Document:

Exhibit 10.31

 

Appendix
D

 

MIROMATRIX MEDICAL INC.

EMPLOYEE STOCK PURCHASE PLAN

 

1.              Purpose
of the Plan. The purpose of this Miromatrix Medical Inc. Employee Stock Purchase Plan (the “Plan”) is to provide
the employees of Miromatrix Medical Inc. (the “Company”) and its participating subsidiaries with a convenient means of purchasing
shares of the Company’s common stock from time to time at a discount to market prices through the use of payroll deductions. The
Company intends that the Plan shall qualify as an “employee stock purchase plan” under Section 423 of the Code.

 

2.              Definitions.
The terms defined in this section are used (and capitalized) elsewhere in this Plan.

 

2.1.           “Affiliate”
means each domestic or foreign entity that is a “parent corporation” or “subsidiary corporation” of the Company,
as defined in Code Sections 424(e) and 424(f) or any successor provisions.

 

		2.2	“Board” means the Board of Directors of the Company.

 

2.3            “Code”
means the Internal Revenue Code of 1986, as amended and in effect from time to time. For
purposes of the Plan, references to sections of the Code shall be deemed to include any applicable regulations thereunder and any successor
or similar statutory provisions.

 

2.4            “Committee”
means the Compensation Committee of the Board or such other committee of non-employee directors appointed by the Board to administer the
Plan as provided in Section 13.

 

2.5            “Common
Stock” means the common stock, par value $0.00001 per share, of the Company.

 

		2.6	“Company” means Miromatrix Medical Inc., a Delaware corporation.

 

2.7            “Corporate
Transaction” means (i) a merger, consolidation or other reorganization of the Company with or into another corporation,
or (ii) the sale of all or substantially all of the assets of the Company.

 

2.8            “Designated
Affiliate” means any Affiliate which has been expressly designated by the Board or Committee as a corporation whose Eligible
Employees may participate in the Plan.

 

2.9            “Eligible
Compensation” means the total cash compensation (including wages, salary, commission, bonus, and overtime earnings) paid by
the Company or any Affiliate to a Participant in accordance with the Participant’s terms of employment, but shall not include any
employer contributions to a 401(k) or other retirement plan, any expense reimbursements or allowances, or any income (whether paid
in Shares or cash) realized by the Participant as a result of participation in any equity-based compensation plan of the Company or any
Affiliate.

 

2.10          “Eligible
Employee” means any employee of the Company or a Designated Affiliate, except for any employee who, immediately after a right
to purchase is granted under the Plan, would be deemed, for purposes of Code Section 423(b)(3), to own stock possessing 5% or more
of the total combined voting power or value of all classes of stock of the Company or any Affiliate. Notwithstanding the foregoing, with
respect to any Offering, the Committee may provide for the exclusion of certain employees within the limitations described in Treasury
Regulations §1.423-2(e)(1), (2) and (3).

 

2.11          “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time, and the regulations promulgated thereunder.

 

     

     

    

 

2.12          “Fair
Market Value” of a Share of Common Stock as of any date means (i) if the Company’s Common Stock is then listed on
a national securities exchange, the closing sale price for a Share on such exchange on said date, or, if no sale has been made on such
exchange on said date, on the last preceding day on which any sale shall have been made; (ii) if the Company’s Common Stock
is not then listed on a national securities exchange, such value as the Committee in its discretion may in good faith determine. The determination
of Fair Market Value shall be subject to adjustment as provided in Section 14.1.

 

2.13          “Offering”
means the right provided to Participants to purchase Shares under the Plan with respect to a Purchase Period.

 

2.14          “Offering
Date” means the first Trading Day of a Purchase Period.

 

2.15          “Participant”
means an Eligible Employee who has elected to participate in the Plan in the manner set forth in Section 4 and whose participation
has not ended pursuant to Section 8.1 or Section 9.

 

2.16          “Plan”
means this Miromatrix Medical Inc. Employee Stock Purchase Plan, as it may be amended from time to time.

 

2.17          “Purchase
Date” means the last Trading Day of a Purchase Period.

 

2.18          “Purchase
Period” means a period of time (but not to exceed 27 months or such longer period as may be permitted under Code Section 423)
commencing on such date as may be established by the Committee under the Plan.

 

2.19          “Recordkeeping
Account” means the account maintained in the books and records of the Company recording the amount contributed to the Plan by
each Participant through payroll deductions.

 

2.20          “Shares”
means shares of Common Stock.

 

2.21          “Trading
Day” means a day on which the national stock exchanges in the United States are open for trading.

 

3.              Shares
Available. Subject to adjustment as provided in Section 14.1, the maximum number of Shares that may be sold by the
Company to Eligible Employees under the Plan shall be 300,000 Shares, plus an automatic annual increase in such amount on January 1
of each year beginning on January 1, 2022 and ending on (and including) January 1, 2031 equal to the lesser of:
(i) 1% of the total number of Shares outstanding as of December 31 of the immediately preceding calendar year, or (ii) 200,000
Shares, provided, however, that the Board may determine that any annual increase shall be for a number of Shares that is less than
the number of Shares determined by the application of clauses (i) and (ii). If the purchases by all Participants in an Offering
would otherwise cause the aggregate number of Shares to be sold under the Plan to exceed the number specified in this Section 3,
each Participant in that Offering shall be allocated a ratable portion of the remaining number of Shares which may be sold under the Plan.

 

4.              Eligibility
and Participation. To be eligible to participate in the Plan for a given Purchase Period, an employee must be an Eligible
Employee on the first day of such Purchase Period. An Eligible Employee may elect to participate in the Plan by filing an election form
with the Company before the Offering Date for a Purchase Period that authorizes regular payroll deductions from Eligible Compensation
beginning with the first payday in such Purchase Period and continuing until the Plan is terminated or the Eligible Employee withdraws
from the Plan, modifies his or her authorization, or ceases to be an Eligible Employee, as hereinafter provided.

 

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5.              Amount
of Common Stock Each Eligible Employee May Purchase.

 

5.1.           Purchase
Amounts and Limitations. Subject to the provisions of this Plan, each Participant shall be offered the right to purchase on the Purchase
Date the maximum number of whole Shares that can be purchased with the balance in the Participant’s Recordkeeping Account at the
per Share price specified in Section 5.2. Notwithstanding the foregoing, no Participant shall be entitled to:

 

(a)              the
right to purchase Shares under this Plan and all other employee stock purchase plans (within the meaning of Code Section 423(b)),
if any, of the Company and its Affiliates that accrues at a rate which in the aggregate exceeds $25,000 of Fair Market Value (determined
on the Offering Date of a Purchase Period when the right is granted) for each calendar year in which such right is outstanding at any
time; or

 

(b)              purchase
more than 10,000 Shares in any Offering under this Plan, such limit subject to adjustment from time to time as provided in Section 14.1.

 

5.2.           Purchase
Price. Unless a greater purchase price is established by the Committee for an Offering prior to the commencement of the applicable
Purchase Period, the purchase price of each Share sold pursuant to this Plan will be the lesser of (i) 85% of the Fair Market Value
of such Share on the Offering Date of the applicable Purchase Period, or (ii) 85% of the Fair Market Value of such Share on the Purchase
Date.

 

6.              Method
of Participation.

 

6.1.           Notice
and Date of Grant. The Company shall give notice to each Eligible Employee of the opportunity to purchase Shares pursuant to this
Plan and the terms and conditions of such Offering. The Company contemplates that for tax purposes the Offering Date for a Purchase Period
will be considered the date of the grant of the right to purchase such Shares.

 

6.2.           Contribution
Elections. Each Eligible Employee who desires to participate in the Plan for a Purchase Period shall signify his or her election to
do so by signing and filing with the Company an election form approved by the Committee. An Eligible Employee may elect to have any whole
percent of Eligible Compensation (that is, 1%, 2%, 3%, etc.) withheld as a payroll deduction, but not exceeding 15% per pay period
(or such other maximum percentage as the Committee may establish from time to time prior to the commencement of an Offering). An election
to participate in the Plan and to authorize payroll deductions as described herein must be made before the Offering Date of a Purchase
Period, and shall be effective beginning with the first payday in the Purchase Period immediately following the filing of such election
form. Any election form submitted shall remain in effect until the Plan is terminated or such Participant withdraws from the Plan, modifies
his or her authorization, or ceases to be an Eligible Employee, as hereinafter provided.

 

6.3            Additional
Contributions. If specifically provided by the Committee in connection with an Offering (including for purposes of complying with
applicable local law), in addition to or instead of making contributions by payroll deductions, a Participant may make additional contributions
to his or her Recordkeeping Account through the payment by cash or check prior to a Purchase Date. A Participant may make such additional
contributions into his or her Recordkeeping Account only if the Participant has not already had the maximum permitted amount withheld
during the Offering through payroll deductions, subject to the limitations set forth in Section 5.1.

