Document:

Exhibit 10.1

 

September 14, 2021

 

Par Chadha 

3003 Pennsylvania Avenue

Santa Monica, CA 90404

 

Service as Executive Chairman

 

Dear Par:

 

This letter agreement evidences our recent discussions,
and our mutual understanding and agreement, as to your service to Exela Technologies Inc. (the “Company”) as the Executive
Chairman of the Board of Directors of the Company (the “Board”) and the compensation payable to you for your service
in that role.

 

1.            Duties
and Responsibilities. You have agreed to commence service as the Executive Chairman on September 14, 2021 (the “Appointment
Date”) and continuing until December 31, 2023, or such earlier or later end date as you and the Company shall mutually
agree (your period of service as Executive Chairman, the “Term”). In this role, you will report solely to the Board.
During the Term, you will be a senior executive officer and employee of the Company and will be expected to devote substantially all of
your business time and attention to oversight, strategic initiatives, operational innovation and management of the Company consistent
with the Executive Chairman role. However, nothing in this letter agreement is intended, or should be construed, to limit your ability
to engage in other activities, whether business-related or otherwise, and therefore, during the Term, you may also engage in any such
other management, investment and charitable activities as do not interfere with the performance of your duties as Executive Chairman to
the maximum extent permitted by applicable law. Without limiting the generality of the preceding sentence, the Company hereby expressly
agrees that, notwithstanding your service as Executive Chairman, you will remain an “Exempted Person” under Article X.B
of the Company’s Certificate of Incorporation.

 

2.            Annual
Compensation. During the Term, you will be paid the following:

 

(a)            Base
Salary. During the Term, the Company will pay you a base salary at an annual rate of $1,000,000 (the “Base Salary”);
provided, that the Base Salary payable to you in respect of 2021 will be prorated based on the Appointment Date. The Base Salary
for each calendar year of the Term will be paid on a date or dates in such calendar year as you and the Board shall mutually agree, except
that, in the absence of any such agreement, the Base Salary will be paid in a lump sum in December of such calendar year.

 

(b)            Annual
Bonus. For each calendar year of the Term (for 2021, prorated with effect from the Appointment Date), you will be eligible to be
paid an annual bonus which, at threshold levels of performance, shall equal 50% of your Base Salary and, at maximum levels of
performance, shall equal 200% of your Base Salary. The annual bonus shall be based on achievement of pre-established performance
goals as the Compensation Committee of the Board shall determine on an annual basis in consultation with you. Any annual bonus
payable to you for performance in a calendar year shall be paid not later than March 15th of the calendar
year immediately following the calendar year of performance. It shall be a condition to the payment of any annual bonus to you that
you remain in the Executive Chairman role through the last day of the calendar year of performance, other than if your employment is
terminated by the Company in the absence of Cause (as defined in the Exela Technologies Inc. 2018
Stock Incentive Plan (the “Equity Plan”)), in which case you will be eligible for an unprorated bonus for the
calendar year in which the termination occurs, paid based on actual performance at the same time bonuses are payable to other senior
executives of the Company for such year (but in all events no later than March 15th of the calendar year immediately following
the calendar year in which the termination occurs). Notwithstanding anything herein to the contrary, if your employment is
terminated for Cause, you will forfeit for no consideration all rights to any then unpaid bonus amounts.

 

     

     

    

 

The
annual bonus, net of any income and employment taxes required to be withheld therefrom, may, at the Board’s discretion, be paid
in cash or in shares of common stock of the Company, par value 0.0001 per share (the “Common Stock”), of equal value,
or in a combination of cash and Common Stock; provided, that, to the extent that the payment of the annual bonus in cash would result
in a Valid Liquidity Concern (as defined in Appendix A), then the payment of the annual bonus in cash may be deferred until the earliest
date on which the Valid Liquidity Concern is no longer present. If your bonus is delivered in Common Stock, the number of shares
of Common Stock you will receive will be determined based on the volume weighted average of the reported closing prices of the Common
Stock for the thirty (30) trading days ending with the trading day immediately preceding the applicable payment date.

 

3.            Equity
Compensation. Effective as of the date hereof, you have been granted Performance Units (as defined in the Equity Plan) covering 8,500,000
shares of Common Stock and having the terms and conditions set forth on Appendix A hereto.

 

4.            Benefits;
Office and Administrative Support. During the Term, you will be eligible for the same benefits made available to other senior executive
officers of the Company, including paid time off and customary expense reimbursement. In addition, during the Term, you will be provided
with an office at the Company’s headquarters and administrative support consistent with the other senior executive officers of the
Company. You will travel on behalf of the business of the Company as necessary but will not be expected to report to any particular office.

 

5.            At-Will
Relationship; Accrued Obligations. Your service as Executive Chairman is “at will,” meaning you or the Board may end
your services in that role at any time for any or no reason. In the event that your services in the Executive Chairman role end for
any reason, in addition to any bonus you may be eligible to receive pursuant to Paragraph 2(b), you will be entitled to receive from
the Company (i) your Base Salary through your last day of employment, (ii) if not yet paid at the date of
termination and your termination is not for Cause, the annual bonus for any completed calendar year based on actual performance,
(iii) reimbursement of business expenses properly incurred by you on behalf of the Company that have not been reimbursed
and (iv) any rights or benefits to which you are entitled as a former employee of the Company. The effect of a
termination of your services on your Performance Units is set forth in Appendix A. For clarity and avoidance of doubt, the
end of your services as Executive Chairman, standing alone, shall have no effect on your continued service after that date as
a member of the Board in a non-employee capacity.

