Minority Tokenholder Protections

Salutary Minority Tokenholder Protection Framework

Executive Summary

Salutary's Minority Tokenholder Protection Framework establishes institutional-grade governance standards for post-acquisition scenarios. Through mandatory pre-funded protections, technical enforcement mechanisms, and transparent operational covenants, we ensure orderly transitions that protect all stakeholders. This framework transforms crypto M&A from speculative events into predictable, professionally executed transactions.

Key Features:

• Three distinct operational frameworks with clear obligations

• Pre-funded exit rights via escrow/letter of credit

• Technical enforcement through multisig treasury controls

• 6-month governance covenant period with objective breach standards

• D&O insurance requirements aligned with traditional M&A

When an acquirer seeks to gain control over a Salutary partner, they must publicly declare their intent by selecting one of three operational frameworks. By proceeding with acquisition, the acquirer accepts binding obligations to Salutary that ensure orderly and fair business transitions for all tokenholders. If the acquirer fails to comply, Salutary will block the acquisition or enforce the acquirer's commitments.

The acquirer remains bound by these governance obligations for 6 months post-acquisition. The partner cannot cancel Salutary partnership during this time to ensure transparency and enforceability of these covenants. Salutary will continue to provide auditing services as it does for all partners.

Terms:

• Legacy Minority Tokenholders: Defined as any holder who: (i) held tokens continuously from any date preceding the Acquisition Event through the relevant determination date, and (ii) is not a Related Party of the Acquirer.

  • Continuous holder status shall be proven by: (i) onchain wallet analysis via Salutary-approved tools, or (ii) exchange attestation on Salutary-provided form. No additional discovery permitted on holder status.

  • Any tokenholders who purchased the token after Salutary has publicly certified the acquisition event as valid are not considered minority tokenholders.

• Control-Block Consideration: The greater of: (i) 30-day volume-weighted average price (VWAP) ending one day prior to acquisition announcement, or (ii) the per-token consideration paid to the selling control group, including all contingent payments. If consideration includes non-cash elements, an independent fairness opinion is required.

• Related-Party: As defined by Singapore Companies Act Section 6, International Accounting Standard 24, and equivalent standards, with quarterly attestations required.

• Force Majeure: Limited exclusively to: (i) change in law rendering performance illegal in relevant jurisdiction, (ii) war or terrorism directly affecting acquirer's operations, (iii) natural disaster preventing access to systems for more than 72 consecutive hours. Explicitly excludes: market conditions, liquidity constraints, voluntary insolvency, blockchain forks, or any self-induced circumstances.

  • For the avoidance of doubt, this narrower definition supersedes MSEA § 9.5 solely for obligations arising under this Framework; all other MSEA obligations retain the broader definition.

• Material Asset Transfer: means any sale, lease, license, or other disposition of assets representing more than 5% of the foundation's total asset value as reflected in the most recent Salutary-audited financial statements.

Terms & Interpretive Order

Capitalized terms not defined herein have the meanings given in the MSEA Core Text or its Schedules.  If the same term is defined differently, the following order of precedence applies:  

1. MSEA Core Text §§ 1–9  

2. MSEA Schedules A-H

3. This Framework

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NOTE: Salutary tokens are governance instruments that enable change-of-control events. They confer no rights to profits, dividends, or revenue shares. Any value is determined by market forces and is not guaranteed by Salutary or partners. Salutary provides enforceable M&A mechanics and financial auditing; we make no representations or promises regarding market pricing. Past token performance does not predict future results. All disputes must be resolved by individual SIAC arbitration seated in Singapore; class or representative actions are waived. All disputes arising under this Framework are subject to individual arbitration under SIAC Rules in Singapore. Class, collective, or representative actions are expressly waived. This information is for educational purposes and is not an offer of securities nor is it legal advice.

Enforcement of acquisition events remains subject to applicable law, commercial feasibility, and jurisdictional constraints. No guarantee of successful enforcement exists in all jurisdictions. 

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Acquirer Acknowledgment

By proceeding with acquisition, the acquirer irrevocably accepts the following binding obligations:

• To maintain treasury and related-party transparency through Salutary multisig negative consent

• To pre-fund purchase obligations through escrow or letter of credit as specified herein

• To maintain required D&O insurance coverage

• To fulfill purchase obligations if triggering events occur

• That these obligations survive any attempt to terminate Salutary partnership for 6 months

• That all disputes are subject to individual SIAC arbitration with class actions waived

These are all contractual obligations, enforceable through SIAC arbitration per the Master Services & Enforcement Agreement Schedule C provisions.

