Document:

Exhibit 10.1

 

ESCROW AGREEMENT

 

ESCROW AGREEMENT,
dated as of August 10, 2018 (this “Agreement”), by and among One Horizon Group, Inc., a Delaware corporation (the “Company”),
Sargon Petros, Mark Hogbin, Rita Liu and Jeremy Chung (collectively, the (“Stockholders”), and Mandelbaum Salsburg
P.C. (the "Agent").

 

Preliminary Statement

 

The Company’s shares
of common stock are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and listed
on The NASDAQ Capital Market (“NASDAQ”).

On May 18, 2018,
the Company acquired from the Stockholders 280,500 shares of Banana Whale Studios Pte. Ltd., a Singapore corporation (“BW”),
representing 51% of BW’s outstanding shares, and issued to the Stockholders a total of 7,383,000 shares of the Company’s
common stock (the “Shares”), pursuant to an Exchange Agreement dated as of that date (the “Exchange Agreement”).
The number of shares of common stock which the Stockholders are entitled to receive from the Company depends upon the after-tax
earnings of BW during the twenty-four month period following the acquisition and will be determined in accordance with the provisions
of Section 5.02 of the Exchange Agreement (the “Adjusted Shares”), which are incorporated herein by reference. The
number of Adjusted Shares may be more or less than the number of Shares, and in the event the number of Adjusted Shares is less
than the number of Shares, the Stockholders are required to return that number of Shares in excess of the number of Adjusted Shares
to the Company for cancellation.

The Stockholders
have agreed to deposit the Shares in escrow with the Agent, who is counsel to the Company, on the terms and subject to the conditions
set forth in this Agreement.

NOW, THEREFORE,
in consideration of the foregoing promises and other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:

 

1. The Stockholders have
concurrently with the execution of this Agreement deposited stock certificates evidencing the Shares with the Agent, together with
undated stock powers duly executed in blank Medallion guaranteed, which are to be held by the Agent on the terms and conditions
set forth herein, the receipt of which is hereby acknowledged by the Agent. In the event that during the term of this Agreement
any stock dividend, reclassification, readjustment or other change is declared or made in the capital structure of the Company,
all additional shares issued by reason of any such change (the “Additional Shares”) shall be deposited with the Agent,
together with undated stock powers Medallion guaranteed, and shall be deemed to be part of the escrowed property held by the Agent
under the terms of this Agreement in the same manner as the shares of common stock originally deposited hereunder. In addition,
all dividends and other distributions (other than stock or liquidating dividends) at any time and from time to time declared or
paid upon any of the Shares and Additional Shares shall be deposited in escrow with the Agent and be part of the escrowed property
held by the Agent hereunder, subject to the conditions for release set forth in Section 4. All of the Shares and related stock
powers, Additional Shares and related stock powers, dividends or other distribution constituting part of the escrowed property
being held by the Agent hereunder shall be collectively be referred to herein as the “Escrowed Property.”

 

2. Each of the Stockholders
agrees that he or she will not during the term of this Agreement sell, transfer or convey any interest in, or otherwise dispose
of, any of the Escrowed Property, or enter into an agreement to do any of the foregoing.

 

      

     

    

3. Each of the Stockholders
shall be entitled to exercise the voting power with respect to the Shares or Additional Shares owned of record by such Stockholder
as long as they remain subject to the terms of this Agreement.

 

4. (a) The Agent shall
continue to hold the Escrowed Property until it receives (x) joint written instructions signed by the Company and the Stockholders
as to the delivery of the Escrow Property, or (y) a letter of instructions from the Company demanding delivery of all or a specified
portion of the Escrowed Property based upon a computation made by the Company’s chief financial officer in accordance with
the provisions of Section 5.02 of the Exchange Agreement (“Company Instruction Letter”), together with documentary
evidence of such computation, a copy of which (together with the related documentation) has been delivered concurrently to the
Stockholders, unless the Agent receives a letter of objection (an “Objection Notice”) from the Stockholders within
five business days after the receipt by the Agent of the Company Instruction Letter (the “Waiting Period”).

 

(b) Upon receipt of joint
written instructions signed by the Company and the Stockholders, the Agent shall promptly thereafter (but in no event later than
five business days thereafter) transfer the all or that portion of the Escrowed Property specified in the joint written instructions
to the Company and/or the Stockholders in accordance therewith.

 

(b) If the Agent does not
receive an Objection Notice by the end of the Waiting Period, the Agent shall promptly thereafter (but in no event later than five
business days thereafter) transfer the all or that portion of the Escrowed Property specified in the Company Instruction Letter
to the Company and/or the Stockholders in accordance therewith.