 

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6.            Confidentiality.
You agree that you will not, at any time during or following the Term, directly or indirectly divulge or disclose for any purpose any
confidential or proprietary information of the Company Group (as defined below) to any third party, other than in connection with your
services to the Company or otherwise with the consent of and at the direction of the Board. Confidential or proprietary information includes,
but is not limited to, business plans and marketing strategies; information concerning existing and prospective markets, suppliers and
customers; financial information; information concerning the development of new products and services; and technical and non-technical
data related to software programs, designs, specifications, compilations, inventions, improvements, patent applications, studies, research,
methods, devices, prototypes, processes, procedures and techniques, sales and pricing techniques, price lists, product development, project
procedures, client, supplier and employee lists and data and other personally identifiable information. If you are required in or pursuant
to any legal, judicial or administrative proceeding (by oral questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any confidential or proprietary information of the Company, you agree to notify
the Company of such request or requirement so that the Company, at its expense, may seek an appropriate protective order and/or take any
other action deemed appropriate by the Company. However, this covenant does not prohibit you, to the extent permitted or required by applicable
law, from providing truthful testimony or accurate information in connection with any investigation being conducted into the business
or operations of the Company by any government agency or other regulator that is responsible for enforcing a law on behalf of the government
or otherwise providing information to the appropriate government regulatory agency or body regarding conduct or action undertaken or omitted
to be taken by the Company that you reasonably believe is illegal or in material non-compliance with any financial disclosure or other
regulatory requirement applicable to the Company Group.

 

Under
the U.S. Defend Trade Secrets Act of 2016, 18 U.S.C. § 1833(b) (the “Act”), persons who disclose trade secrets
in connection with lawsuits or other proceedings under seal (including lawsuits alleging retaliation), or in confidence to a federal,
state or local government official, or attorney, solely for the purpose of reporting or investigating a suspected violation of law, enjoy
immunity from civil and criminal liability under state and federal trade secrets laws for such disclosure.  You acknowledge that
you have hereby received adequate notice of this immunity, such that the Company is entitled to all remedies available for violations
of the Act, including exemplary damages and attorney fees.  Nothing in this agreement is intended to conflict with the Act or create
liability for disclosures of trade secrets that are expressly allowed by the Act.

 

7.            You
hereby acknowledge and agree that during the Term you will not, without the written consent of the Company, directly or indirectly,
on your behalf or on behalf of a third party, (i) hire, solicit, persuade or induce to leave, or attempt to do any of
the foregoing, any person who is employed by, or performing services as an individual independent contractor for, the Company or any
of its direct or indict subsidiaries (the “Company Group”) as of or following the date hereof (or who was an
employee or independent contractor of the Company Group as of or following the date hereof and at any time during the sixty
(60) days preceding the relevant date of determination, unless such individual’s employment or services were terminated by the
Company Group) or (ii) solicit, persuade or induce, or attempt to do any of the foregoing, any current or prospective client,
customer, vendor, business partner, distributor, supplier or other business relation of the Company Group (or who was a client,
customer, vendor, business partner, distributor or supplier of the Company Group as of or following the date hereof and at any time
during the sixty (60) days preceding the relevant date of determination) to terminate its relationship with the Company Group or
otherwise interfere in any way with such relationship.

 

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8.            Registration
Rights. If Common Stock is issued to you under this letter agreement and such Common Stock is not otherwise registered on a Form S-8
or other applicable registration statement, then, as to any such unregistered Common Stock, you and the Company will enter into a registration
rights agreement (the “PC Registration Rights Agreement”) that will provide you with (a) substantially the same
 “Shelf Registration” rights as set forth in Sections 2(a) and 2(b) of that certain Amended and Restated Registration
Rights Agreement, dated as of July 12, 2017, by and among the Company and the stockholders party thereto (the “Current Registration
Rights Agreement”); provided that the last sentence of such Section 2(b) of the Current Registration Rights Agreement
shall not be applicable, and (b) “piggyback registration rights” on underwritten offerings substantially the same as
set forth in Section 4 of the Current Registration Rights Agreement; provided that the shares of Common Stock held by you shall be
cutback prior to the cutback of any other shares of Common Stock subject to the Current Registration Rights Agreement or any other registration
rights agreement in effect as of the date hereof. The PC Registration Rights Agreement shall be subject to the applicable provisions of
Sections 5 through 16 of the Current Registration Rights Agreement.

 

9.            Payment
of Attorneys Fee. Upon presentation of an invoice by you to the Company, you shall be reimbursed for up to $50,000 of the attorneys’
fees incurred by you in connection with the negotiation and entry into this Agreement.

 

10.          Section 16
Covenant. The issuance of the Performance Units and any Common Stock to you under this letter agreement shall be approved by a
majority of the members of the board of directors for purposes of Rule 16b-3 promulgated under the Securities Exchange Act of
1934.

 

11.            Non-Employee
Director Compensation Policy. You and the Company hereby acknowledge and agree that (1) effective as of the Appointment Date,
you shall no longer be eligible to earn any cash compensation pursuant to the Company’s non-employee director compensation policy,
and any cash compensation under such policy shall be pro-rated as of the Appointment Date, and (2) your Base Salary payable hereunder
for September 2021 shall be set off by any overpayment made to you in respect of the cash fees paid to you under the Company’s
non-employee director compensation policy. You and the Company further hereby acknowledge and agree that you will remain eligible to
receive your annual equity grant for 2021 under such policy, which may be delivered in the form of cash or stock in accordance with the
generally applicable terms and conditions of the Company’s non-employee director compensation policy, and solely for purposes of
such grant shall treat your service in 2021 as Executive Chairman also as service as a non-employee director.

