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1 Kimberly Pallen (SBN 288605)
kimberly.pallen@withersworldwide.com
2 Christopher N. LaVigne (NYBN 4811121) ELECTRONICALLY
(admitted Pro Hac Vice)
3 christopher.lavigne@withersworldwide.com F I L E D
Superior Court of California,
Withers Bergman LLP County of San Francisco
4 505 Sansome Street, 2nd Floor
San Francisco, California 94111 05/28/2021
Clerk of the Court
5 Telephone: 415.872.3200 BY: ERNALYN BURA
Facsimile: 415.549.2480 Deputy Clerk
6
Attorneys for Defendants Payward, Inc., a
7 California Corporation d/b/a Kraken; and Kaiser
Ng, an individual
8
9 SUPERIOR COURT OF THE STATE OF CALIFORNIA
10 COUNTY OF SAN FRANCISCO
11
12 NATHAN PETER RUNYON, an individual, Case No. CGC-19-581099
13 Plaintiff, DECLARATION OF KAISER NG IN
SUPPORT OF DEFENDANTS’ MOTION
14 v. FOR SUMMARY ADJUDICATION
15 PAYWARD, INC., a California Corporation REDACTED
d/b/a KRAKEN; and KAISER NG, an
16 individual; and DOES 1 through 10, inclusive, Filed Concurrently with: Memorandum of
Points and Authorities; Separate Statement of
17 Defendants. Undisputed Material Facts; and Declaration of
Christopher N. LaVigne in Support of
18 Defendants’ Motion for Summary
Adjudication
19
20
Date: August 12, 2021
21 Time: 9:30 a.m.
Dept.: 302
22
The Hon. Ethan P. Schulman, Dept. 302
23 Action Filed: November 26, 2019
Trial Date: September 13, 2021
24
25 I, Kaiser Ng, declare as follows:
26 1. The facts stated in this declaration are based on my personal knowledge, and, if
27 called to testify, I could and would competently testify to them.
28 2. I am the Chief Financial Officer (“CFO”) of Payward, Inc. d/b/a Kraken
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1 (“Payward”), and was CFO at all times during the time period reflected in Plaintiff Nathan Peter
2 Runyon’s First Amended Complaint (“FAC”).
3 3. I make this declaration in support of Defendants’ Motion for Summary
4 Adjudication.
5 4. I am familiar with Mr. Runyon because I hired him as a financial analyst to work
6 as part of Payward’s finance team. Mr. Runyon was initially hired as a temporary employee on
7 March 13, 2018, and he became a full-time employee in June of 2018. In his role as a financial
8 analyst, he reported directly to me during the entirety of his employment with Payward. Attached
9 as Exhibit A is a true and correct copy of Mr. Runyon’s employment agreement. As reflected in
10 that agreement, Mr. Runyon’s role was defined to include “the duties and have the responsibilities
11 and authority customarily performed and held by an employee in your position or as otherwise
12 may be assigned or delegated to you by the Company’s Chief Financial Analyst [sic].” This
13 description accurately reflects his role, which was to assist me and the finance team on various,
14 ad hoc, projects that I assigned to him. Mr. Runyon’s agreement with Payward stated that his
15 “employment with the Company will be ‘at will,’ meaning that either you or the Company may
16 terminate your employment at any time and for any reason, with or without cause.”
17 Bank and Customer Balance Reconciliation
18 5. One task I assigned Mr. Runyon was to reconcile Payward’s bank balances with
19 its customer balances. Initially, Mr. Runyon reported an almost $400 million discrepancy
20 between these two balances. Ultimately, it turned out there was a significantly smaller
21 discrepancy of a few million dollars that was ultimately properly reconciled. At no time during
22 Mr. Runyon’s work on this project did he inform me that he believed there was anything he
23 believed to be unlawful or unethical concerning Payward’s bank balances. At that time, the
24 Finance team was working with our Data and Engineering team to develop a better methodology
25 to collect complete and accurate data for our reconciliation process. The project was at its infancy
26 stage when Mr. Runyon was working on it, and has evolved and improved significantly since his
27 employment ended.
28 “The Program” Cap Table Migration and Reconciliation
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1 6. Another major task that I assigned Mr. Runyon was to manage the day-to-day
2 transition of all of Payward’s equity grants and capitalization table or “cap table” from an Excel
3 spreadsheet to (referred to as the “Program” in the FAC), a third-party cap table
4 management software. While I tasked Mr. Runyon with leading the day-to-day transition to the
5 Program, I, as CFO, retained ultimate ownership of and final sign-off on this transition.
6 7. This process took Mr. Runyon much longer than expected. To the best of my
7 recollection the transition process took eight or nine months to complete. The main reason it took
8 so long is that the transition of the existing information in the Excel version of the cap table to
9 the Program was not seamless. Mr. Runyon would periodically provide me with a draft template
10 provided by the Program that he had filled in with information from the Excel version. I recall
11 numerous times when I would spot-check iterations of that template and would catch numerous
12 mistakes, which I would instruct Mr. Runyon to investigate and correct. Examples of the mistakes
13 reflected in the Program’s data upload template included, among other things, incorrect vest
14 commencement dates, wrong or missing termination dates for equity holders, and incorrect
15 vesting schedules.
16 8. Once the data was loaded into the Program, there continued to be mistakes with
17 the terms of equity grants reflected in the Program. Accordingly, I assigned Mr. Runyon to lead
18 the day-to-day reconciliation between Payward’s equity records and the data reflected in the
19 Program.
20 9. As part of this transition and reconciliation, I decided to make Mr. Runyon the
21 main contact at Payward with the Program, since he was handling the bulk of the day-to-day
22 transition. My understanding from Mr. Runyon, the Program’s representatives, and my own
23 experience is that the Program only allows one user to have “Super Admin” access during the
24 implementation phase. This Super Admin account is the only administrative account allowed to
25 make changes to the terms of equity grants reflected in the Program. I decided that Mr. Runyon
26 was the most logical person to be given this Super Admin account. I have only ever had a “Legal
27 administrator” account with the Program, which only allows me to make certain changes to the
28 data listed in the Program, such as changes to personal information, email addresses, and the cost
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1 center (department) equity holders work for. I cannot through my Program account make changes
2 to the terms of option grants. After Mr. Runyon was terminated, the Company assigned another
3 Payward employee that works frequently with the cap table and the Program the same account
4 permissions previously assigned to Mr. Runyon.
5 10. As part of my role as CFO, I am required, for example, to sign off on stock option
6 exercise requests from employees. Because of this, option holders would inquire of me from
7 time-to-time regarding the terms of their equity grants, and because I was supervising and double-
8 checking Mr. Runyon’s transition and reconciliation work, I would regularly review the terms of
9 equity grants reflected in the Program.
10 11. When I would notice mistakes in those terms, I would either contact Mr. Runyon
11 or I would directly contact the Program’s representatives to fix those mistakes. However, from
12 time-to-time, when Mr. Runyon was not available, for example, after normal work hours or on
13 weekends, I would fix mistaken equity data reflected in the Program myself. In order to do so, I
14 would need to use Mr. Runyon’s Super Admin Program account. At all times, Mr. Runyon was
15 aware of this because in order to use his account I needed to request that Mr. Runyon provide a
16 two-factor authentication or 2FA code he would receive from the Program in order to allow me
17 to log into his Program account. Attached as Exhibit B is a true and correct copy of a Saturday,
18 May 18, 2019, Slack message between Mr. Runyon and myself, in which I ask Mr. Runyon to
19 contact me because “I need your 2FA to log into your [Program account] to update some errors
20 on vest commencement dates.” As reflected in this Slack chat, Mr. Runyon did contact me and
21 provide me with his 2FA code.