 

(c) If the Agent
receives an Objection Notice before the end of the Waiting Period (giving rise to a controversy or dispute, hereinafter referred
to as a “Dispute”), the Agent shall continue to hold the Escrowed Property until final resolution of the Dispute. A
final resolution of the Dispute shall occur if (x) a written agreement is reached between the Company and the Stockholders with
respect to Dispute directing the disposition and delivery of the Escrowed Property; or (y) a final, non appealable determination
of a court of competent jurisdiction. Upon final resolution of the Dispute, and upon receipt by the Agent of evidence of such resolution,
the Agent shall deliver the Escrowed Property in accordance with such resolution.

 

5. (a) The Agent shall
have no duties or responsibilities other than those expressly set forth herein. The Agent shall have no duty to enforce any obligation
of any person to make any payment or delivery, or to direct or cause any payment or delivery to be made, or to enforce any obligation
of any person to perform any other act. The Agent shall be under no liability to the other parties hereto or to anyone else by
reason of any failure on the part of any party hereto or any maker, guarantor, endorser or other signatory of any document or any
other person to perform such person’s obligations under any such document. Except for amendments to this agreement referred
to below, and except for instructions given to the Agent by the Company and/or the Stockholders relating to the Escrowed Property
under this Agreement, the Agent shall not be obligated to recognize any agreement between any and all of the persons referred to
herein, notwithstanding that references hereto may be made herein and whether or not it has knowledge thereof.

 

(b) The Agent shall
not be liable to the Company, the Stockholders, or to anyone else for any action taken or omitted by it, or any action suffered
by it to be taken or omitted, in good faith and in the exercise of its own best judgment. The Agent may rely conclusively and
shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen
by the Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained), which is believed
by the Agent to be genuine and to be signed or presented by the proper person or persons. The Agent shall not be bound by any
notice or demand, or any waiver, modification, termination or rescission of this agreement or any of the terms thereof, unless
evidenced by a writing delivered to the Agent signed by the proper party or parties and, if the duties or rights of the Agent
are affected, unless it shall give its prior written consent thereto.

      

     

    

(c) The Agent
shall not be responsible for the sufficiency or accuracy of the form of, or the execution, validity, value or genuineness of, any
document or property received, held or delivered by it hereunder, or of any signature or endorsement thereon, or for any lack of
endorsement thereon, or for any description therein; nor shall the Agent be responsible or liable to the other parties hereto or
to anyone else in any respect on account of the identity, authority or rights of the persons executing or delivering or purporting
to execute or deliver any document or property or this Agreement. The Agent shall have no responsibility with respect to the use
or application of any funds or other property paid or delivered by the Agent pursuant to the provisions hereof.

(d) The Agent shall
have the right to assume in the absence of written notice to the contrary from the proper person or persons that a fact or an event
by reason of which an action would or might be taken by the Agent does not exist or has not occurred, without incurring liability
to the other parties hereto or to anyone else for any action taken or omitted, or any action suffered by it to be taken or omitted,
in good faith and in the exercise of its own best judgment, in reliance upon such assumption.

(e) In the event the
Agent shall be uncertain as to its duties or rights hereunder, or shall receive instructions from any party hereto with respect
to the disposition or delivery of the Escrowed Property, which, in its opinion, are in conflict with any of the provisions of this
agreement, it shall be entitled to refrain from taking any action until such time as there has been a final determination of the
rights of the Company, on the one hand, and the Stockholders, on the other hand, with respect to the Escrowed Property, or alternatively,
it may deposit the Escrowed Property with a court of competent jurisdiction in an interpleader action. For purposes of this Section
5(e), there shall be deemed to have been a final determination of the rights of the Company, on the one hand, and the Stockholders,
on the other hand, with respect to the Escrowed Property at such time as the Agent shall receive (x), joint written instructions
from the Company and the Stockholders, (y) a Company Instruction Letter which has not been disputed in an Objection Notice from
the Stockholders, or (z) a copy of a final judgment rendered by a court of competent jurisdiction which is not subject to appeal.

(f) The Company,
on the one hand, and the Stockholders, on the other hand, each agree to defend, indemnify and hold the Agent harmless from and
against any and all expenses, including reasonable counsel fees and disbursements, or loss suffered by the Agent in connection
with any action, suit or other proceeding involving any claim, or in connection with any claim or demand, which in any way, directly
or indirectly, arises out of or relates to this Agreement, the services of the Agent hereunder, or the Escrowed Property held by
it hereunder. The Agent shall have a lien for the amount of any such expenses or loss on the Escrowed Property held by it hereunder.
Promptly after the receipt of the Agent of notice of any demand or claim or the commencement of any action, suit or proceeding,
the Agent shall, if a claim in respect thereof is to be made against the Company, on the one hand, and the Stockholders, on the
other hand, (each, a “Party”), notify the Party thereof in writing, but the failure by the Agent to give such notice
shall not relieve the Party from any liability which the Party may have to the Agent hereunder.

