Exhibit 10.1


 


EXECUTION COPY


 


ESCROW
AGREEMENT


 


This
Escrow Agreement (this “Agreement”) dated October 7, 2016 by and among Snap Interactive, Inc., a Delaware
corporation (“Parent”), Jason Katz, as representative (the “Company Representative”)
for the former shareholders of A.V.M. Software, Inc., a New York corporation (“Company”), listed on
Schedule A hereto and Corporate Stock Transfer, Inc., as escrow agent (in such capacity, the “Escrow Agent”).


 


RECITALS:


 


A.Parent,
SAVM Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Parent (“Merger Sub”),
Company and Company Representative are parties to an Agreement and Plan of Merger dated as of September 13, 2016 (the “Merger
Agreement”) pursuant to which Merger Sub has merged with Company, with Company being the surviving entity of such
merger. Pursuant to the Merger Agreement, Parent is to be indemnified in certain respects. The parties desire to establish an
escrow fund as collateral security for the indemnification obligations of the Company Indemnitees under Article 9 of the Merger
Agreement. The Company Representative has been designated pursuant to the Merger Agreement to represent all of the Company Indemnitees,
and to act on their behalf for purposes of such indemnification obligations and this Agreement. Capitalized terms used herein
that are not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.


 


B.Pursuant
to the Merger Agreement, the parties to the Merger Agreement have agreed that 18,000,000 shares of the common stock of Parent
(the “Parent Common Stock”) to be issued to the Company Indemnitees pursuant to the Merger Agreement
will be deposited in escrow in accordance with the terms of this Agreement to secure the Company Indemnitees’ indemnification
obligations under Article IX of the Merger Agreement (such shares, which shall be subject to adjustment for stock splits, reverse
stock splits and stock dividends, are referred to as the “Escrow Shares”).


 


AGREEMENT:


 


NOW,
THEREFORE, in consideration of the premises and the mutual promises herein made, and in consideration of the representations,
warranties, and covenants contained herein and in the Merger Agreement, it is hereby agreed as follows:


 


1.Deposit
in Escrow.


 


(a)Concurrently
with the execution hereof, Parent has instructed its transfer agent (the “Transfer Agent”) to deliver
to the Escrow Agent, to be held in escrow pursuant to the terms of this Agreement, stock certificates representing the Escrow
Shares issued in the name of “Corporate Stock Transfer, Inc. as Escrow Agent under agreement dated October 7, 2016”,
to be held and administered as provided herein for the benefit of the Company Indemnitees as specified in Schedule A attached
hereto. The Escrow Shares so delivered by the Transfer Agent to the Escrow Agent shall be held by the Escrow Agent in a segregated
trust account (the “Escrow Account”) under the control of the Escrow Agent.


 






    


     


    

 


(b)The
Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse the assets on deposit in the Escrow Account
pursuant to the terms and conditions hereof. The Escrow Agent shall hold the Escrow Account as a trust account in accordance with
the terms of this Agreement. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow
Account in accordance with this Agreement.


 


(c)Except
as herein provided, the Company Indemnitees shall retain all of their rights as stockholders of Parent with respect to the Escrow
Shares during the period the Escrow Shares are held by the Escrow Agent (the “Escrow Period”); provided,
however, that with respect to the Escrow Shares held in the Escrow Account, the right to vote such Escrow Shares shall be exercised
solely by the Company Representative in his discretion.


 


(d)During
the Escrow Period, all dividends payable in cash with respect to the Escrow Shares (“Cash Dividends”)
and all dividends payable in stock or other non-cash property, including shares issued upon a stock split (“Non-Cash
Dividends”), shall each be delivered to the Escrow Agent to hold in the Escrow Account in accordance with the terms
hereof. As used herein, the term “Escrow Account” shall be deemed to include the Cash Dividends and
Non-Cash Dividends distributed thereon, if any.


 


(e)During
the Escrow Period, no sale, transfer or other disposition may be made of any or all of the Escrow Shares in the Escrow Account.
During the Escrow Period, no Company Indemnitee shall pledge or grant a security interest in such Company Indemnitee’s shares
of Parent Common Stock included in the Escrow Account or grant a security interest in such Company Indemnitee’s rights under
this Agreement.