 

6.4.           Offering
Terms and Conditions. Each Offering shall consist of a single Purchase Period and shall be in such form and shall contain such terms
and conditions as the Committee shall deem appropriate, consistent with the terms of the Plan. The Committee may provide for separate
Offerings for different Designated Affiliates, and the terms and conditions of the separate Offerings, including the applicable Purchase
Period, need not be consistent. Any Offering shall comply with the requirement of Code Section 423 that all Participants shall have
the same rights and privileges for such Offering. The terms and conditions of any Offering shall be incorporated by reference into the
Plan and treated as part of the Plan.

 

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7.              Recordkeeping
Accounts.

 

7.1.           Crediting
Payroll Deduction Contributions. The Company shall maintain a Recordkeeping Account for each Participant. Payroll deductions pursuant
to Section 6 will be credited to such Recordkeeping Accounts on each payday.

 

7.2.           No
Interest Payable. No interest will be credited to a Participant’s Recordkeeping Account (unless required under local law).

 

7.3.           No
Segregation of Accounts. The Recordkeeping Account is established solely for accounting purposes, and all amounts credited to the
Recordkeeping Account will remain part of the general assets of the Company and need not be segregated from other corporate funds (unless
required under local law).

 

7.4.           Additional
Contributions. A Participant may not make any separate cash payment into a Recordkeeping Account, except as may be permitted in accordance
with Section 6.3, and any such additional contributions will be credited to the Recordkeeping Accounts when received by the Company.

 

8.              Right
to Adjust Participation; Withdrawals from Recordkeeping Account.

 

8.1.           Withdrawal
from Plan. A Participant may at any time withdraw from the Plan. If a Participant withdraws from the Plan, the Company will pay to
the Participant in cash the entire balance in such Participant’s Recordkeeping Account and no further deductions will be made from
the Participant’s Eligible Compensation during such Purchase Period. A Participant who withdraws from the Plan will not be eligible
to reenter the Plan until the next succeeding Purchase Period, and any such reentry shall be through the enrollment process described
in Section 6.2.

 

8.2.           Adjusting
Level of Participation. A Participant may adjust his or her rate of payroll deduction contributions to the Plan as follows:

 

(a)              A
Participant may, by written notice, direct the Company to increase or decrease his or her rate of payroll deduction contributions, with
such change to be effective as of the first day of the next Purchase Period.

 

(b)              A
Participant may, by written notice, direct the Company to decrease his or her rate of payroll deduction contributions for a Purchase Period
(including a decrease to 0%) one time during the applicable Purchase Period, with such change to become effective as soon as reasonably
practicable. Any Participant who has decreased his or her rate of payroll deductions
to 0% and does not increase such rate of payroll deductions from 0% to at least 1% in accordance with Section 8.2(a) prior to
the start of the next Purchase Period will be withdrawn from the Plan effective as of the first day of that next Purchase Period.

 

8.3.           Submission
of Notices. Notification of a Participant’s election to withdraw from the Plan as provided in Section 8.1 or to change
his or her rate of payroll deductions as provided in Section 8.2 shall be made by signing and submitting to the Company an appropriate
form for that purpose approved by the Committee. The Committee may promulgate rules regarding the time and manner for submitting
any such written notice, which may include a requirement that the notice be on file with the Company’s designated office for a reasonable
period before it will be effective.

 

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8.4            Adjustments
by Company. To the extent necessary to comply with Section 423(b)(8) of the Code or Section 5.1 of the Plan, a Participant’s
payroll deduction contributions to the Plan may be decreased by the Company to 0% at any time during a Purchase Period.

 

9.              Termination
of Employment. If the employment of a Participant is terminated for any reason, including death, disability, or retirement,
the entire balance in the Participant’s Recordkeeping Account will be refunded in cash to the Participant within 30 days after the
date of termination of employment. For purposes of the Plan, a Participant will not be deemed to have terminated employment while the
Participant is on sick leave, military leave or other leave of absence approved by the Company. Where the period of leave exceeds 90 days
and the Participant’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall
be deemed to have terminated on the ninety-first day of such leave.

 

10.            Purchase
of Shares.

 

10.1.         Number
of Shares Purchased. As of each Purchase Date, the balance in each Participant’s Recordkeeping Account will be used to purchase
the maximum number of whole Shares (subject to the limitations of Section 5.1) at the purchase price determined in accordance with
Section 5.2, unless the Participant has filed an appropriate form with the Company in advance of that date to withdraw from the Plan
in accordance with Section 8.1. Any amount remaining in a Participant’s Recordkeeping Account that represents the purchase
price for any fractional share will be carried over in the Participant’s Recordkeeping Account to the next Purchase Period. Any
amount remaining in a Participant’s Recordkeeping Account that represents the purchase price for any whole Shares that could not
be purchased by reason of the limitations of Section 5.1 or under the circumstances described in Section 3 will be refunded
to the Participant.

 

10.2.         Conversion
of Foreign Currency. In circumstances where payroll deductions have been taken from a Participant’s Eligible Compensation in
a currency other than United States dollars, Shares shall be purchased by converting the balance in the Participant’s Recordkeeping
Account to United States dollars at the exchange rate in effect at the end of the fifth Trading Day preceding the Purchase Date, as published
by Bloomberg.com if available or otherwise as determined with respect to a particular jurisdiction by the Committee or its delegate for
this purpose, and such dollar amount shall be used to purchase Shares as of the Purchase Date.

 

10.3.         Crediting
of Shares. Promptly after the end of each Purchase Period, the number of Shares purchased by all Participants as of the applicable
Purchase Date shall be issued and delivered to an agent selected by the Company. Delivery of the shares to the agent shall be effected
by an appropriate book-entry in the stock register maintained by the Company’s transfer agent or delivery of a certificate. The
agent will hold the Shares for the benefit of all Participants who have purchased Shares and will maintain a Share subaccount for each
Participant reflecting the number of Shares credited to each Participant. Each Participant will be entitled to direct the voting by the
agent of all Shares credited to such Participant’s Share subaccount, and the agent may reinvest any dividends paid on Shares credited
to a Participant’s Share subaccount in additional Shares in accordance with such rules as the Committee may prescribe. Each
Participant may also direct the agent to sell any or all of the Shares credited to the Participant’s Share subaccount and distribute
the net proceeds of such sale to the Participant.

 

10.4          Withdrawal
of Shares from Share Subaccount. Except for sales through the agent as provided in Section 10.3, a Participant may not withdraw
Shares from the Participant’s Share subaccount until after the Participant has satisfied the minimum holding period requirements
established by Code Section 423(a)(1). Once these holding period requirements have been satisfied with respect to Shares credited
to a Participant’s Share subaccount, the Participant may request that the agent transfer any or all of those Shares directly to
the Participant or to a brokerage account maintained by the Participant. The agent shall deliver the requested number of whole Shares
by the issuance of a stock certificate, the electronic delivery of the Shares to a brokerage account designated by the Participant, or
an appropriate book-entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided to
the Participant, and will pay the Participant a cash amount representing the Fair Market Value of any applicable fractional Share withdrawn.

 

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11.            Rights
as a Shareholder. A Participant shall not be entitled to any of the rights or privileges of a shareholder of the Company
with respect to Shares, including the right to vote or direct the voting or to receive any dividends that may be declared by the Company,
until (i) the Participant actually has paid the purchase price for such Shares and (ii) certificates for such Shares have been
issued either to the agent or to the Participant, as provided in Section 10.3.

 

12.            Rights
Not Transferable. A Participant’s rights under this Plan are exercisable only by the Participant during his or her
lifetime, and may not be sold, pledged, assigned, transferred or disposed of in any manner other than by will or the laws of descent and
distribution. Any attempt to sell, pledge, assign, transfer or dispose of the same shall be void and without effect. The amounts credited
to a Recordkeeping Account may not be sold, pledged, assigned, transferred or disposed of in any way, and any attempted sale, pledge,
assignment, transfer or other disposition of such amounts will be void and without effect.

 

13.            Administration
of the Plan.

 

13.1.         Authority
of the Committee. This Plan shall be administered by the Committee. Subject to the express provisions of the Plan and applicable law,
and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power
and authority to:

 

(a)              Determine
when each Purchase Period under this Plan shall occur, and the terms and conditions of each related Offering (which need not be identical);

 

(b)              Designate
from time to time which Affiliates of the Company shall be eligible to participate in the Plan;

 

(c)              Construe
and interpret the Plan and establish, amend and revoke rules, regulations and procedures for the administration of the Plan. The Committee
may, in the exercise of this power, correct any defect, omission or inconsistency in the Plan, in such manner and to the extent it may
deem necessary, desirable or appropriate to make the Plan fully effective;

 

(d)              Exercise
such powers and perform such acts as the Committee may deem necessary, desirable or appropriate to promote the best interests of the Company
and its Designated Affiliates and to carry out the intent that the Offerings made under the Plan are treated as qualifying under Code
Section 423(b);

 

(e)              As
more fully described in Section 18, to adopt such rules, procedures and sub-plans as may be necessary, desirable or appropriate to
permit participation in the Plan by employees who are foreign nationals or employed outside the United States by a non-U.S. Designated
Affiliate, and to achieve tax, securities law and other compliance objectives in particular locations outside the United States; and

 

(f)              Adopt
and amend as the Committee deems appropriate a Plan rule specifying that Shares purchased by a Participant during a Purchase Period
may not be sold by the Participant for a specified period of time after the Purchase Date on which the Shares were purchased by the Participant,
and establish such procedures as the Committee may deem necessary to implement such rule.