      

     

    

(g) For the purposes
hereof, the term “expense or loss” shall include all amounts paid or payable to satisfy any claim, demand or liability,
or in settlement of any claim, demand, action, suit or proceeding settled with the express written consent of the Agent, and all
costs and expenses, including, but not limited to, reasonable counsel fees and disbursements, paid or incurred in investigating
or defending against any such claim, demand, action, suit or proceeding.

(h) The Agent may
resign at any time and be discharged from its duties as Agent hereunder by giving the Parties at least 30 days’ prior written
notice thereof. As soon as practicable after its resignation, the Agent shall turn over to a successor agent appointed by the Company
and the Stockholders the Escrowed Property held hereunder upon presentation of the document appointing the successor agent and
its acceptance thereof. If a successor agent has not been so appointed within the 60-day period following such notice of resignation,
the Agent may deposit the Escrowed Property with any court it deems appropriate.

6. This
Agreement shall terminate on the final disposition of the Escrowed Property held by the Agent hereunder, provided that the rights
of the Agent and the obligations of the other parties hereto hereunder shall survive the termination hereof.

7. This Agreement
shall be governed by and construed in accordance with the internal laws of the State of New York, without reference to conflict
of laws principles. The representations and warranties contained in this Agreement shall survive the execution and delivery hereof
and any investigations made by the parties hereto. The headings in this agreement are for purposes of reference only and shall
not limit or otherwise affect any of the terms hereof.

8. The Company and
each of the Stockholders hereby irrevocably consents to the jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of New York in connection with any action, suit or other
proceeding arising out of or relating to this agreement or any action taken or omitted hereunder, and waives personal service of
any summons, complaint or other process and agrees that the service thereof may be made by certified or registered mail directed
to the parties hereto at their respective addresses for purposes of notices hereunder.

9. All notices, requests,
demands and other communications provided for herein shall be in writing, shall be delivered by hand or by first-class mail, certified
or registered with postage prepaid, or by facsimile or electronic mail with receipt confirmed, shall be deemed given when received
and shall be addressed to the parties hereto at their respective addresses listed on the signature page hereof or to such other
persons or addresses as the relevant party shall designate as to itself from time to time in writing delivered in like manner.

10. This
Agreement and the rights and obligations of the parties hereunder may not be assigned. This Agreement and the rights and obligations
hereunder of the Agent may be assigned by the Agent only to a successor to its entire business. This Agreement shall be binding
upon and inure to the benefit of each party’s respective successors, heirs and permitted assigns. No other person shall acquire
or have any rights under or by virtue of this Agreement. This Agreement may not be changed orally or modified, amended or supplemented
without an express written agreement executed by the Agent, and each of the parties hereto. This Agreement is intended to be for
the sole benefit of the parties hereto, and (subject to the provisions of this Section 8) their respective successors, heirs and
assigns, and none of the provisions of this Agreement are intended to be, nor shall they be construed to be, for the benefit of
any third person.

      

     

    

11. From time to
time on and after the date hereof, the parties hereto shall deliver or cause to be delivered to the Agent such further documents
and instruments and shall do and cause to be done such further acts as the Agent shall reasonably request (it being understood
that the Agent shall have no obligation to make any such request) to carry out more effectively the provisions and purposes of
this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.

12. This
Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing such
instrument to be drafted. The terms “hereby,” “hereof,” “hereto,” “hereunder,”
and any similar terms, as used in this Agreement, refer to the Agreement in its entirety and not only to the particular portion
of this Agreement where the term is used. The word “person” shall mean any natural person, partnership, company, government
and any other form of business or legal entity. All words or terms used in this agreement, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any other gender as the context may require. This Agreement
shall not be admissible in evidence to construe the provisions of any prior agreement. The rule of ejusdem generis shall
not be applicable herein to limit a general statement, which is followed by or referable to an enumeration of specific matters,
to matters similar to the matters specifically mentioned.

13. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the signature of all of the parties reflected hereon
as the signatures.

 

 

[the signature page is on the following
page]

 

      

     

    

[signature page to Escrow Agreement dated August
__, 2018]

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement or have caused this Agreement to be duly executed by one of its officers duly authorized, as of the day
and year first above written.