22 Employee 5
23 12. I am familiar with “Employee 5” referred to in the FAC. Her name is Empl. 5
24 Empl. 5
and she is a former Payward employee. When Employee 5 was hired in 2017, Payward
25 was a relatively small start-up company and as CFO during that time I performed a variety of
26 roles. One of those roles was drafting employment agreements for new hires to sign. I drafted
27 Employee 5’s consulting and employment agreements, and communicated with her about those
28 agreements.
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1 13. Employee 5 was hired by Payward in August 2017. She was initially hired as a
2 consultant. I recall that Payward implemented a change in vesting schedules for new employees
3 hired after July 1, 2017. Prior to that date, employees were granted options based on a 4-year
4 vesting schedule. After July 1, 2017, new hires were granted options based on a 6-year vesting
5 schedule. I recall that the rationale behind this change was to incentivize new hires to remain with
6 the Company longer as it grew.
7 14. Employee 5’s initial consulting agreement granted her, among other things, equity
8 options based on a 6-year vesting schedule. Attached as Exhibit C is a true and correct copy of
9 Employee 5’s consultant agreement, dated August 21, 2017. I drafted this agreement, and
10 Employee 5 emailed me an executed copy of this agreement.
11 15. Three months later, on November 22, 2017, per the terms of her consulting
12 agreement, Payward and Employee 5 signed an employment agreement again setting forth the
13 terms of her equity grant, including that her options were subject to a 6-year vesting schedule.
14 Attached as Exhibit D is a true and correct copy of Employee 5’s employment agreement. I
15 drafted and signed this agreement on behalf of Payward.
16 16. On January 7, 2018, Employee 5 signed a Notice of Stock Option Grant which
17 stated that she was entitled to a 6-year vesting schedule. Attached as Exhibit E is a true and correct
18 copy of the Notice of Stock Option Grant.
19 17. On May 20, 2019, Employee 5signed a document entitled “Option grant ES-90 to
20 [Employee 5]” which stated that she was entitled to a 6-year vesting schedule and entitled to
21 exercise shares based on that schedule. Attached as Exhibit F is a true and correct copy
22 of the “Option grant ES-90 to [Employee 5].”
23 18. On May 28, 2019, Employee 5 signed a document entitled “Exercise Notice and
24 Restricted Stock Purchase Agreement” which stated that she was entitled to a 6-year vesting
25 schedule and entitled to exercise shares based on that schedule. Attached as Exhibit G is
26 a true and correct copy of the “Exercise Notice and Restricted Stock Purchase Agreement.”
27 19. On June 18, 2019, Employee 5 signed an amended “Exercise Notice and
28 Restricted Stock Purchase Agreement” which stated that she was entitled to a 6-year vesting
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1 schedule and entitled to exercise shares based on that schedule. Attached as Exhibit H is
2 a true and correct copy of the amended “Exercise Notice and Restricted Stock Purchase
3 Agreement.”
4 November 27, 2017 Board Consent
5 20. Payward’s Board voted to approve, by written board consent, the terms of a large
6 number of equity grants on November 27, 2017 (the “Board Consent”). Attached as Exhibit I, is
7 a true and correct copy of the Board Consent. The terms of Employee 5’s equity grant set forth
8 in that Board Consent mistakenly included a 4-year vesting schedule, instead of the 6-year vesting
9 schedule that she and Payward had agreed upon.
10 21. As CFO, I was responsible for compiling the information reflected in the draft
11 Board Consent that was circulated to the Board for signature. There was much more than just
12 equity grants reflected in the Board Consent, including, for example, an increase and expansion
13 to Payward’s Stock Plan by approximately shares. My recollection of working on
14 compiling information for the Board Consent is that the majority of my time was spent discussing
15 this stock plan increase and its impacts.
16 Mistakes Contained in the Board Consent
17 22. I recall that in June 2019 Mr. Runyon brought to my attention that Employee 5’s
18 vesting schedule as reflected in the Program was different than her vesting schedule reflected in
19 the Board Consent. Specifically, he said: “[Employee 5’s] [vesting schedule] was changed from
20 1/48 [4-years] to 1/72 [6-years] as well. Is the Board changing that?,” I replied, “Yes. Not really
21 changing. 72 was on her contract and was the intention. She has no expectation of 48.”Attached
22 as Exhibit J is a true and correct copy of a June 7, 2019, Slack message between Mr. Runyon and
23 myself in which Mr. Runyon informed me of this discrepancy.
24 23. Prior to this Slack chat, I discovered that the Program listed Employee 5 as having
25 a 4-year vesting schedule and I changed that schedule to reflect the 6-year vesting schedule she
26 and the Company agreed to. While I have no specific recollection of making this change in the
27 Program, I have no doubt that I did, since I made such changes and fixed similar mistakes
28 regularly in the Program a at that time. When Mr. Runyon asked me on June 7 whether I had
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1 made this change, I confirmed that I had. (See Exhibit J.)
2 24. When fixing such mistakes and making these changes in the Program, I do not
3 recall ever consulting the Board Consent because (a) the vesting schedules reflected in Exhibit C
4 of the Board Consent are defined by a numbering system with an index reflected several pages
5 after the grants listed in Exhibit C, which I found time-consuming and cumbersome to navigate;
6 and (b) I would typically make changes in the Program to equity terms that I knew were incorrect
7 based on my personal knowledge of, for example, when those employees joined the company
8 and what those employees had agreed to in the employment agreements I had drafted.
9 25. Prior to this June 7, 2019 Slack chat, I do not recall knowing that Employee 5’s
10 vesting schedule was incorrectly reflected in the Board Consent. When Mr. Runyon brought this
11 to my attention, I explained to him that Employee 5’s vesting schedule reflected in the Board
12 Consent was a mistake and that she and the Company had agreed and intended that her options
13 would be subject to a 6-year vesting schedule. (See Exhibit J.) Mr. Runyon replied that the Board
14 needs to “approve that change,” which is an incorrect description of what the Board would be
15 doing. In reality, the Board would simply be fixing an inadvertent mistake that was made
16 regarding Employee 5’s vesting schedule. However, when he said this, I responded that I
17 understood.
18 26. I have always intended to have the Board correct this mistake. Sometime during
19 the second half of 2019 I alerted Jesse Powell, the Company’s CEO and a member of the Board,
20 to the errors in the Board Consent that needed to be fixed. However, this mistake has not yet been
21 remedied by the Board in any subsequent vote or written board consent. This is, in part, because
22 two months after the June 7 Slack chat, in August 2019, Mr. Runyon contacted Payward by email,
23 copying me and his attorneys in this lawsuit. Attached as Exhibit K is a true and correct copy of
24 Mr. Runyon’s August 29, 2019 email to Payward copying his current lawyers Claire Cochran
25 and Natalie Xifo. Shortly after this email, Mr. Runyon, through his lawyers, threatened to sue
26 Payward for fraud related to Employee 5’s vesting schedule. In light of this, I did not want to
27 recommend to the Board that it formally fix its earlier mistake regarding Employee 5’s vesting
28 schedule for fear of making it seem like the Company was trying to cover something up.
