DIRECTOR AGREEMENT
Exhibit 10.3
THIS
DIRECTOR AGREEMENT is made effective as of December 31, 2018 (the
“Agreement”),
Blockchain Industries, Inc., a Nevada corporation with its
principal place of business at 000 Xxxxxxx Xxx Xxxxx 000 Xxxxx
Xxxxxx XX 00000 (the “Company”),
and Xxxxx Xx (“Director”).
WHEREAS,
it is essential to the Company to retain and attract as directors
the most capable persons available to serve on the board of
directors of the Company (the “Board”);
and
WHEREAS, the Company believes that Director possesses the necessary
qualifications and abilities to serve as a director of the Company
and to perform the functions and meet the Company’s needs
related to its Board,
WHEREAS,
the Director shall be a Class 1 director whose term ends and are
subject to election at the annual meeting of shareholders in 2019,
2022 and
each third year thereafter.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the benefits to be derived by each party hereunder and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as
follows:
1. Term.
The Director shall hold office until such time that such
Director’s successor is duly elected and qualified, or until
such Director’s death or removal from office. The Director
will be automatically removed from the Board if such Director
resigns his office by writing delivered to the Board, becomes
prohibited by law from acting as a director or commits a material
breach of this Agreement pursuant to Section 7
below.
2. Compensation
and Expenses.
a. Stock
Option. For
the services provided to the Company as a director, the Director
shall receive a non-qualified stock option
(“Option”)
to purchase up to Four Hundred Thousand (400,000) shares of the
Company’s common stock (“Option
Shares”),
pursuant and subject to the Company’s Equity Incentive Plan,
a copy of which has been delivered to the Director, at the
following exercise prices and vesting
schedule:
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Exercise Price
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Quantity Vested
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Vesting Date
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Expiration Date
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$1.75
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150,000
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1/1/2019
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12/31/2023
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$1.75
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250,000
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Sale Transaction
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12/31/2023
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As used herein, “Sale Transaction” means any sale,
exchange or merger of not less than fifty percent (50%) of the
Company’s outstanding shares at a price that provides an
aggregate company valuation of not less than Fifty Million Dollars
($50,000,000).
In the
event of the termination of the Director’s service
relationship (whether an as employee, director or consultant) with
the Company (“Termination
of Service”)
at any time for any reason (including, but not limited to,
resignation, withdrawal, death, disability, termination, with or
without cause, or any other reason) before the Director has
exercised the Option in full, the Option shall automatically
expire, and cease to be exercisable immediately, with respect to
all of the Option Shares, whether vested or unvested. It being
understood and agreed that in no event will the Option become
exercisable for additional Options Shares upon a Termination of
Service for any reason and such outstanding and unexercised Option
shall immediately lapse and Director shall have no further rights
with respect to it.
b. Expenses.
Upon submission of appropriate receipts, invoices or vouchers as
may be reasonably required by the Company, the Company will
reimburse Director for all reasonable out-of-pocket travel expenses
incurred in connection with the performance of Director’s
duties under this Agreement.
c. Taxes.
The Director acknowledges that the exercise, transfer or other
disposition of the Option may give rise to significant U.S. income
tax consequences. Under Section 83 of the Internal Revenue Code and
Treas. Reg. section 1.83-7(b), upon the exercise of the Option, the
Director will recognize taxable ordinary income equal to the
difference between the fair market value of the common stock,
determined as of the exercise date, and the Option exercise price.
When the Director sells the common stock, the Director will
recognize taxable gain or loss (long-term if the Director held the
common stock for more than one year; otherwise, short-term) equal
to the difference between the amount the Director receives from the
sale and the tax basis of the common stock sold. If the Company, in
its discretion, determines that it is obligated to withhold any tax
in connection with the exercise of the Option, or in connection
with the transfer of any common stock acquired pursuant to the
Option, the Director hereby agrees that the Company may withhold
from the Director’s compensation or other remuneration the
appropriate amount of tax. At the discretion of the Company, the
amount required to be withheld may be withheld in cash from such
compensation or other remuneration or in kind from the common stock
otherwise deliverable to the Director on exercise of this option.
