Document:

Exhibit 10.3

 

NOTICE TO RESIDENTS OF THE UNITED STATES

 

THE OFFER AND SALE OF THIS SECURITY INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM. THIS INSTRUMENT HAS NOT BEEN APPROVED FOR TRADING BY THE U.S. COMMODITY FUTURES TRADING COMMISSION (THE “CFTC”) UNDER THE COMMODITY EXCHANGE ACT OF 1936, AS AMENDED (THE “CEA”).

 

 

EXO FOUNDATION, INC.

 

SAFE-T

 

(Simple Agreement for Future Equity with Token Allocation)

 

THIS CERTIFIES THAT in exchange for the payment by the purchaser set forth in the signature block (the “Signature Block”) to this Agreement (the “Purchaser”) for the purchase amount set forth in Exhibit A hereto (the “Purchase Amount”) on or about the date set forth in the Signature Block, EXO Foundation, Inc., a Delaware public benefit corporation (the “Company”), hereby issues to the Purchaser the right to certain shares of the Company’s Capital Stock with a Token allocation option, subject to the terms set forth below.

 

The “Discount Rate” is Eighty-Five Percent (85%).

 

See Section 2 for certain additional defined terms.

 

		1.	
Events

 

(a) Equity Financing. If there is an Equity Financing before the expiration or termination of this instrument, the Company will automatically issue to the Purchaser a number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the price per share of the Standard Preferred Stock sold in the Equity Financing. In connection with the issuance of Safe Preferred Stock by the Company to the Purchaser pursuant to this Section 1(a):

 

(i) The Purchaser will execute and deliver to the Company all transaction documents related to the Equity Financing; provided, that such documents are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock if applicable, and provided further, that such documents have customary exceptions to any drag-along applicable to the Purchaser, including, without limitation, limited representations and warranties, and limited liability and indemnification obligations on the part of the Purchaser.

 

(b) Token Allocation. At the Company’s election in its sole discretion, the Purchaser shall have the right to purchase a number of units of CivX Tokens (the “Tokens” or “CivX”) to be used in a software network platform or application built by the Company and its affiliates (the “Network”), equal to the Purchase Amount divided by the Price Per Token. The Company will provide the Purchaser with notice of an impending Token Sale, in accordance with Section 9(c), at least ten (10) business days prior to the commencement of such Token Sale. If the Purchaser wishes to exercise its right to purchase Tokens in a Token Sale pursuant to this Section 1(b), the Purchaser must deliver notice of its intention to exercise such right to Company, in accordance with Section 9(c), at least one (1) business day prior to the commencement of such Token Sale, which notice shall indicate whether the Purchaser is exchanging this instrument or is paying new money as consideration for the purchase price payable for such Tokens. In connection with the purchase of Tokens pursuant to this Section 1(b), the Purchaser will execute and deliver to the Company all transaction documents related to the Token Sale (the “Token Sale Documents”); provided, that such Token Sale Documents may contain additional or alternative terms and conditions governing the Token Sale (the “Final Token Sale Terms”). Such Final Token Sale Terms will supersede the disclosures, terms and conditions previously provided, made available to or discussed with the Purchaser, if any, except that the economic terms for the distribution of the Tokens (including the Price Per Token) shall be as set forth herein and the method of payment for the Token by, and procedures for delivery of the Tokens to, the Purchaser shall be determined by the Company in its sole discretion on or about the time of the Token Sale. The Purchaser acknowledges that the terms of sale of the Tokens, until superseded by the Final Token Sale Terms, are subject to change on an ongoing basis in the sole and absolute discretion of the Company as and to the extent the Company deems necessary or advisable in connection with the Token Sale. In addition, this Section 1(b) shall not apply (i) to any Token Sale completed pursuant to a registration statement filed with the U.S. Securities and Exchange Commission within twelve (12) months of the date of this instrument; and (ii) if the representations and warranties of the purchasers of Tokens set forth in the Token Sale Documents are not true with respect to the Purchaser at the time of the Token Sale, or the Purchaser is otherwise not eligible to participate in the Token Sale under the terms of the Token Sale.

 

 

(c) Liquidity Event. If there is a Liquidity Event before the expiration or termination of this instrument, the Purchaser will receive a cash payment equal to the Purchase Amount. The Purchase Amount will be due and payable by the Company to the Purchaser immediately prior to, or concurrent with, the consummation of the Liquidity Event. If there are not enough funds to pay the Purchaser and holders of other SAFE, SAFE-Ts, and other convertible instrument holders (collectively, the “Cash-Out Purchasers”) in full, then all of the Company’s available funds will be distributed with equal priority and pro rata among the Cash-Out Purchasers in proportion to their Purchase Amounts, and the Cash-Out Purchasers will automatically receive the number of shares of Common Stock equal to the remaining unpaid Purchase Amount divided by the Liquidity Price. In connection with a Change of Control intended to qualify as a tax-free reorganization, the Company may reduce, pro rata, the Purchase Amounts payable to the Cash-Out Purchasers by the amount determined by its board of directors in good faith to be advisable for such Change of Control to qualify as a tax-free reorganization for U.S. federal income tax purposes, and in such case, the Cash-Out Purchasers will automatically receive the number of shares of Common Stock equal to the remaining unpaid Purchase Amount divided by the Liquidity Price.  

 

(d) Dissolution Event. If there is a Dissolution Event before this instrument expires or terminates, the Company will pay an amount equal to the Purchase Amount, due and payable to the Purchaser immediately prior to, or concurrent with, the consummation of the Dissolution Event. As an obligation to a general unsecured creditor, the Purchase Amount will be paid prior and in preference to any Distribution of any of the assets of the Company to holders of outstanding Capital Stock by reason of their ownership thereof. If immediately prior to the consummation of the Dissolution Event, the assets of the Company legally available for distribution to the Purchaser and all holders of all other SAFE, SAFE-Ts, and other convertible instrument holders (the “ Dissolving Purchasers”), as determined in good faith by the Company’s board of directors, are insufficient to permit the payment to the Dissolving Purchasers of their respective Purchase Amounts, then, subject to legally required payments by the Company (e.g. the repayment of secured creditors), the entire assets of the Company legally available for distribution will be distributed with equal priority and pro rata among the Dissolving Purchasers in proportion to the Purchase Amounts they would otherwise be entitled to receive pursuant to this Section 1(d). 

 

(e) Termination. This instrument will expire and terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with this instrument) upon (i) the issuance of stock to the Purchaser pursuant to Section 1(a); (ii) the sale of Tokens to the Purchaser pursuant to Section 1(b) where the Purchaser has elected to exchange this instrument as consideration for such Token; (iii) the payment, or setting aside for payment, of amounts due to the Purchaser pursuant to Section 1(c) or Section 1(d); or (iv) Twenty-Four (24) months from the Effective Date of this Agreement (“Event Deadline”).  In the event this Agreement expires due to the Event Deadline, the Parties agree to the procedure and terms following the Signature Block to this Agreement under Exhibit A. 

 

		2.	
Definitions

 

“Capital Stock” means the capital stock of the Company, including, without limitation, the “Common Stock” and the “Preferred Stock.”

 

“Change of Control” means (i) a transaction or series of related transactions in which any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly, of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of members of the Company’s board of directors; (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity; or (iii) a sale, lease or other disposition of all or substantially all of the assets of the Company.

 

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 “Company Capitalization” means the sum, as of immediately prior to the Equity Financing, of: (i) all shares of Capital Stock (on an as-converted basis) issued and outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (a) this instrument, (b) all other SAFE-Ts, and (c) convertible promissory notes; and (ii) all shares of Common Stock reserved and available for future grant under any equity incentive or similar plan of the Company, and/or any equity incentive or similar plan to be created or increased in connection with the Equity Financing.

 

“Conversion Price” means the Discount Price.

 

“Discount Price” means the price per share of the Standard Preferred Stock sold in the Equity Financing multiplied by the Discount Rate.

 

 “Disqualified Jurisdiction” means the People’s Republic of China, and New York State.

 

“Dissolution Event” means (i) a voluntary termination of operations of the Company; (ii) a general assignment for the benefit of the Company’s creditors; or (iii) any other liquidation, dissolution or winding up of the Company (excluding a Liquidity Event), whether voluntary or involuntary.

 

“Distribution” means the transfer to holders of Capital Stock by reason of their ownership thereof of cash or other property without consideration, whether by way of dividend or otherwise, other than dividends on Common Stock payable in Common Stock, or the purchase or redemption of Capital Stock by the Company or its subsidiaries for cash or property other than: (i) repurchases of Common Stock held by employees, officers, directors or consultants of the Company or its subsidiaries pursuant to an agreement providing, as applicable, a right of first refusal or a right to repurchase shares upon termination of such service provider’s employment or services; or (ii) repurchases of Capital Stock in connection with the settlement of disputes with any stockholder.

 

“Equity Financing” means a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells Preferred Stock at a fixed pre-money valuation with aggregate proceeds of at least $5,000,000 (excluding any SAFE-Ts, SAFEs, or other convertible securities converting pursuant to the Equity Financing).

 

“Initial Public Offering” means the closing of the Company’s first firm commitment underwritten initial public offering of Common Stock pursuant to a registration statement filed under the Securities Act.

 

“Liquidity Capitalization” means the number, as of immediately prior to the Liquidity Event, of shares of Capital Stock (on an as-converted basis) outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding: (i) shares of Common Stock reserved and available for future grant under any equity incentive or similar plan; (ii) this instrument; (iii) other SAFE-Ts; and (iv) convertible promissory notes.

 

“Liquidity Event” means a Change of Control or an Initial Public Offering.

 

“Liquidity Price” means the price per share equal to the Valuation Cap divided by the Liquidity Capitalization.

 

“Price Per Token” means the fair market value of an individual Token at the time of the Token Sale; provided, however, that if there is no public market for the Tokens at the time of the Token Sale, the price per Token shall be determined by an independent third party valuation firm or expert, as mutually agreed between Company and Purchaser. 

 

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 “SAFE-T” means an instrument containing a future right to shares of Capital Stock with a Token allocation option, similar in form and content to this instrument, purchased by Purchasers for the purpose of funding the Company’s business operations, provided, that for purposes of the foregoing criteria, the existence or absence of a right to purchase Tokens in a Token Sale shall have no bearing on whether an instrument is similar in form and content to this instrument.

