Funko
Annual Report 2017

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission file number: 001-38274 FUNKO, INC.(Exact name of registrant as specified in its charter) Delaware35-2593276(State or other jurisdiction ofincorporation or organization)(I.R.S. EmployerIdentification No.)2802 Wetmore AvenueEverett, Washington98201(Address of principal executive offices)(Zip Code)(425) 783-3616(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of each className of exchange on which registeredClass A Common Stock, $0.0001 Par valueNasdaqSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of“large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer☐ Accelerated filer☐Non-accelerated filer☒(Do not check if a smaller reporting company)Smaller reporting company☐Emerging growth company☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standardsprovided pursuant to Section13(a) of the Exchange Act. ☒Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The registrant was not a public company as of the last business day of its most recently completed second fiscal quarter and, therefore, cannot calculate the aggregate market value of its voting and non-voting common equity held by non-affiliates as of such date.As of March 14, 2018, the registrant had 23,337,705 shares of Class A common stock outstanding and 24,975,932 shares of Class B common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement relating to its 2018 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2017are incorporated herein by reference in Part III. INDEX PagePart I Item 1.Business4Item 1A.Risk Factors18Item 1B.Unresolved Staff Comments50Item 2.Properties50Item 3.Legal Proceedings51Item 4.Mine Safety Disclosures51Part II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities52Item 6.Selected Financial Data54Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations57Item 7A.Quantitative and Qualitative Disclosures About Market Risk76Item 8.Financial Statements and Supplementary Data77Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure110Item 9A.Controls and Procedures110Item 9B.Other Information110Part III Item 10.Directors, Executive Officers and Corporate Governance111Item 11.Executive Compensation111Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters111Item 13.Certain Relationships and Related Transactions, and Director Independence111Item 14.Principal Accounting Fees and Services111Part IV Item 15.Exhibits112Item 16.Form 10-K Summary118 BASIS OF PRESENTATIONAs used in this Annual Report on Form 10-K (this “Form 10-K”), unless the context otherwise requires, references to: •“we,” “us,” “our,” the “Company,” “Funko” and similar references refer to: (1) following the consummation of the Transactions, toFunko, Inc., and, unless otherwise stated, all of its subsidiaries, including FAH, LLC and, unless otherwise stated, all of itssubsidiaries, and (2) prior to the completion of the Transactions, to FAH, LLC and, unless otherwise stated, all of its subsidiaries. •“ACON” refers to ACON Funko Investors, L.L.C., a Delaware limited liability company, and certain funds affiliated with ACON FunkoInvestors, L.L.C. (including any such fund or entity that holds shares of Class A common stock for the Former Equity Owners). •“Continuing Equity Owners” refers collectively to ACON, Fundamental, the Former Profits Interests Holders, the Warrant Holders andcertain current and former executive officers, employees and directors and each of their permitted transferees that own commonunits in FAH, LLC and who may redeem at each of their options (subject in certain circumstances to time-based vestingrequirements) their common units for, at our election, cash or newly-issued shares of Funko, Inc.’s Class A common stock. •“FAH LLC Agreement” refers to FAH, LLC’s second amended and restated limited liability company agreement. •“FHL” refers to Funko Holdings LLC, a Delaware limited liability company. •“Former Equity Owners” refers to those Original Equity Owners affiliated with ACON who transferred their indirect ownership interestsin common units of FAH, LLC for shares of Funko, Inc.’s Class A common stock (to be held by them either directly or indirectly) inconnection with the consummation of the Transactions. •“Former Profits Interests Holders” refers collectively to certain of our directors and certain current executive officers and employees,in each case, who, prior to the consummation of the Transactions, held existing vested and unvested profits interests in FAH, LLCpursuant to FAH, LLC’s prior equity incentive plan and received common units of FAH, LLC in exchange for their profits interests(subject to any common units received in exchange for unvested profits interests remaining subject to their existing time-basedvesting requirements) in connection with the Transactions. •“Fundamental” refers collectively to Fundamental Capital, LLC and Funko International, LLC. •“Original Equity Owners” refers to the owners of ownership interests in FAH, LLC, collectively, prior to the Transactions, whichinclude ACON, Fundamental, the Former Profits Interests Holders and certain current and former executive officers, employees anddirectors. •“Tax Receivable Agreement” refers to a tax receivable agreement entered into between Funko, Inc., FAH, LLC and each of theContinuing Equity Owners as part of the Transactions, defined below. •“Transactions” refers to certain organizational transactions that we effected in connection