 

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12.           Miscellaneous.
The rights and obligations of the parties under this letter agreement may not be assigned by either party without the written consent
of the other party, nor may the terms of this letter agreement be amended, modified, waived or discharged except with the written consent
of the parties hereto. This letter agreement shall be binding on, and shall inure to the benefit of, the parties and their respective
heirs, legal representatives, successors and permitted assigns. This letter agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to its conflicts of law principles. If any provision in this letter agreement
is held to be invalid or unenforceable for any reason, the offending provisions shall be reformed to reflect the intentions of the parties
to the fullest extent of the law, and the balance of this letter agreement shall be construed as if any remaining invalid or unenforceable
provision had not been included. This letter agreement constitutes the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and understandings (whether written or oral) between the parties
relating to such subject matter. All notices or other communications required or permitted to be given hereunder shall be in writing and
shall be sent by email (with copy also sent by regular mail) to the email and mailing addresses on file with the Company (which the parties
shall update from time to time). This letter agreement may be executed in counterparts (including via facsimile or .pdf file), and any
electronically executed and delivered copy of this Agreement shall be treated as, and shall have the same force and effect as, an original.
This letter agreement is effective as of the date first set forth above.

 

[signature page follows]

 

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Please sign this letter agreement below to evidence our mutual agreement
to the terms and conditions set forth herein.

 

	 	Very truly yours,
	 	 
	 	EXELA TECHNOLOGIES INC.
	 	/s/ Ronald Cogburn
	 	By:  Ronald Cogburn
	 	Title:  Chief Executive Officer

 

	Accepted and Agreed:	 
	/s/ Par Chadha	 
	Par Chadha	 

 

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Appendix A

Grant of Performance Units

 

(Note: Capitalized terms used in this Appendix
A but not defined in this Appendix A have the meanings given to such terms in the Exela Technologies Inc. 2018 Stock Incentive Plan (the
 “Equity Plan”).)

 

1.            Grant
of Performance Units. Par Chadha (the “Executive”) is hereby granted 8,500,000 Performance Units, subject to the
terms and conditions of this Appendix A. Of such 8,500,000 Performance Units, one-half of the Performance Units (i.e., 4,250,000 Performance
Units) are referred to herein as the “Tranche 1 Performance Units” and the other one-half of the Performance Units
(i.e., the remaining 4,250,000 Performance Units) are referred to herein as the “Tranche 2 Performance Units”.

 

2.            Vesting
Conditions of the Performance Units. The Tranche 1 Performance Units shall become vested and nonforfeitable on the first day prior
to the Tranche 1 Expiration Date on which the Tranche 1 Stock Price Performance Metric is met with respect thereto. The Tranche 2 Performance
Units shall become vested and nonforfeitable on the first day prior to the Tranche 2 Expiration Date on which the Tranche 2 Stock Price
Performance Metric is met with respect thereto. Each date on which Performance Units vest is referred to herein as a “Vesting
Date.”

 

For purposes of this Appendix A:

 

The “Tranche 1 Stock Price
Performance Metric” will be met if (x) the volume weighted average of the reported closing prices of the Common
Stock is $10 per share of Common Stock (as proportionally adjusted for any of the events described in Section 11(a) of the Plan)
or greater on sixty (60) consecutive trading days following the date hereof or (y) the volume weighted average of the reported
closing price of the Common Stock is $10 per share of Common Stock (as proportionally adjusted for any of the events described in Section 11(a) of
the Plan) or greater on ninety (90) non-consecutive trading days in any period of one hundred and eighty (180) days following the date
hereof.

 

The “Tranche 2 Stock Price
Performance Metric” will be met if (x) the volume weighted average of the reported closing prices of the Common
Stock is $20 per share of Common Stock (as proportionally adjusted for any of the events described in Section 11(a) of the Plan)
or greater on sixty (60) consecutive trading days following the date hereof or (y) the volume weighted average of the reported
closing price of the Common Stock is $20 per share of Common Stock (as proportionally adjusted for any of the events described in Section 11(a) of
the Plan) or greater on ninety (90) non-consecutive trading days in any period of one hundred and eighty (180) days following the date
hereof.

 

The “Tranche 1 Expiration Date”
is June 30, 2024.

 

The “Tranche 2 Expiration Date”
is June 30, 2025, and is referred to together with the Tranche 1 Expiration Date as the “Expiration Dates”).

 

    i

     

    

 

3.            Settlement
of Performance Units. Subject to paragraphs 4-6 hereof, the Company shall settle the vested Performance Units on a date selected by
the Company within thirty (30) days following the Vesting Date thereof. Vested Performance Units shall be settled in cash; provided, that,
following such time that the Company’s shareholders approve an increase to the number of shares authorized for issuance under the
Plan in accordance with NASDAQ Listing Rule 5635(a) (the “Shareholder Approval”) by a number equal to
or greater than the Performance Units issued hereunder, at the election of the Compensation Committee, the Vested Performance Units shall
be settled in cash or in Common Stock; provided that, to the extent that the Company intends to pay cash in whole or in part in
settlement of vested Performance Units but such payment may be delayed without penalty in accordance with Treasury Regulation 1.409A-1(b)(4)(ii)(such
circumstances, a “Valid Liquidity Concern”), then the delivery of cash in settlement of the vested Performance Units
may be deferred until the earliest date on which the Valid Liquidity Concern is no longer present.

 

4.            Effect
of Termination of Services as Executive Chairman. The termination of the Executive’s services as Executive Chairman at any time
following December 31, 2023 (whether initiated by the Company or by the Executive), other than by the Company for Cause, shall have
no effect on unvested Performance Units so long as the Executive continues to provide services to the Company Group in any capacity, including
for avoidance of doubt as a non-employee member of the Board. Upon any termination of the Executive’s services to the Company and
its Affiliates as Executive Chairman due to death or Disability or due to a termination initiated by the Company without Cause, the unvested
Performance Units shall remain outstanding and eligible to vest in accordance with the terms set forth herein as though there had been
no such termination.