 

“Safe Preferred Stock” means the shares of a series of Preferred Stock issued to the Purchaser in an Equity Financing, having the identical rights, privileges, preferences and restrictions as the shares of Standard Preferred Stock, other than with respect to: (i) the per share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which will equal the Conversion Price; and (ii) the basis for any dividend rights, which will be based on the Conversion Price.

 

 “Seller” means the Company, a wholly owned subsidiary of the Company, a Designated Non-profit Foundation (as defined below), or a wholly owned subsidiary of a Designated Non-profit Foundation sells or issues Tokens to the Purchaser pursuant to this Agreement. As used herein, a “Designated Non-profit Foundation” is a non-profit foundation that transfers a substantial portion of the Tokens sold in a Token Sale to the Company for no or de minimis consideration, or for non-cash or part cash and part non-cash consideration in connection with its Token Sale.

 

“Subsequent Convertible Securities” means convertible securities that the Company may issue after the issuance of this instrument with the principal purpose of raising capital and for substantially similar forms of consideration, including but not limited to, other SAFE-Ts, convertible debt instruments and other convertible securities.  Subsequent Convertible Securities excludes: (i) options issued pursuant to any equity incentive or similar plan of the Company; (ii) convertible securities issued or issuable to (A) banks, equipment lessors, financial institutions or other persons engaged in the business of making loans pursuant to a debt financing or commercial leasing or (B) suppliers or third party service providers in connection with the provision of goods or services pursuant to transactions; (iii) convertible securities issued or issuable in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic partnerships; and (iv) convertible securities issued for consideration for cash or convertible virtual currencies.

 

“Standard Preferred Stock” means the shares of a series of Preferred Stock issued to the Purchasers investing new money in the Company in connection with the initial closing of the Equity Financing.

 

“Token Sale” means a bona fide transaction or series of transactions, pursuant to which the Company, a wholly owned subsidiary of the Company, a Designated Non-profit Foundation, or a wholly owned subsidiary of a Designated Non-profit Foundation elects to sells Tokens to the Purchaser pursuant to Section 1(a). 

 

“Use Restriction Period” means 12 months following the Token Sale.

 

3. Tax Treatment  For U.S. federal, state and local income tax purposes only, each of the Company and the Purchaser agree to treat this Agreement as a forward contract, and will not take any position on any tax return, report, statement or other tax document that is inconsistent with such treatment, unless otherwise required by a change in law occurring after the date hereof, a closing agreement with an applicable tax authority or a final non-appealable judgment of a court of competent jurisdiction.

 

4. “MFN” Amendment Provision. If the Company issues any Subsequent Convertible Securities prior to termination of this SAFE-T, the Company will promptly provide the Investor with written notice thereof, together with a copy of all documentation relating to such Subsequent Convertible Securities and, upon written request of the Investor, any additional information related to such Subsequent Convertible Securities as may be reasonably requested by the Investor.  In the event the Investor determines that the terms of the Subsequent Convertible Securities are preferable to the terms of this instrument, the Investor will notify the Company in writing. Promptly after receipt of such written notice from the Investor, the Company agrees to amend and restate this instrument to be identical to the instrument(s) evidencing the Subsequent Convertible Securities. 

 

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		5.	
Company Representations

 

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and has the power and authority to own, lease and operate its properties.

 

(b) To the knowledge of the Company, the execution, delivery and performance by the Company of this instrument is within the power of the Company and, other than with respect to the actions to be taken when equity is to be issued or the Tokens delivered to the Purchaser, has been duly authorized by all necessary actions on the part of the Company. This instrument constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. To the knowledge of the Company, it is not in violation of (i) its current certificate of incorporation or bylaws; (ii) any material statute, rule or regulation applicable to the Company; or (iii) any material indenture or contract to which the Company is a party or by which it is bound, where, in each case, such violation or default, individually, or together with all such violations or defaults, could reasonably be expected to have a material adverse effect on the Company.

 

(c) To the knowledge of the Company, the Company is an Eligible Contract Participant as defined in the CEA.

 

(d) To the knowledge of the Company, the performance and consummation of the transactions contemplated by this instrument do not and will not: (i) violate any material judgment, statute, rule or regulation applicable to the Company; (ii) result in the acceleration of any material indenture or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien upon any property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material permit, license or authorization applicable to the Company, its business or operations.

 

(e) To the knowledge of the Company no consents or approvals are required in connection with the performance of this instrument, other than: (i) the Company’s corporate approvals; (ii) any qualifications or filings under applicable securities laws; and (iii) necessary corporate approvals for the authorization of Capital Stock issuable pursuant to Section 1.

 

(f) To its knowledge, the Company owns or possesses (or can obtain on commercially reasonable terms) sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, processes and other intellectual property rights necessary for its business as now conducted and as currently proposed to be conducted, without any conflicts with, or infringement of, the rights of others.

 

(g) The Company is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act. The Company has been advised that the Purchaser Shares have not been registered under the Securities Act, or any U.S. state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable U.S. state securities laws or unless an exemption from such registration requirements is available. The Company is acquiring the Purchasers Shares for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and the Company has no present intention of selling, granting any participation in, or otherwise distributing the same. The Company has such knowledge and experience in financial and business matters that the Company is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing the Company’s financial condition, and is able to bear the economic risk of such investment for an indefinite period of time.

 

(h) The Company understands that the Company bears sole responsibility for any taxes as a result of the matters and transactions that are the subject of this instrument, and any future acquisition, ownership, use, sale or other disposition of Purchaser Shares held by the Company. To the extent permitted by law, the Company agrees to indemnify, defend and hold the Purchaser or any of its affiliates, employees or agents (including developers, auditors, contractors or founders) harmless for any claim, liability, assessment or penalty with respect to any taxes (other than any net income taxes of the Purchaser that result from the issuance of Purchaser Shares pursuant to this instrument) associated with or arising from the Company’s purchase of Purchaser Shares hereunder, or the use or ownership of Purchaser Shares.

 

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		6.	
Purchaser Representations

 

(a) The Purchaser has full legal capacity, power and authority to execute and deliver this instrument and to perform its obligations hereunder. This instrument constitutes a legal, valid and binding obligation of the Purchaser, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

 

(b) The Purchaser is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act. The Purchaser has been advised that this instrument and the underlying securities have not been registered under the Securities Act, or any U.S. state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable U.S. state securities laws or unless an exemption from such registration requirements is available. The Purchaser is purchasing this instrument and the securities or Tokens to be acquired by the Purchaser hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and the Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. The Purchaser has such knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing the Purchaser’s financial condition, and is able to bear the economic risk of such investment for an indefinite period of time.  To the extent permitted by law, the Purchaser agrees to indemnify, defend and hold the Company or any of its affiliates, employees or agents (including developers, auditors, contractors or founders) harmless for any claim, liability, assessment or penalty with respect to any failure to file any required notices, register the transactions contemplated by this Agreement, or take any other action required of the Purchaser under the Securities Act, the Securities Exchange Act of 1934, or the CEA.

 

(c) The Purchaser has been advised that this Agreement has not been approved for trading by the CFTC. The Purchaser represents that it is not purchasing this Agreement on the basis that it is a contract of sale of a commodity for future delivery (or option on such a contract), a swap or any other instrument subject to the CEA.

 

(d) The Purchaser understands that there is no guarantee that Tokens will ultimately be sold in a Token Sale for any specific price per Token, or at all. The Purchaser also understands there is no guarantee of any distribution of the Tokens, and the funds generated by this instrument may be retained by the Company for its own purposes, rather than committed solely to the development of the Network. The Purchaser has read and understands the preliminary technical white paper attached hereto as Exhibit B (the “White Paper”), and the risk factors attached hereto as Exhibit C (the “Risk Factors”). The Purchaser further acknowledges and understands that the White Paper and Risk Factors are subject to further revisions prior to being finalized in connection with the Token Sale.

 

(e) The Purchaser has such knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of entering into this instrument and of purchasing Tokens, including without limitation and acknowledgement and assumption of the risk that if delivered, the Tokens and the Network may not be broadly adopted, and the Tokens may decrease in value over time and/or lose all their monetary value.

 

(f)  The Purchaser has not relied on any representations or warranties made by the Company outside of this instrument, including, but not limited to, conversations of any kind, whether through oral or electronic communication. The Purchaser represents that it has adequate information on which to base its decision to purchase Tokens through this instrument, notwithstanding the fact that the terms of Token Sale are not yet final and may undergo changes before they are superseded by the Final Token Sale Terms. The Purchaser acknowledges that such potential changes may be significant and understands that the Final Token Sale Terms shall be at the sole and absolute discretion of the Company and will be binding on the Purchaser regardless of the extent, nature or impact of such changes, except that the economic terms for the distribution of the Tokens (including the Price Per Token) shall be as set forth herein and the method of payment for the Token by, and procedures for delivery of the Tokens to, the Purchaser shall be determined by the Company in its sole discretion on or about the time of the Token Sale.

 

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(g) The Purchaser understands that no federal or state agency or any other governmental authority has passed on or made any recommendation or endorsement of this Agreement or the Tokens or the fairness or suitability of this investment, nor has any governmental authority passed upon or endorsed the merits of this instrument.

 

(h) The Purchaser’s entry into this instrument complies with applicable laws and regulations in the Purchaser’s jurisdiction.

 

(i) The Purchaser understands that the Purchaser bears sole responsibility for any taxes as a result of the matters and transactions that are the subject of this instrument, and any future acquisition, ownership, use, sale or other disposition of Tokens held by the Purchaser. To the extent permitted by law, the Purchaser agrees to indemnify, defend and hold the Company or any of its affiliates, employees or agents (including developers, auditors, contractors or founders) harmless for any claim, liability, assessment or penalty with respect to any taxes (other than any net income taxes of the Company that result from the issuance of Tokens to the Purchaser pursuant to this instrument) associated with or arising from the Purchaser’s purchase of Tokens hereunder, or the use or ownership of Tokens.