 

	ONE HORIZON GROUP, INC.	THE STOCKHOLDERS:	 
	 	 	 
	By: 	     /s/ Mark White     	 	     /s/ Sargon Petros     

	 
	 	Name: Mark White	Sargon Petros	 
	 	Title: President and Chief Executive Officer 	 	 
	 	     /s/ Mark Hogbin     

	 
	 	Mark Hogbin	 
	 	 	 
	 	     /s/ Rita Liu     

	 
	 	Rita Liu	 
	 	 	 
	 	     /s/ Jeremy Chung     

	 
	 	Jeremy Chung	 

 

	MANDELBAUM SALSBURG P.C. (“Agent”)

	 
	 	 
	 	 
	By:    	     /s/ Vincent J. McGill	 
	 	Name: Vincent J. McGill	 
	 	Title: Partner	 

Address: 1270 Avenue of the Americas, 18th floor

New York, NY 10020

Telephone: 212-324-1876

E-mail: vmcgill@lawfirm.msfnko-ex101_7.htm

Exhibit 10.1

FUNKO, INC.
2017 INCENTIVE AWARD PLAN

Restricted Stock Unit Grant Notice

Funko, Inc., a Delaware corporation (the “Company”), pursuant to its 2017 Incentive Award Plan, as amended from time to time (the “Plan”), hereby grants to the holder listed below (“Participant”) the number of Restricted Stock Units set forth below (the “RSUs”).  The RSUs are subject to the terms and conditions set forth in this Restricted Stock Unit Grant Notice (the “Grant Notice”), the Plan and the Restricted Stock Unit Agreement attached as Exhibit A (the “Agreement”), each of which are incorporated into this Grant Notice by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Agreement.

		
	
Participant:
	
[__________]

	
Grant Date:
	
[________ __], 

	
Number of Restricted Stock Units:
	
[__________]

	
Vesting Commencement Date:
	
[________ __, 201_]

	
Vesting Schedule:
	
 

The Participant will be deemed to have accepted the RSUs and agreed to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice, unless the Participant informs the Company in writing within 30 days immediately following the date of the Company’s electronic or other written notification to the Participant of the grant of the RSUs (the “Notification Date”) that the Participant wishes to reject the RSUs. Failure to notify the Company in writing of the Participant’s rejection of the RSUs during this 30-day period will result in the Participant’s acceptance of the RSUs and the Participant’s agreement to be bound by the terms and conditions of the Plan, the Agreement and this Grant Notice.

In addition, the Participant agrees to be bound by the terms and conditions of the Plan, the Agreement and the Grant Notice by signing below following the Notification.  

Participant agrees that he or she has reviewed the Agreement, the Plan and the Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to accepting the Grant Notice and fully understands all provisions of the Grant Notice, the Agreement and the Plan.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, the Grant Notice or the Agreement.  

				
	
FUNKO, INC.
	
PARTICIPANT

	
By:
	
 
	
By:
	
 

	
Print Name: 
	
 
	
Print Name:
	
 

	
Title:
	
 
	
 
	
 

	
 
	
 
	
Address: 
	
 

	
 
	
 
	
 
	
 

 

 

 

 

EXHIBIT A

TO RESTRICTED STOCK UNIT GRANT NOTICE 

RESTRICTED STOCK UNIT AGREEMENT

Pursuant to the Grant Notice to which this Agreement is attached, the Company has granted to Participant the number of RSUs set forth in the Grant Notice.  

ARTICLE I.
general

1.1Defined Terms.  Capitalized terms not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice.

1.2Incorporation of Terms of Plan.  The RSUs and the shares of Common Stock (“Stock”) to be issued to Participant hereunder (“Shares”) are subject to the terms and conditions set forth in this Agreement and the Plan, each of which is incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.

ARTICLE II.
award of restricted stock UNITS and DIVIDEND EQUIVALENTS

2.1Award of RSUs and Dividend Equivalents.  

(a)In consideration of Participant’s past and/or continued employment with or service to any Company Group Member and for other good and valuable consideration, effective as of the grant date set forth in the Grant Notice (the “Grant Date”), the Company has granted to Participant the number of RSUs set forth in the Grant Notice, upon the terms and conditions set forth in the Grant Notice, the Plan and this Agreement, subject to adjustments as provided in Article 13 of the Plan.  Each RSU represents the right to receive one Share or, at the option of the Company, an amount of cash as set forth in Section 2.3(b), in either case, at the times and subject to the conditions set forth herein.  However, unless and until the RSUs have vested, Participant will have no right to the payment of any Shares subject thereto.  Prior to the actual delivery of any Shares, the RSUs will represent an unsecured obligation of the Company, payable only from the general assets of the Company.  

(b)The Company hereby grants to Participant an Award of Dividend Equivalents with respect to each RSU granted pursuant to the Grant Notice for all ordinary cash dividends which are paid to all or substantially all holders of the outstanding shares of Stock between the Grant Date and the date when the applicable RSU is distributed or paid to Participant or is forfeited or expires.  The Dividend Equivalents for each RSU shall be equal to the amount of cash which is paid as a dividend on one share of Stock.  All such Dividend Equivalents shall be credited to Participant and be deemed to be reinvested in additional RSUs as of the date of payment of any such dividend based on the Fair Market Value of a share of Stock on such date.  Each additional RSU which results from such deemed reinvestment of Dividend Equivalents granted hereunder shall be subject to the same vesting, distribution or payment, adjustment and other provisions which apply to the underlying RSU to which such additional RSU relates.