 

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13.2.         Interpretations
and Decisions by the Committee. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations,
and other decisions under or with respect to the Plan shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all persons, including the Company, any Affiliate, any Participant and any Eligible Employee.

 

13.3.         Delegation
by the Committee. Subject to the terms of the Plan and applicable law, the Committee may delegate ministerial duties associated with
the administration of the Plan to such of the Company’s officers, employees or agents as the Committee may determine.

 

13.4.         Indemnification.
No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan.
In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Company or
a Designated Affiliate, members of the Board and Committee and any officers or employees of the Company or Designated Affiliate to whom
authority to act for the Committee is delegated shall be indemnified by the Company from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act or omission to act in connection with the performance of such person’s
duties, responsibilities and obligations under the Plan if such person has acted in good faith and in a manner that he or she reasonably
believes to be in, or not opposed to, the best interests of the Company.

 

14.            Changes
in Capitalization and Corporate Transactions.

 

14.1.         Adjustments.
In the event of any change in the Common Stock of the Company by reason of a stock dividend, stock split, reverse stock split, corporate
separation, recapitalization, merger, consolidation, combination, exchange of shares and the like, the Committee shall make such equitable
adjustments as it deems appropriate in the aggregate number and class of Shares or other securities available under this Plan, the Share
limitation expressed in Section 5.1(b) of the Plan, and the number, class and purchase price of Shares or other securities subject
to purchase under any pending Offering.

 

14.2.         Corporate
Transactions. In the event of a Corporate Transaction, each right to acquire Shares on any Purchase Date that is scheduled to occur
after the date of the consummation of the Corporate Transaction may be continued or assumed or an equivalent right may be substituted
by the surviving or successor corporation or a parent or subsidiary of such corporation. If such surviving or successor corporation or
parent or subsidiary thereof refuses to continue, assume or substitute for such outstanding rights, then the Board may, in its discretion,
either terminate the Plan or shorten the Purchase Period then in progress by setting a new Purchase Date for a specified date before the
date of the consummation of the Corporate Transaction. Each Participant shall be notified in writing, prior to any new Purchase Date,
that the Purchase Date for the existing Offering has been changed to the new Purchase Date and that the Participant’s right to acquire
Shares will be exercised automatically on the new Purchase Date unless prior to such date the Participant’s employment has been
terminated or the Participant has withdrawn from the Plan. In the event of a dissolution or liquidation of the Company, any Offering and
Purchase Period then in progress will terminate immediately prior to the consummation of such action, unless otherwise provided by the
Board.

 

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15.            Amendment
or Suspension of Plan. The Board may at any time suspend this
Plan or amend it in any respect, but no such amendment may, without shareholder approval, increase the number of shares reserved under
this Plan, increase the rate of automatic annual increase in the number of shares reserved as provided in Section 3, or effect any
other change in the Plan that would require shareholder approval under
applicable law or regulations or the rules of any securities exchange on which the Shares may then be listed, or to maintain compliance
with Code Section 423. No such amendment or suspension shall adversely affect the rights of Participants pursuant to Shares previously
acquired under the Plan. During any suspension of the Plan, no new Offering or Purchase Period shall begin and no Eligible Employee shall
be offered any new right to purchase Shares under the Plan or any opportunity to elect to participate in the Plan, and any existing payroll
deduction authorizations shall be suspended, but any such right to purchase Shares previously granted for a Purchase Period that began
prior to the Plan suspension shall remain subject to the other provisions of this Plan and the discretion of the Board and the Committee
with respect thereto.

 

16.            Effective
Date and Term of Plan. The Plan was adopted by the Board of Directors of the Company on April 28, 2021, and approved
by the shareholders of the Company on May [•], 2021. The Plan will
become effective on the effective date of the Company’s registration statement on Form S-1 for the initial public offering
of the Common Stock. The Plan and all rights of Participants hereunder shall terminate (i) at any time, at the discretion
of the Board of Directors, or (ii) upon the completion of any Offering under which the limitation on the total number of shares to
be issued during the entire term of the Plan, as determined in accordance with Section 3 and including the annual increased provided
thereby, has been reached. Except as otherwise determined by the Board, upon termination of this Plan, the Company shall pay to each Participant
cash in an amount equal to the entire remaining balance in such Participant’s Recordkeeping Account.

 

17.            Governmental
Regulations and Listing. All rights granted or to be granted to Eligible Employees under this Plan are expressly subject
to all applicable laws and regulations and to the approval of all governmental authorities required in connection with the authorization,
issuance, sale or transfer of the Shares reserved for this Plan, including, without limitation, there being a current registration statement
of the Company under the Securities Act of 1933, as amended, covering the Shares purchasable on the Purchase Date applicable to such Shares,
and if such a registration statement shall not then be effective, the term of such Purchase Period shall be extended until the first Trading
Day after the effective date of such a registration statement, or post-effective amendment thereto. If applicable, all such rights hereunder
are also similarly subject to effectiveness of an appropriate listing application to a national securities exchange covering the Shares
issuable under the Plan upon official notice of issuance.

 

18.            Rules for
Foreign Jurisdictions. The Committee may adopt rules, procedures or subplans relating to the operation and administration of the
Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Committee
is specifically authorized to adopt rules and procedures regarding handling of payroll deductions, payment of interest, conversion
of local currency, payroll tax, the definition of Eligible Compensation, withholding procedures and handling of stock certificates that
vary with local requirements.

 

19.            Miscellaneous.

 

19.1.         Effect
on Employment Status. This Plan shall not be deemed to constitute a contract of employment between the Company and any Participant,
nor shall it interfere with the right of the Company to terminate the employment of any Participant and treat him or her without regard
to the effect that such treatment might have upon him or her under this Plan.

 

19.2.         Governing
Law. This Plan, and all agreements hereunder, shall be construed in accordance with and governed by the laws of the State of Delaware.

 

19.3.         Electronic
Documentation and Signatures. Any reference in the Plan to election or enrollment forms, notices, authorizations or any other document
to be provided in writing shall include the provision of any such form, notice, authorization or document by electronic means, including
through the Company’s intranet, and any reference in the Plan to the signing of any document shall include the authentication of
any such document provided in electronic form, in each case in accordance with procedures established by the Committee.

 

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19.4.         Book-Entry
and Electronic Transfer of Shares. Any reference in this Plan to the issuance or transfer of a stock certificate evidencing Shares
shall be deemed to include, in the Committee’s discretion, the issuance or transfer of such Shares in book-entry or electronic form.
Uncertificated Shares shall be deemed delivered for all purposes of this Plan when the Company or its agent shall have provided to the
recipient of the Shares a notice of issuance or transfer by electronic mail (with proof of receipt) or by United States mail, and have
recorded the issuance or transfer in its records.

 

19.5.         Registration
of Share Accounts and Certificates. Any Share account contemplated by Section 10.3 and certificate to be issued to a Participant
shall be registered in the name of the Participant, or jointly in the name of the Participant and another person, as the Participant may
direct on an appropriate form filed with the Company or the agent.

 

    -9-OneSpan Inc. 8-K

 

Exhibit
10.1

COOPERATION
AGREEMENT

This
cooperation agreement (this “Agreement”) is made and entered into as of May 28, 2021, by and among OneSpan
Inc., a Delaware corporation (the “Company”), on the one hand, and Legion Partners Asset Management,
LLC, a Delaware limited liability company, Legion Partners, L.P. I, a Delaware limited partnership, Legion Partners, L.P. II,
a Delaware limited partnership, Legion Partners Offshore I SP I, a Delaware segregated portfolio company of Legion Partners Offshore
Opportunities SPC I, a company organized under the laws of the Cayman Islands, Legion Partners, LLC, a Delaware limited liability
company, Legion Partners Holdings, LLC, a Delaware limited liability company (“LPH”), Christopher S.
Kiper, an individual, and Raymond T. White, an individual (the foregoing, collectively with each of their respective Affiliates,
the “Investor Group”), on the other hand. The Company and the Investor Group are each herein referred
to as a “party” and collectively, the “parties.” Capitalized terms not otherwise defined are defined in
Section 14 below.

 

WHEREAS,
on November 1, 2018, the Investor Group, filed a Schedule 13D (as amended through the date hereof, the “Schedule 13D”)
with the SEC;

 

WHEREAS,
on February 25, 2021, LPH submitted notice (the “Nomination Notice”) of its intent to nominate four
(4) candidates for election to the board of directors of the Company (the “Board”) at the Company’s
2021 annual meeting of stockholders (the “2021 Annual Meeting”); and

 

WHEREAS,
the Company and the Investor Group have determined to come to an agreement with respect to the composition of the Board and certain
other matters, as provided in this Agreement.