 

(j) The Purchaser is not a resident of or is domiciled in any Disqualified Jurisdiction or purchasing the Tokens from a location in any Disqualified Jurisdiction.

 

(k) The Purchaser is not (i) a citizen or resident of a geographic area in which use of cryptographic tokens is prohibited by applicable law, decree, regulation, treaty, or administrative act; (ii) a citizen or resident of, or located in, a geographic area that is subject to U.S. or other applicable sanctions or embargoes; or (iii) an individual, or an individual employed by or associated with an entity, that is identified on the U.S. Department of Commerce’s Denied Persons or Entity List, the U.S. Department of Treasury’s Specially Designated Nationals or Blocked Persons Lists, or the U.S. Department of State’s Debarred Parties List. If Purchaser’s country of residence or other circumstances change such that the above representations are no longer accurate, the Purchaser will immediately notify Company.

 

(l) The Purchaser will not use the Tokens in connection with any activity that violates applicable laws in any relevant jurisdiction, including, but not limited to, use of the Tokens in connection with transactions that violate U.S. federal or state securities or commodity laws.

 

(m)  The Purchaser will at all times maintain control of the Purchaser’s wallet where any Tokens are stored, and the Purchaser will not share or disclose the account credentials associated with such wallet with any other party. If the Purchaser transfers Tokens into another wallet or vault, the Purchaser will likewise at all times maintain control of such other wallet or vault, and will not share or disclose the account credentials associated with such other wallet or vault with any other party.

 

(n) The Purchaser understands that the Token design remains under development, and that ongoing development efforts may result in material changes to the Company’s current design of the Token as outlined in the Company’s Whitepaper and other materials. Further, the Purchaser understands that the timing, the token allocation structure and other ongoing development plans of the Token Sale may be subject to change in the sole and absolute discretion of the Company.

 

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7. Lock-Ups & Other Features. If upon the conversion of this instrument the Purchaser is receiving Tokens, fifty percent (50%) of such Tokens (the “Locked-Up Tokens”) shall be subject to a lock-up for the Use Restriction Period, as defined above. During the Use Restriction Period, except as provided pursuant to this Section 7, the Purchaser will not be able to (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly the Locked-Up Tokens, or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Locked-Up Tokens; provided, however, that during the Use Restriction Period, the Purchaser may transfer or otherwise dispose of Locked-Up Tokens if such transfer or disposition is necessary to access or use services or functions of the Network.

 

Notwithstanding the foregoing, the Purchaser acknowledges that it may be necessary or advisable under applicable law for the Seller to require certain additional lockups, dribble out rules, or other features to apply to all Tokens upon delivery to the Purchaser. Any distribution of the Tokens by the Seller to the Purchaser shall be subject to these additional features and requirements as deemed necessary or advisable in the sole and absolute discretion of the Seller under then applicable law.

 

8. Assignment

 

(a) Subject to Section 8(c), the Purchaser shall not, by operation of law or otherwise, directly or indirectly (and shall not agree to) assign the benefit of this instrument (in whole or in part), or sell, transfer, declare a trust of, pledge, or otherwise dispose of in any manner whatsoever, any Tokens or any economic interest in any Tokens without the prior written consent of the Company, which will not be unreasonably withheld. Subject to Section 8(b), the Company shall not assign this instrument nor the rights contained herein, by operation of law or otherwise, without the prior written consent of the Purchaser, which will not be unreasonably withheld.

 

(b) The Company may assign this instrument in whole, without the consent of the Purchaser, (i) in connection with a reincorporation to change the Company’s domicile or a transfer by way of continuation of the company to another jurisdiction or (ii) to either a wholly-owned subsidiary of the Company or a Designated Non-profit Foundation, that is the seller of the Tokens in the Token Sale.

 

(c) The Purchaser shall be entitled, without the consent of the Company, after having given no less than three (3) Business Days’ prior written notice to the Company, to assign the benefit of this instrument (in whole or in part) or transfer any or all its obligations and liabilities under this instrument to any other entity that directly or indirectly, controls, is controlled by or is under common control with the Purchaser, including, without limitation, any general partner, managing member, officer or director of the Purchaser, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, the Purchaser (an “Assignee”), provided that the Assignee: (i) undertakes in writing to the Company to be bound by the Purchaser’s obligations and liabilities under this Agreement; (ii) warrants in writing to the Company that each of the Purchaser’s representations set forth in Section 6 and elsewhere in this instrument is true, accurate and not misleading as at the date of the assignment or transfer with respect to itself (as if each reference to the Purchaser is construed as a reference to the Assignee); and (iii) delivers such other documents to the Company relating to this instrument as the Company may reasonably request.

 

9. Miscellaneous

 

(a) Any provision of this instrument may be amended, waived or modified only upon the written consent of the parties.

 

(b) This instrument sets forth the entire agreement and understanding of the parties relating to the subject matter herein and supersedes all prior or contemporaneous disclosures, discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.

 

(c) Any notice required or permitted by this instrument will be deemed sufficient (i) when delivered personally or by overnight courier or sent by email to the relevant address listed on the signature page; or (ii) 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address listed on the signature page, as subsequently modified by written notice.

 

(d) In the event any one or more of the provisions of this instrument is for any reason held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this instrument operate or would prospectively operate to invalidate this instrument, then and in any such event, only those such provision(s) will be deemed null and void and will not affect any other provision of this instrument, and the remaining provisions of this instrument will remain operative and in full force and effect and will not be affected, prejudiced, or disturbed thereby.

 

(e) In the event that the Purchase Amount (or any portion thereof) is paid in any currency or property, including digital currencies, other than U.S. dollars, the value of the Purchase Amount (or the applicable portion thereof) shall be deemed to be the Adjusted Value as defined in Exhibit A hereto.

 

(f) All rights and obligations hereunder will be governed by the laws of the state of Delaware, without regard to the conflicts of law provisions of such jurisdiction.

 

(g) The Purchaser is not entitled, as a holder of this instrument, to vote or receive dividends or be deemed the holder of Capital Stock for any purpose, nor will anything contained herein be construed to confer on the Purchaser, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action or to receive notice of meetings, or to receive subscription rights or otherwise until shares have been issued upon the terms described herein.

 

 

 (Signature page follows)

 

8

 

IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly executed and delivered as of the date written below.

 

	
Effective Date:

	
November 2nd, 2018

 

	

COMPANY:

 EXO FOUNDATION, INC.

 

	 	 	
INVESTOR:

 ROKK3R INC.

	 
	 	 	 	 	 
	
Signed:

	
/s/ Salim Ismail

	 	 	
Signed:

	
/s/ Nabyl Charania

	
Name:

	
Salim Ismail

	 	 	
Name:

	
Nabyl Charania

	
Title:

	
Chairman

	 	 	
Title:

	
CEO

	 	 	 	 	 	
(add title if signing on behalf of an entity)

	
Address:

	
3500 S DuPont Hwy

	 	 	
Address:

	
2121 NW 2nd Ave.

	 	
Suite YY 102

	 	 	 	
Suite #203

	 	
Dover, DE  19901

	 	 	 	
Miami, FL 33127

	 	
USA

	 	 	 	
USA

	
Email:

	
salim@exo.team

	 	 	
Email:

	
nabyl@rokk3r.com

	
Entity:

	
ExOFoundation, Inc.

	 	 	
Entity:

	
Rokk3r Inc.

	 	 	 	 	 	
(add entity if signing on behalf of an entity)

	 	 	 	 	 	 
	
With Copy to:

	 	 	 	
With Copy to:

 

	 
	
Name:

	
Michael Nichols

	 	 	
Name:

	
Katia Rocha or Luisa Gamboa

	
Address:

	
2142 University Ave

	 	 	
Address:

	
2121 NW 2nd Ave.

	 	 	 	 	 	
Suite #203

	 	
Mountain View, CA  94040

	 	 	 	
Miami, FL 33127

	 	
USA

	 	 	 	
USA

	
Email:

	
michael@exo.team

	 	 	
Email:

	
Katia@rokk3r.com Luisa@rokk3r.com

	
Entity:

	
ExO Foundation, Inc.

	 	 	
Entity:

	
Rokk3r Inc.

 

9

 

Exhibit A

 

Additional Definitions and Terms

 

Purchase Amount: 

 

5,000,000 common stock shares of Rokk3r, Inc. (OTC: ROKK) (“Purchaser Shares”).  The value of the Purchaser Shares, for purposes of (i) an Equity Financing, (ii) a Token Allocation, or (iii) an Event Deadline described under “Event Deadline” subsections (ii) and (iii) below (collectively, the “Qualifying Events”), shall be determined as follows (each, the “Adjusted Value”): 

 

(i) the publicly traded price of the Purchaser Shares at the time of a Qualifying Event, subject to the following limitations: 

 

(a) if the shares are trading over Three Dollars ($3.00 USD) per share (“Maximum Value”) each share shall be deemed to have the Maximum Value; and 

 

(b) if the shares are trading under Sixty-Four Cents ($0.64 USD) per share (“Minimum Value”), each share shall be deemed to have the Minimum Value; or  

 

(ii) If the Purchaser Shares are not publicly traded at the time of a Qualifying Event, the value of such shares shall be: the Fair Market Value, up to but not exceeding the Maximum Value; and

 

The Discount Rate shall then be applied to the Adjusted Value to determine the final value of the “Purchase Amount.” 

 

Event Deadline

 

If this Agreement expires and terminates due to the Event Deadline, as defined above in Section 1(e), the Company shall return or give to Purchaser, based upon the mutual agreement of Company and Purchaser (such agreement not to be unreasonably withheld), one of the following or a combination thereof: 

 

(i) Purchaser Shares acquired by Company under this Agreement; or 

 

(ii) cash in an amount equivalent of the Purchase Amount; or 

 

(iii) an amount of common stock equity in the Company (based on the then most recent valuation or financing) equal to the Purchase Amount (or some other mutually agreed upon means). 

 

Use of Proceeds

 

The proceeds generated from the Agreement for the Company shall not be used for: (i) any personal, family or household purpose, or (ii) the repayment of indebtedness for borrowed money (other than short-term bridge or similar loans), redemption or repurchase of securities, or payments to employees other than in the ordinary course of business; or (iii) payments to other SAFE, SAFE-T, and other convertible instrument holders for purposes of cancelling other indebtedness.  