The Director further agrees that, if the Company does not withhold
an amount from the Director’s compensation or other
remuneration sufficient to satisfy the withholding obligation of
the Company, the Director will make reimbursement on demand, in
cash, for the amount underwithheld.
3. Market
Stand-Off Agreement. In
the event of a public or private offering of the Company’s
securities and upon request of the Company, the underwriters or
placement agents placing the offering of the Company’s
securities, the Director agrees not to sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise
dispose of any of the Option Shares other than those included in
the registration, without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time
from the effective date of such registration as may be requested by
the Company or such placement agent or
underwriter.
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4. Confidential
Information. The
Director recognizes and acknowledges that the Director will have
access to Confidential Information (as defined below) relating to
the business or interests of the Company or of persons with whom
the Company may have business relationships. The Director agrees
that both during and after his time as a director of the Company,
the Director will not use for the Director’s own, or for
another’s benefit, or disclose or permit the disclosure of
any confidential information relating to the Company, including
without limitation any information about the deliberations of the
Board. The term “Confidential
Information”
means any non-public information that relates to the actual or
anticipated business and/or products, research or development of
the Company, its affiliates or subsidiaries, or to the
Company’s, its affiliates’ or subsidiaries’
technical data, trade secrets, or know-how, including, but not
limited to, research, product plans, or other information regarding
the Company’s, its affiliates’ or subsidiaries’
products or services and markets therefor, customer lists and
customers, prospective customers, software, developments,
inventions, processes, methodologies, algorithms, know-how,
procedures, formulas, technology, designs, drawings, engineering,
hardware configuration information, marketing, finances, business
plans, vendor relationships, passwords, encryption coding, search
technology, analytics, transaction data, ledgers, and other
business information disclosed by the Company, its affiliates or
subsidiaries, either directly or indirectly, in writing, orally or
by drawings or inspection of premises, parts, equipment, programs,
formulas, ledgers or other property of Company, its affiliates or
subsidiaries. The Director also agrees during his appointment that
he will not, other than for the benefit of the Company and in
connection with his service as a director, make any notes,
memoranda, electronic records, tape records, films, photographs,
plans, drawings or any form of record relating to any matter within
the scope of the business or concerning the dealings or affairs of
the Company and will return any such items at any time at the
request of the Board. The Director confirms that he has notified
the Board in writing of all other directorships, appointments and
interests, including any directorship, appointment or interest in a
company, business or undertaking which competes or is likely to
compete with the Company or which could otherwise potentially give
rise to a conflict with his duties with the
Company.
5. Duties,
Time and Commitment. The
Director shall use reasonable best efforts to attend all convened
meetings of the Board. During the continuance of the
Director’s appointment, the Director will be expected to: (i)
faithfully, efficiently, competently and diligently perform his
duties and exercise such powers as are appropriate to his role as a
director; (ii) in so far as reasonably possible, attend all
meetings of the Board and of any committees of the Board of which
he is a member; (iii) comply with all reasonable requests,
instructions and regulations made or given by the Board (or by any
duly authorized committee thereof) and give to the Board such
explanations, information and assistance the Board may reasonably
require; (iv) act in the best interests of the Company; and (v) use
commercially reasonable efforts to promote and extend the interests
and reputation of the Company, including assisting the Board in
relation to public and corporate affairs and bringing to bear for
the benefit of the Board the Director’s particular knowledge
and experience.
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6. Business
Opportunities & Conflicts Disclosure. The
Company acknowledges and agrees that the Director should be
permitted to engage in, acquire or invest in the same or similar
activities or lines of business involving the provision of services
or products with respect to digital assets, cryptocurrency,
alternative distribution ledgers and/or blockchain technologies
(each, a “Business
Opportunity”),
provided that the Director fully complies with and adheres to the
following advance notice, standards of conduct and Disqualified
Business Opportunity (as hereinafter defined)
restrictions:
a. Business
Opportunity Notice.
Within ten (10) business days of the Director’s appointment
to the Board, the Director shall inform the Board of any held
(direct or indirect) personal interests which may conflict with the
Company and its businesses. In the event that the Director becomes
aware of a Business Opportunity, the Director shall notify the
Company in writing of such opportunity (a
“Disclosed
Business Opportunity”)
and deliver to the Company, or provide the Company access to, all
information prepared by or on behalf of, or material information
submitted or delivered to, the Director related to such potential
transaction (the “Business
Opportunity Notice”).