 


2.Distribution
of the Escrow Shares.


 


(a)Parent,
acting through at least two (2) members of the Committee, may make a claim for indemnification pursuant to the Merger Agreement
(“Indemnification Claim”) against the Escrow Account by giving notice in the form attached hereto as
Exhibit A (a “Notice”) to the Company Representative (with a copy to the Escrow Agent) specifying
(i) the covenant, representation, warranty, agreement, undertaking or obligation contained in the Merger Agreement which it asserts
has been breached or otherwise entitles Parent to indemnification, (ii) in reasonable detail, the nature and dollar amount of
any Indemnification Claim, (iii) whether the Indemnification Claim results from a Third Party Claim against Parent or Company
and (iv) the number of Escrow Shares to be delivered to Parent in respect of such Indemnification Claim.


 


(b)If
the Company Representative gives a notice in the form attached hereto as Exhibit B to the Escrow Agent in accordance with
Section 9.2 of the Merger Agreement (with a copy to the Committee) (a “Counter Notice”), within 30 days
following the date of receipt (as specified in the Committee’s certification) by the Company Representative of a copy of
the Notice, disputing that all or a portion of the Indemnification Claim is indemnifiable under the Merger Agreement, the Committee
and the Company Representative shall attempt to resolve such dispute by voluntary settlement as provided in Section 2(c)
below and in accordance with Section 9.2 of the Merger Agreement. If no Counter Notice with respect to an Indemnification Claim
is received by the Escrow Agent from the Company Representative within such 30-day period, the Indemnification Claim shall be
deemed to be an Established Claim (as hereinafter defined) for purposes of this Agreement.


 






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(c)If
the Company Representative delivers a Counter Notice to the Escrow Agent (with a copy to the Committee) in accordance with Section
9.2 of the Merger Agreement, the Committee and the Company Representative shall, during the period of 30 days following the delivery
of such Counter Notice or such greater period of time as the parties may agree to in writing (with a copy to the Escrow Agent),
attempt to resolve the dispute with respect to which the Counter Notice was given through good faith negotiations in accordance
with Section 9.2(d)(i) of the Merger Agreement. If the Committee and the Company Representative reach a settlement with respect
to any such dispute, they shall jointly deliver written notice of such settlement to the Escrow Agent specifying the terms thereof.


 


(d)
If the Committee and the Representative cannot resolve a dispute through good faith negotiations prior to expiration of the 30-day
period referred to in Section 2(c) above (or such longer period as the parties may have agreed to in writing), then such
dispute shall be subject to resolution in accordance with Sections 9.2(d)(ii) and (iii) of the Merger Agreement.


 


(e)As
used in this Agreement, “Established Claim” means any (i) Indemnification Claim deemed established pursuant
to the last sentence of Section 2(b) above, (ii) Indemnification Claim resolved in favor of Parent by settlement pursuant to Section
2(c) above, resulting in an award to Parent, (iii) Indemnification Claim established pursuant to Section 2(d) above, resulting
in an award to Parent, (iv) Third Party Claim that has been sustained by a final determination (after exhaustion of any appeals)
of a court of competent jurisdiction, or (v) Third Party Claim that the Committee and the Company Representative have jointly
notified the Escrow Agent has been settled in accordance with the provisions of the Merger Agreement or otherwise.


 


(f)Promptly
after an Indemnification Claim becomes an Established Claim, the Committee (acting by at least two (2) members thereof) and the
Company Representative shall jointly deliver a notice to the Escrow Agent in the form attached hereto as Exhibit C (a “Joint
Notice”) directing the Escrow Agent to transfer and deliver to Parent (or its designee as specified in the Notice),
and the Escrow Agent promptly shall transfer and deliver to Parent (or its designee as specified in the Notice), the number of
Escrow Shares (or other assets in the Escrow Account as the Joint Notice shall specify) (or, if at such time there remains in
the Escrow Account less than the full number of Escrow Shares or other assets specified in the Joint Notice, the assets remaining
in the Escrow Account).