 

 

Registration Rights

 

The Purchaser agrees that, upon receipt of the Purchaser Shares, the Company shall have rights as any other purchaser common stock holder. Purchaser will use reasonable efforts to obtain other investors’ approval to grant piggyback registration rights to Company. 

 

Stock Restriction Agreement

 

The parties shall enter into a stock transfer restriction agreement (or the applicable stock purchase agreement pursuant to which the Company acquires the Purchaser Shares shall provide), with respect to fifty percent (50%) of the Purchaser Shares (the “Locked Up Shares”) received by the Company, that provides that the Locked Up Shares shall be subject to a blanket restriction on transfer without disinterested approval by the Board of Directors of the Purchaser. The stock transfer restriction agreement (or applicable stock purchase agreement) shall also have provisions providing for a standard right of first refusal in favor of the Purchaser including in an event of a change of control of the Company, or, to the extent permitted by applicable law without requiring additional consent from the Company’s existing creditors, in the event of a dissolution.

 

10

 

EXHIBIT B

 

WHITE PAPER

 

 

11

12

 

13

14

15

16

17

18

19

20

21

22

23

24

25

 

26

 

27

28

 

29

 

 

 

EXHIBIT C

 

RISK FACTORS

 

 

A purchase of the Tokens involves a high degree of risk. You should carefully consider the risks and uncertainties described below before deciding to purchase the Tokens. The occurrence of any of the following risks could result in you losing all or part of your investment.

 

Business Risks

 

Risks Relating to the Further Development and Acceptance of Blockchain Technology and Cryptocurrencies

 

	·	
The growth of the blockchain industry in general and cryptocurrencies in particular is subject to a high degree of uncertainty. The factors affecting the foregoing include, without limitation:

 

	·	
Worldwide growth in the adoption and use of blockchain technologies and cryptocurrencies;

 

	·	
Government and quasi-government regulation of blockchain technologies and cryptocurrencies;

 

	·	
The availability and popularity of other forms or methods of buying and selling goods and services, or trading assets, including new means of using fiat currencies;

 

	·	
General economic conditions; and

 

	·	
A decline in the popularity or acceptance of cryptocurrencies.

 

The slowing or stopping of the development, general acceptance and adoption and usage of blockchain networks and cryptocurrencies may deter or delay the acceptance and adoption of the Network and the Tokens.

 

Risks Associated with the Continued Development of the Network

 

The Network has been developed but its continued development will require significant capital, the expertise of the Seller’s management and substantial time and effort by skilled developers, service providers, and other parties. The Seller may not retain the services of developers with the technical skills and expertise needed to successfully develop additional features for the Network. In addition, even if developers introduce additional features and functions into the Network, there can be no assurance that the Network will function as intended or that it will be able to sustain long-term operation of the Tokens or other large-scale distributed applications or cryptocurrencies. Although the Seller intends for the Network to have the features and specifications set forth in the White Paper, changes to such features and specifications may be made for any number of reasons. There can be no assurance that the Network or the Tokens will function as described in the White Paper or will continue to operate according to the Seller’s current plans.

 

The Seller plans to incorporate various technology solutions into the Network. Some or all of these technology solutions may be new and/or relatively untested. There is significant risk to building and implementing such new technologies that may have never been used, or that are being used in different ways. There is no guarantee that such technologies will operate as intended or as described in the White Paper or will be launched according to the Seller’s current plans.

 

Risks Associated with a Lack of Interest in the Network

 

It is possible that the Network will not be used by a large number of individuals, companies and other entities and/or that there will be limited public interest in the creation and development of distributed ecosystems (such as the Network) more generally or distributed applications to be used on the Network. In addition, it is possible that the Network will not be used by service providers offering services on the Network contemplated in the White Paper. Such a lack of use or interest could negatively affect the development of the Network and the potential utility of the Tokens.

 

Technical Risks Associated with the Network

 

The Network may include coding errors or otherwise not function as intended, which may negatively affect the Network and the functionality of the Tokens. Upgrades to the Network, a hard fork in the Network or a change in how transactions are confirmed on the Network may have unintended adverse effects on the Tokens. As a result, any such coding errors or unintended functionalities in the Network may remain unresolved.

 

Risk that the Network is Superseded

 

30

 

The can be no assurance that the technology being proposed to underpin the Network will not be supplanted by competing protocols that improve upon, or fully replace, the Network technology. It is not known whether the Network will become the predominant protocol adopted globally by the industry. If the Network is surpassed or superseded, usage of the Tokens and adoption may decline. The Network’s technology will be available as open-source, meaning that anyone can copy and disseminate the Network source code either in the same form or with modifications as a “fork.”

 

Risk of Competing Ecosystems

 

It is possible that alternative ecosystems could be established that utilize the same open source code and protocol underlying the Network and attempt to facilitate services that are materially similar to those provided by the Network. The Network may compete with these alternatives, which could negatively impact the Network and Tokens, including the utility of the Tokens.

 

Regulatory and Legal Risks

 

Uncertain Regulatory Framework

 

The regulatory status of cryptographic tokens, digital assets and blockchain technology is unclear or unsettled in many jurisdictions. It is difficult to predict how or whether governmental authorities will regulate such technologies. It is likewise difficult to predict how or whether any governmental authority may make changes to existing laws, regulations and/or rules that will affect cryptographic tokens, digital assets, blockchain technology and its applications. Such changes could negatively affect the Tokens in various ways, including, for example, through a determination that the Tokens are regulated financial instruments that require registration or licensing of those instrument or some or all of the parties involved in the sale, purchase and delivery thereof. The Seller, may cease the distribution of Tokens, cease the development of the Network or cease operations in a specific jurisdiction in the event that governmental authority, regulatory actions, changes to law or regulations, or other actions make such distribution, development and/or operations unlawful or commercially undesirable to obtain the necessary regulatory approval(s) to operate in such jurisdiction.

 

Legal and Regulatory Factors Relating to the Seller’s Business Model Might Present Barriers to Success

 

The Network operates in a new and developing legal and regulatory environment. The established body of law, regulations, and court decisions concerning blockchain and smart contracts is nascent, and the law regarding token sales and cryptocurrencies is developing. As a result, it is possible that there could be legal disputes over the interpretation of smart contracts used in connection with the Network, thus undermining the functionality of the Network and the Tokens. To the extent licenses or other authorizations are required in one or more jurisdictions in which the Seller operates or will operate, there is no guarantee that the Seller will be granted such licenses or authorizations. The Seller may need to change its business model, and therefore modify the proposed use of the Network and the Tokens to comply with these licensing and/or registration requirements (or any other legal or regulatory requirements) in order to avoid violating applicable laws or regulations or because of the cost of such compliance.

 

Risks of Government and Private Actions

 

The cryptocurrency market is new, and may be subject to heightened oversight and scrutiny, including investigations or enforcement actions. There can be no assurance that governmental authorities will not examine the operations of the Seller or enact regulations or pursue enforcement actions against the Seller, which may result in curtailment of, or inability to operate, the Network as intended, or judgments, settlements, fines or penalties against the Seller. In addition, non-governmental parties may bring private legal actions against the Seller, either individually or as a class, which may result in curtailment of, or inability to operate, the Network as intended, or judgments, settlements, fines or penalties against the Seller.

 

Risks Associated with Intellectual Property Matters

 

The Seller does not currently hold any issued patents and, thus, would not be entitled to exclude or prevent other entities from replicating its technology, methods and processes. While the Seller enters into confidentiality and invention assignment agreements with its developers, no assurance can be given that these agreements will be effective in controlling access to the Seller’s proprietary information and trade secrets. The confidentiality agreements on which the Seller relies to protect certain technologies may be breached, may not be adequate to protect its confidential information, trade secrets and proprietary technologies and may not provide an adequate remedy in the event of unauthorized use or disclosure of its confidential information, trade secrets or proprietary technology. Further, these agreements do not prevent the Seller’s competitors or others from independently developing technology that is substantially equivalent or superior to their technology. In addition, others may independently discover the Seller’s trade secrets and confidential information, and in such cases, the Seller likely would not be able to assert any trade secret rights against such parties.

 

31

 

Although the Seller does not believe that the technology, processes and methods relating to the Network have been patented by any third party, it is possible that patents have been issued to third parties that cover all or a portion of the Network. Patent holders or other intellectual property owners may assert that the Seller’s methods or practices infringe, misappropriate or otherwise violate their intellectual property or other proprietary rights. Any such claims, regardless of merit, could result in substantial expenses, divert the attention of management or materially disrupt the operation of the Network, including through awarded injunctive relief.

 

Other Risks

 

Risks of Losing Access to the Tokens

 

When issued, the Tokens received by you may be held in a digital wallet or vault, which requires a private key or a combination of private keys for access. Accordingly, loss of the private key(s) associated with your digital wallet or vault storing the Tokens will result in the loss of such Tokens. Moreover, any third party that gains access to such private key(s), including by gaining access to login credentials of a hosted wallet or vault service you use, may be able to misappropriate your Tokens. The Seller is not responsible for any such losses.

 

In addition, any errors or malfunctions caused by or otherwise related to the digital wallet or vault you choose to receive and store Tokens, including your own failure to properly maintain or use such digital wallet or vault, may also result in the loss of your Tokens. Additionally, your failure to follow precisely the procedures set forth for buying and receiving Tokens, may also result in the loss of your Tokens.

 

Risks of Hacking and Security Weakness

 

The Tokens may be subject to expropriation and/or theft. Hackers or other malicious groups or organizations may attempt to interfere with the Network or with the Tokens in a variety of ways, including but not limited to malware attacks, denial of service attacks, consensus-based attacks, Sybil attacks, smurfing and spoofing. Furthermore, because the Network will be released as open-source software, hackers or other individuals may uncover and exploit intentional or unintentional bugs or weaknesses in the Network which may negatively affect the Network and the Tokens, including the utility of the Tokens. Hackers or other malicious groups of organizations may also attempt to get access to private keys or other access credentials of any wallet, vault, or other storage mechanism used to receive and hold the Tokens which would result in the loss of your Tokens or the loss of your ability to access or control your Tokens.