with our initial public offering (“IPO”) inNovember 2017. See Note 16, Stockholders’ Equity of the notes to our consolidated financial statements for a description of theTransactions. •“Warrant Holders” refers to lenders under our Senior Secured Credit Facilities (as defined herein) that previously held warrants topurchase ownership interests in FAH, LLC, which were converted into common units of FAH, LLC in connection with theconsummation of the Transactions.1 Presentation of Financial InformationFAH, LLC is the predecessor of the issuer, Funko, Inc., for financial reporting purposes. Funko, Inc. is the audited financial reporting entity.On October 30, 2015, ACON, through FAH, LLC, an entity formed in contemplation of the transaction, acquired a controlling interest in FHL and itssubsidiary, Funko, LLC. We refer to this transaction as the “ACON Acquisition.” As a result of the ACON Acquisition, this Annual Report on Form10-K presents certain financial information for two periods, Predecessor and Successor, which relate to the period preceding the ACON Acquisitionon October 30, 2015 and the period succeeding the ACON Acquisition, respectively. References to the “Successor 2015 Period” refer to the periodfrom October 31, 2015 through December 31, 2015 and references to the “Predecessor 2015 Period” refer to the period from January 1, 2015through October 30, 2015. Financial information in the Predecessor 2015 Period principally relates to FHL and its subsidiary Funko, LLC. See PartII, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-K for more information.Our presentation of certain financial information for the combined year ended December 31, 2015, including net sales, gross margin and adjustedEBITDA, represents the mathematical addition of the Predecessor 2015 Period and the Successor 2015 Period. The change in basis resultingfrom the ACON Acquisition did not materially impact such financial information and, although this presentation of financial information on acombined basis does not comply with U.S. generally accepted accounting principles (“U.S. GAAP”), or with the pro forma requirements of Article11 of Regulation S-X, we believe it provides a meaningful method of comparison to the other periods presented in this Annual Report on Form 10-K. The data is being presented for analytical purposes only. Combined operating results (1) may not reflect the actual results we would haveachieved absent the ACON Acquisition, (2) may not be predictive of future results of operations and (3) should not be viewed as a substitute forthe results of the Predecessor and the Successor presented in accordance with U.S. GAAP.2 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.All statements contained in this Annual Report on Form 10-K other than statements of historical fact, including statements regarding our futureoperating results and financial position, our business strategy and plans, potential acquisitions, market growth and trends, anticipated effects oftax reform, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,”“anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “preliminary,” “likely,” and similar expressions are intended to identifyforward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about futureevents and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term businessoperations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties, andassumptions, including the important factors described in this Annual Report on Form 10-K under Part II. Item 1A. “Risk Factors,” and in our otherfilings with the Securities and Exchange Commission (“SEC”), that may cause our actual results, performance or achievements to differ materiallyand adversely from those expressed or implied by the forward-looking statements.Any forward-looking statements made herein speak only as of the date of this Annual Report on Form 10-K, and you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements arereasonable, we cannot guarantee that the future results, performance, or achievements reflected in the forward-looking statements will be achievedor occur. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Annual Report onForm 10-K or to conform these statements to actual results or revised expectations.3 PART IITEM 1. BUSINESSWe are a leading pop culture consumer products company. Our business is built on the principle that almost everyone is a fan of something andthe evolution of pop culture is leading to increasing opportunities for fan loyalty. We create whimsical, fun and unique products that enable fans toexpress their affinity for their favorite “something”—whether it is a movie, TV show, video game, musician or sports team. We typically infuse ourdistinct designs and aesthetic sensibility into one of the industry’s largest portfolios of licensed content over a wide variety of product categories,including figures, plush, accessories, apparel, hand bags and homewares. With our unique style, expertise in pop culture, broad productdistribution and highly accessible price points, we have developed a passionate following for our products that has underpinned our growth. Webelieve we sit at the nexus of pop culture—content providers value us for our broad network of retail customers, retailers value us for our broadportfolio of licensed pop culture products and pop culture insights, and consumers value us for our distinct, stylized products and the content theyrepresent. We believe