Token Linked Employee Bonus Plan

Disclaimer

The following is draft of a possible plan to provide employees with the benefits of Token ownership without having to deal with distributing ownership before Network Launch, IRC Section 83 or IRC Section 409A.

Any comments or thoughts would be appreciated.


[COMPANY NAME]

TOKEN LINKED BONUS PLAN


1)     Purpose. 
a)      [COMPANY NAME] (the “Company”) hereby establishes the Token Linked Bonus Plan (the “Plan”) to enhance the ability of the Company to reward the historic contribution of certain employees and other service providers and to attract and retain highly skilled and competent executives, employees and contractors and to induce such individuals to exert their utmost efforts in furtherance of the business of the Company by the payment of bonuses designed to imitate the benefits of owning [TokenName] (“Tokens”) as described herein.
b)     The structure of the Plan is a cash bonus plan designed to avoid adverse treatment under IRC Section 409A as follows: 
i)      a Participant does not vest in any right to payment under the plan before the date on which the Network becomes distributed (the “Network Live Date”).  If the Participant is not a Service Provider on the Network Live Date he or she will not be entitled to any payments.
ii)     After the Network Live Date, each Participant will vest in a right to a payment and receive that payment within thirty (30) days of each vesting event, provided such Participant is a Service Provider on the date of such Vesting Event, so there is no material deferral of a vested right to compensation subject to IRC Section 409A.
2)     Bonus Payments.  Each Participant shall be entitled to receive additional compensation payments (“Bonus Payments”) at the times and in the amounts set forth below, subject to any withholding or payroll taxes, including those referred to in Section 12(c), imposed with respect thereto:
a)      Network Live Payments.  Within thirty (30) days after the Network Live Date, the Company shall pay each Participant who is a Service Provider on the Network Live Date an amount in cash equal to the product of the number of Earned Plan Units held by such Participant on such date and the Periodic Token Value for such Network Live Date (a “Network Live Payment”);
b)     Periodic Payments.  Within thirty (30) days after each Vesting Event occurring after the Network Live Date, provided the Participant is a Service Provider on such Vesting Event, the Company shall pay each Participant an amount in cash equal to the product of the number of Plan Units that became Vested Plan Units on such Vesting Event and the Periodic Token value with respect to such Vesting Event (a “Periodic Payment”);
No Bonus Payments shall be payable with respect to Plan Units that relates to any Vesting Event which occurs after the Termination Date for that Plan Unit or after the relevant Participant ceases to be a Service Provider.
3)     Definitions.  Capitalized terms used herein and not otherwise defined shall be defined as follows:
a)      Periodic Token Value” shall mean (i) with respect to the Network Live Date, the average price per Unit received by the Company with respect to Token sales on such date, net of all commissions and other related expenses, (ii) with respect to any other date after the Network Live Date, the ten (10) day weighted average trading price of Tokens on the [Exchange], ending on the day before such date, and (iii) shall otherwise be determined by the Plan Administrator in his or her reasonable discretion, provided that payment of the net (after withholding tax) amount in Tokens will be deemed per se correct.
b)     Service Provider” means service as an employee or consultant.  A Participant shall not be considered to have ceased to be a Service Provider (although Plan Units will cease to be “Earned” or “Vested” during such period) in the case of:  (i) sick leave designated by the Plan Administrator as not a break in Service Provider status; (ii) military leave; (iii) any other leave of absence approved by the Plan Administrator; or (iv) in the case of transfers between locations of the Company or between the Company and its affiliates or their respective successors.  A change in status from an employee to a consultant or from a consultant to an employee will not constitute ceasing to be a Service Provider.
c)      Grant Certificates” shall be the sole documentation representing a Participant’s right to Bonus Payments hereunder, and shall be in substantially the form attached hereto as Exhibit A.  A Grant Certificate shall not be valid unless signed by the Plan Administrator.
d)     Plan Units” shall mean Plan Units issued pursuant to this Plan, regardless of whether they are Vested Plan Units or Unvested Plan Units.  No Participant shall have any right to payments with respect to a Plan Unit that is not a Vested Plan Unit.  It is intended that the economic value of a Plan Unit shall correspond to the economic value of one Token (ignoring the termination of all Plan Units on the Termination Date).
e)      Participant” shall mean any of the individuals to whom Plan Units have been issued pursuant to this Plan and not cancelled.
f)       Earned”, prior to the Network Live Date, a Plan Unit shall be considered “Earned” upon the occurrence of such events as are set forth on the Grant Certificate with respect to such Plan Unit (the “Vesting Schedule”).  Generally, Units will be Earned, 25% on the one year anniversary of the Vesting Commencement Date set forth on the Grant Certificate and 1/48th on the first day of each calendar month commencing thereafter, unless other terms are set forth on the Grant Certificate.  Notwithstanding the foregoing, an Earned Plan Unit will not be a Vested Plan Unit (and will not entitle the Participant to any payment with respect thereto) until the Network Live Date.
g)     Vested”, no Plan Units will be Vested Plan Units until the Network Live Date.  Immediately prior to the Network Live Date, all previously Earned Units will be automatically converted into Vested Plan Units, and following the Network Live Date, Plan Units shall become Vested Plan Units on the date such Plan Unit becomes an Earned Unit. 
h)     Vesting Event” shall be an event occurring after the Network Live Date on which an Earned Plan Unit becomes a Vested Plan Unit as provided in the Plan and/or related Grant Certificate.
i)      Termination Date” Termination Date shall mean the earliest of (i) October 31, 2027, and (ii) the date set forth on the Participant’s Grant Certificate as the termination date of such Plan Units.
j)      Vested Plan Units” Vested Plan Units shall mean Plan Units which have become Vested Plan Units as provided herein or in the Participant’s Grant Certificate.
4)     Calculation Principles.  The amount of any Periodic Payment or Network Live Payment shall be calculated by the Plan Administrator in his or her reasonable discretion. Absent manifest error, such determination shall be conclusive.
5)     Administration
a)      The Plan shall be administered by _____________ (the “Plan Administrator”).  In addition to all authority specified elsewhere in this Plan, the Pan Administrator shall have authority, in his or her discretion:
i)      to grant all Plan Units under the Plan, to determine the number of Plan Units to be granted to each Participant, and to determine who shall be a Participant and on what terms such Plan Units shall become Earned Plan Units;
ii)     to interpret all provisions of the Plan and of the Grant Certificates, if any, issued thereunder;
iii)   to adopt, amend and rescind rules and regulations for the administration of the Plan;
iv)    to determine the amount of any Bonus Payments. 