 

Upon any termination of the Executive’s
services to the Company Group (i) in all capacities (whether initiated by the Company or by the Executive) other than due
to death or Disability, (ii) as Executive Chairman due to a voluntary resignation at any time prior to December 31, 2023, or
(iii) as Executive Chairman at a time when Cause exists, in each case, at any time when unvested Performance Units remain outstanding,
such unvested Performance Units shall be automatically forfeited without payment.

 

For clarity and avoidance of doubt, the termination
of the Executive’s services to the Company Group for any reason, whether initiated by the Executive or by the Company Group, shall
have no effect on Performance Units that vested prior to the date of such termination.

 

5.            Effect
of a Change in Control. In the event of a Change in Control, the transaction agreement pursuant to which the Change in Control
occurs must either provide for (x) the assumption or substitution of the unvested Performance Units for a number of
restricted stock units of the acquiror or a parent (the “Substituted RSUs”) having a value that is equal to the
value of the Performance Units as of immediately prior to the Change in Control (in each case determined based on the consideration
paid to the Company’s shareholders with respect to the Common Stock in the Change in Control, and without regard to vesting
conditions) or (y) the cancellation of any then unvested Performance Units upon the consummation of such Change in
Control and the payment to the Executive for a number of Performance Units equal to the product of (x) each of the
Tranche 1 Performance Units and the Tranche 2 Performance Units, times (y) the applicable Vested Percentage (as
defined below), of the same consideration paid to a holder of a share of Common Stock at the same time as such consideration is paid
to the holders of the Common Stock.

 

    ii

     

    

 

For this purposes, “Vested Percentage”
will mean:

 

(A) with
respect to the Tranche 1 Performance Units, (x) one-hundred percent (100%) so long as: (I) the Change in Control is principally
negotiated by and approved by, and recommended to the Company’s shareholders for approval by, a special committee of independent
directors which committee does not include the Executive, (II) neither the Executive nor any of his Affiliates (including, for clarity,
any other person of which the Executive or any of his Affiliates is a group member under Section 13 of the Exchange Act) is directly
or indirectly an equity holder in the entity acquiring control of the Company in such transaction and (III) each class of equity
interests held by the Executive and his Affiliates is entitled to receive the same consideration in the Change in Control as the other
holders of such class of equity securities (taking into account, if applicable, elections as to the form of consideration available to
such class); and (y) otherwise, (I) zero percent (0%) if the consideration paid to the Company’s shareholders with respect
to the Common Stock in the Change in Control is equal to or less than $2.00 per share (as proportionally adjusted for all stock splits,
dividends, and other recapitalizations or similar adjustments affecting such shares of Common Stock subsequent to the date hereof), (II) one-hundred
percent (100%) if the consideration paid to the Company’s shareholders with respect to the Common Stock in the Change in Control
is equal to or greater than the Tranche 1 Stock Price Performance Metric, and (III) a percentage determined based on a straight
line interpolation in the event that the consideration paid to the Company’s shareholders with respect to the shares of Common Stock
in the Change in Control is between clauses (I) and (II); and

 

(B) with
respect to the Tranche 2 Performance Units, (x) zero percent (0%) if the consideration paid to the Company’s shareholders with
respect to the Common Stock in the Change in Control is equal to or less than $2.00 per share (as proportionally adjusted for all stock
splits, dividends, and other recapitalizations or similar adjustments affecting such shares of Common Stock subsequent to the date hereof),
(y) one-hundred percent (100%) if the consideration paid to the Company’s shareholders with respect to the Common Stock in
the Change in Control is equal to or greater than the Tranche 2 Stock Price Performance Metric, and (z) a percentage determined
based on a straight line interpolation in the event that the consideration paid to the Company’s shareholders with respect to the
shares of Common Stock in the Change in Control is between (x) and (y).

 

The Substituted RSUs shall provide for full
vesting and settlement upon the earlier of (1) the Expiration Date applicable to the related Performance Units, subject
to the Executive’s continued service to the acquiror or any of its Affiliates through such date, (2) the
termination of the Executive’s services by the acquiror and its Affiliates without Cause or by the Executive with Good Reason.
For this purpose, “Good Reason” shall mean (A) an action by the acquiror or any of its Affiliates
taken without the Executive’s consent thereto that constitutes a material reduction in the title, duties, authorities or
responsibilities held by the Executive immediately prior to the Change in Control or (B) a material breach by the
acquiror or any of its Affiliates of this Appendix A or the letter agreement to which this Appendix A is attached.

 

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6.            Tax
Withholding Matters. In the event that Performance Units are to be settled in Common Stock, the Company shall retain (i.e., not issue)
a number of shares of Common Stock as of the date of settlement having a value equal to the income and employment taxes required to be
withheld thereon and shall remit cash to the applicable taxing authorities equal to the value of such retained shares; provided,
that, if this method of withholding results in a Valid Liquidity Concern, the parties shall cooperate reasonably and in good faith to
timely satisfy such withholding obligations in another manner that is mutually agreed.

 

7.             Equity
Plan Matters. Upon, and subject to, the Company obtaining the Shareholder Approval, this Appendix A shall constitute an Award Agreement
under the Equity Plan, as may be amended, or amended and restated. Until such time that the Shareholder Approval is obtained, if ever,
this Appendix A and the grant hereunder shall be subject to the terms and conditions of the Equity Plan as though granted thereunder,
but will not be considered an Award that is outstanding thereunder; provided, that, in no event shall the Performance Units be subject
to the negative discretion set forth in Section 9(h) thereof or the one-year minimum vesting provision set forth in Section 4(e) thereof.
The Performance Units shall be subject to adjustment upon the corporate events specified in Section 11(a) thereof.