our innovative product design and market positioning have disrupted the licensed product markets and helped to definetoday’s pop culture products category.Pop culture pervades modern life and almost everyone is a fan of something. In the past, pop culture fandom was often associated withstereotypical images of fans from narrow demographics, such as Star Trek fans attending conventions to speak Klingon to each other or friendsgetting together to play Dungeons & Dragons. Today, more quality content is available and technology innovation has made content accessibleanytime, anywhere. As a result, the breadth and depth of pop culture fandom resembles, and in many cases exceeds, the type of fandompreviously associated only with sports. Social media has further allowed for fans to share their love and form communities easier than before.Everyday interactions at home, work or with friends, whether in person or through social media, are increasingly influenced by pop culture.We have invested strategically in our relationships with key constituents in pop culture. Content providers value us for our broad network of retailcustomers and retailers value us for our broad portfolio of licensed pop culture products, pop culture insights and ability to drive consumer traffic.Consumers, who value us for our distinct, stylized products, remain at the center of everything we do. •Content Providers: We have strong licensing relationships with many established content providers, such as Disney, HBO,LucasFilm, Marvel, Blizzard Entertainment, the National Football League and Warner Brothers. We strive to license every popculture property that we believe is relevant to consumers. We believe our numerous licensing relationships have allowed us to buildone of the largest portfolios in our industry, and from which we can create multiple products based on each character within thoseproperties. Content providers trust us to create unique, stylized extensions of their intellectual property that extend the relevance oftheir content with consumers through ongoing engagement, helping to maximize the lifetime value of their content. We believe wehave benefited from a trend of content providers consolidating their relationships to do more business with fewer licensees. Ourtrack record of obtaining licenses from content providers, together with our proven ability to renew and extend the scope of ourlicenses, demonstrates the trust content providers place in us. •Retail Channels: We sell our products through a diverse network of retail customers across multiple retail channels, includingspecialty retailers, mass-market retailers and e-commerce sites. We can provide our retail customers a customized product mixdesigned to appeal to their particular customer bases. Our current retail customers include Amazon, GameStop, Hot Topic, Targetand Walmart in the United States, and Micromania, E.M.P. Merchandising and Smyths Toys, internationally. Retailers recognize theopportunity presented by the demand for pop culture products and are continuing to dedicate additional shelf space as well asincreased presence on their e-commerce platform to our products and the pop culture category. Additionally, some of our retailcustomers, such as Target and Walmart, view us as pop culture experts, and we help them manage their pop culture category. Webelieve we drive meaningful traffic to our retail customers’ stores because our products have their own built-in fan base, arerefreshed regularly creating a “treasure hunt” shopping experience for consumers, and are often supplemented with exclusive,limited-time products that are highlighted on4  social media. We believe these merchandising strategies create a sense of urgency with consumers that encourages repeat visits toour retail customers. •Consumers: Fans are increasingly looking for ways to express their affinity for and engage with their favorite pop culture content.Over time, many of our consumers evolve from occasional buyers to more frequent purchasers, whom we categorize as enthusiastsor collectors. We estimate that enthusiasts, who are more engaged in pop culture, and collectors, who regularly purchase ourproducts and self-identify as collectors, each make up approximately one-third of our customers. We create products to appeal to abroad array of fans across consumer demographic groups—men, women, boys and girls—not a single, narrow demographic. Weoffer a large number of products across our product categories. Our products are generally priced under $10, excluding apparel andhandbags, which generally are priced at a higher range, which allows our diverse consumer base to express their fandom frequentlyand impulsively. We continue to introduce innovative products designed to facilitate fan engagement across different price pointsand styles in different categories. In addition, our fans routinely express their passion for our products and brands through socialmedia and live pop culture events, such as Comic-Con or Star Wars Celebration.We have developed a nimble and low fixed cost production model. The strength of our in-house creative team and relationships with contentproviders, retailers and third-party manufacturers allows us to move from product concept to pre-selling a new product in as few as 24 hours. Wetypically have a new figure on the store shelf between 110 and 200 days and can have it on the shelf in as few as 70 days in certaincircumstances. As a result, we can