 

NOW,
THEREFORE, in consideration of the foregoing premises and the mutual covenants and agreements contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally
bound hereby, agree as follows:

 

		1.	Board
                                         Composition and Related Matters.

 

(a)       Effective
upon the issuance of the Press Release (as defined herein), LPH hereby irrevocably withdraws the Nomination Notice, and the Investor
Group shall cease all solicitation efforts with respect to the 2021 Annual Meeting.

 

(b)       Promptly
following the execution and delivery of this Agreement, the Board shall increase the size of the Board from nine (9) to ten (10)
directors, effective as of immediately following the conclusion of the 2021 Annual Meeting, and promptly following the resignation
of John N. Fox, Jr. from the Board pursuant to Section 1(c), the Board shall decrease the size of the Board to nine (9)
directors. For the duration of the Standstill Period, the size of the Board may not be increased above ten (10) directors prior
to Mr. Fox’s resignation or above nine (9) directors following Mr. Fox’s resignation.

    1

     

    

 

(c)       At
the 2021 Annual Meeting, the Board shall not nominate Matthew Moog for reelection. Promptly following the execution and delivery
of this Agreement, the Board shall appoint Sarika Garg and Michael J. McConnell (collectively, the “Investor Group
Designees”) to the Board, effective as of immediately following the conclusion of 2021 Annual Meeting, to fill the
vacancy resulting from the increase in the size of the Board pursuant to Section 1(b) and the vacancy resulting from not
nominating Mr. Moog for reelection. Promptly following the 2021 Annual Meeting, the Board shall complete its onboarding processes
with each of the Investor Group Designees. On or prior to September 30, 2021, John N. Fox, Jr. shall resign from the Board. On
or prior to the Company’s 2022 annual meeting of stockholders (the “2022 Annual Meeting”), Jean
K. Holley shall resign from the Board.

 

(d)       Promptly
following the 2021 Annual Meeting, the Board shall take the necessary steps to (i) appoint and seat each of the Investor Group
Designees on the Finance and Strategy Committee of the Board; (ii) appoint and seat Sarika Garg on the Corporate Governance and
Nominating Committee of the Board (the “Corporate Governance and Nominating Committee”); and (iii) appoint
and seat Michael J. McConnell on the Management Development and Compensation Committee of the Board, subject in each case to applicable
rules of the SEC and of any stock exchange on which securities of the Company are listed.

 

(e)       Prior
to the execution and delivery of this Agreement, such Investor Group Designee shall have agreed to all Company policies applicable
to independent directors of the Board (full and complete copies of which have been delivered to LPH prior to the execution of
this Agreement), including conflict of interest policies requiring each Investor Group Designee to recuse himself or herself from
any deliberation (and vote) of the Board or any committee thereof and providing that the Board shall be permitted not to share
information with any Investor Group Designee with respect to any deliberation (or vote) or information that could be deemed a
conflict of interest.

 

(f)       The
Investor Group agrees that there shall be no contracts, plans or arrangements, written or otherwise, in effect during the Standstill
Period between any members of the Investor Group and either of the Investor Group Designees providing for any compensation, reimbursement
of expenses or indemnification of either of the Investor Group Designees in connection with or related to such Investor Group
Designee’s service on the Board.

 

(g)       During
the Standstill Period and as long as the Investor Group’s Net Long Position exceeds 4.0% of the outstanding shares of Company
common stock, par value $0.001 per share (“Common Stock”), in the event that either of the Investor
Group Designees resigns, is removed or is no longer able to serve as a director of the Company for any reason, the Investor Group
shall have the right to propose a candidate for replacement of such Investor Group Designee (such replacement, a “Replacement
Designee”) who possesses relevant skillsets and is reasonably acceptable to the Board. Any Replacement Designee
of any Investor Group Designee shall qualify as an Independent Director. The Corporate Governance and Nominating Committee shall
use reasonable best efforts, in good faith and consistent with its fiduciary duties, to approve or deny any candidate for Replacement
Designee, such approval not to be unreasonably withheld, conditioned or delayed, within five (5) Business Days after such candidate
has: (i) provided the Company with such candidate’s written consent to a customary background check, which shall be provided
within one (1) Business Day after such candidate is proposed by the Investor Group; (ii) completed a reasonably satisfactory interview
with the Corporate Governance and Nominating Committee, which shall be completed within five (5) Business Days after receipt of
a completed director questionnaire; (iii) provided the Company with (A) a completed director questionnaire (in the form to be
provided by the Company within two (2) Business Days of being requested, which form is substantially similar to the form completed
by other prospective director candidates) and (B) an executed consent to be named by the Company as a nominee for election to
the Board; and (iv) agreed to take all necessary action not to be considered to be “overboarded” under the applicable
policies of Institutional Shareholder Services, Inc. (“ISS”) and Glass Lewis & Co., LLC (“Glass
Lewis”) as a result of his or her appointment to the Board. In the event the Corporate Governance and Nominating
Committee declines to approve a candidate for Replacement Designee, members of the Investor Group may propose one or more additional
candidates, subject to the approval process described above, until a Replacement Designee is approved by the Corporate Governance
and Nominating Committee. Following the approval of a candidate for Replacement Designee by the Corporate Governance and Nominating
Committee, the Board shall promptly (but no later than five (5) Business Days) appoint such Replacement Designee to the Board.
Upon his or her appointment to the Board, such Replacement Designee shall be deemed to be an Investor Group Designee for all purposes
under this Agreement and shall be appointed to the same committees of the Board on which the applicable departing Investor Group
Designee sat.

    2

     

    

 

(h)       The
Company shall hold the 2021 Annual Meeting as previously publicly announced, by June 9, 2021.

(i)       Subject
to their delivery to the Company of consents to being named as nominees in the Company’s proxy statement and to serve as
directors of the Company if elected at the 2022 Annual Meeting, during the Standstill Period, the Company shall, with respect
to the 2022 Annual Meeting, (i) include each of the Investor Group Designees as a nominee for election to the Board in its proxy
statement and proxy card, (ii) recommend to the Company’s stockholders the election of each of the Investor Group Designees
to the Board and (iii) solicit proxies in favor of the election of each of the Investor Group Designees to the Board in a manner
no less rigorous and favorable than the manner in which the Company supports its other incumbent nominees; provided, however,
that if the Board determines, in good faith and consistent with its fiduciary duties, that renominating one or both of the Investor
Group Designees for election at the 2022 Annual Meeting is not in the best interests of the Company, the Board shall provide notice
to LPH of such determination no later than 30 days prior to the deadline for the submission of notice of director nominations
for the 2022 Annual Meeting and the Company shall have no obligations under clause (i), (ii) or (iii) of this Section 1(i)
with respect to such Investor Group Designee(s) following the delivery of such notice.

 

2.       Voting
Commitment. During the Standstill Period, each member of
the Investor Group shall, or shall cause its Representatives to, appear in person or by proxy at each Stockholder Meeting and
vote, or act by written consent with respect to, all of the shares of Common Stock beneficially owned by such member of the Investor
Group in accordance with the Board’s recommendations as such recommendations of the Board are set forth in the applicable
definitive proxy statement or consent solicitation statement filed in respect thereof with respect to (a) the election, removal
and/or replacement of directors (a “Director Proposal”) and (b) any other proposal submitted to the
stockholders at a Stockholder Meeting or for action by written consent; provided, however, that in the event that ISS and
Glass Lewis issue voting recommendations that differ from the voting recommendation of the Board with respect to any proposal
submitted to the stockholders at any Stockholder Meeting or action by written consent (other than Director Proposals), the members
of the Investor Group shall be permitted to vote all or some shares of Common Stock they beneficially own at such Stockholder
Meeting, or act by written consent with respect to all or some shares of Common Stock they beneficially own, in accordance with
the ISS and Glass Lewis recommendations; and provided, further, that each member of the Investor Group shall have the ability
to vote freely or act by written consent freely with respect to any proposal relating to (i) any Extraordinary Transaction or
(ii) the implementation of takeover defenses not in existence as of the date of this Agreement. For the avoidance of doubt, each
member of the Investor Group shall take all actions necessary (including by calling back loaned out shares) to ensure that they
have the voting power for each share beneficially owned by such member of the Investor Group on the record date for each Stockholder
Meeting or action by written consent.