 

8.             Dividend
Equivalent Rights. On each date that the Company pays an ordinary cash dividend to holders of Common Stock after the date hereof and
prior to the settlement date of the Performance Units, the Company shall credit to a bookkeeping account established for Executive an
additional number of Performance Units equal to (A) (i) the number of Performance Units covered by this Agreement, multiplied
by (ii) the dollar amount of the per share cash dividend, and divided by (B) the Fair Market Value of a share of Common
Stock on the dividend payment date. Performance Units credited pursuant to this paragraph 8 shall be subject to the same terms and conditions
(including vesting, forfeiture and settlement) as the Performance Units to which such dividend equivalent rights relate.

 

9.             Expiration
Date. Unvested Performance Units as to which the Vesting Date does not occur on or prior to the Expiration Date applicable thereto
shall be forfeited automatically without payment as of the Expiration Date.

 

10.           Transfer
Restrictions. The Executive shall not be permitted to sell, transfer, pledge, or otherwise encumber the Performance Units before
they vest and are settled, and any attempt to sell, transfer, pledge, or otherwise encumber the Performance Units in violation of the
foregoing shall be null and void.

 

11.           General
Unsecured Creditor. The Executive shall have only the rights of a general unsecured creditor of the Company until such time, if any,
shares of Common Stock are issued in respect of the Performance Units.

 

12.            No
Voting Rights. Neither the Performance Units nor this letter agreement shall entitle the Executive to any voting rights or other rights
as a stockholder of the Company in respect of shares that may be delivered hereunder unless and until the shares of Common Stock in respect
of the Performance Units have been issued in settlement thereof.

 

13.           Additional
Terms. The Performance Units shall be subject to the following additional terms:

 

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		a.	Any certificates representing the shares of Common Stock delivered to the Executive shall be subject to
such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements
of the Securities and Exchange Commission, any stock exchange upon which such shares are listed, and any applicable federal or state laws,
and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions
as the Committee deems appropriate.

 

		b.	Upon issuance of shares of Common Stock in respect of the Performance Units, the Executive shall be required
to satisfy applicable withholding tax obligations, if any, as provided in the Plan (subject to paragraph 6 hereof).

 

		c.	This letter agreement does not confer upon the Executive any right to continue as an employee or service
provider of the Company or any other member of the Company Group.

 

		d.	The Executive understands that the Performance Units are intended to be exempt from Section 409A
of the Code as a “short term deferral” to the greatest extent possible and the Performance Units will be administered and
interpreted in accordance with such intent. In no event whatsoever shall this letter agreement be construed to provide the Executive with
any contractual obligation of the Company or any of its Affiliates to be liable for any additional tax, interest or penalties that may
be imposed on the Executive as a result of Section 409A of the Code or any damages for failing to comply with Section 409A of
the Code (other than for withholding obligations or other obligations applicable to employers, if any, under Section 409A of the
Code).

 

		e.	The Executive agrees that the Company may deliver by email all documents relating to the Plan or the Performance
Units (including, without limitation, a copy of the Plan) and all other documents that the Company is required to deliver to its security
holders (including, without limitation, disclosures that may be required by the Securities and Exchange Commission). The Executive also
agrees that the Company may deliver these documents by posting them on a website maintained by the Company or by a third party under contract
with the Company. If the Company posts these documents on a website, it shall notify the Executive by email or such other reasonable manner
as then determined by the Company.

 

    vex_284328.htm

 

Exhibit 10.1

 

 

THIRD AMENDED AND RESTATED RELEASE AGREEMENT

 

This THIRD AMENDED AND RESTATED RELEASE AGREEMENT (the “Release”) is made and entered into by and between Salt Blockchain Inc. (f/k/a Salt Lending Holdings, Inc.) (“Holdings” or the “Company”), and Shawn Owen and Owen Enterprise, LLC (each, a “Holder” and collectively “Owen” or “Holders”), as of the date on which the parties execute it.

 

WHEREAS, the Company and the Holders previously entered into that certain Amended and Restated Release Agreement, dated as of April 11, 2019 that amended and restated that certain Release Agreement (the “Prior Agreement”), dated as of April 3, 2019 (the “Effective Date”), and hereby agree that the Prior Agreement shall be further amended and restated as follows.

 

NOW THEREFORE, in consideration of the mutual promises and covenants contained in this Release, it is hereby agreed by and between the parties hereto as follows:

 

1.    Acknowledgement of Full Receipt of Consideration. In exchange for $150,000 paid by the Company to Owen on April 11, 2019, with appropriate federal and state tax withholdings, Owen agreed to fully dismiss any pending claims. Additionally, (i) as of April 11, 2019, and upon payment of funds provided herein, Owen has been paid all sums that he had earned, or to which he otherwise was entitled, in connection with his employment with Holdings and membership on the Board of Directors and (ii) in connection with this Release, the Company has entered into a certain loan refinancing transaction with Owen. Holdings acknowledges that Owen’s cessation of employment as Chief Executive Officer was without cause.

 

2.    Reserved.

 

3.    Indemnification. For the consideration set forth in this Release and the mutual covenants of Holdings and Owen under this Release, Holdings does hereby release, indemnify and agree to defend Owen and his successors, assigns, members, managers, subsidiaries, affiliates, parents, partners, officers, directors, employees, agents, attorneys, licensors, licensees and representatives from any and all debts and obligations, causes of action, actions, suits, judgments, liens, indebtedness, damages, losses, claims, attorney’s fees, liabilities and demands of any nature and kind whatsoever in law or equity, whether direct or indirect, absolute or contingent, now or hereafter existing, due or to become due, known or unknown, related to, and arising out of, or in connection with any regulatory matter initiated by the United States Government, including by the Securities and Exchange Commission, in the matter styled Lechner v. Salt Holdings, Inc., Case Number 2018CV34191, currently pending in the Colorado District Court, Denver County, and/or any other matter that involves Owen’s role as an employee or as a Director for Holdings. This includes reasonable attorney’s fees, costs, and assessed damages and/or penalties so long as no criminal wrongdoing is found.