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Universal Requirements 

• Mandatory Treasury Multisig: For 6 months post-acquisition, all treasury assets must remain in a multisig wallet requiring Salutary's approval, achieved through absence of negative consent, for related-party transactions exceeding 5% of treasury value. This applies across all acquisition frameworks and serves as a technical enforcement mechanism for governance standards and to protect against actions like self-dealing. 

• Mandatory Treasury Veto Oracle (Negative-Consent). For 6 months post-closing, all Foundation treasury assets shall be held in a smart-contract wallet (the "Veto Oracle") that (i) permits transfers initiated by the Acquirer or Foundation signatories, but (ii) automatically delays settlement for forty-eight (48) hours, during which Salutary may exercise a veto flag on any single transaction that constitutes a Related-Party Transaction or exceeds 5% of treasury value. Salutary's role is strictly negative-consent; it never initiates, holds, or beneficially controls assets, and its power is limited to blocking disallowed transfers. 

• D&O Insurance Requirement: Acquirer shall obtain and maintain Directors & Officers liability insurance with minimum coverage equal to the greater of: (i) 10% of the total acquisition consideration, or (ii) $5 million USD. Such policy must:

• Name Salutary as additional insured for actions taken pursuant to this Framework

• Include 24-month tail coverage

• Be placed with an A-rated or better insurance carrier (exceptions must be approved by Salutary)

• Be evidenced by certificate of insurance delivered to Salutary at closing

• No Fiduciary Relationship. Salutary's authority is limited to enforcement of objective standards; no fiduciary relationship is created between Salutary and any party - including Legacy Minority Tokenholders, Partner, Acquirer, or the Foundation.

• Negative Consent Only. Salutary's multisig authority extends solely to blocking prohibited transactions per the objective standards herein, not directing business operations. Salutary never initiates, holds, or beneficially controls any business assets for or on behalf of any party.

• Not Insurance or Investment Guarantee. These protections do not create an insurance arrangement, fiduciary relationship, or investment guarantee whatsoever. They constitute governance rights designed to deter abuse rather than economic promises of security, value, or return.

• Limited Liability. Salutary shall not be liable for any failure to detect violations, delays in enforcement, or inability to recover assets, except in cases of willful misconduct.

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Salutary provides administrative enforcement services only and exercises no investment discretion, custody functions, or fiduciary duties toward any party. The Parties agree that neither Salutary nor any vehicle formed under partnership is intended to be, or shall be deemed, an “investment company” within the meaning of the U.S. Investment Company Act of 1940.

Salutary does not undertake, and Partner expressly disclaims any expectation of, fiduciary duties, or advisory services regarding regulatory compliance, business strategy, tax strategy, or legal guidance. Salutary does not provide digital payment token services as defined under Singapore Payment Services Act. All token-related activities remain solely with Partner. Salutary does not provide financial advice under the Singapore Financial Advisers Act or Securities and Futures Act. All investment decisions remain with relevant parties.

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Governance Standards and Post-Acquisition Compliance

Professional Standards

All post-acquisition operations shall maintain:

• Monthly financial reporting in accordance with IFRS/GAAP as applicable

• Quarterly attestations from directors regarding related-party transactions

Breach Determination Process

1. Preliminary Finding: Salutary's compliance team identifies potential violation

2. Notice & Cure: Acquirer receives 72-hour notice to remedy or provide explanation

3. Salutary Review: Salutary internal legal committee reviews evidence

4. Final Determination: Published on Salutary's transparency portal with supporting documentation

5. Enforcement Action: Automatic treasury freeze and escrow release procedures initiated

Anti-Circumvention Mechanisms

• Prohibited Actions: Asset stripping, dividend recapitalizations, or synthetic transactions designed to extract value while evading Framework obligations

• Monitoring: Real-time blockchain analytics with anomaly detection (subject to Salutary discretion).

• Liquidated damages: an amount equal to three times the diverted value, capped at twenty-five percent (25%) of the total acquisition consideration, drawable first from D&O insurance.  