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1 27. Since Mr. Runyon raised the issue regarding Employee 5’s vesting schedule in the
2 Board Consent, I have discovered that the mistake regarding Employee 5’s vesting schedule is
3 not the only mistake reflected in the Board Consent. The Board Consent also incorrectly reflects
4 4-year vesting schedules for several employees that, like Employee 5, were hired after July 1,
5 2017. Those employees, reflected in Exhibit C of the Board Consent are
6 . Like Employee 5, those
7 employees and the Company agreed that their option grants would be subject to a 6-year vesting
8 schedule. Attached as Exhibit L are true and correct copies of the employment agreements signed
9 by the Company and these employees. Like Employee 5’s employment agreements, I drafted
10 these agreements.
11 28. These mistakes reflected in the Board Consent are the result of bad data I provided
12 for inclusion in the draft Board Consent. I believe this mistake was the result of, among other
13 things, a small back-office support team, including the legal department (that now handles all
14 Board and equity documentation), that I was the only employee at that time to manage HR and
15 stock-related matters, and the fact that I was performing a variety of other roles at a small
16 company.
17 29. None of these employees’ vesting schedule discrepancies, including Employee
18 5’s, were addressed in the June 30, 2019, written Board consent.
19 30. I do not recall Mr. Runyon ever informing me of any of these other vesting
20 schedule discrepancies reflected in the Board Consent aside from the discrepancy regarding
21 Employee 5’s vesting schedule.
22 31. Aside from the June 7, 2019, Slack chat with Mr. Runyon about Employee 5’s
23 vesting schedule, I do not recall Mr. Runyon raising the issue of Employee 5’s vesting schedule
24 with me.
25 32. I did not intend to, nor do I believe I did, defraud Employee 5. What I told Mr.
26 Runyon in the June 7 Slack chat remains true: at all times I have understood that Employee 5 and
27 Payward had agreed that her options would vest subject to a 6-year, not a 4-year, schedule. The
28 Board Consent merely reflects an anomalous mistake in the information I provided for inclusion
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1 in the draft Board Consent regarding the vesting schedules for several employees, including
2 Employee 5, who were hired after July 1, 2017.
3 Employee 7
4 33. I am familiar with the person identified as “Employee 7” in the FAC. Employee
5 7 refers to a current Payward employee, Empl. 7 .
6 34. Mr. Runyon’s allegations regarding Employee 7 are partially correct. I recall that
7 Mr. Runyon unilaterally changed the email address in the Program associated with one or
8 Employee 7’s option grants. While I do not recall becoming angry or yelling at Mr. Runyon for
9 changing that email address, I do recall that Mr. Runyon should not have changed it.
10 35. Employee 7’s equity grant from Payward is unusual because he is one of the only
11 Payward employees that agreed to and was granted by the Board two separate equity grants, one
12 of which is performance-based. His first, and largest, options grant is similar to Employee 5’s
13 and other employees hired after July 1, 2017, and is subject to a 6-year vesting schedule with a
14 1-year cliff. Employee 7’s second options grant is performance-based, and is subject to approval
15 by Payward’s CEO and Chief Brand Officer. Attached as Exhibit M is a true and correct copy of
16 Employee 7’s employment agreement dated January 11, 2019.
17 36. Mr. Runyon was aware of this because I asked him and Payward’s Program
18 representative how the two separate equity grants should be handled in the Program so that
19 Employee 7 would not immediately and mistakenly receive an email notification that his
20 performance based options had vested until those options were properly approved at a later time.
21 Attached as Exhibit N is a true and correct copy of an email dated May 20, 2019, from me to
22 Joseph , Payward’s Program representative, copying Mr. Runyon, in which I inform Mr.
23 of Employee 7’s different equity grants.
24 37. Mr. Runyon was also aware that the Program recommended that Employee 7 be
25 given a placeholder email address in the Program for his performance-based options so that
26 Employee 7 would not be granted these options until they were properly approved. In a May 20,
27 2019 email chain between Mr. Park, Mr. Runyon, and myself, Mr. Park suggests that he edit
28 Employee 7’s second, performance-based equity grant in the Program to reflect a placeholder
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1 email address. (See Exhibit N.) Attached as Exhibit O are true and correct copies of Employee
2 7’s regular and performance based options grants as reflected in the Program. Despite this, Mr.
3 Runyon unilaterally changed the placeholder email address in the Program to Employee 7’s
4 actual email address.
5 38. To the best of my recollection, Mr. Runyon never asked me prior to unilaterally
6 deciding to change the placeholder email address in the Program associated with Employee 7’s
7 performance-based options.
8 Mr. Runyon’s Purported OFAC-Related Concerns
9 39. I do not recall Mr. Runyon coming to me with any OFAC-related concerns. I do
10 not recall Mr. Runyon telling me that he was “concerned about how Kraken aligned the countries
11 for revenue reporting and mostly worried that Kraken could not operate in those countries.” (FAC
12 ¶ 28.) I recall asking Mr. Runyon to align countries to regions for purposes of revenue
13 recognition. I put Mr. Runyon in touch with , Payward’s Head of Compliance, to
14 help Runyon map revenue based on a spreadsheet of Payward’s regional revenue. Attached
15 hereto as Exhibit P is a true and correct copy of a Slack message between me, Mr. Runyon and
16 dated April 23, 2019. Attached hereto as Exhibit Q is a true and correct copy of an
17 email message between me, Mr. Runyon and dated February 20, 2019.
18 40. I also do not recall reassuring Mr. Runyon I would follow up with
19 regarding Mr. Runyon’s purported concerns. I also do not recall telling Mr. Runyon that “it would
20 be resolved” in response to these purported concerns.
21 41. I do not recall being part of any conversations between Mr. Runyon and
22 regarding any OFAC-related issue.
23 42. However, if Mr. Runyon did raise these concerns to me I believe I would have
24 referred him to , who is the Company’s Head of Compliance. OFAC-related
25 regulatory requirements are not something I handled or handle as CFO.
26 Mr. Runyon’s Requests That Payward Pay for His Continued Schooling
27 43. I recall that Mr. Runyon approached me and inquired whether Payward would be
28 willing to pay for him to attend graduate school to obtain an MBA. I recall telling Mr. Runyon in
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1 response that the Company would be willing to provide some financial support for his continued
2 education, but it would be better if he chose a course that would provide him some benefit, and
3 increase his skills, in relation to his role as a financial analyst, such as a data analytics or an
4 accounting course.
5 44. Mr. Runyon then asked me if Payward was willing to pay for him to attend a data
6 analytics course. I agreed, and Payward paid for Mr. Runyon to attend this course. My
7 recollection is that Mr. Runyon attended and completed the course.
8 45. Mr. Runyon’s enrollment in this course, and Payward’s payment for the course,
9 was solely the result of Mr. Runyon’s suggestion that he take the course and that Payward pay
10 for it. I do not recall suggesting in the first instance that Mr. Runyon take this course, and I never
11 demanded that he take the course or in any way forced him to enroll in the course.
12 Mr. Runyon’s Alleged Disabilities and Veteran Status
13 46. I do not recall ever discussing with Mr. Runyon his alleged disabilities or his
14 veteran status. I do not recall that Mr. Runyon ever raised these issues with me.