 

4.    Denial of Liability. The parties acknowledge that any payment by Holdings and any release by Owen pursuant to this Release are made in compromise of disputed claims; that in making any such payment or release, neither Holdings nor Owen admit in any way any wrongdoing or liability to each other or to any other affiliated party; and that the parties expressly deny any such liability.

 

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5.    Nondisparagement and Non-Waiver. Owen and Holdings agree that neither Owen nor any officer or director of Holdings will at any time disparage the other to third parties in any manner likely to be harmful to the other party, a party’s business reputation, or the personal or business reputation of its directors, shareholders and/or employees. Notwithstanding the prohibition in the preceding sentence, each party shall respond accurately and fully to any question, inquiry, or request for information when required by law to do so. Nothing in this Release shall limit either Party’s right to file a charge with, communicate with, or participate in an investigation or proceeding conducted by the Equal Employment Opportunity Commission (“EEOC”), National Labor Relations Board (“NLRB”), Securities Exchange Commission (“SEC”), or any other federal or state agency. This Release does not limit either Party’s right to receive an award for information provided to the SEC about potential securities law violations.

 

6.    Holdings’ Property. Holdings acknowledges that Owen has returned any and all Holdings tangible and physical property which was in his possession upon the cessation of his employment.

 

7.    Option to Purchase. The Holders represent and warrant that Shawn Owen and Owen Enterprise, LLC were, as of the Effective Date, the beneficial owners of 1.25 million shares (the “Shares”). The Company agreed to pay Shawn Owen / Owen Enterprise, LLC a lump sum payment of $600,000.00 USD on April 11, 2019, and each Holder agrees that such Holder’s Shares shall be subject to the Purchase Option as set forth below. Until the earliest of: (i) the Company’s entry into a definitive agreement to consummate a Change in Control, (ii) an IPO, or (iii) the two-year anniversary of the Effective Date (the “Exercise Period”), the Company shall have the right and option (the “Purchase Option”) to purchase from each Holder, for a price equal to the per share price as determined by an independent valuation firm based upon the Section 409A fair market valuation of the Company on or about the time of the exercise (a copy of which report shall be provided to each Holder at the time of the exercise) (the “Option Price”), 1,250,000 (One Million Two Hundred and Fifty Thousand) of such Holder’s Shares. The Company may exercise the Purchase Option by delivering or mailing to a Holder a written notice of exercise of the Purchase Option, specifying the number of Shares to be purchased. Within five (5) days after delivery to the Holder of the Company’s notice of the exercise of the Purchase Option, the Holder shall tender to the Company at its principal offices the certificates representing the Shares that the Company has elected to purchase, duly endorsed in blank or with duly endorsed stock powers attached thereto, all in form acceptable to the Company. Promptly following its receipt of such certificates, the Company shall pay to the Holder the aggregate Option Price for such Shares (provided that any delay in making such payment shall not invalidate the Company’s exercise of the Purchase Option with respect to such Shares). If the Shares are uncertificated, or the Holder fails to deliver the foregoing certificates and stock power, the Company may at its option, in addition to other remedies it may have, send to such Holder the purchase price for such Shares and transfer to the name of the Company on the Company’s books any certificates or book entry representing such Shares. From the Effective Date, the Holders shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”) any Shares, or any interest therein, without the prior written consent of the Company, and any transfer entered into without such consent shall be null and void. For purposes of this agreement:

 

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(a)    “Change in Control” means (i) any sale, license, lease, exchange, transfer or other disposition of the assets of the Company or any subsidiary of the Company constituting more than 50% of the consolidated assets of the Company or accounting for more than 50% of the consolidated revenues of the Company in any one transaction or in a series of related transactions; or (ii) any merger, consolidation, business combination, share purchase, share exchange, reorganization or similar transaction or series of related transactions involving the Company or any subsidiary of the Company whereby the holders of voting capital stock of the Company immediately prior to any such transaction hold less than 50% of the voting capital stock of the Company or the surviving corporation (or its parent company) immediately after the consummation of any such transaction.

 

(b)    “IPO” means the consummation of the Company’s first public offering of its Common Stock under the Securities Act of 1933, as amended.

 

8.        RESERVED

 

9.        RESERVED.

 

10.      RESERVED.

 

11.      RESERVED.

 

12.    Confidentiality of Agreement. Unless otherwise provided in this Release, Owen and Holdings acknowledge that confidentiality and nondisclosure are material considerations for the parties entering into this Release. As such, the provisions of this Release shall be held in strictest confidence by Owen and Holdings and shall not be publicized or disclosed in any manner whatsoever, including but not limited to, the print or broadcast media, any public network such as the Internet, any other outbound data program such as computer generated mail, reports, faxes, or any source likely to result in publication or computerized access. Notwithstanding the prohibition in the preceding sentence: (a) the parties may disclose this Release in confidence to their respective attorneys, accountants, auditors, tax preparers, and financial advisors; (b) Holdings may disclose this Release as necessary to fulfill standard or legally required corporate or securities reporting or disclosure requirements; (c) the parties may disclose this Release upon request from any government entity or court of law; and (d) the parties may disclose this Release insofar as such disclosure may be necessary to enforce its terms or as otherwise required by law.

 

13.    Confidentiality and Proprietary Information. Owen agrees that he shall take all reasonable steps to maintain and hold confidential all Confidential Information as defined in Annex A only for the benefit of the Company. Owen understands that all documents and materials which contain Confidential Information are the property of the Company. Owen understands that the Company’s competitive position is highly dependent on its Confidential Information. Accordingly, Owen recognizes that any disclosure of Confidential Information will cause immediate, irreparable harm to the Company. Any breach or threatened breach of this Release, therefore, may be presented without notice to a court for enforcement by both injunction and damages. All obligations of this Release shall remain in effect for the longer of a four year period following any termination of employment with the Company and so long thereafter as each particular item of Confidential Information remains not rightfully and publicly available as assembled information from one library source. In the event litigation is instituted seeking the enforcement of this Release, the prevailing party shall be entitled to recover reasonable attorney fees and costs incurred in such litigation; however, such attorney fees and costs shall not be assessed against Owen in the event that Owen consents, prior to a preliminary hearing, to a permanent injunction as requested by the Company.

