the United States Code of, by, or against Pledgor or the Borrower.
4.In the event of the nonpayment of any indebtedness when due under the Note, or upon the happening of any of the events specified in the last preceding section, Pledgee may apply, set off, collect or sell the Pledged Collateral in one or more sales, or take such steps as may be necessary to take ownership of the Pledged Shares or liquidate and reduce the Pledged Shares to cash in the hands of Pledgee in whole or in part.
5.The proceeds of the sale of any of the Pledged Collateral and all sums received or collected by Pledgee from or on account of the Pledged Collateral shall be applied by Pledgee to the payment of the indebtedness under the Note or any part thereof. The Borrower then shall pay any remaining balance of the Note to Pledgor; provided, however, that, if such disposition is at private sale, then the purchase price of the Pledged Collateral shall be mutually agreed to by Pledgee and Pledgor or, if the parties cannot agree upon a purchase price, then at a purchase price established by an independent appraiser knowledgeable of the value of the Pledged Collateral, mutually selected by Pledgor and the Pledgee, with the appraisal to be rendered within thirty (30) days of the appointment of the appraiser.
6.If any provision of this Pledge Agreement is held to be unenforceable for any reason, then it shall be adjusted, if possible, rather than voided in order to achieve the intent of the parties to the extent possible.
7.This Pledge Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware as applied to contracts made and performed entirely within the State of Delaware by residents of such State.

[Signature page follows.]
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IN WITNESS WHEREOF, this Pledge Agreement has been executed by the Pledgor on August 8, 2019.
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	PLEDGOR:

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	By:

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	[Paul Antonio Pereira / John M. Cook II]

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	Acknowledged and Agreed:
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	LEE AEROSPACE, INC.
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	By:
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	Name: James Lee
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	Title: Chief Executive Officer
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	LECREFY, INC.
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	By:
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	Name: [Paul Antonio Pereira / John M. Cook II]
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	Title: Chief Executive Officer
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