 

Risks of Uninsured Losses

 

Unlike bank accounts or accounts at some other financial institutions, the Tokens are uninsured unless you specifically obtain private insurance to insure them. Thus, in the event of loss or loss of utility value, there is no public insurer, such as the Federal Deposit Insurance Corporation, or private insurance arranged by the Seller, to offer recourse to you.

 

Risks Associated with the Sale and Purchase of the Tokens

 

There can be no assurance that the Token Sale will be conducted as expected or that purchasers will subscribe for a significant supply of Tokens available for sale which could impact the Seller’s ability to develop the Tokens and the Network.

 

The Tokens are intended to be used by users in the Network. The Tokens are not investment products. There should be no expectation of future profit or gain from the purchase or sale of the Tokens. The Tokens do not represent (i) any equity or other ownership interest in the Seller, (ii) any rights to dividends or other distribution rights from the Seller, or (iii) any governance rights in Tokens.

 

Public policy towards token sales and cryptocurrency is evolving, and it is conceivable that regulators may in the future seek to broaden the scope of regulation of token sales or cryptocurrency. If the offer and sale of the Tokens becomes subject to registration, prospectus or licensing requirements in a particular jurisdiction, the Seller may be found liable if it has not complied with the applicable registration, prospectus or licensing requirements, and the market for the Tokens may be adversely affected. There are also other risks of participating in any token sale involving cryptocurrency, including volatility in cryptocurrency markets, the possibility of increasing regulation of cryptocurrency exchanges, the potential for a post facto government investigation of a token sale and other risks.

 

32

 

Risk of Price Volatility

 

The prices of cryptocurrencies have historically been subject to dramatic fluctuations and are highly volatile, and the market price of the Tokens may also be highly volatile. Several factors may influence the market price of the Tokens, including, but not limited to:

 

	·	
Global supply of cryptocurrencies, both with respect to the number of different cryptocurrencies and the supply of each individual cryptocurrency;

 

	·	
Global demand for cryptocurrencies, which can be influenced by the growth of acceptance of cryptocurrencies as payment for goods and services, the security of online cryptocurrency exchanges and digital wallets that hold cryptocurrencies, the perception that the use and holding of cryptocurrencies is safe and secure, and the regulatory restrictions on their use;

 

	·	
Changes in software, software requirements or hardware requirements underlying blockchain technologies;

 

	·	
Fiat currency withdrawal and deposit policies of cryptocurrency exchanges on which cryptocurrencies may be traded and liquidity on such exchanges;

 

	·	
Interruptions in service from or failures of major cryptocurrency exchanges;

 

	·	
Investment and trading activities of large investors, including private and registered funds, that may directly or indirectly invest in cryptocurrencies;

 

	·	
Monetary policies of governments, trade restrictions, currency devaluations and revaluations; and

 

	·	
Regulatory measures, if any, that affect the use of cryptocurrencies.

 

A decrease in the price of a single cryptocurrency may cause volatility in the entire cryptocurrency industry and may affect other cryptocurrencies, including the Tokens. For example, a security breach that affects investor or user confidence in Bitcoin or Ethereum may affect the industry as a whole and may also cause the price of the Tokens and other cryptocurrencies to fluctuate.

 

Taxation Risks

 

The tax characterization of the Tokens is uncertain, and you must seek your own tax advice in all jurisdictions relevant to you in connection with your purchase of the Tokens. A purchase of the Tokens may result in adverse tax consequences to you, including withholding taxes, income taxes and tax reporting requirements. It is also possible that the proceeds to the Seller would be subject to significant amounts of income and/or withholding taxes. Further, the use of the Tokens as a form of currency may or may not be subject to income taxes, capital gains taxes, value added, sales or use taxes or other forms of taxes. The uncertainty in the tax treatment of the Tokens and transactions in the Tokens may expose subscribers, prospective purchasers and the Seller alike to unforeseen future tax consequences associated with the purchase, ownership, sale or other use of the Tokens.

 

Capital Control Risks

 

Many jurisdictions impose strict controls on the cross-border flow of capital. Holders of the Tokens may be subject to these regulations.

 

Countering the Financing of Terrorism (“CFT”) and Anti-Money Laundering (“AML”) Regulations

 

The United Kingdom has issued a series of regulations to combat terrorist financing and money- laundering activities. Many other countries, including the United States, have enacted similar legislation to control the flow of capital for such illicit activities. In the event that licenses, registrations or other authorizations are required under applicable CFT and/or AML regulations to operate the Network, there is no guarantee that the Seller will be able to successfully obtain such licenses, registrations or authorizations. In addition, any illicit use of the Tokens by bad actors could breach such regulations and seriously impact the global reputation of the Network. In such event, it is conceivable that this could trigger scrutiny by CFT and AML regulators and potentially cause significant disruption to the distribution and circulation of the Tokens.

 

Unanticipated Risks

 

Cryptographic tokens such as the Tokens are a new and untested technology. In addition to the risks included herein there are potentially other unanticipated risks associated with the purchase, possession, and use of the Tokens. Such risks may further materialize as unanticipated variations or combinations of the risks discussed herein.

 

33THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 1st day of September, 2016 (the "Effective Date"), by and between MICHAEL MAGNUSSON (the "Employee") and JETFLEET MANAGEMENT CORP., a California corporation (the "Company"). The Company and Employee may be referred to together as the "Parties."  In consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

For ease of reference, this Agreement is divided into the following parts, which begin on the pages indicated:

FIRST PART:  TERM OF EMPLOYMENT, DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT (Sections 1-5, beginning on page 2)

SECOND PART:  COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR CONSTRUCTIVE TERMINATION (Section 6, beginning on page 8)

THIRD PART:  SUCCESSORS, ARBITRATION, EMPLOYEE REPRESENTATIONS, MISCELLANEOUS PROVISIONS, CODE SECTION 409A, SIGNATURE PAGE (Sections 7-10, beginning on page 7)

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

FIRST PART:  TERM OF EMPLOYMENT, DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT

Section 1.        Term of Employment

(a) Basic Rule.  The Company agrees to employ the Employee in the capacity of Managing Director and the Employee agrees to such employment.  Employee's employment with the Company shall begin on September 1, 2016 ("Effective Date of Employment").

(b) Initial Term. The Company agrees to continue the Employee's employment, and the Employee agrees to remain in employment with the Company, from the Effective Date of Employment, until the earliest of:

(1) August 31, 2019 ("Initial Term Expiration Date"); or

(2) The date of the Employee's death or when  the  Employee's  employment terminates pursuant to Subsections (c), (d), (e) or (f) below.

(c) Automatic Extensions.  The term and provisions of this Agreement shall automatically extend for additional one-year periods if Employee remains employed on and after the Initial Term Expiration Date, unless either party notifies the other in writing to the contrary at least 90 days prior to the applicable expiration that it, or he, does not want the term to so extend.  The Initial Term, and if applicable, any automatic extensions pursuant to this subsection (c) is hereinafter referred to as the "Employment Period"

(d) Termination By Company for Cause.  The Company may terminate the Employee's employment at any time for Cause.  For all purposes under this Agreement, "Cause" shall mean (1) a material breach by the Employee of his/her duties and responsibilities as set forth under this Agreement, resulting from other than the Employee's complete or partial incapacity due to physical or mental disability or impairment, as defined in Section 1(e) below and except as otherwise required by law, (2) a willful act by the Employee that constitutes gross misconduct and that is materially injurious to the Company, (3) a willful breach by the Employee of a material provision of this Agreement, (4) an egregious violation by the Employee of one of the Company's General Standards of Conduct as set forth in the Manual (as defined in 2(c) below), or (5) a material and willful  violation of a federal or state law or regulation applicable to the business of the Company that is materially and demonstrably injurious to the Company.  No act, or failure to act, by the Employee shall be considered "willful" unless committed without good faith and without a reasonable belief that the act or omission was in the Company's best interest.

However, if such Cause is reasonably curable, the Company shall not terminate the Employee's employment hereunder unless the Company first gives written notice of its intention to terminate and of the grounds for such termination, and the Employee has not, within sixty (60) days following receipt of notice, cured such Cause.  In the event of a termination for Cause by the Company, Employee shall be entitled to receive his salary and benefits through the date of termination.

(e) Termination by Company for Disability. The Company may terminate the Employee's employment for Disability by giving the Employee written notice.  For all purposes under this Agreement, "Disability" shall mean, unless otherwise required by law, any physical or mental incapacitation that results in Employee's inability to perform his duties and responsibilities for the Company for a total of 120 days during any 12 month period, as determined by the Company's Chief Executive Officer ("CEO") in the CEO's good-faith judgment, except as otherwise required by law.  Disability will be deemed to have occurred on the 120th day of such inability to perform.  In the event that the Employee resumes the performance of substantially all of the Employee's duties under this Agreement before the termination of the Employee's employment under this Section becomes effective, the notice of termination shall automatically be deemed to have been revoked.  In the event of a termination for Disability by the Company, Employee shall be entitled to receive his salary and benefits through the date of termination.

(f) Termination by Employee For Good Reason.  The Employee may terminate his employment with the Company for Good Reason.  Termination shall be for "Good Reason" if:  (1) there is a material and adverse change in Employee's position, duties, responsibilities, or status with Company; (2) there is a reduction in Employee's salary or benefits then in effect, other than a reduction comparable to reductions generally applicable to similarly situated employees of the Company; (3) the Company materially breaches this Agreement; or (4) on or before the initial Term Expiration Date, there is a Change of Control.  Employee agrees to deliver the Company written notice of his termination for Good Reason no later than 30 days after the occurrence of any such event in order for Employee's termination for Good Reason to be effective hereunder; such termination for Good Reason will not be effective until the 30th day following receipt of such written notice by the Company and such termination shall not be deemed to be for "Good Reason" hereunder unless the circumstance giving rise to Employee's Good Reason remains uncured at the end of such 30-day period.  If Employee terminates this Agreement for Good Reason, he is entitled to the payments described in Section 6 below.