    3

     

    

 

3.       Standstill.
During the Standstill Period, without the prior written consent of the Board, the members of the Investor Group shall not, and
shall instruct their Affiliates not to, directly or indirectly:

 

(a)       (i)
acquire, offer or seek to acquire, agree to acquire or acquire rights to acquire (except by way of stock dividends or other distributions
or offerings made available to holders of voting securities of the Company generally on a pro rata basis), directly or indirectly,
whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a group, through
swap or hedging transactions or otherwise, any voting securities of the Company or any voting rights decoupled from the underlying
voting securities which would result in the Investor Group beneficially owning 9.9% or more of the then-outstanding shares of
Common Stock in the aggregate (the “Maximum Ownership Cap”); or (ii) sell its shares of Common Stock,
other than in open market sale transactions where the identity of the purchaser is not known and in underwritten widely-dispersed
public offerings, to any Third Party that, to the Investor Group’s knowledge (after due inquiry in connection with a private,
non-open market transaction, it being understood that such knowledge shall be deemed to exist with respect to any publicly available
information, including information in documents filed with the SEC), would result in such Third Party, together with its Affiliates
and Associates, beneficially owning, in the aggregate, 5.0% or more of the shares of Common Stock outstanding at such time or
would increase the beneficial ownership interest of any Third Party who, together with its Affiliates and Associates, has a beneficial
ownership in the aggregate of 5.0% or more of the shares of Common Stock outstanding at such time;

 

(b)       (i)
other than pursuant to Section 1(g) of this Agreement, nominate, recommend for nomination or give notice of an intent to
nominate or recommend for nomination a person for election at any Stockholder Meeting at which the Company’s directors are
to be elected; (ii) knowingly initiate, encourage or participate in any solicitation of proxies in respect of any election contest
or removal contest with respect to the Company’s directors; (iii) submit, initiate, make or be a proponent of any stockholder
proposal for consideration at, or bring any other business before, any Stockholder Meeting; (iv) knowingly initiate, encourage
or participate in any solicitation of proxies in respect of any stockholder proposal for consideration
at, or other business brought before, any Stockholder Meeting; or (v) knowingly initiate,
encourage or participate in any “withhold” or similar campaign with respect to any Stockholder Meeting;

    4

     

    

 

(c)       (i)
form, join or in any way participate in any group or agreement of any kind with respect to any voting securities of the Company
(other than with members of the Investor Group); provided, however, that an Affiliate of the Investor Group shall be permitted
to join the “group” following the execution of this Agreement, so long as (A) any such Affiliate agrees to be bound
by the terms and conditions of this Agreement and (B) such joining would not result in the Investor Group beneficially owning
in excess of the Maximum Ownership Cap; or (ii) deposit any voting securities of the Company in any voting trust or subject any
voting securities of the Company to any arrangement or agreement with respect to the voting thereof (other than with members of
the Investor Group or any Affiliate thereof that has agreed to be bound by the terms and conditions of this Agreement);

 

(d)       seek
publicly, alone or in concert with others, to amend any provision of the Company’s certificate of incorporation, as amended
(the “Charter”), or the Company’s by-laws, as amended and restated (the “By-laws”);

 

(e)       demand
an inspection of the Company’s books and records;

 

(f)       (i)
make any public or private proposal with respect to or (ii) make any public statement or otherwise seek to encourage, advise or
assist any Third Party in so encouraging or advising with respect to: (A) the composition of the Board; (B) the capitalization,
share repurchase or dividend policy of the Company; (C) the Company’s management, directors, business, operations, strategy,
governance, corporate structure or other affairs or policies; (D) any Extraordinary Transaction; or (E) causing a class of securities
of the Company to be delisted from, or to cease to be authorized to be quoted on, any securities exchange or become eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act;

 

(g)       initiate,
make, effect, seek to effect, offer or propose to effect, cause or participate in, or in any way assist, facilitate or participate
in, directly or indirectly, any (i) Extraordinary Transaction; (ii) material acquisition of any assets or businesses of the Company
or any of the Company’s subsidiaries; (iii) tender offer or exchange offer, merger, acquisition, share exchange or other
business combination involving any of the voting securities or any of the material assets or businesses of the Company or any
of its subsidiaries; (iv) recapitalization, restructuring, liquidation, dissolution or other material transaction with respect
to the Company or any of its subsidiaries or any material portion of its or their businesses; or (v) proposal, either alone or
in concert with others, to the Company that would reasonably be expected to require a public announcement or disclosure regarding
any such matter;

 

(h)       engage
in any short sale, forward contract or any purchase, sale or grant of any option, warrant, convertible security, stock appreciation
right or other similar right (including any put or call option or “swap” transaction) with respect to any security
(other than a broad-based market basket or index) that includes, relates to or derives any significant part of its value from
a decline in the market price or value of the securities of the Company and which would, in the aggregate or individually, result
in the Investor Group or any member of the Investor Group having a Net Long Position in the Company that is less than $0;

    5

     

    

 

(i)       enter
into any negotiations, agreements or understandings with any Third Party with respect to the foregoing, or advise, assist, encourage
or seek to persuade any Third Party to take any action with respect to any of the foregoing, or otherwise take or cause any action
inconsistent with any of the foregoing;

 

(j)       publicly
make or in any way advance publicly any request or proposal that the Company or the Board amend, modify or waive any provision
of this Agreement; or

 

(k)       take
any action challenging the validity or enforceability of this Section 3 or this Agreement, except as permitted under Section
5 hereof.

 

Notwithstanding
the foregoing, nothing in this Agreement shall prevent the members of the Investor Group from (A) making any statement in response
to a Legal Requirement or that the Investor Group reasonably believes, after consultation with outside counsel, to be legally
required by applicable Law; (B) communicating privately with the Company’s directors or officers on any matter so long as
such communication would not be reasonably expected to trigger public disclosure obligations for either party; (C) making private
factual statements to the stockholders of the Company or making or sending private communications to investors in any member of
the Investor Group or any of their Affiliates or prospective investors in any member of the Investor Group or any of their Affiliates,
provided that such statements or communications (1) are based on publicly available information; (2) are not reasonably
expected to be publicly disclosed and are understood by all parties to be confidential communications; and (3) are not made with
an intent to circumvent any of the restrictions listed in paragraphs (a) through (k) of this Section 3 or Section 4;
(D) identifying potential director candidates to serve on the Board so long as such actions do not create a public disclosure
obligation for the Investor Group or the Company, are not publicly disclosed by the Investor Group or its Affiliates or Associates
and are undertaken on a basis reasonably designed to be confidential; or (E) tendering shares, receiving payment for shares or
otherwise participating in any such transaction on the same basis as the other stockholders of the Company or from participating
in any such transaction that has been approved by the Board, subject to the other terms of this Agreement. For the avoidance of
doubt, nothing in this Agreement shall be deemed to limit the exercise in good faith by either of the Investor Group Designees
of their fiduciary duties in their capacity as a director of the Company.

 

Notwithstanding
anything set forth herein to the contrary, upon the public announcement by the Company of entry into a definitive agreement for
a transaction that would constitute a Change of Control Transaction and which Change of Control Transaction was not encouraged,
facilitated or solicited by any member of the Investor Group, this Agreement shall immediately and automatically terminate in
its entirety, and no party hereunder shall have any further rights or obligations under this Agreement.

    6

     

    

 

4.       Mutual
Non-Disparagement. During the Standstill Period and subject
to the exceptions set forth in the last two full paragraphs of Section 3 above, without the prior written consent of the
other party, neither party shall, nor shall it permit any of its Representatives to, make any public or private statement that
defames or disparages the other party, the other party’s current or former directors in their capacity as such, officers
or employees (including with respect to such persons’ service at the other party), the other party’s subsidiaries,
or the business of the other party’s subsidiaries or any of its or its subsidiaries’ current or former directors,
officers or employees, including the business and current or former directors, officers and employees of the other party’s
controlled Affiliates, as applicable. The restrictions in this Section 4 shall not (a) apply (i) in any compelled testimony
or production of information, whether by legal process, subpoena or as part of a response to a request for information from any
governmental or regulatory authority with jurisdiction over the party from whom information is sought, in each case, to the extent
required or (ii) to any disclosure that such party reasonably believes, after consultation with outside counsel, to be legally
required by applicable Law; or (b) prohibit any party from reporting what it reasonably believes, after consultation with outside
counsel, to be violations of federal Law to any governmental authority pursuant to Section 21F of the Exchange Act or Rule 21F
promulgated thereunder.

 

5.       No
Litigation. During the Standstill Period, each party hereby
covenants and agrees that it shall not, and shall not permit any of its Representatives to, directly or indirectly, alone or in
concert with others, encourage, pursue or assist any other person to threaten or initiate any Legal Proceeding against the other
party or any of its Representatives based on information known or unknown as of the date of this Agreement, except for (a) any
Legal Proceeding initiated primarily to remedy a breach of or to enforce this Agreement and (b) counterclaims with respect to
any proceeding initiated by, or on behalf of one party or its Affiliates against the other party or its Affiliates; provided,
however, that the foregoing shall not prevent any party or any of its Representatives from responding to any Legal Requirement
in connection with any Legal Proceeding if such Legal Proceeding has not been initiated by, on behalf of, or at the direct or
indirect suggestion of such party or any of its Representatives; provided, further, that in the event any party
or any of its Representatives receives such Legal Requirement, such party shall give prompt written notice of such Legal Requirement
to the other party (except where such notice would be prohibited by Law or not practicable). Each party represents and warrants
that neither it nor any assignee has filed any Legal Proceeding against the other party.

 

6.       Press
Release; SEC Filings.

 

(a)       No
later than the next Business Day immediately following the date of this Agreement, the Company shall issue a press release (the
“Press Release”) announcing this Agreement, in form and content substantially in the form attached hereto
as Exhibit A. Prior to the issuance of the Press Release, neither the Company nor any members of the Investor Group shall
issue any press release or public announcement regarding this Agreement, or take any action that would require public disclosure
thereof, without the prior written consent of the other party.