dynamically manage our business to balance current content releases and pop culture trends with contentbased on classic evergreen properties, such as Mickey Mouse or classic Batman. This has allowed us to deliver significant growth while lesseningour dependence on individual content releases.Recent DevelopmentsOn November 6, 2017, we completed our IPO of 10,416,666 shares of Class A common stock at an initial public offering price of $12.00 per shareand received approximately $117.3 million in net proceeds after deducting underwriting discounts and commissions. We used the net proceeds topurchase 10,416,666 newly issued common units directly from FAH, LLC at a price per unit equal to the price per share of Class A common stockin the IPO less underwriting discounts and commissions of $117.3 million. Immediately following the completion of the IPO, there were 24,975,932shares of Class B common stock outstanding and 23,337,705 shares of Class A common stock outstanding, comprised of 10,416,666 sharesissued in connection with the IPO and 12,921,039 shares issued in connection with the Transactions described in Note 16, Stockholders’ Equity ofthe notes to our consolidated financial statements.Leading Design and Creative CapabilitiesOur in-house creative team layers our own whimsical, fun and distinct stylization onto content providers’ characters, creating unique products forwhich there is substantial consumer demand. Our creative team is passionate about pop culture. We enjoy a strong pipeline of talent for ourcreative team given our culture and the opportunity we provide to work with the most relevant pop culture content. We believe content providerstrust us with their properties, and consumers passionately engage with our products and brands because of our creativity. In addition, wereinvigorate classic evergreen or back catalog content by infusing a fresh, unique aesthetic and design into characters that enjoy enduring passionand nostalgia from fans.Diversity of Products and Accessible Price Points Create Broad AppealWe create products to appeal to a broad array of fans across consumer demographic groups. We believe our broad appeal comes through our largeselection of items, a large variety of licenses and properties and varied form factors across a number of product categories. We do not limitourselves by targeting discrete demographics such as the stereotypical collector or the child seeking the latest (and often short-lived) toy craze.We estimate based on market and internal data that occasional buyers, which we define as those consumers who are mainstream movie and TVfans, but do not self-identify as enthusiasts, and enthusiasts, who are more engaged in pop culture than occasional buyers but who do not self-identify as collectors, each make up approximately one- third of our customers. To continue to broaden our offerings beyond figures, we havelaunched new or expanded5 categories such as plush and accessories. We believe we have one of the largest and most engaged fan bases in our industry, driven by theirpassion and love of our unique products and the properties we represent.Trusted Steward of the Most Important Pop Culture ContentWe strive to license every pop culture property that we believe is relevant to our consumers. Over the last decade, we have built strongrelationships with content providers and currently have a catalog of content licenses covering a large number of properties that we believe is one ofthe industry’s largest. We believe there is a trend of content providers consolidating their relationships to do more business with fewer licensees.As a trusted steward with a strong retail distribution network and connection with the end user, we believe we have benefited from this trend. Weoften work collaboratively with content providers in advance of new content releases to create unique, stylized products to maximize the value oftheir properties. In some cases, the input we have provided has influenced the content provider’s creative choices for its original content. Webelieve we are well positioned to continue to obtain licenses for new important movie franchises and other properties. Further, we have historicallybeen able to renew productive licenses on commercially reasonable terms, which positions us to benefit from the ongoing desire of consumers toengage with and show affinity for their favorite pop culture content.Deep, Mutually Beneficial Relationships with a Broad Network of Retail CustomersWe partner with a diverse group of retail customers through which we sell our products. Many of our retail customers view us as experts in popculture and in some cases, we help manage their pop culture category within their stores and can provide a curated experience by catering to theirparticular customer bases. We believe this enables us to enhance the productivity of the pop culture category for our retail customers, resulting inincreased sales and expanded shelf space or online placement for our products—a major driver of our growth historically. Additionally, we believeour pop culture expertise and omnichannel sales model position us well to capture the industry shift from traditional brick and mortar stores tochannel-agnostic content consumerism. In addition, we often release exclusive new products with a specific retail customer, which can drive trafficand sales for them.Nimble Speed to Market Reflects “Fast Fashion” Product Development ProcessSpeed to market