 






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(g)Payment
of an Established Claim shall be made only from the Escrow Account. However, in no event shall the Escrow Agent be required to
calculate or make a determination of the number of Escrow Shares or other assets to be delivered to Parent in satisfaction of
any Established Claim; rather, such calculation and determination shall be included in and made part of a Notice or Joint Notice
delivered to the Escrow Agent. The Escrow Agent shall transfer to Parent (or its designee as specified in the Joint Notice) out
of the Escrow Account that number of Escrow Shares or other assets necessary to satisfy each Established Claim, as set out in
the applicable Notice or Joint Notice. Any dispute between the Committee and the Company Representative concerning the calculation
of the number of Escrow Shares or other assets necessary to satisfy any Established Claim, or any other dispute regarding a Joint
Notice, shall be resolved between the Committee and the Company Representative in accordance with Section 9.2(d) of the Merger
Agreement, and shall not involve the Escrow Agent. Each transfer of Escrow Shares in satisfaction of an Established Claim shall
be made by the Escrow Agent delivering, or causing the delivery, to Parent (or its designee as specified in the Joint Notice)
certificates registered in the name of Parent (or such other name as shall be specified in the Joint Notice) evidencing the aggregate
number of shares specified in the applicable Notice or Joint Notice. The parties hereto (other than the Escrow Agent) agree that
the foregoing right to make payments of Established Claims in shares of Parent Common Stock may be made notwithstanding any other
agreements restricting or limiting the ability of any Company Indemnitee to sell any shares of Parent stock or otherwise. The
Committee and the Company Representative shall be required to exercise utmost good faith in all matters relating to the preparation
and delivery of each Notice or Joint Notice.


 


3.Escrow
Termination Date.


 


(a)Not
less than five Business Days prior to the occurrence of the Escrow Termination Date, Parent shall deliver written notice to the
Escrow Agent of the date of the Escrow Termination Date.


 


(b)On
the first Business Day after the Escrow Termination Date, upon receipt of a Joint Notice, the Escrow Agent shall distribute and
deliver to the Transfer Agent (a) certificates representing the original number of Escrow Shares in the Escrow Account and other
assets in the Escrow Account (b) less the sum of (i) the number of Escrow Shares and value of other assets applied in satisfaction
of Indemnification Claims made prior to that date and (ii) the number of Escrow Shares and value of other assets in the Pending
Claims Reserve (in each case, subject to adjustment for stock splits, reverse stock splits and stock dividends), and it shall
be the responsibility of the Company Representative and the Transfer Agent to issue and distribute such shares to the Company
Indemnitees. If, at such time, there are any Indemnification Claims with respect to which Notices have been received but which
have not been resolved pursuant to Section 2 hereof or in respect of which the Escrow Agent has not been notified of, and received
a copy of, a final determination (after exhaustion of any appeals) by a court of competent jurisdiction, as the case may be (in
either case, “Pending Claims”), and which, if resolved or finally determined in favor of Parent, would
result in a payment to Parent, the Escrow Agent shall retain in the Pending Claims Reserve that number of Escrow Shares having
a value (determined pursuant to Section 9.2(b) of the Merger Agreement) equal to the dollar amount for which indemnification is
sought in such Indemnification Claim. The Joint Notice will include the value to be used in calculating the Pending Claims Reserve
and the number of Escrow Shares to be retained therefor. Thereafter, if any Pending Claim becomes an Established Claim, the Committee
and the Company Representative shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to deliver to Parent
(or its designee as specified in the Joint Notice) the number of Escrow Shares in the Pending Claims Reserve in respect thereof
determined in accordance with Section 2 above and to deliver to Transfer Agent the remaining Escrow Shares in the Pending
Claims Reserve allocated to such Pending Claim, all as specified in a Joint Notice, and it shall be the responsibility of the
Company Representative and the Transfer Agent to issue and distribute such Escrow Shares to the Company Indemnitees. If any Pending
Claim is resolved against Parent, the Committee and the Representative shall deliver to the Escrow Agent a Joint Notice directing
the Escrow Agent to deliver to the Transfer Agent the number of Escrow Shares allocated to such Pending Claim in the Pending Claims
Reserve, and it shall be the responsibility of the Company Representative and the Transfer Agent to issue and distribute such
shares to the Company Indemnitees.