 

(b)       No
later than two (2) Business Days following the date of this Agreement, the Company shall file with the SEC a Current Report on
Form 8-K reporting its entry into this Agreement, disclosing applicable items to conform to its obligations hereunder and appending
this Agreement as an exhibit thereto (the “Form 8-K”). The Form 8-K shall be consistent with the terms
of this Agreement and the Press Release. The Company shall provide the members of the Investor Group and their Representatives
with a reasonable opportunity to review and comment on the Form 8-K prior to the filing with the SEC and consider in good faith
any comments of the members of the Investor Group and their Representatives; provided that the foregoing shall not prevent the
Company from making any required disclosures in accordance with applicable Law.

    7

     

    

 

(c)       No
later than two (2) Business Days following the date of this Agreement, the Investor Group shall file with the SEC an amendment
to its Schedule 13D reporting its entry into this Agreement, disclosing applicable items to conform to its obligations hereunder
and including the terms of this Agreement and appending this Agreement as an exhibit thereto (the “Schedule 13D Amendment”).
The Schedule 13D Amendment shall be consistent with the terms of this Agreement and the Press Release. The Investor Group shall
provide the Company and its Representatives with a reasonable opportunity to review and comment on the Schedule 13D Amendment
prior to the filing with the SEC and consider in good faith any comments of the Company and its Representatives; provided that
the foregoing shall not prevent the Investor Group from making any required disclosures in accordance with applicable Law.

 

(d)       Except
for the issuance of the Press Release and the filing of the Form 8-K and Schedule 13D Amendment, no party shall issue any press
release or make any other public statement (including in any filing required under the Exchange Act) or speak with any member
of the media in a manner inconsistent with this Agreement, except as required by Law or with the prior written consent of the
other party and otherwise in accordance with this Agreement.

 

7.       Confidentiality.
The Investor Group agrees that none of the Investor Group Designees may share any information with the Investor Group in respect
of the Company or the Board which they may learn in their capacities as directors of the Company, including discussions or matters
considered in meetings of the Board or any Board committee, at any time, for any reason, without the Company’s prior written
consent.

 

8.        Representations
and Warranties.

 

(a)       Each
of the members of the Investor Group who is an individual represents and warrants that he is sui juris and of full capacity.
Each of the members of the Investor Group who is not an individual represents and warrants that it has full power and authority
to execute, deliver and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby
and that this Agreement has been duly and validly authorized, executed and delivered by such member, constitutes a valid and binding
obligation and agreement of such member and is enforceable against such member in accordance with its terms. Each member of the
Investor Group represents and warrants that the execution of this Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof, in each case in accordance with the terms hereof, will not conflict with, or result
in a breach or violation of any applicable organizational documents as currently in effect, the execution, delivery and performance
of this Agreement by such member does not and will not (i) violate or conflict with any Law, order, judgment or decree applicable
to it or (ii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or
both could constitute such a breach, violation or default) under or pursuant to, or result in the loss of a material benefit under,
or give any right of termination, amendment, acceleration or cancellation of, any organizational document, agreement, contract,
commitment, understanding or arrangement to which it is a party or by which it is bound. The Investor Group represents and warrants
that, as of the date of this Agreement, the Investor Group beneficially owns an aggregate of 2,775,846 shares of Common Stock.
The Investor Group represents and warrants that it has voting authority over such shares and owns no Synthetic Equity Interests,
any Short Interests or any other securities in the Company.

    8

     

    

 

(b)       The
Company represents and warrants that it has the power and authority to execute, deliver and carry out the terms and provisions
of this Agreement and to consummate the transactions contemplated hereby and that this Agreement has been duly and validly authorized,
executed and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company and is enforceable
against the Company in accordance with its terms. The Company represents that the execution of this Agreement, the consummation
of the transactions contemplated hereby and the fulfillment of the terms hereof, in each case in accordance with the terms hereof,
will not conflict with, or result in a breach or violation of the organizational documents of the Company as currently in effect,
the execution, delivery and performance of this Agreement by the Company does not and will not (i) violate or conflict with any
Law, order, judgment or decree applicable to the Company or (ii) result in any breach or violation of or constitute a default
(or an event which with notice or lapse of time or both could constitute such a breach, violation or default) under or pursuant
to, or result in the loss of a material benefit under, or give any right of termination, amendment, acceleration or cancellation
of, any organizational document, agreement, contract, commitment, understanding or arrangement to which the Company is a party
or by which it is bound.

 

9.       Termination.

 

(a)       
This Agreement shall terminate upon the end of
the Standstill Period. Except as otherwise provided elsewhere in this Agreement, the “Standstill Period”
shall begin upon the execution and delivery of this Agreement and shall end at 11:59 p.m. Eastern Time on the 30th day prior to
the deadline for the submission of notice of director nominations for the Company’s 2023 annual meeting of stockholders;
provided, however, that, if the Company provides notice to LPH pursuant to Section 1(i), then the Investor Group
shall have the right, in its sole discretion, to immediately terminate the Standstill Period by promptly delivering notice of
such termination to the Company.

 

(b)       All
rights and obligations under this Agreement shall terminate upon termination of this Agreement in accordance with this Section
9; provided, however, that no termination of this Agreement in accordance with this Section 9 shall relieve
any party from liability for any breach of this Agreement prior to such termination.

 

10.       Expenses.
The Company shall reimburse the Investor Group for its reasonable,
documented out-of-pocket fees and expenses (including legal expenses) incurred in connection with the 2021 Annual Meeting and
the negotiation of this Agreement up to an amount of $750,000 in the aggregate.

    9

     

    

 

11.       Notices.
All notices, demands, consents, requests, instructions, approvals
and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and
shall be deemed to have been given (a) when delivered by hand, with written confirmation of receipt; (b) upon sending if sent
by electronic mail to the electronic mail addresses below, with confirmation of receipt from the receiving party by electronic
mail; (c) one (1) Business Day after being sent by a nationally recognized overnight carrier to the addresses set forth below;
or (d) when actually delivered if sent by any other method that results in delivery, with written confirmation of receipt:

 

	If
        to the Company:

         

        OneSpan
        Inc.

        121
        West Wacker Drive, Suite 2050

        Chicago,
        IL 60601

        Attn:
        Steven R. Worth

        General
        Counsel, Chief Compliance Officer and Corporate Secretary

        Email:
        steven.worth@onespan.com
	with
        mandatory copies (which shall not constitute notice) to:

         

        Sidley
        Austin LLP

        1
        South Dearborn Street

        Chicago,
        IL 60603

        Attn:
        Beth E. Berg

        Email:
        bberg@sidley.com

         

        and

         

        Sidley
        Austin LLP

        787
        Seventh Avenue

        New
        York, NY 10019

        Attn:
        Kai H.E. Liekefett

        Email:
        kliekefett@sidley.com

         

	If
        to LPH or the Investor Group:

         

         

        Legion
        Partners Asset Management, LLC

        12121 Wilshire Blvd., Suite 1240

        Los Angeles, CA 90025

        Attn:
        Christopher S. Kiper

        Email:
        ckiper@legionpartners.com

         
	with
        mandatory copies (which shall not constitute notice) to:

         

        Olshan
        Frome Wolosky LLP

        1325
        Avenue of the Americas

        New York, NY 10019

        Attn:
        Steve Wolosky

        Elizabeth
        Gonzalez-Sussman

        Email:
SWolosky@olshanlaw.com

                    EGonzalez@olshanlaw.com

        

    10

     

    

  

12.       Governing
Law; Jurisdiction; Jury Waiver. This Agreement and any Legal
Proceeding arising out of or relating to this Agreement or any action of the Company or the Investor Group in the administration,
performance or enforcement hereof (whether for breach of contract, tortious conduct or otherwise) shall be governed by, and construed
and enforced in accordance with, the laws of the State of Delaware without giving effect to any choice or conflict of laws provision
or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware. Each party irrevocably agrees that any Legal Proceeding arising out of or relating to this Agreement
shall be brought and determined exclusively in the State and Federal courts in New Castle County, Delaware (the “Chosen
Courts”). Each party hereby irrevocably submits with regard to any such Legal Proceeding for itself and in respect
of its property, generally and unconditionally, to the personal jurisdiction of the Chosen Courts and agrees that it shall not
bring any Legal Proceeding arising out of or relating to this Agreement in any court other than the Chosen Courts (other than
to enforce a judgment with respect thereto). Each party hereby irrevocably waives, and agrees not to assert in any Legal Proceeding
arising out of or relating to this Agreement, (a) any claim that it is not personally subject to the jurisdiction of the Chosen
Courts for any reason, (b) any claim that it or its property is exempt or immune from jurisdiction of any Chosen Court or from
any Legal Proceeding commenced in the Chosen Courts (whether through service of notice, attachment prior to judgment, attachment
in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by applicable Law,
any claim that (i) the Legal Proceeding in any Chosen Court is brought in an inconvenient forum, (ii) the venue of such Legal
Proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by the Chosen Courts.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT.