 

 

2.2Vesting of RSUs and Dividend Equivalents.  

(a)Subject to Participant’s continued employment with or service to the Company Group on each applicable vesting date and subject to the terms of this Agreement, the RSUs shall vest in such amounts and at such times as are set forth in the Grant Notice.  Each additional RSU which results from deemed reinvestments of Dividend Equivalents pursuant to Section 2.1(b) hereof shall vest whenever the underlying RSU to which such additional RSU relates vests.

(b)In the event Participant incurs a Termination of Service, except as may be otherwise provided by the Administrator or as set forth in a written agreement between Participant and the Company, Participant shall immediately forfeit any and all RSUs and Dividend Equivalents granted under this Agreement which have not vested or do not vest on or prior to the date on which such Termination of Service occurs, and Participant’s rights in any such RSUs and Dividend Equivalents which are not so vested shall lapse and expire. 

(c)For purposes of this Section 2.2, the following definitions shall apply:

(i)“Cause” shall mean a Company Group Member having “Cause” to terminate Participant’s employment or services, as such term is defined in any relevant employment agreement between Participant and a Company Group Member; provided that, in the absence of such agreement containing such definition, a Company Group Member shall have “Cause” to terminate Participant’s employment or services upon:  (i) gross neglect or willful misconduct by Participant of Participant’s duties or Participant’s willful failure to carry out, or comply with, in any material respect any lawful and reasonable directive of the Board; (ii) conviction of Participant of, or Participant’s plea of no contest, plea of nolo contendere or imposition of adjudicated probation with respect to, any felony or crime involving moral turpitude or Participant’s indictment for any felony or crime involving moral turpitude; (iii) Participant’s habitual unlawful use (including being under the influence) or possession of illegal drugs on a Company Group Member’s premises or while performing Employee’s duties and responsibilities; (iv) Participant’s commission at any time of any act of fraud, embezzlement, misappropriation, material misconduct, or breach of fiduciary duty against the Company (or any predecessor thereto or successor thereof); or (v) Participant’s material breach of this Agreement or any other confidentiality, non-compete or non-solicitation covenant with a Company Group Member; provided that such Company Group Member shall provide Participant with fifteen (15) days prior written notice before any termination due to (a) or (e) (other than to the extent that (a) relates to any fraud or intentional misconduct) with an opportunity to meet with the Board and discuss or cure any such alleged violation.

(ii) “Company Group” shall mean the Company and its Subsidiaries.

(iii)“Company Group Member” shall mean each member of the Company Group.

(iv)“Disability” shall have the meaning ascribed to such term in any relevant employment agreement between Participant and a Company Group Member; provided that, in the absence of such agreement containing such definition, “Disability” shall mean Participant’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in 

A-2

 

 

 

death or that can be expected to last for a continuous period of not less than twelve (12) months.

2.3Distribution or Payment of RSUs.  

(a)Participant’s RSUs shall be distributed in Shares (either in book-entry form or otherwise) or, at the option of the Company, paid in an amount of cash as set forth in Section 2.3(b), in either case, as soon as administratively practicable following the vesting of the applicable RSU pursuant to Section 2.2, and, in any event, within sixty (60) days following such vesting.  Notwithstanding the foregoing, the Company may delay a distribution or payment in settlement of RSUs if it reasonably determines that such payment or distribution will violate Federal securities laws or any other Applicable Law, provided that such distribution or payment shall be made at the earliest date at which the Company reasonably determines that the making of such distribution or payment will not cause such violation, as required by Treasury Regulation Section 1.409A-2(b)(7)(ii), and provided further that no payment or distribution shall be delayed under this Section 2.3(a) if such delay will result in a violation of Section 409A.

(b)In the event that the Company elects to make payment of Participant’s RSUs in cash, the amount of cash payable with respect to each RSU shall be equal to the Fair Market Value of a Share on the day immediately preceding the applicable distribution or payment date set forth in Section 2.3(a).  All distributions made in Shares shall be made by the Company in the form of whole Shares, and any fractional share shall be distributed in cash in an amount equal to the value of such fractional share determined based on the Fair Market Value as of the date immediately preceding the date of such distribution.

2.4Conditions to Issuance of Certificates.  The Company shall not be required to issue or deliver any certificate or certificates for any Shares prior to the fulfillment of all of the following conditions:  (A) the admission of the Shares to listing on all stock exchanges on which such Shares are then listed, (B) the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable, and (C) the obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable.