Objective Breach Standards

The following create presumption of covenant breach requiring acquirer response within 72 hours:

• Related-party transactions exceeding 5% of treasury without Salutary notice and approval

• Asset sales below 90% of documented fair market value without independent fairness opinion

• Dividend or distribution exceeding 10% of treasury value

• Failure to maintain required insurance or multisig structure

• Material misrepresentation in quarterly attestations

Acquirer may rebut the presumption by delivering documented evidence to Salutary within the same 72-hour window; failure to do so renders the breach conclusive for all purposes of this Framework.

For tokenholder edification, Salutary shall publish detailed breach determination criteria prior to acquisition closing.

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Framework 1: Operational Continuity With Existing Token

Strategic Intent: Acquirer commits to operate the business as a going concern while maintaining the existing token structure. This framework suits acquirers seeking to improve operations while preserving token utility and community.

Operational Transparency Obligations

• • Revenue Recognition: All protocol revenues must flow through foundation-controlled addresses to maintain auditability. Revenues remain property of the foundation; tokenholders have no direct claim.

  • Related-party transactions must be reported to Salutary and designated accordingly. Salutary maintains sole discretion, exercised reasonably and in good faith based on documented criteria, on validity of any related-party transactions.

    • Subject to monthly reporting with independent valuation for transactions exceeding 5% of treasury

  • Strategic Initiatives: Major pivots or new product launches require 20 business-day advance notice to Salutary

Acquirer's Obligation: Pre-Funded Exit Mechanism

• • As a pre-condition to closing, acquirer shall deposit into escrow with an independent escrow agent that Salutary explicitly approves, or secure via irrevocable letter of credit from a rated financial institution, funds equal to twenty percent (20 %) of the maximum potential tender obligation, denominated in USD or Salutary-approved USD-pegged stablecoins (calculated as Control-Block Consideration × outstanding minority tokens).

  • If Salutary confirms a covenant breach based on the objective standards herein, Acquirer shall promptly extend an offer to purchase tokens from Legacy Minority Tokenholders at the Control-Block Consideration. The escrowed funds or letter of credit shall be used to fulfill properly tendered tokens on a pro-rata basis if tenders exceed available funds.

    • Tender window: 20 business days from Salutary’s breach certification.

Settlement-Agent Standards (Universal)

The Acquirer shall complete cash settlement no later than T + 5 Business Days after the tender window closes through one of the following regulated intermediaries (or an on-chain contract meeting § 1(c) below):

(a) Salutary Approval

The intermediary must appear on Salutary's public "Pre-Qualified Settlement List" or receive prior written consent (not to be unreasonably withheld).

(b) Acquirer Liability & Indemnity

Acquirer remains solely responsible for the acts or omissions of the intermediary and shall indemnify Salutary against any resulting loss. Salutary's approval is administrative only and shall not create agency, fiduciary status, or any warranty of performance.

(c) Onchain Alternative

If Acquirer opts for an onchain payment contract, it must: (i) be open-source, (ii) pass a security audit by a firm on Salutary's Tier-1 Audit Panel (Schedule F § F.5), and (iii) route funds through a wallet controlled by the SEC/ MAS/ EU-CASP-licensed custodian selected above.

(d) Backup Trigger

Failure to nominate a compliant intermediary by T – 10 Business Days automatically triggers use of a Salutary-appointed backup agent, funded from the escrow/LOC, with costs borne by Acquirer.

Technical Enforcement: Negative Consent Only

Salutary's enforcement authority is strictly limited to negative consent mechanisms. Upon determination of covenant violations, Salutary may:

• Exercise veto rights over prohibited treasury transactions through the multisig wallet

• Block all transfers that violate objective standards set forth herein

• Release escrowed funds according to pre-defined waterfall mechanics

• Where legally permissible, facilitate release of escrowed funds according to pre-defined criteria 

This technical enforcement mechanism operates independently of and in addition to legal remedies available through Singapore courts. Of note:

• • This acquirer obligation applies only to Legacy Minority Tokenholders

  • There is a 20 business-day tender window for Legacy Minority Tokenholders

  • A pro-rata settlement from escrow is provided if oversubscribed

  • Legacy Minority Tokenholders shall have standing to pursue collective action against the acquirer in Singapore courts for enforcement of the acquirer's purchase obligations, subject to the arbitration provisions referenced herein.