All such actions or determinations of the Administrator shall be final and binding upon all persons.  The Administrator shall not be liable for any action or determination made by him in good faith in administering the Plan.
6)     Issuance and Vesting of Units
a)      The Administrator from time to time may decide to issue Plan Units to Participants, which issuance shall be evidenced solely by a Grant Certificate signed by the Plan Administrator.  Such Grant Certificate shall set forth (1) the name of the Participant; (2) the total number of Plan Units issued thereby, (3) the number of such Plan Units as are Unvested on the date of issuance, (4) the Vesting Commencement Date related to such Unvested Plan Units, (5) the Vesting Schedule applicable to such Unvested Plan Units, and (6) the Termination Date for such Plan Units if different than October 31, 2027.
b)     Unless Plan Units are specifically identified on the Grant Certificate as “Vested Plan Units” on the date of issuance, 100% of the Plan Units set forth on each Grant Certificate shall be Unvested Plan Units and shall not entitle the Participant to any payments pursuant to this Plan until such Plan Units are Vested Plan Units. 
7)     Termination.  This Plan shall terminate thirty (30) days after the Termination Date.  Any Unvested Plan Units held by such Participants which are not explicitly extended at the time of such termination shall automatically terminate without any payment with respect thereto.
8)     Receipts and Releases; Forfeiture Provisions; Facility of Payment.  Acceptance of any payment by any Participant in accordance with the provisions of the Plan (including a delivery of Tokens as provided in Section 3(a)) shall constitute full satisfaction of all claims of such Participant and his or her heirs, assigns and affiliates against the Company (or any affiliate thereof) pursuant to this Plan or for any other reason.  The Administrator may require such Participant, as a condition to receiving such payment or delivery, to sign a receipt and release to such effect.  Such receipt and release may also contain or incorporate by reference new or existing provisions regarding non-solicitation of employees or clients or suppliers or referral sources, non-competition with the Company (or any successor, assign or affiliate thereof), and/or confidentiality.  Violation of these provisions shall result in forfeiture of any remaining payments hereunder and/or repayment of any amounts already paid to the Participant under the terms of the Plan.  If any Participant is determined by the Administrator to be incompetent by reason of physical or mental disability to give a valid receipt and release, the Administrator may cause the payment or payments becoming due to such person to be made to another person for his or her benefit upon execution of such a receipt and release; however, the Administrator and the Company shall not be responsible to follow how the recipient applies such funds.  In addition, if a Participant becomes entitled to a payment under the Plan, and if at such time the Participant has outstanding any debt, obligation or other liability representing an amount owing to the Company, then the Company may offset such amount owed to it against the amount of the payment otherwise due to the Participant.
9)     Nature of Plan Units; No Rights as an Equity Holder or to Continued Relationship. Plan Units represent only a contingent and conditional right to receive payments in the future from the Company.  Plan Units shall be used solely as a mechanism to determine amounts of compensation to be paid to Participants under the Plan.  Plan Units shall not be treated as an equity interest in any of the Company, or any of its affiliates or any right or interest in or to such equity or any ownership of Tokens.  The Participant shall have no rights as a partner, member, or stockholder including without limitation rights at any time to vote such interests or to receive any cash dividends or other cash distributions paid with respect to equity of the Company or any of its affiliates or to receive any Tokens or distributions with respect thereto.  The Company shall owe no duty to the Participant as a fiduciary.  The Participant shall have no right to employment or other relationship with the Company because of the grant or payment of Plan Units issued pursuant to this Plan.
10)   Non-Transferability, etc.  No Plan Unit may be transferred, assigned, or alienated by a Participant, and any attempt to do so shall be void.  No Plan Unit shall be subject to the claims of a Participant’s creditors or liable to attachment, execution or other process of law.  All payments hereunder shall be made from the general funds of the Company, no Participant has any interest in any Tokens owned by the Company or any cash deposits as security or otherwise and this Plan shall not be construed to create or require the creation of any trust or fiduciary relationship.  The Company is not required to own or hold any particular number of Tokens regardless of the number of Plan Units Issued.  Participants shall have no greater rights than an unsecured general creditor of the Company.  Notwithstanding the foregoing, any Bonus Payments payable with respect to Vested Plan Units after a Participants death will be made to the Participant’s executor, administrator, other legal representative of his or her estate to be distributed as directed by the Participant or as otherwise provided by applicable law. 
11)   Token Dividends; Splits; Combinations; Recapitalizations.  The number of Plan Units granted to each Participant shall be appropriately adjusted in such manner as the Plan Administrator may deem equitable to give effect to any Token dividends, splits, combinations, recapitalizations and other similar changes in the number of Tokens held by token holders.
12)   Miscellaneous.
a)      Entire Agreement.  This Plan and accompanying Grant Certificates, if any, constitute the entire agreement of the Company with respect to the subject matter thereof and cannot be modified by any oral statement or otherwise.
b)     Conflict Between Grant Certificates and Plan.  The Plan provides for the general terms and conditions which shall be applicable to Plan Units granted pursuant to the Plan.  The Administrator may authorize more specific terms applicable to any Plan Unit granted under the Plan.  However, in the event of a conflict between the terms of the Plan and any term contained in a Grant Certificate granted pursuant to the Plan (other than with respect to the Vesting Schedule), the terms of the Plan shall control.
c)      Withholding Taxes.  Any payment the Company makes under the Plan shall be subject to the federal, state or local income and employment tax withholding requirements to which payments of this type are subject, and the Company may take any appropriate action to satisfy its withholding responsibilities.  The Company may make any payment by delivery of Tokens representing the number of Plan Units that Vested with respect to the relevant payment date, multiplied by a fraction equal to one minus the aggregate percentage of all withholding or employment taxes applicable to such payment, provided that the Company makes payment to the applicable authorities with respect to such withholding or employment taxes.
d)     Governing Law.  This Plan and any Plan Unit granted pursuant to it shall be construed under the laws of [California], without regard to conflict of laws rules, provided that no restriction upon the right of the Company to impose non-competition or non-solicitation obligations upon Participants shall be effective unless the Participant is a resident of California.