15 47. I do not recall ever knowing that Mr. Runyon is disabled. I do not recall ever
16 reviewing Mr. Runyon’s information in BambooHR, the Company’s HR software.
17 48. I do not recall mocking Mr. Runyon for being disabled or telling him “You don’t
18 look disabled.” That is not something I would say and I do not believe the conversation Mr.
19 Runyon described in paragraph 36 of the FAC ever occurred.
20 49. I understand that Mr. Runyon alleges that I “verbally attacked” him because I
21 thought I could speak to him that way because he had served as a Marine. I do not recall this and
22 I do not believe this to be true.
23 50. I never yelled at Mr. Runyon for failing to perform his job, or for raising any
24 substantive issues with me relating to, or any issues or questions he raised in connection with his
25 day-to-day duties as a financial analyst. I never yelled at him or became angry with him for
26 bringing issues or mistakes or discrepancies to my attention, such as the discrepancy he raised
27 regarding Employee 5’s vesting schedule. The point of hiring Mr. Runyon as a financial analyst,
28 and building out the finance team generally, was to institute tighter controls and a stronger review
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1 process within the finance team.
2 51. However, I recall having some heated conversations with Mr. Runyon in
3 connection with the numerous interpersonal conflicts he was involved in with other Payward
4 employees. Again, I do not recall mentioning Mr. Runyon’s veteran status during any of these
5 conversations.
6 Reasons for Mr. Runyon’s Termination
7 52. Mr. Runyon was terminated due to his work performance being below
8 expectation, the numerous interpersonal conflicts he caused with other Payward employees, and,
9 ultimately, his explicit refusal to continue working.
10 53. I recall that I would frequently have to follow-up with Mr. Runyon regarding tasks
11 he was assigned that he either would not deliver or would be extremely delayed in delivering.
12 Mr. Runyon did not take full ownership over tasks and projects, despite that I asked him and
13 encouraged him to. Indeed, because of all of the follow-up I had to do with Mr. Runyon, I decided
14 to institute a weekly 1-on-1 meeting with Mr. Runyon so that I could monitor his work.
15 54. On numerous occasions, I provided feedback, both verbal and written, to Mr.
16 Runyon regarding these performance-related issues. Attached as Exhibit R is a true and correct
17 copy of an April 12, 2019, email I sent to Mr. Runyon containing some of this feedback. Among
18 other things, I informed Mr. Runyon, “I should not have to ask you for the same reports every
19 month. You should do whatever it takes to deliver your work in high quality. If you can’t meet a
20 deadline, let me know instead of going silent. Any update is better than no update.” I also
21 provided him with feedback throughout the Program cap table transition project, which took him
22 almost nine months to complete. I recall specifically that the draft transition templates Mr.
23 Runyon provided to me contained numerous mistakes, and until recently were still fixing
24 mistakes made during the transition of the cap table to the Program. I informed Mr. Runyon he
25 needs to have “a stronger sense of ownership” and that “[i]t was made clear to [Mr. Runyon] that
26 he own[s] the cap table and the [Program] project.” In that email, I also told Mr. Runyon, “If
27 things are not clear, ask. Don’t start doing anything if you don’t have a clear idea of what is
28 required and expected [o]f you.” Finally, I told him, “If you don’t have all the information you
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1 need to do your job, schedule time with me. Don’t wait for our weekly 1on1 and for me to ask
2 for it, and then come back to me and say you never received full information.”
3 55. In my April 19, 2019, email to Mr. Runyon I also stated that “I have invested in
4 you and I really want to see return on the investment.” I said this not only because Payward
5 literally invested in Mr. Runyon’s continued education, but because I spent a significant amount
6 of time providing him feedback, dealing with the fallout from Mr. Runyon’s numerous
7 interpersonal conflicts with other employees, advising him on how to better handle those
8 conflicts, and explaining his actions to protect him from being fired based on those conflicts.
9 56. The list of conflicts Mr. Runyon caused and complaints I received about Mr.
10 Runyon is long. Some main examples that I recall are as follows:
11 a. Mr. Runyon decided to play a YouTube video loudly through his computer
12 speakers so that numerous people seated near him in the office (which has an open floor plan)
13 were able to hear the video. I received a complaint about this when a senior member of the
14 Engineering Team, who was visiting the office from Germany, approached me, complained that
15 the volume of the video was distracting, and told me that he had asked Mr. Runyon to please turn
16 down the volume of the video but Mr. Runyon had refused. When I asked Mr. Runyon about this,
17 he was unapologetic and stated that he was right to have played this video loudly because the
18 employee he sat near on the finance team did not understand cryptocurrency and Mr. Runyon was
19 trying to educate him. I attempted to explain to Mr. Runyon that, even though he had good
20 intentions, his behavior was inappropriate, but he refused to acknowledge he had acted in any way
21 inappropriately.
22 b. Mr. Runyon made comments to regarding the office’s bathrooms that
23 caused a few female employees to voice their concerns to me. I shared the concerns with Mr.
24 Runyon. Mr. Runyon insisted there was nothing concerning about his suggestion and that he was
25 serious about his suggestions despite the concerns.
26 c. Mr. Runyon complained that the Ethernet cables in the conference room at
27 the San Francisco office did not work properly. He apparently became so frustrated that when
28 speaking with an IT employee, Mr. Runyon called the IT employee’s work a “pain-in-the-ass.”
W ITHERS
NY28571/0001-US-9465064/5 13
B ERGMAN LLP
DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION
1 Both the IT employee and another employee brought this to my attention, and I had to discuss this
2 with Mr. Runyon and ask him to apologize to the IT employee. Mr. Runyon insisted that he meant
3 what he said and he was angry that the IT employee had escalated the situation to an executive as
4 opposed to dealing with Mr. Runyon directly.
5 d. On another occasion, Mr. Runyon was frustrated that he had not received
6 information from another Payward employee, Katy, and insulted her in a group Slack channel with
7 other employees. Katy was understandably upset at this and brought it to my attention. Again, I
8 spoke with Mr. Runyon about this and about why his approach to Katy was inappropriate, even if
9 he was rightfully frustrated by her lack of response to his request. He was again unapologetic
10 about his conduct, and did not think he did anything wrong. Attached as Exhibit S is a true and
11 correct copy of Slack conversation I had with Mr. Runyon on June 28, 2019, regarding his
12 inappropriate behavior towards Katy. As reflected in this conversation, Mr. Runyon was
13 unapologetic, and when I said we need to talk about the incident, he stated “do you want me to just
14 apologies? I think she got the message.” When I responded that “I would think so” if he can “[d]o
15 it sincerely [and] if you agree your approach could have been better (tone, group DM, calling her
16 out),” Mr. Runyon replied:
17 It was very unprofessional and I was calling her out for it. I don’t like working with
people who drag their feet, aren’t responsive, and make stupid excuses for why they
18 can’t do something. People like that hold our company back. The team is getting lazy.