Delaware analogue: Entire‑fairness review for controller self‑dealing (Weinberger v. UOP, Kahn v. Lynch).

NOTE: Any Delaware examples are illustrative only. No inference should be drawn that Delaware law governs or that US fiduciary standards apply. The analogue highlights economic parity, not governing law.

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Framework 2: Maintain Operations, Issue New Token

• Rights offering: The acquirer commits to offer each Legacy Minority Tokenholder an exchange into the new token at a rate that maintains their proportional holdings.

• Same minority protection obligations as Framework 1 apply

• The new token must inherit all Salutary governance standards and minority protections ab initio or the acquirer must follow Framework 3 procedures.

Delaware analogue: Stock‑for‑stock recap under MFW dual‑protections framework; reverse‑Morris‑Trust logic.

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Framework 3: Close Operations, Asset Strip/Wind-Down

Mandatory Pre-Funded Tender

If Acquirer elects to wind down within 6 months, it must initiate Framework 3 procedures

As a mandatory pre-condition to closing and asset transfer, the acquirer must deposit 100% of funds necessary (denominated in USD or USD-pegged stablecoins) to purchase all outstanding legacy minority tokens at the Control-Block Consideration with an independent third-party escrow agent approved by Salutary.

• Irrevocable Instructions

  • Escrow must include irrevocable instructions to disburse funds upon Salutary's certification of valid tenders. All properly submitted tenders from Legacy Minority Tokenholders must be fulfilled before any asset transfers to acquirer are permitted.

Delaware analogue: Take‑private LBOs; minority cash‑out and appraisal rights (Glassman v. Unocal).

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Universal Minority Protection Standards

• 6-month minority protection period: ensures acquirers fulfill their obligations to minority tokenholders and maintain governance standards

• Anti-circumvention provision: If the acquirer elects to wind down operations or substantially divest assets (>50% by value) within 6 months, they must follow Framework 3 procedures at the better of the original Control-Block Consideration or prevailing 30-day VWAP.

  • This is designed to protect Legacy Minority Tokenholders from opportunistic closures.

• Automatic Bad-Faith Presumption: Asset transfers, dividends, or restructurings in the final 30 days of the 6-month period create presumption of bad faith circumvention, shifting burden to acquirer to prove legitimate business purpose.

• Force-Majeure events (as defined within the MSEA) do not toll or extend the 6-month period unless Salutary, acting reasonably, certifies in writing that performance is impossible under Applicable Law.

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Why Salutary Works: M&A Protections, Adapted For Crypto

The Salutary Framework represents the evolution of M&A standards for the blockchain era, maintaining institutional standards while leveraging technological advantages.

• Clear governance framework → institutional confidence: Draws from established minority protection principles in corporate law, establishing trust and accountability.

• Operational flexibility preserved: Acquirer can still restructure, leverage, or reorganize assets, after fulfilling their binding commitments to minority tokenholders under this framework.

• Pre-funded protections via escrow/LC: Ensures real money backs obligations

• Technical enforcement via multisig: Immediate protective action without court delays

• D&O insurance requirement: Creates additional recovery source and acquirer skin-in-the-game

Traditional M&A Protections Brought Onchain

This Framework adapts time-tested minority protection mechanisms from traditional finance:

• Weinberger Standard (Delaware): Entire fairness review for controlling party transactions

• MFW Framework: Dual protections through independent committee + majority-of-minority vote

• Revlon Duties: Maximization of value in change-of-control contexts

• Appraisal Rights: Fair-value determination for dissenting shareholders

Key Innovations for Blockchain Context

• Smart Contract Enforcement: Multisig mechanisms allow rapid responses over court injunctions

• Transparent Verification: Blockchain analysis replaces traditional discovery

• Pre-Funded Protection: Escrow/LC requirements ensure real backing

• Rapid Resolution: 6-month framework vs. years of litigation

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Salutary Role, Discretion, and Limitation of Liability

Limited Enforcement Role: Salutary's role is limited to mechanical enforcement of pre-defined covenants. No fiduciary relationship is created between Salutary and any party. Salutary's multisig authority extends solely to blocking prohibited transactions per the objective standards herein, not directing business operations. If Salutary invokes a treasury freeze, the funding and release mechanics in MSEA § 5.3 and Schedule B (Reserve-Wallet waterfall) govern the disbursement of any indemnity or tender funds.