 

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14.    Release of Claims by Owen. Unless otherwise provided for in this Release, for the consideration set forth in this Release and the mutual covenants of Holdings and Owen, Owen hereby releases, acquits and forever discharges Holdings, its affiliated corporations and entities, its and their officers, directors, agents, representatives, servants, attorneys, employees, shareholders, successors, assigns and employee benefit plans of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known or unknown, suspected and unsuspected, disclosed and undisclosed, liquidated or contingent, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the Effective Date, including but not limited to: any and all such claims and demands directly or indirectly arising out of or in any way connected with Owen’s employment with Holdings or the termination of that employment; claims or demands related to salary, commissions, vacation pay, personal time off, fringe benefits, expense reimbursements, sabbatical benefits, severance benefits, or any other form of compensation; claims pursuant to any federal, any state or any local law, statute, common law or cause of action including, but not limited to, the Civil Rights Act of 1964, as amended; attorney’s fees, costs, or any other expenses under Title VII of the Civil Rights Act of 1964, as amended; the Employment Retirement Income Security Act; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act; the Age Discrimination in Employment Act; the Equal Pay Act; the Colorado Discrimination and Unfair Employment Act, tort law; wrongful discharge; discrimination; harassment; fraud; defamation; libel; emotional distress; and breach of the implied covenant of good faith and fair dealing.

 

15.    Release of Claims by Holdings. Unless otherwise provided for in this Release, for the consideration set forth in this Release and the mutual covenants of Holdings and Owen Holdings hereby releases, acquits and forever discharges Owen his affiliated corporations and entities, its and their officers, directors, managers, agents, representatives, servants, attorneys, employees, shareholders, members, successors, assigns and employee benefit plans of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known or unknown, suspected and unsuspected, disclosed and undisclosed, liquidated or contingent, arising out of or in any way related to agreements, events, acts or conduct at any time prior to and including the Effective Date, including but not limited to: any and all such claims and demands directly or indirectly arising out of or in any way connected with Owen’s employment with Holdings or the termination of that employment; claims or demands related to Owen s’ position as a Director of Holdings; claims pursuant to any federal, any state or any local law, statute, common law or cause of action including, but not limited to, the Civil Rights Act of 1964, as amended; attorney’s fees, costs, or any other expenses under Title VII of the Civil Rights Act of 1964, as amended; the Employment Retirement Income Security Act; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act; the Age Discrimination in Employment Act; the Equal Pay Act; the Colorado Discrimination and Unfair Employment Act; the Colorado Uniform Trade Secret Act; the Defend Trade Secret Act; Delaware trade secrets law; tort law; breach of fiduciary duty; breach of the duty of loyalty; discrimination; harassment; fraud; defamation; libel; emotional distress; and breach of the implied covenant of good faith and fair dealing.

 

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16.    Tax Consequences. The parties make no representations in regard to the tax consequences of this Release, except for the obligations set forth in Paragraph 17 of this Release. Holdings agrees to fully indemnify and hold Owen harmless from, and for any IRS or any other taxing authority investigation or audit of Holding’s treatment of Owen related to the 2017 and 2018 tax years, including, but not limited to, any penalties, interest, or additional tax associated with same; provided, however, that Holder shall not be indemnified with respect to any income and employment taxes (and penalties, interest and additional tax thereon) payable with respect to those years. The parties agree that the rights or remedies related to the 2017 and 2018 tax consequences related to Owen’s compensation and issuance of stock are carved out of this Release and there are no waiver of these rights or remedies.

 

17.    Tax Amendments. Holdings agrees to reimburse Owen for any and all income and employment taxes, penalties and interest incurred by Owen related to the vesting of 750,000 shares of restricted stock to Holder in 2017; in order to receive such reimbursement, Owen must submit to Holdings proof of payment to the United States Internal Revenue Service and any state taxing authority along with documents supporting the required payment and Holdings will pay the reimbursement amounts, net of applicable withholding taxes, within 5 business days thereafter.  Holdings agrees to issue to Owen an amended Wage and Tax Statement (Form W-2) for the 2018 tax year to reflect Owen’s receipt of a bitcoin bonus with a value of $1,958,877 (the “Bitcoin Bonus”).  Holdings agrees to pay, on behalf of Owen, to the United States Internal Revenue Service and any state taxing authority all income and employment taxes that Holdings would be required to withhold in connection with the payment of the Bitcoin Bonus (the “Bonus Tax Amount”) and Holdings will withhold from the amounts payable to Owen (or Owen Enterprise, LLC) under Section 1 and Section 7 of the Agreement all income and employment taxes required to be withheld by Holdings in connection with the payment of the Bonus Tax Amount by Holdings.  Owen agrees to pay any additional income and employment taxes due to the United States Internal Revenue Service and any taxing authority on the Bitcoin Bonus and Bonus Tax Amount.

 

18.    Authorization of Transaction. Holdings, and the party signing on behalf of Holdings below, represent that they have full corporate power and authority to execute and deliver this Release and to perform Holdings’ obligations hereunder. This Release constitutes the valid and legally binding obligation of Holdings, enforceable in accordance with its terms and conditions. Holdings need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency, or other third party, in order to consummate the transactions contemplated by this Release. The execution, delivery, and performance of this Release and all other agreements contemplated hereby have been duly authorized by Holdings.