You have high standards and want me to meet them, which I’m definitel
Preview
1 Kimberly Pallen (SBN 288605) kimberly.pallen@withersworldwide.com 2 Christopher N. LaVigne (NYBN 4811121) ELECTRONICALLY (admitted Pro Hac Vice) 3 christopher.lavigne@withersworldwide.com F I L E D Superior Court of California, Withers Bergman LLP County of San Francisco 4 505 Sansome Street, 2nd Floor San Francisco, California 94111 05/28/2021 Clerk of the Court 5 Telephone: 415.872.3200 BY: ERNALYN BURA Facsimile: 415.549.2480 Deputy Clerk 6 Attorneys for Defendants Payward, Inc., a 7 California Corporation d/b/a Kraken; and Kaiser Ng, an individual 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 COUNTY OF SAN FRANCISCO 11 12 NATHAN PETER RUNYON, an individual, Case No. CGC-19-581099 13 Plaintiff, DECLARATION OF KAISER NG IN SUPPORT OF DEFENDANTS’ MOTION 14 v. FOR SUMMARY ADJUDICATION 15 PAYWARD, INC., a California Corporation REDACTED d/b/a KRAKEN; and KAISER NG, an 16 individual; and DOES 1 through 10, inclusive, Filed Concurrently with: Memorandum of Points and Authorities; Separate Statement of 17 Defendants. Undisputed Material Facts; and Declaration of Christopher N. LaVigne in Support of 18 Defendants’ Motion for Summary Adjudication 19 20 Date: August 12, 2021 21 Time: 9:30 a.m. Dept.: 302 22 The Hon. Ethan P. Schulman, Dept. 302 23 Action Filed: November 26, 2019 Trial Date: September 13, 2021 24 25 I, Kaiser Ng, declare as follows: 26 1. The facts stated in this declaration are based on my personal knowledge, and, if 27 called to testify, I could and would competently testify to them. 28 2. I am the Chief Financial Officer (“CFO”) of Payward, Inc. d/b/a Kraken W ITHERS NY28571/0001-US-9465064/5 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 (“Payward”), and was CFO at all times during the time period reflected in Plaintiff Nathan Peter 2 Runyon’s First Amended Complaint (“FAC”). 3 3. I make this declaration in support of Defendants’ Motion for Summary 4 Adjudication. 5 4. I am familiar with Mr. Runyon because I hired him as a financial analyst to work 6 as part of Payward’s finance team. Mr. Runyon was initially hired as a temporary employee on 7 March 13, 2018, and he became a full-time employee in June of 2018. In his role as a financial 8 analyst, he reported directly to me during the entirety of his employment with Payward. Attached 9 as Exhibit A is a true and correct copy of Mr. Runyon’s employment agreement. As reflected in 10 that agreement, Mr. Runyon’s role was defined to include “the duties and have the responsibilities 11 and authority customarily performed and held by an employee in your position or as otherwise 12 may be assigned or delegated to you by the Company’s Chief Financial Analyst [sic].” This 13 description accurately reflects his role, which was to assist me and the finance team on various, 14 ad hoc, projects that I assigned to him. Mr. Runyon’s agreement with Payward stated that his 15 “employment with the Company will be ‘at will,’ meaning that either you or the Company may 16 terminate your employment at any time and for any reason, with or without cause.” 17 Bank and Customer Balance Reconciliation 18 5. One task I assigned Mr. Runyon was to reconcile Payward’s bank balances with 19 its customer balances. Initially, Mr. Runyon reported an almost $400 million discrepancy 20 between these two balances. Ultimately, it turned out there was a significantly smaller 21 discrepancy of a few million dollars that was ultimately properly reconciled. At no time during 22 Mr. Runyon’s work on this project did he inform me that he believed there was anything he 23 believed to be unlawful or unethical concerning Payward’s bank balances. At that time, the 24 Finance team was working with our Data and Engineering team to develop a better methodology 25 to collect complete and accurate data for our reconciliation process. The project was at its infancy 26 stage when Mr. Runyon was working on it, and has evolved and improved significantly since his 27 employment ended. 28 “The Program” Cap Table Migration and Reconciliation W ITHERS NY28571/0001-US-9465064/5 2 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 6. Another major task that I assigned Mr. Runyon was to manage the day-to-day 2 transition of all of Payward’s equity grants and capitalization table or “cap table” from an Excel 3 spreadsheet to (referred to as the “Program” in the FAC), a third-party cap table 4 management software. While I tasked Mr. Runyon with leading the day-to-day transition to the 5 Program, I, as CFO, retained ultimate ownership of and final sign-off on this transition. 6 7. This process took Mr. Runyon much longer than expected. To the best of my 7 recollection the transition process took eight or nine months to complete. The main reason it took 8 so long is that the transition of the existing information in the Excel version of the cap table to 9 the Program was not seamless. Mr. Runyon would periodically provide me with a draft template 10 provided by the Program that he had filled in with information from the Excel version. I recall 11 numerous times when I would spot-check iterations of that template and would catch numerous 12 mistakes, which I would instruct Mr. Runyon to investigate and correct. Examples of the mistakes 13 reflected in the Program’s data upload template included, among other things, incorrect vest 14 commencement dates, wrong or missing termination dates for equity holders, and incorrect 15 vesting schedules. 16 8. Once the data was loaded into the Program, there continued to be mistakes with 17 the terms of equity grants reflected in the Program. Accordingly, I assigned Mr. Runyon to lead 18 the day-to-day reconciliation between Payward’s equity records and the data reflected in the 19 Program. 20 9. As part of this transition and reconciliation, I decided to make Mr. Runyon the 21 main contact at Payward with the Program, since he was handling the bulk of the day-to-day 22 transition. My understanding from Mr. Runyon, the Program’s representatives, and my own 23 experience is that the Program only allows one user to have “Super Admin” access during the 24 implementation phase. This Super Admin account is the only administrative account allowed to 25 make changes to the terms of equity grants reflected in the Program. I decided that Mr. Runyon 26 was the most logical person to be given this Super Admin account. I have only ever had a “Legal 27 administrator” account with the Program, which only allows me to make certain changes to the 28 data listed in the Program, such as changes to personal information, email addresses, and the cost W ITHERS NY28571/0001-US-9465064/5 3 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 center (department) equity holders work for. I cannot through my Program account make changes 2 to the terms of option grants. After Mr. Runyon was terminated, the Company assigned another 3 Payward employee that works frequently with the cap table and the Program the same account 4 permissions previously assigned to Mr. Runyon. 5 10. As part of my role as CFO, I am required, for example, to sign off on stock option 6 exercise requests from employees. Because of this, option holders would inquire of me from 7 time-to-time regarding the terms of their equity grants, and because I was supervising and double- 8 checking Mr. Runyon’s transition and reconciliation work, I would regularly review the terms of 9 equity grants reflected in the Program. 