Following the expiration of the thirty- (30-)-day period
(“Business
Opportunity Notice Period”)
after receipt of such Business Opportunity Notice, the Company
shall be deemed to have renounced any interest or expectancy in the
Disclosed Business Opportunity and the Director may pursue the
Disclosed Business Opportunity, provided that the Disclosed
Business Opportunity is conducted by the Director in accordance
with the standard set forth in Section 6.c. below and that the
Disclosed Business Opportunity is not a Disqualified Business
Opportunity. The Company shall not be prohibited from pursuing any
Business Opportunity with respect to which it is deemed to have
renounced any interest or expectancy as a result of this Section
6.
b. Disqualified
Business Opportunity.
During the term of this Agreement and for a period of twelve (12)
months after the Director ceases to be a Director of the Company,
the Director shall not shall not, directly or indirectly, pursue,
become engaged in or have any ownership interest or become
associated with in any Person (as hereinafter defined) which
directly or indirectly pursues or becomes engaged in any Business
Opportunity that (i) is first presented to the Director solely in
his capacity as a director or officer of the Company or its
affiliates or (ii) is identified by the Director solely through the
disclosure of information by or on behalf of the Company or its
affiliates (each such Business Opportunity referred to in clauses
(i) and (ii), a “Disqualified
Business Opportunity”).
The Director acknowledges that the foregoing restrictions and time
limitations with respect to a Business Opportunity and Disqualified
Business Opportunity are reasonable and properly required for the
adequate protection of the business interests of the
Company.
c. Standards
for Separate Conduct of Disclosed Business
Opportunity. The
Director may pursue a Disclosed Business Opportunity following the
expiration Business Opportunity Notice Period if such Disclosed
Business Opportunity is developed and pursued solely through the
use of personnel and assets of the Director or jointly with the
personnel and assets of any other “Person(s)”
(as hereinafter defined), provided that such Person(s) does not owe
any fiduciary or other duty to the Company.
“Person”
means an individual, corporation, partnership, limited liability
company, trust, joint venture, unincorporated organization or other
legal or business entity.
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7. Termination
for Material Breach. The
Director’s service on the Board may be terminated by the
Company pursuant to the provision of written notice to the Director
under Section 17 below in the event of a material breach by the
Director of any of the provisions of this Agreement, including but
not limited to Section 6 above;
provided however,
that the Director shall have been given reasonable notice and an
opportunity to promptly cure any such event of a material breach
(unless the event cannot be cured).
8. Limitation
of Liability; Right to Indemnification. The
Company shall indemnify the Director in his capacity as director of
the Company to the fullest extent permitted by applicable law
against all debts, judgments, costs, charges or expenses incurred
or sustained by the Director in connection with any action, suit or
proceeding to which the Director may be made a party by reason of
his being or having been a director of the Company. The Company
shall have the right to assume, with legal counsel of its choice,
the defense of Director in any such action, suit or proceeding for
which the Company is providing indemnification to Director. Should
Director determine to employ separate legal counsel in any such
action, suit or proceeding, any costs and expenses of such separate
legal counsel shall be the sole responsibility of Director. If the
Company does not assume the defense of any such action, suit or
other proceeding, the Company shall, upon request of the Director,
promptly advance or pay any amount for costs or expenses
(including, without limitation, the reasonable legal fees and
expenses of counsel retained by Director) incurred by Director in
connection with any such action, suit or proceeding. The Company
shall not be obligated to indemnify Director against any actions
that constitute, in the reasonable discretion of the Board of
Directors, an act of gross negligence or willful misconduct or
contrary to the general indemnification provisions of the Nevada
Revised Statutes or the Company’s certificate of
incorporation or bylaws.