For purposes of this Agreement, except as otherwise specified herein, "Change in Control" means: the consummation of: (1) a plan of complete liquidation of the Company, (2) an agreement for the sale or disposition of the Company or all or substantially all of the Company's assets, (3) a plan of merger or consolidation of the Company with any other corporation, or (4) a similar transaction or series of transactions involving the Company, however, if after any of the transactions discussed in (1) through (4) of this Section 1(f) the Company's shareholders immediately before the transaction continue to own at least a majority of the voting securities of the new (or continued) entity immediately after the transaction, in substantially the same proportion as their respective ownership prior to the transaction, then (1) through (4) of this Section 1(f) will not be considered a Change in Control.  Notwithstanding the foregoing, for purposes of this Agreement only, no merger or any other transaction between Company and AeroCentury Corp ("ACY") constitutes a "Change of Control."

Section 2.        Duties and Scope of Employment

	

	
The Company agrees to employ the Employee for the Employment Period in the position of Managing Director, subject to the overall direction and authority of the CEO.  Employee shall be given such duties, responsibilities and authorities as are appropriate to his position including, without limitation:

	
i.

	
strategic planning and management of all aircraft acquisition, leasing and remarketing activities managed by the Company under the Management Agreement between the Company and ACY and any other agreements entered into by the Company for management of aircraft portfolios;

	
ii.

	
assume role of Chief Executive Officer of ACY, including, without limitation, reporting to the ACY Board of Directors and assuming any responsibilities as designated by the ACY Board of Directors, review and execution of audit representation letters, review and certification of ACY federal and/or state securities, stock exchange and other administrative filings requiring  execution in employee's capacity as Chief Executive Officer of ACY;

	
iii.

	
representing ACY at industry conferences worldwide; and

	
iv.

	
assist in ACY debt and equity capital raising activities.

(b) Obligations.  During the Employment Period, the Employee shall devote such business efforts and time to the business and affairs of the Company as are needed to carry out his duties and responsibilities hereunder, subject to the overall supervision of the Company's Board of Directors.  The foregoing shall not preclude Employee from engaging in appropriate civic, charitable or religious activities or from devoting a reasonable amount of time to private investments or from serving on the boards of directors of other entities, as long as such activities and service are disclosed to CEO and do not interfere or conflict with the Employee's responsibilities to the Company.  Employee will perform his duties and responsibilities hereunder to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

(c) Employment Manual.  Employee shall comply with and be subject to all terms of the JMC Employee Handbook, as may be amended from time to time with notice to all employees at the Company's discretion (the "Manual"); provided, however, that terms set forth in this Agreement that conflict with terms of the Manual shall supersede such terms in the Manual.  Employee hereby acknowledges receipt of such Manual, and that he has read and reviewed the term contained therein.

(d) Confidentiality Agreement.  As a condition of Employee's employment, Employee shall execute, deliver, and comply at all times with, the Confidentiality Agreement in the form attached as Exhibit A hereto.

(e) Inventions and Patents.  Employee acknowledges that all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) that relate to the Company's or any of its affiliates' actual or anticipated business, research and development or existing or future products or services and that are conceived, developed or made by Employee (1) in the course of Employee's employment with the Company; or (2) during Employee's employment with the Company if related to the Company's actual or anticipated business, research and development ("Work Product"), belong to the Company or such affiliate. Employee shall promptly disclose such Work Product to the Company and perform all actions requested by the Company (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments). Any work product that constitutes a pre-existing invention consistent with California Labor Code Sections 2870 and 2872 or other applicable law is specifically excluded from this provision.  Employee agrees to disclose any such work product prior to beginning employment with the Company and to complete the appropriate forms.

(f) Additional Acknowledgments: Employee acknowledges that the provisions of Sections 2 (d) and 2(e) are in consideration of: (i) employment with the Company and (ii) additional good and valuable consideration as set forth in this Agreement. Employee expressly agrees and acknowledges that the restrictions contained in Sections 2(d) and 2(e) do not preclude Employee from earning a livelihood, nor do they unreasonably impose limitations on Employee's ability to earn a living. Employee acknowledges that he/she has carefully read this Agreement and has given careful consideration to the restraints imposed upon Employee by this Agreement.

Section 3.        Compensation

(a) Base Salary. During the Employment Period, the Company agrees to pay the Employee as compensation for services a base salary at the annual rate of $350,000 (the "Base Salary"), or at such higher rate as the Company may determine from time to time.  The Base Salary specified in this Section 3, together with any increases in such that the Company may grant from time to time, and together with any reductions made in accordance with this Section 3, is referred to in this Agreement as "Base Compensation".  Such Base Compensation shall be payable in accordance with the standard payroll procedures of the Company and shall be subject to customary withholdings.  Once the Company has increased such Base Salary, it thereafter shall not be reduced; provided, however, that such salary (including any increases) may be reduced by the Company if the Employee commits an act or omission that meets the definition of Cause, as defined in Section 1(d).

(b) Bonus Compensation. Employee shall earn bonus compensation for any calendar year as set forth in this subsection.

	
i.

	
In each calendar year, if the pre-tax, pre-bonus profit of the Company is greater than $750,000 ("Target Earnings"), then Employee shall be paid a fixed bonus ("Fixed Bonus") of $50,000; provided however, that for fiscal year 2016, if Target Earnings are reached for that year, Employee shall earn a Fixed Bonus of $17,000 reflecting the partial year of employment; provided, further, that Employee must be employed on the last day of the calendar year in order to be eligible to receive this fixed bonus amount for that calendar year, and such bonus shall not be pro-rated for a partial year of employment after fiscal year 2016.  Upon determination that Target Earnings are reached for a particular calendar year, the Company will pay the amount no later than March 15th following the end of said calendar year.

	
ii.

	
Notwithstanding the language in Section 3(b)(i), if Employee has either been terminated without Cause (as described in Section 1(d)) or has terminated employment for Good Reason (as described in Section 1(f)) and Target Earnings are reached for the year in which Employee has been terminated pursuant to Section 1(d) or has terminated employment pursuant to Section 1(f), then Employee shall be entitled to receive a pro-rated Fixed Bonus based on the partial final year of Employment.

	
iii.

	
In each calendar year, Employee may, but is not required to, receive an additional discretionary bonus, at the total discretion of the CEO of the Company.  Upon determination by the CEO of such bonus to be paid, the Company will pay the bonus amount as quickly as possible in lump sum, but no later than March 15th following the end of said  calendar year.

	
iv.

	
For the avoidance of doubt, any compensation paid pursuant to this subsection 3(b) shall not be deemed a part of Employee's Base Salary, nor constitute an increase in Base Salary for purposes of subsection 3(a) above.

Section 4.        Employee Benefits

(a) Benefits. During the term of employment under this  Agreement, the Employee shall be eligible to participate in the employee benefit plans and executive compensation and fringe benefit programs maintained by the Company, including life, disability, health, accident and other insurance programs for Employee and eligible dependents, paid vacations, and similar plans or programs, as set forth in the Manual, subject in each case to the generally applicable terms and conditions of the plan or program in question and to the discretion and determinations of any person, committee or entity administering such plan or program. Employee will be responsible for all costs related to his/her retirement contributions.

(b) Paid Vacation. Employee shall be entitled to five weeks (25 days) of vacation annually, with a carryover of unused, accrued vacation at year-end; however, Employee may not accrue more than two times the amount of his annual vacation entitlement (e.g., 50 days). Once this maximum is reached, all further accruals will cease.  Vacation accruals will recommence after the Employee has taken vacation and his accrued hours have dropped below the maximum accrual amount. Employee shall earn a pro-rata number of vacation days in calendar year 2016 based on the portion of 2016 calendar year employed.

Section 5.   Business Expenses and Travel

During the term of employment under this Agreement, the Employee shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in  connection  with the  Employee's  duties  hereunder.  The Company shall reimburse the Employee for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with generally applicable policies established by the Company.  Notwithstanding the Company's corporate travel policy as set forth in the Manual, flights within North America and flight segments of five hours or less shall be booked in upgrade economy class that provides extra legroom ("Economy Plus").  Flights of greater than five hours will be booked in Economy Plus or Business Class, depending on availability and cost.

SECOND PART:  COMPENSATION AND BENEFITS IN CASE OF TERMINATION

Section 6. Termination By Company Without Cause, Or By Employee For Good Reason

In the event that, during the term of this Agreement, the Employee's employment terminates in a Qualifying Termination, as defined in Subsection (a), the Employee shall be entitled to receive the payments described in Subsections (b) and (c), on the condition that Employee executes a general release, the content of which will be mutually agreed to between Employer and Employee at the time of the Qualifying Termination, in a form substantially similar to the Severance Agreement and General Release attached as Exhibit B to this Agreement.

(a)     Qualifying Termination.  A Qualifying Termination occurs if:

i. The Company terminates the Employee's employment for any reason other than Cause (as described in Section 1(d)) or Disability (as described in Section 1(e)) of this Agreement; or

ii. The Employee terminates his employment with the Company for Good Reason (as described in Section 1(f)).

(b) Severance.  The Company shall continue to pay to the Employee on a semi-monthly basis the Employee's Base Compensation in effect on the date of the employment termination for the period from termination to Expiration Date.

(c) Mitigation Obligation.  In the event of a Qualifying Termination and Employee obtains subsequent employment prior to the date that, but for the Qualifying Termination, would have been the scheduled expiration date of this Agreement, then Employee's periodic severance payments shall be reduced by an amount equal to 75% of the compensation received from Employee's new employer.

THIRD PART:       SUCCESSORS, EMPLOYEE REPRESENTATIONS, MISCELLANEOUS PROVISIONS, CODE SECTION 409A, SIGNATURE PAGE

Section 7.    Successors

	
(a)

	
 Company's Successors.  The Company shall require any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets, by an agreement in substance and form satisfactory to the Employee, to assume this Agreement and to agree expressly to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession.  The Company's failure to obtain such agreement prior to the effectiveness of a succession shall be a breach of this Agreement and shall entitle the Employee to all of the compensation and benefits to which the Employee would have been entitled hereunder if the Company had involuntarily terminated the Employee's employment without Cause or Disability, on the date when such succession becomes effective. For all purposes under this Agreement, the term "Company" shall include any successor to the Company's business and/or assets that executes and delivers the assumption agreement described in this Subsection (a) or that becomes bound by this Agreement by operation of law.