10 11. When I would notice mistakes in those terms, I would either contact Mr. Runyon 11 or I would directly contact the Program’s representatives to fix those mistakes. However, from 12 time-to-time, when Mr. Runyon was not available, for example, after normal work hours or on 13 weekends, I would fix mistaken equity data reflected in the Program myself. In order to do so, I 14 would need to use Mr. Runyon’s Super Admin Program account. At all times, Mr. Runyon was 15 aware of this because in order to use his account I needed to request that Mr. Runyon provide a 16 two-factor authentication or 2FA code he would receive from the Program in order to allow me 17 to log into his Program account. Attached as Exhibit B is a true and correct copy of a Saturday, 18 May 18, 2019, Slack message between Mr. Runyon and myself, in which I ask Mr. Runyon to 19 contact me because “I need your 2FA to log into your [Program account] to update some errors 20 on vest commencement dates.” As reflected in this Slack chat, Mr. Runyon did contact me and 21 provide me with his 2FA code. 22 Employee 5 23 12. I am familiar with “Employee 5” referred to in the FAC. Her name is Empl. 5 24 Empl. 5 and she is a former Payward employee. When Employee 5 was hired in 2017, Payward 25 was a relatively small start-up company and as CFO during that time I performed a variety of 26 roles. One of those roles was drafting employment agreements for new hires to sign. I drafted 27 Employee 5’s consulting and employment agreements, and communicated with her about those 28 agreements. W ITHERS NY28571/0001-US-9465064/5 4 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 13. Employee 5 was hired by Payward in August 2017. She was initially hired as a 2 consultant. I recall that Payward implemented a change in vesting schedules for new employees 3 hired after July 1, 2017. Prior to that date, employees were granted options based on a 4-year 4 vesting schedule. After July 1, 2017, new hires were granted options based on a 6-year vesting 5 schedule. I recall that the rationale behind this change was to incentivize new hires to remain with 6 the Company longer as it grew. 7 14. Employee 5’s initial consulting agreement granted her, among other things, equity 8 options based on a 6-year vesting schedule. Attached as Exhibit C is a true and correct copy of 9 Employee 5’s consultant agreement, dated August 21, 2017. I drafted this agreement, and 10 Employee 5 emailed me an executed copy of this agreement. 11 15. Three months later, on November 22, 2017, per the terms of her consulting 12 agreement, Payward and Employee 5 signed an employment agreement again setting forth the 13 terms of her equity grant, including that her options were subject to a 6-year vesting schedule. 14 Attached as Exhibit D is a true and correct copy of Employee 5’s employment agreement. I 15 drafted and signed this agreement on behalf of Payward. 16 16. On January 7, 2018, Employee 5 signed a Notice of Stock Option Grant which 17 stated that she was entitled to a 6-year vesting schedule. Attached as Exhibit E is a true and correct 18 copy of the Notice of Stock Option Grant. 19 17. On May 20, 2019, Employee 5signed a document entitled “Option grant ES-90 to 20 [Employee 5]” which stated that she was entitled to a 6-year vesting schedule and entitled to 21 exercise shares based on that schedule. Attached as Exhibit F is a true and correct copy 22 of the “Option grant ES-90 to [Employee 5].” 23 18. On May 28, 2019, Employee 5 signed a document entitled “Exercise Notice and 24 Restricted Stock Purchase Agreement” which stated that she was entitled to a 6-year vesting 25 schedule and entitled to exercise shares based on that schedule. Attached as Exhibit G is 26 a true and correct copy of the “Exercise Notice and Restricted Stock Purchase Agreement.” 27 19. On June 18, 2019, Employee 5 signed an amended “Exercise Notice and 28 Restricted Stock Purchase Agreement” which stated that she was entitled to a 6-year vesting W ITHERS NY28571/0001-US-9465064/5 5 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 schedule and entitled to exercise shares based on that schedule. Attached as Exhibit H is 2 a true and correct copy of the amended “Exercise Notice and Restricted Stock Purchase 3 Agreement.” 4 November 27, 2017 Board Consent 5 20. Payward’s Board voted to approve, by written board consent, the terms of a large 6 number of equity grants on November 27, 2017 (the “Board Consent”). Attached as Exhibit I, is 7 a true and correct copy of the Board Consent. The terms of Employee 5’s equity grant set forth 8 in that Board Consent mistakenly included a 4-year vesting schedule, instead of the 6-year vesting 9 schedule that she and Payward had agreed upon. 10 21. As CFO, I was responsible for compiling the information reflected in the draft 11 Board Consent that was circulated to the Board for signature. There was much more than just 12 equity grants reflected in the Board Consent, including, for example, an increase and expansion 13 to Payward’s Stock Plan by approximately shares. My recollection of working on 14 compiling information for the Board Consent is that the majority of my time was spent discussing 15 this stock plan increase and its impacts. 16 Mistakes Contained in the Board Consent 17 22. I recall that in June 2019 Mr. Runyon brought to my attention that Employee 5’s 18 vesting schedule as reflected in the Program was different than her vesting schedule reflected in 19 the Board Consent. Specifically, he said: “[Employee 5’s] [vesting schedule] was changed from 20 1/48 [4-years] to 1/72 [6-years] as well. Is the Board changing that?,” I replied, “Yes. Not really 21 changing. 72 was on her contract and was the intention. She has no expectation of 48.”Attached 22 as Exhibit J is a true and correct copy of a June 7, 2019, Slack message between Mr. Runyon and 23 myself in which Mr. Runyon informed me of this discrepancy. 24 23. Prior to this Slack chat, I discovered that the Program listed Employee 5 as having 25 a 4-year vesting schedule and I changed that schedule to reflect the 6-year vesting schedule she 26 and the Company agreed to. While I have no specific recollection of making this change in the 27 Program, I have no doubt that I did, since I made such changes and fixed similar mistakes 28 regularly in the Program a at that time. When Mr. Runyon asked me on June 7 whether I had W ITHERS NY28571/0001-US-9465064/5 6 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 made this change, I confirmed that I had. (See Exhibit J.) 2 24. When fixing such mistakes and making these changes in the Program, I do not 3 recall ever consulting the Board Consent because (a) the vesting schedules reflected in Exhibit C 4 of the Board Consent are defined by a numbering system with an index reflected several pages 5 after the grants listed in Exhibit C, which I found time-consuming and cumbersome to navigate; 6 and (b) I would typically make changes in the Program to equity terms that I knew were incorrect 7 based on my personal knowledge of, for example, when those employees joined the company 8 and what those employees had agreed to in the employment agreements I had drafted. 9 25. Prior to this June 7, 2019 Slack chat, I do not recall knowing that Employee 5’s 10 vesting schedule was incorrectly reflected in the Board Consent. When Mr. Runyon brought this 11 to my attention, I explained to him that Employee 5’s vesting schedule reflected in the Board 12 Consent was a mistake and that she and the Company had agreed and intended that her options 13 would be subject to a 6-year vesting schedule. (See Exhibit J.) Mr. Runyon replied that the Board 14 needs to “approve that change,” which is an incorrect description of what the Board would be 15 doing. In reality, the Board would simply be fixing an inadvertent mistake that was made 16 regarding Employee 5’s vesting schedule. However, when he said this, I responded that I 17 understood. 