2.5Tax Withholding.  Notwithstanding any other provision of this Agreement:

(a)The Company Group has the authority to deduct or withhold, or require Participant to remit to the applicable Company Group Member, an amount sufficient to satisfy any applicable federal, state, local and foreign taxes (including the employee portion of any FICA obligation) required by Applicable Law to be withheld with respect to any taxable event arising pursuant to this Agreement.  The Company Group may withhold or Participant may make such payment in one or more of the forms specified below:

(i)by cash or check made payable to the Company Group Member with respect to which the withholding obligation arises;

(ii)by the deduction of such amount from other compensation payable to Participant;

(iii)with respect to any withholding taxes arising in connection with the distribution of the RSUs, with the consent of the Administrator, by requesting that the Company withhold 

A-3

 

 

 

a net number of vested shares of Stock otherwise issuable pursuant to the RSUs having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Company Group based on the maximum statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income;

(iv)with respect to any withholding taxes arising in connection with the distribution of the RSUs, with the consent of the Administrator, by tendering to the Company vested shares of Stock having a then current Fair Market Value not exceeding the amount necessary to satisfy the withholding obligation of the Company Group based on the maximum statutory withholding rates in Participant’s applicable jurisdictions for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such taxable income; 

(v)with respect to any withholding taxes arising in connection with the distribution of the RSUs, through the delivery of a notice that Participant has placed a market sell order with a broker acceptable to the Company with respect to shares of Stock then issuable to Participant pursuant to the RSUs, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company Group Member with respect to which the withholding obligation arises in satisfaction of such withholding taxes; provided that payment of such proceeds is then made to the applicable Company Group Member at such time as may be required by the Administrator, but in any event not later than the settlement of such sale; or

(vi)in any combination of the foregoing.

(b)With respect to any withholding taxes arising in connection with the RSUs, in the event Participant fails to provide timely payment of all sums required pursuant to Section 2.5(a), the Company shall have the right and option, but not the obligation, to treat such failure as an election by Participant to satisfy all or any portion of Participant’s required payment obligation pursuant to Section 2.5(a)(ii) or Section 2.5(a)(iii) above, or any combination of the foregoing as the Company may determine to be appropriate. The Company shall not be obligated to deliver any certificate representing shares of Stock issuable with respect to the RSUs to Participant or his or her legal representative unless and until Participant or his or her legal representative shall have paid or otherwise satisfied in full the amount of all federal, state, local and foreign taxes applicable with respect to the taxable income of Participant resulting from the vesting or settlement of the RSUs or any other taxable event related to the RSUs.

(c)In the event any tax withholding obligation arising in connection with the RSUs will be satisfied under Section 2.5(a)(iii), then the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on Participant’s behalf a whole number of shares from those shares of Stock then issuable to Participant pursuant to the RSUs as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the tax withholding obligation and to remit the proceeds of such sale to the Company Group Member with respect to which the withholding obligation arises.  Participant’s acceptance of this Award constitutes Participant’s instruction and authorization to the Company and such brokerage firm to complete the transactions described in this Section 2.5(c), including the transactions described in the previous sentence, as applicable.  The Company may refuse to issue any shares of Stock in settlement of the RSUs to Participant until the foregoing tax withholding obligations are satisfied, provided that no payment shall be delayed under this Section 2.5(c) if such delay will result in a violation of Section 409A of the Code.

(d)Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs, regardless of any action any Company Group Member takes with respect to any tax withholding obligations that arise in connection with the RSUs.  No Company Group Member makes any 

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representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the RSUs or the subsequent sale of Shares.  The Company Group does not commit and is under no obligation to structure the RSUs to reduce or eliminate Participant’s tax liability.

2.6Rights as Stockholder.  Neither Participant nor any Person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book-entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars, and delivered to Participant (including through electronic delivery to a brokerage account).  Except as otherwise provided herein, after such issuance, recordation and delivery, Participant will have all the rights of a stockholder of the Company with respect to such Shares, including, without limitation, the right to receipt of dividends and distributions on such Shares.

ARTICLE III.
Restrictive Covenants

3.1Restriction on Competition. Participant hereby agrees that Participant shall not, at any time during the Noncompetition Restricted Period, directly or indirectly engage in, have any interest in (including, without limitation, through the investment of capital or lending of money or property), or manage, operate or otherwise render any services to, any Person (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity) that engages in (either directly or through any Company Group Member or Affiliate thereof) any business or activity, within any of the states or territories within the United States or any other country, territory or state in which the Company Group operates, (i) that creates, designs, invents, engineers, develops, sources, markets, manufactures, distributes or sells any product or provides any service that may be used as a substitute for or otherwise competes with any product or service of the Company Group, or (ii) which the Company Group or any of its Affiliates has taken active steps to engage in or acquire, but only if Participant directly or indirectly engages in, has any interest in (including, without limitation, through the investment of capital or lending of money or property), or manages, operates or otherwise renders any services in connection with, such business or activity (whether on his own or in association with others, as a principal, director, officer, employee, agent, representative, partner, member, security holder, consultant, advisor, independent contractor, owner, investor, participant or in any other capacity). Notwithstanding the foregoing, Participant shall be permitted to acquire a passive stock or equity interest in such a business; provided that such stock or other equity interest acquired is not more than five percent (5%) of the outstanding interest in such business.