	
(b)

	
Employee's Successors.  This Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees.

Section 8: Employee Representations

Employee hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Employee does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Employee is a party or by which he or she is bound, (ii) Employee is not a party to or bound by any employment agreement, non-compete agreement, or confidentiality agreement with any other person or entity (other than a Nondisclosure Agreement with Employee's prior employer, the terms of which he has disclosed to the Company and which he does not expect to materially interfere with the performance of his obligations hereunder) and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of Employee, enforceable in accordance with its terms.  Employee hereby acknowledges and represents that he has had the opportunity to consult with independent legal counsel regarding his rights and obligations under this Agreement and that he fully understands the terms and conditions contained herein.

  

Section 9. Code Section 409A

(a) The parties hereto intend that all benefits and payments to be made to the Employee hereunder will be provided or paid to him in compliance with all applicable provisions of Code Section 409A. This Agreement shall be construed and administered in accordance with such intent. If any provision of this Agreement (or of any award of compensation) would cause Employee to incur any additional tax or interest under Code Section 409A, the Parties will negotiate in good faith to amend this Agreement as necessary to comply with Section 409A in a manner that preserves the original intent of the Parties to the extent reasonably possible.  No action or failure to act, pursuant to this Section 9, shall subject the Company to any claim, liability, or expense, and the Company shall not have any obligation to indemnify or otherwise protect the Employee from the obligation to pay any taxes pursuant to Section 409A of the Code.

(b) 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 are considered nonqualified deferred compensation under Code Section 409A upon or following a termination of 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." The determination of whether and when a separation from service has occurred for purposes of this Agreement shall be made in accordance with the presumptions set forth in Section 1.409A-1(h) of the Treasury Regulations.

(c) For purposes of Section 409A, each payment made after termination of employment, including any COBRA continuation reimbursement payments, will be considered one of a series of separate payments.

(d) Any amount that the Employee is entitled to be reimbursed under this Agreement that may be treated as taxable compensation, including any gross-up payment, will be reimbursed to the Employee as promptly as practical and in any event not later than the end of the calendar year following the calendar year in which the expenses are incurred. The amount of the expenses eligible for reimbursement during any calendar year will not affect the amount of expenses for reimbursement in any other calendar year, except as may be required pursuant to an arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code.

(e) Unless this Agreement provides a specified and objectively determinable payment schedule to the contrary, to the extent that any payment of Base Salary, Base Compensation, or other compensation is to be paid for a specified continuing period of time beyond the date of termination of the Employee's employment in accordance with the Company's payroll practices (or other similar term), the payments of such Base Salary, Base Compensation, or other compensation shall be made on a semi-monthly basis.

Section 10. Miscellaneous Provisions

(a) Amendment and Waiver.  No provision of this Agreement shall be modified, waived, or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(b) Complete Agreement. This Agreement embodies the complete agreement and understanding among the parties and supersedes and preempts any prior understandings, agreements or representations by or among the parties (whether written or oral, and whether express or implied), which may have related to the subject matter hereof in any way.

(f) Notices.  Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed by first class mail, return receipt requested, or emailed at the following address:

To Employee:

Michael Magnusson

__________________

__________________

To Company:

Toni Perazzo

JetFleet Management Corp.

1440 Chapin Avenue #310, Burlingame, CA 94010

___________________

Any notice under this Agreement shall be deemed to have been received when personally delivered or  three (3) days after it is sent via email or deposited in the U.S. mail, as specified above.  Either party may change its address for notices by giving notice to the other party in the manner specified in this Section.

(d) Choice of Law. The validity, interpretation, construction, and performance of this Agreement shall be governed by the laws of the State of California.

(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 invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.  In the event any ruling of any court or governmental authority calls into question the validity of any portion of this Agreement, the parties hereto shall consult with each other concerning such matters and shall negotiate in good faith a modification to this Agreement which would obviate any such questions as to validity while preserving, to the extent possible, the intent of the parties and the economic and other benefits of this Agreement and the portion thereof whose validity is called into question.

(f) Arbitration.  Any dispute or controversy arising out of the Employee's employment relationship with Company, or the termination thereof, or the validity, enforcement, or breach of this Agreement (including this section) shall be resolved by binding  arbitration, in accordance with the then-applicable Employment Dispute Resolution rules ("Rules") of the American Arbitration Association (which can be viewed at www.adr.org/aaa/faces/rules), except that nothing in this Section 10(f) shall require arbitration of disputes or claims that are excluded from coverage by law. The arbitration shall take place in San Francisco, California, and shall be conducted by one (1) arbitrator appointed in accordance with the Rules.  Judgment may be entered on the arbitrator's award in any court having jurisdiction.

The Company and Employee agree that any dispute in arbitration will be brought on an individual basis only, and not on a class, collective, or representative basis on behalf of others (this specific agreement to be referred to as the Class Action Waiver.)  The Class Action Waiver does not apply to any claim that Employee brings on behalf of both himself and others under the California Private Attorneys General Act.

 (g) Attorneys' Fees.  If any action is brought to enforce the rights and obligations set forth herein, the prevailing party shall be entitled to receive all of the fees and costs, including reasonable attorneys' fees, incurred in the action.  Any fees and costs awarded under this provision shall be in addition to any other relief awarded to the prevailing party.

 (h) No Assignment of Benefits.  The rights of any person to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor's process, and any action in violation of this Subsection (h) shall be void.

(i) Employment Taxes.  All payments made pursuant to this Agreement shall be subject to withholding of applicable taxes.

(j)  Counterparts:  This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.  Employee represents that he has consulted (or has had the opportunity to consult) with his own counsel prior to execution of this Agreement.

EMPLOYEE

MICHAEL MAGNUSSON

 ________________________________

COMPANY

JETFLEET MANAGEMENT CORP.

________________________________

    By:  Toni M. Perazzo, President

ATTACHMENT A

EMPLOYEE CONFIDENTIALITY AGREEMENT

("Employee") in consideration of his employment by JetFleet Management Corp., ("JMC") represents and agrees with JMC as follows:

1. Employee understands that the JMC is engaged in a continuing business of aircraft leasing businesses. Employee further understands that in his position with JMC he will have access to and, in some cases, develop or derive confidential and proprietary information of JMC, its clients and business associates.

2. Employee understands and acknowledges that his employment by JMC creates a fiduciary relationship of confidence and trust with respect to all proprietary business information of a confidential nature that may be disclosed to him or developed or derived by him which relates to the business of JMC, its customers and its business associates. Such proprietary, confidential business information includes but is not limited to product, research and investment plans, inventions, processes, technology, designs, business strategies, financial information, marketing and advertising materials, sales and profit figures, other employees' personnel information, customer or client identifying information (including but not limited to customer lists),   particular customer or client requirements, business forecasts, and other technical and business information, except as may be required by law.

3. At all times, both during his employment and after its termination, Employee agrees to keep and hold all proprietary, confidential business information in strict confidence and trust, and agrees not to use or disclose any such proprietary, confidential business information without the prior written consent of JMC, except as may be required to perform his work for JMC or required by law. Upon termination of his employment with JMC, for whatever reason, Employee agrees to promptly deliver to JMC all documents and materials of whatever nature belonging to JMC which pertain to his work at JMC and agrees further that he will not take with him any documents or materials or copies thereof containing any proprietary, confidential business information.

 4.    Employee acknowledges that in the event of breach or threatened breach of this Confidentiality Agreement by him, JMC may suffer irreparable harm and will therefore be entitled to injunctive relief to enforce this Agreement, and in the event JMC prevails in any proceeding in connection therewith, Employee agrees to pay to JMC all costs and expenses including reasonable attorney's fees incurred in connection therewith.. \

 

5. This Agreement will be governed and interpreted in accordance with the laws of the State of California.

JETFLEET MANAGEMENT CORP. EMPLOYEE

_________________________ ____________________________

BY:  Toni M. Perazzo, President Michael Magnusson

For  JetFleet Management Corp.

 

 

EXHIBIT B

FORM OF SEPARATION AGREEMENT

SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS

This Separation Agreement and Release of All Claims ("Separation Agreement") is made and entered into by and between MICHAEL MAGNUSSON, an individual residing at [Address]  ("Employee") and JETFLEET MANAGEMENT CORP., a corporation with its principal place of business at 1440 Chapin Avenue, Suite 310, Burlingame, CA 94010  ("Employer" or "Company") to establish the terms and conditions of Employee's separation from Employer.  Employee and Employer hereby agree as follows:

1. Separation Date.  Employee's employment with the Company will cease on [  ] ("Separation Date").  Employee hereby resigns, effective as of the Separation Date, as an employee of the Company.

2. Compensation.  Employee has been paid all salary, accrued vacation, and other benefits due to Employee through the Separation Date.  The Company will reimburse Employee for his final expenses in the amount of [  ] within three business days of the receipt of this signed Separation Agreement.

3. Separation Payment.  Employer agrees to pay Employee on a semi-monthly basis Employee's Base Salary in effect on the Separation Date, [specify amount] for the period of time from the Separation Date until August 31, 2019, which is the end of the term  specified in Employee's Agreement to which this Separation Agreement is attached.  Accordingly, Employer will pay [specify how many months between separation and such end of term] base salary, [specify amount to be paid twice a month based on Base Salary in effect at time of separation] per month, totaling the gross sum of $ [    ], reduced by all legally required and previously authorized deductions and withholdings  ("Separation Pay").  The Company's obligation to provide Employee with the Severance Pay shall be suspended until the expiration of the seven-day revocation period described in section 17(g).

4. Health Insurance.  Employee acknowledges that his eligibility to participate in Employer's current group health insurance policy will cease on the last day of the calendar month in with the Separation Date occurs.  Any employer contributions to Employee's group health insurance will cease as of the Separation Date.  Employee understands that after such date, he may have rights under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") that allow him to continue participating in Employer's health plan. Employee acknowledges that nothing in this section 4 shall prohibit Employer from changing, withdrawing, or in any way modifying its group health plans, and nothing herein shall be construed as a guarantee of payment of any particular claim submitted by Employee to such plans.

5. It is understood and agreed that the Separation Pay constitute(s) the sole consideration for and settlement in full of any and all potential claims by Employee against Employer and that Employee would not be entitled to receive any portion of the sums set forth in section 3 above absent this Separation Agreement.