 

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19.    Covenant of Cooperation. The parties acknowledge that because of their previous business relationship, the parties may possess information that may be relevant to or discoverable in litigation and/or regulatory matters in which either or both parties are involved or may in the future be involved. The parties agree that as the responding party (“Responding Party”), they shall testify truthfully in connection with any such matters, shall cooperate with one another in connection with such matters, and that their respective duties of cooperation shall include an obligation to meet with the other party’s (“Other Party”) representatives and/or counsel concerning such litigation and/or regulatory matters for such purposes, and at such times and places, as the Other Party deems necessary, in its sole discretion, and to appear for deposition upon the Other Party’s request and without a subpoena. Each party agrees that under those circumstances, the Responding Party shall not be entitled to any compensation in connection with their duty of cooperation, except that the Other Party may reimburse the Responding Party for reasonable out-of-pocket expenses that it incurs in honoring its obligation of cooperation.

 

20.    Compliance with Laws.The parties shall comply with the requirements of all applicable laws and acknowledge that such compliance may, individually or in the aggregate, materially and adversely affect the ability of the parties to perform their obligations under the Agreement; provided that the parties are acting in good faith to perform such obligations.

 

21.    No Third-Party Rights. The parties agree that by making this Release they do not intend to confer any benefits, privileges, or rights to others. The Release is strictly between the parties hereto, and it shall not be construed to vest in any other third-party beneficiary.

 

22.    Voluntary and Knowingly. The parties acknowledges that in executing this Release, each has reviewed it and understands its terms and has had an opportunity and was advised to seek guidance from counsel of his own choosing, and was fully advised of their rights under law, and acted knowingly and voluntarily.

 

23.    Duty to Effectuate. The parties agree to perform any lawful additional acts, including the execution of additional agreements, as are reasonably necessary to effectuate the purpose of this Release.

 

24.    Entire Agreement. This Release constitutes the complete, final and exclusive embodiment of the entire agreement between Owen and Holdings with regard to the provisions of this Release, including but not necessarily limited to Salt’s termination without cause of Owen’s employment, the severance benefits paid to Owen Owen’s obligations concerning competition against the Company, and Owen’s obligations concerning company confidential and proprietary information. This Release is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein.

 

25.    Successors and Assigns. This Release shall bind the heirs, personal representatives, successors, assigns, executors and administrators of each party, and inure to the benefit of each party, its heirs, successors and any assign of the Company.

 

26.    Applicable Law. The parties agree and intend that this Release be construed and enforced in accordance with the laws of the State of Colorado, to the fullest extent permitted by law.

 

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27.    Forum. Unless otherwise provided for in this Release, any controversy arising out of or relating to this Release or the breach thereof, or any claim or action to enforce this Release or portion thereof, or any controversy or claim requiring interpretation of this Release must be brought in a forum located within the State of Colorado. No such action may be brought in any forum outside the State of Colorado. Any action brought in contravention of this paragraph by one party is subject to dismissal at any time and at any stage of the proceedings by the other, and no action taken by the other in defending, counterclaiming, or appealing shall be construed as a waiver of this right to immediate dismissal. A party bringing an action in contravention of this paragraph shall be liable to the other party for the costs, expenses and attorney’s fees incurred in successfully dismissing the action or successfully transferring the action to a forum located within the State of Colorado.

 

28.    Severable. If any provision of this Release is determined to be invalid, void or unenforceable, in whole or in part, this determination will not affect any other provision of this Release, and the provision in question shall be modified so as to be rendered enforceable.

 

29.    Enforce According To Terms. The parties intend this Release to be enforced according to its terms.

 

30.    Attorney’s Fees. The prevailing party in an action to enforce the terms of this Release shall be entitled to its reasonable costs, expenses, and attorney’s fees.

 

31.    Section Headings. The section and paragraph headings contained in this Release are for reference purposes only and shall not affect in any way the meaning or interpretation of this Release.

 

IN WITNESS WHEREOF, the parties have duly authorized and caused this Release to be executed as follows:

 

	 	 	Salt Blockchain Inc.
	 	 	 	 
	Shawn Owen	By:	/s/ Justin English
	 	 	 	 
	By:	/s/ Shawn Owen	 	 
	 	 	Its:	CEO
	 	 	 	 
	 	 	 	 
	Date:	September 10, 2021	Date:	September 10, 2021
	 	 	 	 
	 	 	 	 
	Owen Enterprise, LLC	 	 
	 	 	 	 
	 	 	 	 
	By:	/s/ Shawn Owen	 	 
	 	 	 	 
	Its:	Manager	 	 
	 	 	 	 
	Date:	September 10, 2021	 	 

 

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ANNEX A

 

DEFINITIONS

 

(a)     “Confidential Information” means all information considered by the Company to provide it a competitive advantage, except to the extent it can be clearly established by Owen that such information either was known by Owen prior to Owen’s employment by the Company or is publicly available as assembled information from one library source. As used in this Release, “Confidential Information” shall include by example, but not as a limitation, (1) all development or design information relating to existing products of the Company or relating to products under development or planned by the Company or on its behalf, such as the information contained in schematics, circuitry descriptions and drawings, parts, descriptions of product problems or limitations, technical and scientific information, information relating to key research and development areas, consulting source’s documents, notes and correspondence, descriptions of development efforts, whether successful or not, flow charts or source code listings; (2) all manufacturing information of existing products of and products under development or planned by the Company or on its behalf such as materials sources, vendors, costs, manufacturing methods, purchasing sources; and (3) all business, marketing and financial information of the Company including but not limited to research and development strategies, employee responsibilities other than generic titles, development schedules, business forecasts, client and customer lists, past, present and future financial information about the Company, consultant identities and capabilities, materials and component supplies, or Company opportunity lists or items.

 

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