EXO FOUNDATION, INC. SAFE-T (Simple Agreement for Future Equity with Token Allocation)

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”).

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.

(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.

“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.

 “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.

 “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.

(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.

(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.

(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.

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.

(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.

(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.

 

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

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).

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.

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.

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

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.

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.

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.

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.

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.