6. Employee's Release.  The parties understand and agree that this Separation Agreement resolves and settles all obligations and differences between Employer and its past and present owners, partners, investors, officers, directors, stockholders, affiliates, predecessors, successors, assigns, agents, employees, representatives and attorneys (the "Releasees") on the one hand, and Employee, and for each of Employee's past and present agents, assigns, transferees, heirs, spouses, relatives, executors, attorneys, administrators, employees, predecessors, affiliates, successors, insurers, and representatives ("Releasors") on the other hand, arising out of Employee's employment with Employer and the cessation of that employment.  This is a compromise settlement of all claims and therefore does not constitute an admission of liability on the part of the Releasees or Employee, or an admission, directly or by implication, that the Releasees or Employee have individually or collectively violated any law, rule, regulation, contractual right or any other duty or obligation.   Releasors irrevocably and unconditionally waive, release and forever discharge, the Releasees from all claims for relief, causes of action and liabilities, known or unknown, that Releasors have or may have against any of the Releasees individually and/or collectively, arising out of, relating to, or resulting from, any events occurring prior to the execution of this Separation Agreement including, but not limited to, any claims for relief, causes of action and liabilities arising out of, relating to, or resulting from, Employee's employment with Employer or the cessation of that employment.  Nothing contained herein or elsewhere in this Separation Agreement shall constitute any release or waiver by Employee of any rights to seek specific performance of any provision of this Separation Agreement or to bring any action or claim based on any breach of any covenant contained in this Separation Agreement.

7. Employee's Waiver of Potential and Actual Claims.  It is understood and agreed that the total amount specified in paragraph 3 above, constitutes the sole consideration for and settlement in full of any and all claims by Employee against the Releasees, including claims for costs and attorneys' fees.  It is expressly understood by Employee that among the various rights and claims being waived in this release are all claims for breach of any implied or express contract or covenant; claims for promissory estoppel; claims of entitlement to any pay (other than the consideration promised in paragraph 3); claims of wrongful denial of insurance and employee benefits, including, but not limited to claims for benefits or monies under Employer's benefit plans or any other plan; claims for wrongful termination, public policy violations, defamation, invasion of privacy, fraud, misrepresentation, emotional distress or other common law or tort causes of action; claims of harassment, retaliation or discrimination under federal, state, or local law; claims based on any federal, state or other governmental statute, regulation or ordinance, including, without limitation, Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1866, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Americans with Disabilities Act, the Family and Medical Leave Act, the National Labor Relations Act, the Older Worker's Benefit Protection Act, the Employee Retirement Income Security Act, the Age Discrimination in Employment Act of 1967, 29 U.S.C.  § 621, et seq., the California Fair Employment and Housing Act, the California Family Rights Act, the California Constitution, and/or the California Labor Code, including wage and hour issues and claims arising under Labor Code Section 132a.  This release shall not be interpreted to require Employee to waive or release Employee's right to file a charge with the Equal Employment Opportunity Commission ("EEOC") or the National Labor Relations Board ("NLRB"), however, Employee does waive and release Employee's right to any monetary recovery or other personal relief should the EEOC, NLRB, or any other agency pursue claims on Employee's behalf.  This release also does not apply to any lawsuit brought to challenge the validity of this Separation Agreement under the ADEA, to enforce the terms of this Separation Agreement, or for claims that arise under the ADEA after the Separation Agreement becomes effective pursuant to section 17(g).  The parties acknowledge that Employee may be required to respond to subpoena(s) to the extent required by law and Employee agrees that Employee will give prompt written notice to Employer at such time that such involvement is requested of Employee.

8. Waiver Under CCP § 1542.  Employee waives all rights under § 1542 of the California Civil Code, which section has been fully read and understood by Employee or explained to his by his counsel.  Section 1542 provides as follows:

A general release does not extend to claims which the creditor does not know or suspect to exist in his or his favor at the time of executing the release, which if known by him or his must have materially affected his or his settlement with the debtor.

9. Confidential Information Obligation.  Employee agrees that he will keep confidential all matters, documents and information disclosed to him by the Employer or to which he has or had access and will not at any time disclose such materials and information to third parties or use or attempt to use any such materials and information in any manner which may injure or cause loss or may be calculated to injure or cause loss, whether directly or indirectly, to the Employer.  By the Separation Date, Employee shall return to Employer, and will not retain any copies of, all documents, information and other property of Employer or Employer's customers or partners in his possession or control, including, but not limited to: files, notes, memoranda, correspondence, agreements, draft documents, notebooks, logs, drawings, records, plans, proposals, reports, forecasts, financial information, specifications, computer-recorded information, tangible property and equipment, credit cards, entry cards, identification badges and keys, and any materials of any kind that contain or embody any proprietary or confidential information of Employer or Employer's customers or partners (and all reproductions thereof in whole or in part).  Employee agrees to make a diligent search for any documents, information and property (as described above) in his possession or control prior to the Separation Date.  Nothing in this Separation Agreement shall prohibit Employee from publicly disclosing that he worked for the Company and to publicly disclose the work he performed, services he provided and accomplishments he achieved while working for the Company.

10. Nondisparagement.  The parties agree that they will not, at any time now or in the future, disparage or discredit the other or any of Employer's directors, officers and employees in any communication.

11. References and Employment Verification.  Employee agrees that he will direct all requests for verification of his employment with Employer to Toni Perazzo at Employer.  Employer agrees that it will instruct Toni Perazzo and any successor to the position he currently holds, to respond to inquiries regarding Employee's employment with Employer by giving the dates of Employee's employment with Employer and the last position held by Employee.  If Employer is required by law to provide other or different information regarding Employee's employment with Employer, nothing in this Separation Agreement will require Employer to violate that legal requirement.  In the event Employee directs any request for information regarding his employment with Employer to anyone other than Toni Perazzo or his successor, Employer will not be legally responsible for any responses to said information request(s).

12. Attorneys' Fees.  It is fully understood and agreed that each party shall pay that party's own attorneys' fees and costs, if any.

13. Arbitration.  It is understood and agreed that if, at any time, a violation of any term of this Separation Agreement is asserted by any party hereto or any dispute arises hereunder or related hereto, the parties shall submit such dispute to binding arbitration before a sole arbitrator in the San Francisco Bay Area, California.  Such arbitration shall be governed by the American Arbitration Association's National Rules for the Resolution of Employment Disputes, which can be viewed at www.adr.org/aaa/faces/rules.  The prevailing party shall be entitled to recover its reasonable costs and attorneys' fees.  The parties agree that judgment upon any such award may be ordered in a court properly having jurisdiction over such claims.

14. Governing Law.  This Separation Agreement shall be interpreted, enforced and governed by the laws of the State of California without reference to conflicts of laws principles.

15. Waiver of Age Claims.  Employee fully understands, acknowledges and agrees that he:

a) is granted a full forty-five (45) days within which to consider this Separation Agreement before executing it;

b) has carefully read and fully understands all of the terms and provisions of this Separation Agreement;

c) is, through this Separation Agreement, releasing the Releasees from any and all claims he may have against any of the Releasees;

d) knowingly and voluntarily agrees to all of the terms and provisions of this Separation Agreement;

e) knowingly and voluntarily intends to be legally bound by all of the terms and provisions of this Separation Agreement;

f) was advised to, and has been given an opportunity to, consult an attorney of his choice before executing this Separation Agreement;

g) has a period of seven (7) days following his execution of this Separation Agreement to revoke this Separation Agreement and has been and hereby is advised in writing that this Separation Agreement will not become effective and enforceable until the revocation period has expired; and

h) understands that any claims under the Federal Age Discrimination in Employment Act of 1967, 29 U.S.C.  § 621 et seq., that may arise after the date this Separation Agreement is executed by Employee are not waived.

i)  Informed and Voluntary Execution of Separation Agreement.  Employee acknowledges and agrees that (i) he has been advised that this Separation Agreement is a final and binding legal document, (ii) he has had reasonable and sufficient opportunity to consult with an independent legal representative of his own choosing before signing this Separation Agreement, (iii) he has either (A) so consulted with such an independent legal representative of his own choosing or (B) freely, independently and voluntarily declined to do so, and (iv) in signing this Separation Agreement he has acted voluntarily of his own free will and has not relied upon any representation made by the Employer regarding this Separation Agreement's subject matter or its effect.

16. No Assignment of Claims.  Employee represents and warrants that he has not transferred or assigned to any person or entity any rights, claims and/or causes of action released herein.

17. Successors.  It is understood and agreed that this Separation Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, administrators, representatives, including, but not limited to, attorneys, executors, successors, and assigns.

18. Severability.  The parties agree that if any provision of this Separation Agreement is declared or determined by any court of competent jurisdiction to be illegal, invalid, or unenforceable, the legality, validity, and enforceability of the remaining parts, terms, or provisions shall not be affected thereby, and said illegal, unenforceable or invalid part, term, or provision shall be deemed not to be part of this Separation Agreement.

19. Ambiguity.  It is agreed that the general rule pertaining to the construction of contracts, that ambiguities are to be construed against the drafter, shall not apply to this Separation Agreement.

20. Entire Separation Agreement.  Except as specifically stated herein, this Separation Agreement sets forth the entire Separation Agreement between the parties relating to the rights herein and the obligations herein assumed, and supersedes any and all previous negotiations, Separation Agreements and/or understandings of any kind relating to the subject matter hereof.  Any oral representations or modifications concerning this Separation Agreement shall be of no force or effect.  This Separation Agreement can be modified only in the form of a writing signed by both parties hereto.

21. No Claims.  The Company represents that it is not aware of any claims it may have against Employee.

HAVING READ the foregoing, consisting of this and five (5) other typewritten pages, the parties hereby voluntarily sign below and execute this Separation Agreement.

PLEASE READ CAREFULLY.  THIS SEPARATION AGREEMENT INCLUDES THE RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

	
DATED:_________________

	
"EMPLOYEE"

By:_________________________________

       Michael Magnusson

 

 

 

	
DATED:_________________

	
"EMPLOYER"

JETFLEET MANAGEMENT CORP.

By:_________________________________

      Toni M. Perazzo President

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