 

13.       Specific
Performance. Each party to this Agreement acknowledges and
agrees that the other party would be irreparably injured by an actual breach of this Agreement by the first-mentioned party or
its Representatives and that monetary remedies would be inadequate to protect either party against any actual or threatened breach
or continuation of any breach of this Agreement. Without prejudice to any other rights and remedies otherwise available to the
parties under this Agreement, each party shall be entitled to equitable relief by way of injunction or otherwise and specific
performance of the provisions hereof upon satisfying the requirements to obtain such relief without the necessity of posting a
bond or other security, if the other party or any of its Representatives breach or threaten to breach any provision of this Agreement.
Such remedy shall not be deemed to be the exclusive remedy for a breach of this Agreement, but shall be in addition to all other
remedies available at law or equity to the non-breaching party.

    11

     

    

 

14.       Certain
Definitions and Interpretations. As used in this Agreement:
(a) the terms “Affiliate” and “Associate” (and any plurals thereof) have the
meanings ascribed to such terms under Rule 12b-2 promulgated by the SEC under the Exchange Act and shall include all persons or
entities that at any time during the Standstill Period become Affiliates or Associates of any applicable person or entity referred
to in this Agreement; provided, however, that the term “Associate” shall refer only to Associates controlled
by the Company or the members of the Investor Group, as applicable; provided, further, that, for purposes of this Agreement,
the members of the Investor Group shall not be Affiliates or Associates of the Company, and the Company shall not be an Affiliate
or Associate of any of the members of the Investor Group; (b) the term “Annual Meeting” means an annual
meeting of stockholders of the Company and any adjournment, postponement, rescheduling or continuation thereof; (c) the terms
“beneficial ownership,” “group,” “participant,”
“person,” “proxy” and “solicitation” (and any plurals
thereof) have the meanings ascribed to such terms under the Exchange Act and the rules and regulations promulgated thereunder;
provided, however, that the meaning of “solicitation” shall be without regard to the exclusions set
forth in Rules 14a-1(l)(2)(iv) and 14a-2 under the Exchange Act; (d) the term “Business Day” means any
day that is not a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or obligated
to be closed by applicable Law; (e) “Change of Control Transaction” means (i) any transaction pursuant
to which any person is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing more than
50% of the Company’s then-outstanding equity interests and voting power, (ii) any merger or stock-for-stock transaction
with a Third Party whereby immediately after the consummation of the transaction, the Company’s stockholders retain less
than 50% of the equity interests and voting power of the surviving entity’s then-outstanding equity securities or (iii)
the sale of all or substantially all of the Company’s assets to a Third Party; (f) the term “Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder; (g) the term “Extraordinary
Transaction” means any tender offer, exchange offer, merger, consolidation, acquisition, business combination, sale,
spin-off, recapitalization, restructuring, share issuance or similar extraordinary transaction with a Third Party; (h) the term
“Independent Director” means an individual who qualifies as an “independent director” under
applicable rules of the SEC and the rules of any stock exchange on which securities of the Company are listed and is not an employee,
principal, Affiliate or Associate of the members of the Investor Group; (i) the term “Law” means any
law (including common law), rule, code, ordinance or regulation of any governmental entity, including the rules of any stock exchange
on which the Company is traded; (j) the term “Legal Proceeding” means any lawsuit, action, suit, claim
or other proceeding before any court; (k) the term “Legal Requirement” means any oral questions, interrogatories,
requests for information or documents, subpoenas, civil investigative demands or similar processes in connection with any Legal
Proceeding; (l) the term “Net Long Position” means such shares of Common Stock beneficially owned, directly
or indirectly, that constitute such person’s net long position as defined in Rule 14e-4 under the Exchange Act mutatis
mutandis, provided that “Net Long Position” shall not include any shares as to which such person does not
have the right to vote or direct the vote; and the terms “person” or “persons,”
for purposes of the meaning of the term “Net Long Position,” shall mean any individual, corporation (including not-for-profit),
general or limited partnership, limited liability or unlimited liability company, joint venture, estate, trust, associate, organization
or other entity of any kind or nature; (m) the term “Representatives” means (i) a person’s Affiliates
and Associates and (ii) its and their respective directors, officers, employees, partners, members, managers, consultants, legal
or other advisors, agents and other representatives acting in a capacity on behalf of, in concert with or at the direction of
such person or its Affiliates or Associates; (n) the term “SEC” means the U.S. Securities and Exchange
Commission; (o) the term “Short Interests” means any agreement, arrangement, understanding or relationship,
including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged
in, directly or indirectly, by such person, the purpose or effect of which is to mitigate loss to, reduce the economic
risk (of ownership or otherwise) of shares of any class or series of the Company’s equity securities by, manage the
risk of share price changes for, or increase or decrease the voting power of, such person with respect to the shares of any class
or series of the Company’s equity securities, or that provides, directly or indirectly, the opportunity to profit from any
decrease in the price or value of the shares of any class or series of the Company’s equity securities; (p) the term “Stockholder
Meeting” means each annual or special meeting of stockholders of the Company, or any action by written consent of
the Company’s stockholders, and any adjournment, postponement, rescheduling or continuation thereof; (q) the term “Synthetic
Equity Interests” means any derivative, swap or other transaction or series of transactions engaged in, directly
or indirectly, by such person, the purpose or effect of which is to give such person economic risk similar to ownership of equity
securities of any class or series of the Company, including due to the fact that the value of such derivative, swap or other transactions
are determined by reference to the price, value or volatility of any shares of any class or series of the Company’s equity
securities, or which derivative, swap or other transactions provide the opportunity to profit from any increase in the price or
value of shares of any class or series of the Company’s equity securities, without regard to whether (i) the derivative,
swap or other transactions convey any voting rights in such equity securities to such person; (ii) the derivative, swap or other
transactions are required to be, or are capable of being, settled through delivery of such equity securities; or (iii) such person
may have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions;
and (r) the term “Third Party” refers to any person that is not a party to this Agreement, a member
of the Board, a director or officer of the Company, or legal counsel to either party. In this Agreement, unless a clear contrary
intention appears, (i) the word “including” (in its various forms) means “including, without limitation;”
(ii) the words “hereunder,” “hereof,” “hereto” and words of similar import are references
to this Agreement as a whole and not to any particular provision of this Agreement; (iii) the word “or” is not exclusive;
(iv) references to “Sections” and “Exhibits” in this Agreement are references
to Sections of this Agreement and Exhibits to this Agreement unless otherwise indicated;
and (v) whenever the context requires, the masculine gender shall include the feminine and neuter genders, the neuter gender shall
include the feminine and masculine genders and the feminine gender shall include the masculine and neuter genders.

    12

     

    

 

		15.	Miscellaneous.

 

(a)       This
Agreement is solely for the benefit of the parties and is not enforceable by any other persons.

 

(b)       This
Agreement shall not be assignable by operation of law or otherwise by a party without the consent of the other party. Any purported
assignment without such consent is void ab initio. Subject to the foregoing sentence, this Agreement shall be binding upon,
inure to the benefit of, and be enforceable by and against the permitted successors and assigns of each party.

 

(c)       Neither
the failure nor any delay by a party in exercising any right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any
right, power or privilege hereunder.

 

(d)       If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. It is hereby stipulated and declared to be the intention
of the parties that the parties would have executed the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable. In addition, the parties agree to use their reasonable
best efforts to agree upon and substitute a valid and enforceable term, provision, covenant or restriction for any of such that
is held invalid, void or unenforceable by a court of competent jurisdiction.

 

(e)       Any
amendment or modification of the terms and conditions set forth herein or any waiver of such terms and conditions must be agreed
to in a writing signed by each party.

    13

     

    

 

(f)       This
Agreement may be executed in one or more textually identical counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement. Signatures to this Agreement transmitted by facsimile transmission,
by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended
to preserve the original graphic and pictorial appearance of a document, shall have the same effect as physical delivery of the
paper document bearing the original signature.

 

(g)       Each
of the parties acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded
the execution of this Agreement, and that it has executed this Agreement with the advice of such counsel. Each party and its counsel
cooperated and participated in the drafting and preparation of this Agreement, and any and all drafts relating thereto exchanged
among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason
of its drafting or preparation. Accordingly, any rule of Law or any legal decision that would require interpretation of any ambiguities
in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of
the parties, and any controversy over interpretations of this Agreement shall be decided without regard to events of drafting
or preparation.

 

(h)       The
headings set forth in this Agreement are for convenience of reference purposes only and shall not affect or be deemed to affect
in any way the meaning or interpretation of this Agreement or any term or provision of this Agreement.

 

(i)       This
Agreement, including all exhibits hereto, constitutes the only agreement among the parties with respect to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, among the parties
with respect to the subject matter hereof.

 

[Signature
Pages Follow]

    14

     

    

IN
WITNESS WHEREOF, each of the parties has executed this Agreement, or caused the same to be executed by its duly authorized representative,
as of the date first above written.