 






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(c)As
used herein, the “Pending Claims Reserve” shall mean, at the time any such determination is made, that
number of Escrow Shares of Parent Common Stock in the Escrow Account having a value (determined pursuant to Section 9.2(b) of
the Merger Agreement) equal to the sum of the aggregate dollar amounts claimed to be due with respect to all Pending Claims (as
shown in the Notices of such Claims).


 


(d)As
used herein, the “Escrow Termination Date” shall mean the date that is sixty (60) days after the date
on which Parent files with the SEC its audited consolidated financial statements for the fiscal year ended December 31, 2016.


 


4.Cooperation
and Good Faith; Voting.


 


(a)The
Escrow Agent, the Committee and the Company Representative shall cooperate in all respects with one another in good faith in the
calculation of any amounts determined to be payable to Parent and the Company Indemnitees in accordance with this Agreement and
in implementing the procedures necessary to effect such payments.


 


(b)If
the Escrow Agent receives from Parent or any other person any proxy materials or other information relating to a vote to be taken
with respect to Parent common stock, the Escrow Agent shall promptly furnish copies of such materials to the Company Representative
and the Company Representative shall vote all Escrow Shares, whether in person or by proxy, in such manner as the Company Representative
shall instruct the Escrow Agent in writing.


 


5.Escrow
Agent Responsibilities.


 


(a)The
Escrow Agent undertakes to perform only such duties as are expressly set forth herein. It is understood that the Escrow Agent
is not a trustee or fiduciary and is acting hereunder merely in a ministerial capacity.


 


(b)The
Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment,
and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel
(including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due
execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons.
The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement
unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights
of the Escrow Agent are affected, unless it shall have given its prior written consent thereto. Upon or before the execution of
this Agreement, the Committee and the Company Representative shall deliver to the Escrow Agent authorized signers’ lists
in the form of Exhibit D-1 and Exhibit D-2 to this Agreement.  


 






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(c)The
Escrow Agent’s sole responsibility upon receipt of any notice requiring any payment to Parent pursuant to the terms of this
Agreement or, if such notice is disputed by the Committee or the Company Representative, the settlement with respect to any such
dispute, whether by virtue of joint resolution, arbitration or determination of a court of competent jurisdiction, is to pay to
Parent the amount specified in such notice, and the Escrow Agent shall have no duty to determine the validity, authenticity or
enforceability of any specification or certification made in such notice.


 


(d)The
Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within the rights
or powers conferred upon it by this Agreement, and may consult with counsel of its own choice and shall have full and complete
authorization and indemnification under Section 5(f), below, for any action taken or suffered by it hereunder in good faith
and in accordance with the opinion of such counsel.


 


(e)The
Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by its giving the other parties
hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective
at such time that the Escrow Agent shall turn over the Escrow Account to a successor escrow agent appointed jointly by the Committee
and the Company Representative.


 


(f)The
Escrow Agent shall be indemnified and held harmless by Parent from and against any expenses, including counsel fees and disbursements,
or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any
way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the Escrow
Account held by it hereunder, other than expenses or losses arising from the gross negligence or willful misconduct of the Escrow
Agent. Upon request by the Escrow Agent, Parent shall advance funds in an amount sufficient to pay such expenses of the Escrow
Agent; provided, however, that the Escrow Agent shall repay any amount advanced by Parent (i) that exceeds the Escrow Agent’s
actual expenses or (ii) in the event that it is ultimately determined that the Escrow Agent is not entitled to indemnification
under this Agreement. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any
action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing.


 


(g)The
Escrow Agent shall be entitled to reasonable compensation from Parent for all services rendered by it hereunder. The Escrow Agent
shall also be entitled to reimbursement from Parent for all reasonable expenses incurred by it in the administration of its duties
hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or
other governmental charges.


 


(h)From
time to time on and after the date hereof, the Committee and the Company Representative shall deliver or cause to be delivered
to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent
shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.


 


(i)Notwithstanding
anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own gross negligence
or its own willful misconduct.


 






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6.This
Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions
of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms and conditions
of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger Agreement.