18 26. I have always intended to have the Board correct this mistake. Sometime during 19 the second half of 2019 I alerted Jesse Powell, the Company’s CEO and a member of the Board, 20 to the errors in the Board Consent that needed to be fixed. However, this mistake has not yet been 21 remedied by the Board in any subsequent vote or written board consent. This is, in part, because 22 two months after the June 7 Slack chat, in August 2019, Mr. Runyon contacted Payward by email, 23 copying me and his attorneys in this lawsuit. Attached as Exhibit K is a true and correct copy of 24 Mr. Runyon’s August 29, 2019 email to Payward copying his current lawyers Claire Cochran 25 and Natalie Xifo. Shortly after this email, Mr. Runyon, through his lawyers, threatened to sue 26 Payward for fraud related to Employee 5’s vesting schedule. In light of this, I did not want to 27 recommend to the Board that it formally fix its earlier mistake regarding Employee 5’s vesting 28 schedule for fear of making it seem like the Company was trying to cover something up. W ITHERS NY28571/0001-US-9465064/5 7 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 27. Since Mr. Runyon raised the issue regarding Employee 5’s vesting schedule in the 2 Board Consent, I have discovered that the mistake regarding Employee 5’s vesting schedule is 3 not the only mistake reflected in the Board Consent. The Board Consent also incorrectly reflects 4 4-year vesting schedules for several employees that, like Employee 5, were hired after July 1, 5 2017. Those employees, reflected in Exhibit C of the Board Consent are 6 . Like Employee 5, those 7 employees and the Company agreed that their option grants would be subject to a 6-year vesting 8 schedule. Attached as Exhibit L are true and correct copies of the employment agreements signed 9 by the Company and these employees. Like Employee 5’s employment agreements, I drafted 10 these agreements. 11 28. These mistakes reflected in the Board Consent are the result of bad data I provided 12 for inclusion in the draft Board Consent. I believe this mistake was the result of, among other 13 things, a small back-office support team, including the legal department (that now handles all 14 Board and equity documentation), that I was the only employee at that time to manage HR and 15 stock-related matters, and the fact that I was performing a variety of other roles at a small 16 company. 17 29. None of these employees’ vesting schedule discrepancies, including Employee 18 5’s, were addressed in the June 30, 2019, written Board consent. 19 30. I do not recall Mr. Runyon ever informing me of any of these other vesting 20 schedule discrepancies reflected in the Board Consent aside from the discrepancy regarding 21 Employee 5’s vesting schedule. 22 31. Aside from the June 7, 2019, Slack chat with Mr. Runyon about Employee 5’s 23 vesting schedule, I do not recall Mr. Runyon raising the issue of Employee 5’s vesting schedule 24 with me. 25 32. I did not intend to, nor do I believe I did, defraud Employee 5. What I told Mr. 26 Runyon in the June 7 Slack chat remains true: at all times I have understood that Employee 5 and 27 Payward had agreed that her options would vest subject to a 6-year, not a 4-year, schedule. The 28 Board Consent merely reflects an anomalous mistake in the information I provided for inclusion W ITHERS NY28571/0001-US-9465064/5 8 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 in the draft Board Consent regarding the vesting schedules for several employees, including 2 Employee 5, who were hired after July 1, 2017. 3 Employee 7 4 33. I am familiar with the person identified as “Employee 7” in the FAC. Employee 5 7 refers to a current Payward employee, Empl. 7 . 6 34. Mr. Runyon’s allegations regarding Employee 7 are partially correct. I recall that 7 Mr. Runyon unilaterally changed the email address in the Program associated with one or 8 Employee 7’s option grants. While I do not recall becoming angry or yelling at Mr. Runyon for 9 changing that email address, I do recall that Mr. Runyon should not have changed it. 10 35. Employee 7’s equity grant from Payward is unusual because he is one of the only 11 Payward employees that agreed to and was granted by the Board two separate equity grants, one 12 of which is performance-based. His first, and largest, options grant is similar to Employee 5’s 13 and other employees hired after July 1, 2017, and is subject to a 6-year vesting schedule with a 14 1-year cliff. Employee 7’s second options grant is performance-based, and is subject to approval 15 by Payward’s CEO and Chief Brand Officer. Attached as Exhibit M is a true and correct copy of 16 Employee 7’s employment agreement dated January 11, 2019. 17 36. Mr. Runyon was aware of this because I asked him and Payward’s Program 18 representative how the two separate equity grants should be handled in the Program so that 19 Employee 7 would not immediately and mistakenly receive an email notification that his 20 performance based options had vested until those options were properly approved at a later time. 21 Attached as Exhibit N is a true and correct copy of an email dated May 20, 2019, from me to 22 Joseph , Payward’s Program representative, copying Mr. Runyon, in which I inform Mr. 23 of Employee 7’s different equity grants. 24 37. Mr. Runyon was also aware that the Program recommended that Employee 7 be 25 given a placeholder email address in the Program for his performance-based options so that 26 Employee 7 would not be granted these options until they were properly approved. In a May 20, 27 2019 email chain between Mr. Park, Mr. Runyon, and myself, Mr. Park suggests that he edit 28 Employee 7’s second, performance-based equity grant in the Program to reflect a placeholder W ITHERS NY28571/0001-US-9465064/5 9 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 email address. (See Exhibit N.) Attached as Exhibit O are true and correct copies of Employee 2 7’s regular and performance based options grants as reflected in the Program. Despite this, Mr. 3 Runyon unilaterally changed the placeholder email address in the Program to Employee 7’s 4 actual email address. 5 38. To the best of my recollection, Mr. Runyon never asked me prior to unilaterally 6 deciding to change the placeholder email address in the Program associated with Employee 7’s 7 performance-based options. 8 Mr. Runyon’s Purported OFAC-Related Concerns 9 39. I do not recall Mr. Runyon coming to me with any OFAC-related concerns. I do 10 not recall Mr. Runyon telling me that he was “concerned about how Kraken aligned the countries 11 for revenue reporting and mostly worried that Kraken could not operate in those countries.” (FAC 12 ¶ 28.) I recall asking Mr. Runyon to align countries to regions for purposes of revenue 13 recognition. I put Mr. Runyon in touch with , Payward’s Head of Compliance, to 14 help Runyon map revenue based on a spreadsheet of Payward’s regional revenue. Attached 15 hereto as Exhibit P is a true and correct copy of a Slack message between me, Mr. Runyon and 16 dated April 23, 2019. Attached hereto as Exhibit Q is a true and correct copy of an 17 email message between me, Mr. Runyon and dated February 20, 2019. 18 40. I also do not recall reassuring Mr. Runyon I would follow up with 19 regarding Mr. Runyon’s purported concerns. I also do not recall telling Mr. Runyon that “it would 20 be resolved” in response to these purported concerns. 21 41. I do not recall being part of any conversations between Mr. Runyon and 22 regarding any OFAC-related issue. 23 42. However, if Mr. Runyon did raise these concerns to me I believe I would have 24 referred him to , who is the Company’s Head of Compliance. OFAC-related 25 regulatory requirements are not something I handled or handle as CFO. 26 Mr. Runyon’s Requests That Payward Pay for His Continued Schooling 27 43. I recall that Mr. Runyon approached me and inquired whether Payward would be 28 willing to pay for him to attend graduate school to obtain an MBA. I recall telling Mr. Runyon in W ITHERS NY28571/0001-US-9465064/5 10 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 response that the Company would be willing to provide some financial support for his continued 2 education, but it would be better if he chose a course that would provide him some benefit, and 3 increase his skills, in relation to his role as a financial analyst, such as a data analytics or an 4 accounting course. 5 44. Mr. Runyon then asked me if Payward was willing to pay for him to attend a data 6 analytics course. I agreed, and Payward paid for Mr. Runyon to attend this course. My 7 recollection is that Mr. Runyon attended and completed the course. 8 45. Mr. Runyon’s enrollment in this course, and Payward’s payment for the course, 9 was solely the result of Mr. Runyon’s suggestion that he take the course and that Payward pay 10 for it. I do not recall suggesting in the first instance that Mr. Runyon take this course, and I never 11 demanded that he take the course or in any way forced him to enroll in the course. 