 

	 	COMPANY:
	 	 	 
	 	ONESPAN INC.
	 	 	 
	 	By:	/s/ Steven R. Worth
	 	Name:	Steven R. Worth
	 	Title:	General Counsel, Chief Compliance
	 	 	Officer and Corporate Secretary

 

COOPERATION AGREEMENT

     

     

    

 

	 	INVESTOR GROUP:
	 	 	 
	 	LEGION PARTNERS ASSET
	 	MANAGEMENT, LLC
	 	 	 
	 	By:	/s/ Christopher S. Kiper
	 	Name:	Christopher S. Kiper
	 	Title:	Managing Director
	 	 	 
	 	LEGION PARTNERS, L.P. I
	 	 	 
	 	By: Legion Partners Asset Management,
    LLC
	 	Investment Advisor
	 	 	 
	 	By:	/s/ Christopher S. Kiper
	 	Name:	Christopher S. Kiper
	 	Title:	Managing Director
	 	 	 
	 	LEGION PARTNERS, L.P. II
	 	 	 
	 	By: Legion Partners Asset Management,
    LLC
	 	Investment Advisor
	 	 	 
	 	By:	/s/ Christopher S. Kiper
	 	Name:	Christopher S. Kiper
	 	Title:	Managing Director
	 	 	 
	 	LEGION PARTNERS OFFSHORE I SP I
	 	 	 
	 	By: Legion Partners Asset Management,
    LLC
	 	Investment Advisor
	 	 	 
	 	By:	/s/ Christopher S. Kiper
	 	Name:	Christopher S. Kiper
	 	Title:	Managing Director
	 	 	 
	 	LEGION PARTNERS, LLC
	 	 	 
	 	By: Legion Partners Holdings, LLC
	 	Managing Member

 

COOPERATION AGREEMENT

     

     

    

	 	 	 
	 	By:	/s/ Christopher S. Kiper
	 	Name:	Christopher S. Kiper
	 	Title:	Managing Member
	 	 	 
	 	LEGION PARTNERS HOLDINGS, LLC
	 	 	 
	 	By:	/s/ Christopher S. Kiper
	 	Name:	Christopher S. Kiper
	 	Title:	Managing Member
	 	 	 
	 	/s/ Christopher S. Kiper
	 	Christopher S. Kiper
	 	 	 
	 	/s/ Raymond T. White
	 	Raymond T. White

 

COOPERATION
AGREEMENT

     

     

    

Exhibit
A

  

Form
of Press Release

  

OneSpan Reaches Agreement with Legion Partners

 

Sarika Garg and Michael McConnell to Join the OneSpan
Board of Directors after 2021 Annual Meeting

 

John Fox, Jean Holley and Matthew Moog to Leave
OneSpan Board Over the Next Year

 

CHICAGO – May 28, 2021 – OneSpan Inc. (NASDAQ: OSPN),
the global leader in securing remote banking transactions, today announced that it has entered into an agreement with Legion Partners
Holdings, LLC (together with its affiliates, “Legion”), which owns approximately 6.9% of the outstanding stock of OneSpan,
pursuant to which two of Legion’s independent director nominees, Sarika Garg and Michael McConnell, will be appointed to the OneSpan
Board of Directors following the 2021 Annual Meeting of Stockholders (the “Annual Meeting”), scheduled to be held on June
9, 2021.

 

"Over the past several years, we have made tremendous progress in
transforming OneSpan and evolving our Board to ensure we have the right skills to support those efforts,” said John N. Fox, Jr.,
Chairman of OneSpan. “As we welcome Sarika and Mike to the Board, I am confident the Board will be well composed to oversee the
ongoing execution of our multi-year transformation to become a trusted identity solutions provider. We are pleased to have reached the
agreement with Legion, and we look forward to working together toward our common goal of enhancing value for our stockholders and other
stakeholders.”

 

OneSpan director Matthew Moog has announced he will not stand for re-election
at the Annual Meeting, and Mr. Fox will step down as Chairman and retire from the Board by September 30, 2021. Jean K. Holley will retire
from the Board at or prior to the 2022 annual meeting.

 

Mr. Fox continued, “As I look ahead to my retirement from the Board,
I am committed to working closely with my fellow directors to execute an orderly transition. On behalf of all of us at OneSpan, I want
to thank Matt and Jean for the years of dedicated service and guidance they have given to the Board.”

 

Chris Kiper, Managing Director of Legion, said, “As long-term investors
in OneSpan, we believe the company has a tremendous opportunity to further enhance value for all stockholders. Sarika and Mike will bring
highly relevant backgrounds and expertise to the Board to help the company achieve this goal. We appreciate the Board’s engagement
and look forward to OneSpan’s future success.”

 

In connection with the appointment of these two new directors, OneSpan
and Legion have entered into a cooperation agreement, including customary standstill and voting commitments. A copy of the agreement will
be included as an exhibit to the company's Current Report on Form 8-K to be filed with the Securities and Exchange Commission.

 

About Sarika Garg

 

Sarika Garg has served as Co-founder and Chief Executive Officer at Cacheflow
Inc., a B2B embedded finance company currently in stealth, since October 2020. She is also a strategic advisor to Tradeshift Inc., where
she previously served as Chief Strategy Officer responsible for product and go-to-market. Tradeshift is a cloud network and platform for
supply chain payments, marketplaces and apps. During her tenure from 2015 through 2020, she helped Tradeshift grow from a small 100-person
startup in 2015 to a leader currently valued at a $2.7B valuation. Before joining Tradeshift, Ms. Garg led product management for Ariba
Network, following its acquisition by SAP SE. Ms. Garg started her career at SAP SE, a multinational software corporation, where she spent over 10 years.
She has been recognized as one of the Top 50 Women Leaders in SaaS by The Software Report in both 2018 and 2019 and is a member
of the Forbes Business Development Council.

 

 

    A-1 

     

    

 

 

About Michael McConnell

 

Michael McConnell currently serves on the board of Vonage Holdings Corp.
(Nasdaq: VG), a cloud communications provider, where he has served since 2019. He also serves as Chairman of the Board of Adacel Technologies
Limited (ASX: ADA), a developer of air traffic management systems and technology, and previously served as a member of the board of directors
beginning in 2017. Mr. McConnell’s prior board experience includes serving on the board of SPS Commerce, Inc. (Nasdaq: SPSC), a
provider of cloud-based supply chain management services, from 2018 through 2019, and Spark Networks SE (NYSE: LOV), a leader in affinity-based
online subscription dating networks, from 2014 until the company was sold in 2017. He also served as Spark Network’s interim executive
chairman and chief executive officer during 2014, and he served as a non-executive director and as executive chairman of Redflex Holdings
Ltd. (ASX: RDF), a provider of intelligent transport system solutions and services. Mr. McConnell also previously served on the board
of Guidance Software, Inc. (Nasdaq: GUID), a global provider of forensic security solutions, from 2016 until the company was sold in 2017.
He has also served on numerous other public and private company boards in the United States, Australia, New Zealand and Ireland. He is
the former Managing Director of Shamrock Capital Advisors, a private investment company managing private equity and hedge funds.

 

About OneSpan

 

OneSpan helps protect the world from digital fraud by establishing trust
in people’s identities, the devices they use and the transactions they execute. We make digital banking accessible, secure, easy
and valuable. OneSpan’s Trusted Identity platform and security solutions significantly reduce digital transaction fraud and enable
regulatory compliance for more than half of the top 100 global banks and thousands of financial institutions around the world. Whether
automating agreements, detecting fraud or securing financial transactions, OneSpan helps reduce costs and accelerate customer acquisition
while improving the user experience. Learn more at OneSpan.com.

 

Copyright© 2021 OneSpan North America Inc., all rights reserved.
OneSpanTM is a registered or unregistered trademark of OneSpan North America Inc. or its affiliates in the U.S. and other countries.

 

About Legion Partners

 

Legion Partners is a value-oriented investment manager based in Los Angeles,
with a satellite office in Sacramento, CA. Legion Partners seeks to invest in high-quality businesses that are temporarily trading at
a discount, utilizing deep fundamental research and long-term shareholder engagement. Legion Partners manages a concentrated portfolio
of North American small-cap equities on behalf of some of the world’s largest institutional and HNW investors.

 

 

 

    A-2 

     

    

 

 

Investor Contact

Joe Maxa

Vice President of Investor Relations

+1-312-766-4009

joe.maxa@onespan.com

 

Bob Marese

MacKenzie Partners, Inc.

+1-212-929-5500

OSPN-MPI@mackenziepartners.com

 

Media Contacts

 

For OneSpan

 

Sarah Hanel

Global Director of Corporate Communications

+1-312-871-1729

sarah.hanel@onespan.com

 

Bryan Locke / Mike DeGraff / Danya Al-Qattan

Sard Verbinnen & Co.

+1-312-895-4700

OneSpan-SVC@sardverb.com

 

For Legion

 

Sloane & Company

Joe Germani / Dan Zacchei

jgermani@sloanepr.com /
dzacchei@sloanepr.com

 

 

    A-3

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