Discretionary Authority: Salutary maintains reasonable discretion, exercised in good faith based on documented criteria, in determining whether violations have occurred and selecting appropriate remedies. This includes decisions regarding treasury freezes, escrow releases, and enforcement actions. Salutary shall maintain internal review minutes documenting its decision process.

No Guarantee of Recovery and Risk Acknowledgment: While Salutary shall use commercially reasonable efforts to protect Legacy Minority Tokenholders through the mechanisms described herein, Salutary does not guarantee full recovery of losses or complete remediation of violations. The protective framework creates rights and enforceable procedures but cannot ensure against all potential harms, particularly in cases of sophisticated evasion, criminal fraud, or jurisdictional challenges.

All participants acknowledge that:

• Market forces determine token pricing independent of these protections

• Enforcement mechanisms may fail in hostile jurisdictions or in cases of Acquirer or Partner fraudulent evasion and other criminal behavior

• Technical exploits or blockchain failures could compromise safeguards

• Regulatory changes may limit enforcement capabilities

These governance mechanisms create procedural rights, not economic guarantees.

Limitation of Liability: Salutary shall not be liable for any failure to detect violations, delays in enforcement, or inability to recover assets, except in cases of willful misconduct.

Not Insurance or Fiduciary Relationship: These protections do not create an insurance arrangement, fiduciary relationship, or investment guarantee. They constitute governance rights designed to deter abuse rather than economic promises of security or return.

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RISK DISCLOSURES & DISCLAIMERS

Salutary tokens are "change-of-control" governance instruments that may, at predefined thresholds, facilitate an enforceable transfer of business assets. They do not confer any rights to profit participation, dividends, revenue shares, or any guarantee of market valuations. Neither Salutary nor its partners make any representation that token price will correlate with business performance. Market pricing is determined by independent actors and may not reflect intrinsic value.

Enforcement of acquisition events remains subject to applicable law, commercial feasibility, and jurisdictional constraints. Salutary reserves sole discretion in selecting enforcement methodology based on cost-effectiveness and legal practicability. No guarantee of successful enforcement exists in all jurisdictions. If enforcement actions prove unlawful, expose the company or its principals to disproportionate risk, or become economically impracticable, Salutary reserves sole discretion to suspend, modify, or decline proceedings.

All disputes must be resolved by individual SIAC arbitration seated in Singapore; class or representative actions are waived. All disputes arising under this Framework are subject to individual arbitration under SIAC Rules in Singapore. Class, collective, or representative actions are expressly waived.

Salutary provides administrative enforcement services only and exercises no investment discretion, custody functions, or fiduciary duties toward any party. The Parties agree that neither Salutary nor any vehicle formed under partnership is intended to be, or shall be deemed, an “investment company” within the meaning of the U.S. Investment Company Act of 1940.

Salutary does not undertake, and Partner expressly disclaims any expectation of, fiduciary duties, or advisory services regarding regulatory compliance, business strategy, tax strategy, or legal guidance. Salutary does not provide digital payment token services as defined under Singapore Payment Services Act. All token-related activities remain solely with Partner. Salutary does not provide financial advice under the Singapore Financial Advisers Act or Securities and Futures Act. All investment decisions remain with relevant parties.

This information is for educational purposes and is not an offer of securities nor is it legal or tax advice. Tokenholders should consult their own advisors regarding the implications of any acquisition event.

Any protections described herein are contractual governance mechanisms, not guarantees of economic outcome. They are designed to create procedural fairness and transparent processes, not to ensure any particular market result or token valuation.

Limitations

• Market Risk: Token prices may decline regardless of governance protections

• Enforcement Risk: Cross-border enforcement subject to jurisdictional limitations

• Solvency Risk: Protections dependent on acquirer's continued solvency

• Regulatory Risk: Future regulatory changes may impact enforceability

Salutary documentation may contain forward-looking statements regarding potential acquisition scenarios and enforcement mechanisms. Actual results may differ materially due to factors beyond Salutary's control.

This document is proprietary to Salutary Pte. Ltd. and subject to the terms of the Master Services & Enforcement Agreement.

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Build for Weight

Additional documentation here