9. Remedies.
The Director agrees that any breach of the terms of Section 3 and
Section 6 of this Agreement would result in irreparable injury and
damage to the Company for which the Company would have no adequate
remedy at law; the Director therefore also agrees that in the event
of said breach or any threat of breach, the Company shall be
entitled to an immediate injunction and restraining order to
prevent such breach and/or threatened breach and/or continued
breach by the Director and/or any and all entities acting for
and/or with the Director, without having to prove damages or paying
a bond, in addition to any other remedies to which the Company may
be entitled at law or in equity. The terms of this paragraph shall
not prevent the Company from pursuing any other available remedies
for any breach or threatened breach hereof, including, but not
limited to, the recovery of damages from the Director. The Director
acknowledges that the Company would not have entered into this
Agreement had the Director not agreed to the provisions of this
Section 8.
10. Amendments
and Waiver. No
supplement, modification or amendment of this Agreement will be
binding unless executed in writing by both parties. No waiver of
any provision of this Agreement on a particular occasion will be
deemed or will constitute a waiver of that provision on a
subsequent occasion or a waiver of any other provision of this
Agreement.
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11. Binding
Effect. This
Agreement will be binding upon and inure to the benefit of and be
enforceable by the parties and their respective successors and
assigns.
12. Severability.
The provisions of this Agreement are severable, and any provision
of this Agreement that is held by a court of competent jurisdiction
to be invalid, void, or otherwise unenforceable in any respect will
not affect the validity or enforceability of any other provision of
this Agreement.
13. Arbitration.
Any disputes arising from this Agreement not resolved by the
parties in a good faith, timely manner shall be arbitrated within
Los Angeles County, California under the rules and procedures of
the American Arbitration Association. Attorney fees and costs are
to be awarded to the prevailing party.
14. Governing
Law. This
Agreement will be governed by and construed and enforced in
accordance with the laws of the State of Nevada applicable to
contracts made and to be performed in that state without giving
effect to the principles of conflicts of
laws.
15. Entire
Agreement. This
Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof, superseding all
negotiations, prior discussions and prior agreements and
understanding relating to such subject
matter.
16. Notices.
Every
notice relating to this Agreement shall be in writing and shall be
given by personal delivery or by registered or certified mail,
postage prepaid, return receipt requested;
to:
If to the Company, to:
000 Xxxxxxx Xxx
Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: President
If to the Director, to the address for notice on the signature page
to this Agreement or, if no such address is provided, to the last
address of the Director provided by the Director to the
Company.
Either of the parties may change their address for purposes of
notice hereunder by giving notice in writing to such other party
pursuant to this Section 16.
17. Miscellaneous.
This Agreement may be executed by the Company and Director in any
number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and
the same instrument. Any party may execute this Agreement by
facsimile signature and the other party will be entitled to rely on
such facsimile signature as evidence that this Agreement has been
duly executed by such party.
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18. Definitions.
As used in this Agreement, the following definitions shall
apply:
a. The
“Board”
shall have the meaning set forth in the
preamble.
b. “Business
Opportunity”
shall have the meaning set forth in Section
6.
c. “Business
Opportunity Notice”
shall have the meaning set forth in Section
6.
d. “Business
Opportunity Notice Period”
shall have the meaning set forth in Section
6.
e. “Company”
shall have the meaning set forth in the
preamble.
f. “Confidential
Information”
shall have the meaning set forth in Section
4.
g. “Dollars”
and the sign
“$”
mean the lawful money of the United States of
America.
h. “Director”
shall have the meaning set forth in the
preamble.
i. “Disqualified
Business Opportunity”
shall have the meaning set forth in Section
6.
j. “Option”
shall have the meaning set forth in Section
2.
k. “Option
Shares”
shall have the meaning set forth in Section
2.
l. “Termination
of Service”
shall have the meaning set forth in Section
2.
m. “Person(s)”
shall have the meaning set forth in Section
6.
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The Parties have executed this Agreement as of the date first
written above.
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DIRECTOR
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By:
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/s/
Xxxxx
Xx
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By:
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/s/
Xxxxxxx Xxxxxxxx
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Name:
Xxxxx
Xx
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Name:
Xxxxxxx Xxxxxxxx
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Title: CEO
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Address for Notice:
0 Xx. Xxxxxx Xx
Xxxxxxxxx, Xxxxxxx, X0X 0X0
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