            EXECUTED as of ________________.


[COMPANY NAME]


                                                           
By:      
       
Title:   



_________________________________________________________________________________________
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[COMPANY NAME]
TOKEN LINKED BONUS PLAN
GRANT CERTIFICATE


As of ___________

Name:                                                  
Address:                                             
                                                           
Total Plan Units:                                                                       
Initial Unvested Plan Units:                                             
Vesting Commencement Date:                                          

ENTITLEMENT TO PAYMENTS PURSUANT TO [COMPANY NAME] TOKEN BONUS PLAN:

Participant shall be entitled to a Network Live Payment and Periodic Payments pursuant to the [COMPANY NAME] Token Linked Bonus Plan associated with this Grant Certificate only with respect to Plan Units which are Vested Plan Units on the date on which such payments accrue.  Capitalized terms used herein and not otherwise defined shall have their respective meanings set forth in the Plan. 

VESTING TERMS:

Twenty Five (25%) of the Initial Unvested Plan Units shall become Earned Plan Units on the date which is One (1) Year after the Vesting Commencement Date, and 1/48th of the total number of such Initial Unvested Plan Units (rounded down to the next whole number of Plan Units) shall become Earned Plan Units on the first day of each full month thereafter, provided Participant is a Service Provider on such date, so that all of the Plan Units listed above shall be Earned Plan Units on the first day of the forty-eighth (48th) month beginning after the Vesting Commencement Date. 

Earned Plan Units shall become Vested Plan Units (a) with respect to Plan Units Earned prior to the Network Live Date, on the Network Live Date, and (b) with respect to Plan Units Earned after the Network Live Date, on the date such Plan Units become Earned Units.

IN WITNESS WHEREOF, the Company has caused this Grant Certificate to be signed by its duly authorized officers this __ day of _______, 201_:

                                                [COMPANY NAME]

                                                                                               
                                                Plan Administrator

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