 


7.This
Agreement shall inure to the benefit of and be binding upon the parties (including the Committee) and their respective heirs,
successors, assigns and legal representatives, shall be governed by and construed in accordance with the law of Delaware applicable
to contracts made and to be performed therein. This Agreement cannot be changed or terminated except by a writing signed by Parent
(by a member of the Committee), the Company Representative and the Escrow Agent.


 


8.This
Agreement, and all claims or causes of action (whether at law, in contract or in tort) that may be based upon, arise out of or
relate to this Agreement or the negotiation, execution or performance hereof, shall be governed by and construed in accordance
with the Laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the
State of New York or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State
of New York. Each of the parties hereto irrevocably (i) consents to submit itself to the personal jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United States District Court for the Southern District of
New York in the event any dispute arises out of this Agreement or any of the transactions contemplated hereby, and, in connection
with any such matter, to service of process by notice as otherwise provided herein, (ii) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not
bring any action relating to this Agreement or any of the transactions contemplated hereby in any court other than the foregoing
New York State court or, to the fullest extent permitted by applicable Law, the foregoing Federal court. Any party may make service
on another party by sending or delivering a copy of the process to the party to be served at the address and in the manner provided
for the giving of notices in Section 9 hereof.


 


9.All
notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed
to have been given and duly delivered: (i) when delivered (or delivery was properly tendered) by hand; (ii) when delivered (or
delivery was properly tendered) by the addressee if sent by a nationally recognized overnight courier; or (iii) on the date sent
by e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on
the next Business Day if sent after normal business hours of the recipient, if the original of such notice was duly transmitted
in accordance with (i) or (ii) of this Section 9 or transmitted by certified mail, return receipt requested, postage prepaid.
Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 9:


 


		A.	If
                                         to the Committee, to:

                                         

                                         Snap Interactive, Inc.

                                         320 W. 37th Street, 13th Floor

                                         New York, N.Y. 10018

                                         Attention: Alex Harrington

                                         Email: alex@snap-interactive.com
			Telephone:
                                         212-967-5120 ext. 113



 






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With
a copy to (which will not constitute notice to the Committee):



Haynes and Boone, LLP

2323 Victory Avenue, Suite 700

Dallas, TX 75219-7672

Attention: Gregory R. Samuel

Email: Greg.Samuel@haynesboone.com


Telephone:
214-651-5645


 


		B.	If
                                         to the Company Representative, to:



 


			A.V.M
                                         Software, Inc.

                                         122 East 42nd Street

                                         New York, NY

                                         Attention: Jason Katz

                                         Email: jkatz@paltalk.com
			Telephone:
                                         212-520-7000



 


With
a copy to (which shall not constitute notice to the Company Representative):


 


Pryor
Cashman LLP


7
Times Square, 39th Floor


New
York, New York 10036


Attention:
Eric B. Woldenberg, Esq.


Email:
ewoldenberg@pryorcashman.com


Telephone:
212-326-0865


 


		C.	If
                                         to the Escrow Agent, to:



 


			Corporate
                                         Stock Transfer, Inc.

                                         3200 Cherry Creek South Drive, Suite 430

                                         Denver, Colorado 80209






Attention:
Carylyn Bell

Email: cbell@corporatestock.com


Telephone:
303-282-4800


 


or
to such other person or address as any of the parties hereto shall specify by notice in writing to all the other parties hereto.


 


10.This
Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument and all of
which together shall constitute a single agreement.


 


[Signatures
are on following page]


 




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IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on the date first above written.


 


	 	

                                         PARENT:

         

        SNAP
        INTERACTIVE, INC.

	 	 	 
	 	By:	/s/
    Alexander Harrington
	 	Name:	Alexander Harrington
	 	Title:	Chief Executive
    Officer
	 	 	 
	 	ESCROW
                                         AGENT:

         

        

        CORPORATE STOCK TRANSFER, INC.

	 	 	 
	 	By: 	/s/
    Carylyn Bell
	 	Name:	Carylyn Bell
	 	Title:	President
	 	

         

        

        COMPANY REPRESENTATIVE:

         

	 	By:	/s/
    Jason Katz
	 	Name:	Jason Katz
	 	


 


 


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