3.2 Non-Solicitation. Participant hereby agrees that Participant shall not, at any time during the Nonsolicitation Restricted Period, directly or indirectly, either for Participant or on behalf of any other Person, (i) recruit or otherwise solicit or induce any employee, customer or supplier of the Company Group to terminate his, her or its employment or arrangement with the Company Group, or otherwise change his, her or its relationship with the Company Group, or (ii) hire, or cause to be hired, any person who was employed by the Company Group at any time during the twelve (12)-month period immediately prior to date of Participant’s Termination of Service or who thereafter becomes employed by the Company Group.

3.3 Confidentiality. Except as Participant reasonably and in good faith determines to be required in the faithful performance of Participant’s duties for the Company Group or in accordance with Section 3.5, Participant shall, during the Participant’s period of service with the Company Group and after the Cessation Date, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, for Participant’s benefit or the benefit of any other Person, any confidential or proprietary information or trade secrets of or relating to the Company Group, including, without limitation, information 

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with respect to the Company Group’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any Person, any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information. Participant’s obligation to maintain and not use, disseminate, disclose or publish, or use for Participant’s benefit or the benefit of any other Person, any Proprietary Information after the Cessation Date will continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known and in the public domain (other than by means of Participant’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company Group. The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company Group (and any successor or assignee of the Company Group). In accordance with 18 U.S.C. Section 1833, the Company hereby notifies Participant that, notwithstanding anything to the contrary herein, (a) Participant shall not be in breach of this Section 3.3 and shall not be held criminally or civilly liable under any federal or state trade secret law (i) for the disclosure of a trade secret that is made in confidence to a federal, state or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal, and (b) if Participant files a lawsuit for retaliation by the Company Group for reporting a suspected violation of law, Participant may disclose a trade secret to Participant’s attorney, and may use trade secret information in the court proceeding, if Participant files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.

3.4 Return of Company Group Property. Upon Participant’s Termination of Service for any reason, Participant will promptly deliver to the Company Group (i) all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents that are Proprietary Information, including all physical and digital copies thereof, and (ii) all other Company Group property (including, without limitation, any personal computer or wireless device and related accessories, keys, credit cards and other similar items) which is in his or her possession, custody or control.

3.5 Response to Subpoena; Whistleblower Protection. Participant may respond to a lawful and valid subpoena or other legal process but shall give the Company Group the earliest possible notice thereof, and shall, as much in advance of the return date as possible, make available to the Company Group and its counsel the documents and other information sought, and shall assist such counsel in resisting or otherwise responding to such process. Notwithstanding anything to the contrary contained herein, no provision of this Agreement shall be interpreted so as to impede Participant (or any other individual) from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures under the whistleblower provisions of federal law or regulation. Participant does not need the prior authorization of the Company Group to make any such reports or disclosures and Participant shall not be not required to notify the Company Group that such reports or disclosures have been made.

3.6Non-Disparagement. Participant agrees not to disparage the Company Group, any of its products or practices, or any of its directors, officers, agents, representatives, partners, members, equity holders or Affiliates, either orally or in writing, at any time; provided that Participant may confer in confidence with Participant’s legal representatives and make truthful statements as required by law.

3.7 Restrictions Upon Subsequent Employment. Prior to accepting other employment or any other service relationship during the Noncompetition Restricted Period, Participant shall provide a copy of 

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this Article III to any recruiter who assists Participant in obtaining other employment or any other service relationship and to any employer or other Person with which Participant discusses potential employment or any other service relationship.

3.8Enforcement. In the event the terms of this Article III shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action. Any breach or violation by Participant of the provisions of this Article III shall toll the running of any time periods set forth in this Article III for the duration of any such breach or violation.

3.9Forfeiture Upon Violation. Notwithstanding any other provision of this Agreement that may provide to the contrary, in the event of Participant’s violation of any restrictive covenant within this Article III or any other agreement by and between Participant and any Company Group Member, as determined by the Company, in its sole discretion, then (a) the RSUs shall immediately be terminated and forfeited in its entirety and (b) Participant shall pay to the Company in cash any amounts paid to Participant in respect of the RSUs during the 12-month period immediately preceding (or at any time after) the date of such violation. By accepting these RSUs, Participant hereby acknowledges, agrees and authorizes the Company to reduce any amounts owed by any Company Group Member (including amounts owed as wages or other compensation, fringe benefits, or vacation pay, as well as any other amounts owed to Participant by any Company Group Member), by the amounts Participant owes to the Company under this Section 3.9. To the extent such amounts are not recovered by the Company through such set-off, Participant agrees to pay such amounts immediately to the Company upon demand. This right of set-off is in addition to any other remedies the Company may have against Participant for Participant’s breach of this Agreement or any other agreement. Participant’s obligations under this Section 3.9 shall be cumulative (but not duplicative) of any similar obligations Participant may have pursuant to this Agreement or any other agreement with any Company Group Member.