12 Mr. Runyon’s Alleged Disabilities and Veteran Status 13 46. I do not recall ever discussing with Mr. Runyon his alleged disabilities or his 14 veteran status. I do not recall that Mr. Runyon ever raised these issues with me. 15 47. I do not recall ever knowing that Mr. Runyon is disabled. I do not recall ever 16 reviewing Mr. Runyon’s information in BambooHR, the Company’s HR software. 17 48. I do not recall mocking Mr. Runyon for being disabled or telling him “You don’t 18 look disabled.” That is not something I would say and I do not believe the conversation Mr. 19 Runyon described in paragraph 36 of the FAC ever occurred. 20 49. I understand that Mr. Runyon alleges that I “verbally attacked” him because I 21 thought I could speak to him that way because he had served as a Marine. I do not recall this and 22 I do not believe this to be true. 23 50. I never yelled at Mr. Runyon for failing to perform his job, or for raising any 24 substantive issues with me relating to, or any issues or questions he raised in connection with his 25 day-to-day duties as a financial analyst. I never yelled at him or became angry with him for 26 bringing issues or mistakes or discrepancies to my attention, such as the discrepancy he raised 27 regarding Employee 5’s vesting schedule. The point of hiring Mr. Runyon as a financial analyst, 28 and building out the finance team generally, was to institute tighter controls and a stronger review W ITHERS NY28571/0001-US-9465064/5 11 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 process within the finance team. 2 51. However, I recall having some heated conversations with Mr. Runyon in 3 connection with the numerous interpersonal conflicts he was involved in with other Payward 4 employees. Again, I do not recall mentioning Mr. Runyon’s veteran status during any of these 5 conversations. 6 Reasons for Mr. Runyon’s Termination 7 52. Mr. Runyon was terminated due to his work performance being below 8 expectation, the numerous interpersonal conflicts he caused with other Payward employees, and, 9 ultimately, his explicit refusal to continue working. 10 53. I recall that I would frequently have to follow-up with Mr. Runyon regarding tasks 11 he was assigned that he either would not deliver or would be extremely delayed in delivering. 12 Mr. Runyon did not take full ownership over tasks and projects, despite that I asked him and 13 encouraged him to. Indeed, because of all of the follow-up I had to do with Mr. Runyon, I decided 14 to institute a weekly 1-on-1 meeting with Mr. Runyon so that I could monitor his work. 15 54. On numerous occasions, I provided feedback, both verbal and written, to Mr. 16 Runyon regarding these performance-related issues. Attached as Exhibit R is a true and correct 17 copy of an April 12, 2019, email I sent to Mr. Runyon containing some of this feedback. Among 18 other things, I informed Mr. Runyon, “I should not have to ask you for the same reports every 19 month. You should do whatever it takes to deliver your work in high quality. If you can’t meet a 20 deadline, let me know instead of going silent. Any update is better than no update.” I also 21 provided him with feedback throughout the Program cap table transition project, which took him 22 almost nine months to complete. I recall specifically that the draft transition templates Mr. 23 Runyon provided to me contained numerous mistakes, and until recently were still fixing 24 mistakes made during the transition of the cap table to the Program. I informed Mr. Runyon he 25 needs to have “a stronger sense of ownership” and that “[i]t was made clear to [Mr. Runyon] that 26 he own[s] the cap table and the [Program] project.” In that email, I also told Mr. Runyon, “If 27 things are not clear, ask. Don’t start doing anything if you don’t have a clear idea of what is 28 required and expected [o]f you.” Finally, I told him, “If you don’t have all the information you W ITHERS NY28571/0001-US-9465064/5 12 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 need to do your job, schedule time with me. Don’t wait for our weekly 1on1 and for me to ask 2 for it, and then come back to me and say you never received full information.” 3 55. In my April 19, 2019, email to Mr. Runyon I also stated that “I have invested in 4 you and I really want to see return on the investment.” I said this not only because Payward 5 literally invested in Mr. Runyon’s continued education, but because I spent a significant amount 6 of time providing him feedback, dealing with the fallout from Mr. Runyon’s numerous 7 interpersonal conflicts with other employees, advising him on how to better handle those 8 conflicts, and explaining his actions to protect him from being fired based on those conflicts. 9 56. The list of conflicts Mr. Runyon caused and complaints I received about Mr. 10 Runyon is long. Some main examples that I recall are as follows: 11 a. Mr. Runyon decided to play a YouTube video loudly through his computer 12 speakers so that numerous people seated near him in the office (which has an open floor plan) 13 were able to hear the video. I received a complaint about this when a senior member of the 14 Engineering Team, who was visiting the office from Germany, approached me, complained that 15 the volume of the video was distracting, and told me that he had asked Mr. Runyon to please turn 16 down the volume of the video but Mr. Runyon had refused. When I asked Mr. Runyon about this, 17 he was unapologetic and stated that he was right to have played this video loudly because the 18 employee he sat near on the finance team did not understand cryptocurrency and Mr. Runyon was 19 trying to educate him. I attempted to explain to Mr. Runyon that, even though he had good 20 intentions, his behavior was inappropriate, but he refused to acknowledge he had acted in any way 21 inappropriately. 22 b. Mr. Runyon made comments to regarding the office’s bathrooms that 23 caused a few female employees to voice their concerns to me. I shared the concerns with Mr. 24 Runyon. Mr. Runyon insisted there was nothing concerning about his suggestion and that he was 25 serious about his suggestions despite the concerns. 26 c. Mr. Runyon complained that the Ethernet cables in the conference room at 27 the San Francisco office did not work properly. He apparently became so frustrated that when 28 speaking with an IT employee, Mr. Runyon called the IT employee’s work a “pain-in-the-ass.” W ITHERS NY28571/0001-US-9465064/5 13 B ERGMAN LLP DECL. OF KAISER NG ISO DEFENDANTS’ MOTION FOR SUMMARY ADJUDICATION 1 Both the IT employee and another employee brought this to my attention, and I had to discuss this 2 with Mr. Runyon and ask him to apologize to the IT employee. Mr. Runyon insisted that he meant 3 what he said and he was angry that the IT employee had escalated the situation to an executive as 4 opposed to dealing with Mr. Runyon directly. 5 d. On another occasion, Mr. Runyon was frustrated that he had not received 6 information from another Payward employee, Katy, and insulted her in a group Slack channel with 7 other employees. Katy was understandably upset at this and brought it to my attention. Again, I 8 spoke with Mr. Runyon about this and about why his approach to Katy was inappropriate, even if 9 he was rightfully frustrated by her lack of response to his request. He was again unapologetic 10 about his conduct, and did not think he did anything wrong. Attached as Exhibit S is a true and 11 correct copy of Slack conversation I had with Mr. Runyon on June 28, 2019, regarding his 12 inappropriate behavior towards Katy. As reflected in this conversation, Mr. Runyon was 13 unapologetic, and when I said we need to talk about the incident, he stated “do you want me to just 14 apologies? I think she got the message.” When I responded that “I would think so” if he can “[d]o 15 it sincerely [and] if you agree your approach could have been better (tone, group DM, calling her 16 out),” Mr. Runyon replied: 17 It was very unprofessional and I was calling her out for it. I don’t like working with people who drag their feet, aren’t responsive, and make stupid excuses for why they 18 can’t do something. People like that hold our company back. The team is getting lazy. You have high standards and want me to meet them, which I’m definitel