3.10 Injunctive Relief. Participant recognizes and acknowledges that a breach of the covenants contained in this Article III will cause irreparable damage to the Company Group and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate. Accordingly, Participant agrees that in the event of a breach of any of the covenants contained in this Article III, in addition to any other remedy which may be available at law or in equity, the Company Group will be entitled to specific performance and injunctive relief.

3.11Special Definition. As used in this Article III, the following terms shall have the ascribed meanings:

(a)“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person where “control” shall have the meaning given such term under Rule 405 of the Securities Act.

(b)“Cessation Date” shall mean the date of Participant’s Termination of Service (regardless of the reason for such termination).

(c)“Noncompetition Restricted Period” shall mean the period from the Grant Date through the first (1st) anniversary of the Cessation Date.

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(d)“Nonsolicitation Restricted Period” shall mean the period from the Grant Date through the second (2nd) anniversary of the Cessation Date.

ARTICLE IV.

other provisions

4.1Administration.  The Administrator shall have the power to interpret the Plan, the Grant Notice and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan, the Grant Notice and this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator will be final and binding upon Participant, the Company and all other interested Persons. To the extent allowable pursuant to Applicable Law, no member of the Committee or the Board will be personally liable for any action, determination or interpretation made with respect to the Plan, the Grant Notice or this Agreement.

4.2RSUs Not Transferable.  The RSUs may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the Shares underlying the RSUs have been issued, and all restrictions applicable to such Shares have lapsed.  No RSUs or any interest or right therein or part thereof shall be liable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.

4.3Adjustments The Administrator may accelerate the vesting of all or a portion of the RSUs in such circumstances as it, in its sole discretion, may determine. Participant acknowledges that the RSUs and the Shares subject to the RSUs are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan, including Section 13.2 of the Plan..

4.4Notices.  Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to Participant shall be addressed to Participant at Participant’s last address reflected on the Company’s records. By a notice given pursuant to this Section 4.4, either party may hereafter designate a different address for notices to be given to that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.

4.5Titles.  Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

4.6Governing Law.   The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

4.7Conformity to Securities Laws.  Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws, including, without limitation, the provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the Securities and Exchange Commission and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the 

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RSUs are granted, only in such a manner as to conform to Applicable Law. To the extent permitted by Applicable Law, the Plan, the Grant Notice and this Agreement shall be deemed amended to the extent necessary to conform to Applicable Law.

4.8Amendment, Suspension and Termination.  To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board, provided that, except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall adversely affect the RSUs in any material way without the prior written consent of Participant.

4.9Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in Section 4.2 and the Plan, this Agreement shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

4.10Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the RSUs (including RSUs which result from the deemed reinvestment of Dividend Equivalents), the Dividend Equivalents, the Grant Notice and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by Applicable Law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

4.11Not a Contract of Employment.  Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue to serve as an employee or other service provider of any Company Group Member or shall interfere with or restrict in any way the rights of the Company Group, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between a Company Group Member and Participant.

4.12Entire Agreement.  The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings, notices, communications and agreements of the Company and Participant with respect to the subject matter hereof, subject to the last sentence of Section 3.9 hereof.

4.13Section 409A.  This Award is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A.  However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any time the Administrator determines that this Award (or any portion thereof) may be subject to Section 409A, the Administrator shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other Person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Administrator determines are necessary or appropriate for this Award either to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.

4.14Agreement Severable.  In the event that any provision of the Grant Notice or this Agreement is held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

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4.15Limitation on Participant’s Rights.  Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs and Dividend Equivalents. 

4.16Counterparts.  The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which shall be deemed an original and all of which together shall constitute one instrument.

4.17Broker-Assisted Sales.  In the event of any broker-assisted sale of shares of Stock in connection with the payment of withholding taxes as provided in Section 2.5(a)(iii) or Section 2.5(a)(v): (A) any shares of Stock to be sold through a broker-assisted sale will be sold on the day the tax withholding obligation arises or as soon thereafter as practicable; (B) such shares of Stock may be sold as part of a block trade with other participants in the Plan in which all participants receive an average price; (C) Participant will be responsible for all broker’s fees and other costs of sale, and Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (D) to the extent the proceeds of such sale exceed the applicable tax withholding obligation, the Company agrees to pay such excess in cash to Participant as soon as reasonably practicable; (E) Participant acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the applicable tax withholding obligation; and (F) in the event the proceeds of such sale are insufficient to satisfy the applicable tax withholding obligation, Participant agrees to pay immediately upon demand to the Company Group Member with respect to which the withholding obligation arises an amount in cash sufficient to satisfy any remaining portion of the applicable Company Group Member’s withholding obligation.

 

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