has become increasingly important as technological innovation has accelerated the pace of content discovery and sharing andthe speed at which niche content can become mainstream. Our flexible and low-fixed cost production model enables us to go from product designof a figure to the store shelf between 110 and 200 days and can have it on the shelf in as few as 70 days, with a minimal upfront investment formost figures of $5,000 to $7,500 in tooling, molds and internal design costs. Because of the strength of our in-house creative team, we are able tomove from product design to pre-selling a new product in as few as 24 hours. This ability, coupled with the valuable data insights we havedeveloped over the past decade, and the increasing use of repeated franchise properties by content providers, reduces potential product risk to uswhile better positioning us to benefit from trends in content creation and consumption. As an example of our “fast fashion” product developmentprocess, we announced and were able to pre-sell a dancing Baby Groot figure, which was a surprise character in Marvel’s 2014 Guardians of theGalaxy movie release, within a week of the movie release.Dynamic Business Model Drives Revenue Visibility and GrowthOur business is diversified across content providers and properties, product categories, and sales channels. As a result, we can dynamicallymanage our business to capitalize on pop culture trends, which has allowed us to deliver significant growth while lessening our dependence onindividual content releases. Our content provider relationships are highly diversified. We generated approximately 8% and 15% of sales from ourtop property for the years ended December 31, 2017 and 2016, respectively, and the portion of our sales for the years ended December 31, 2017and 2016 attributable to our top five properties was 23% and 36%, respectively. Our products are balanced across our licensed propertycategories. In 2017, we generated approximately 45% of sales from classic evergreen properties, approximately 21% from movie releaseproperties, approximately 15% from current video game properties and approximately 18% from current TV properties. In 2016, we generatedapproximately 43% of sales from classic evergreen properties, approximately 24% from movie release properties, approximately 20% from currentvideo game properties and approximately 12% from current TV properties. We have visibility into the new release schedule of our contentproviders and our expansive license portfolio allows us to dynamically manage new product creation. This allows us to adjust the mix of productsbased on classic evergreen properties and new releases, depending on the media release cycle. In addition, we typically sell our6 products worldwide through a diverse group of sales channels, including specialty retailers, distributors, mass- market retailers, e-commerce sitesand direct-to-consumer.Visionary Management Team and Employees with Genuine Passion for Pop CultureOur highly experienced management team is led by Brian Mariotti, an industry pioneer. A long- time pop culture fan, Brian recognized early on theimpact that trends in media and entertainment would have on the pop culture industry and the value of having a diverse portfolio of licenses.Passion for pop culture pervades our company and our openness to new ideas from anywhere in the organization has resulted in some of our mostinnovative and differentiated products.How We Plan to GrowWe are pursuing the following strategies that we believe will drive substantial future growth.Increase Sales with Existing Retail CustomersWe intend to continue to increase our sales by expanding our shelf space and deepening our relationships with our retail customers. Our productshave driven traffic to our retail customers’ previously less productive square footage, which has resulted in increased shelf space for our products.In addition to designing unique, stylized products that resonate with pop culture fans and drive traffic, both online and in store, we intend toincrease the number of retail customers for whom we curate pop culture selections. We believe doing so deepens our relationships with our retailcustomers and encourages them to allocate more shelf space to our products and pop culture products generally and, in some cases, create popculture departments where none existed before, which we believe will drive additional brand awareness and sales growth. We are also in theprocess of creating a self-service online portal for our retail customers to reduce ordering time and increase the efficiency of our ordering process,which we believe will increase our sales with our existing retail customers.Add New Retail Customers and Expand into New ChannelsWe regularly evaluate and add new retail customers as we believe consumers demand Funko products regardless of the retail channel throughwhich they purchase them. While we believe we have opportunities to add new retailers within existing channels, we also plan to selectively targetnew or underdeveloped sales channels, such as dollar, drug, grocery and convenience stores. By adding new retail customers, we will increase theawareness and availability of our products to consumers, which we believe will increase sales.Broaden Our Product OfferingsIn addition to designing products to address new content that licensors continually produce, we plan to add new product categories, lines andbrands to leverage our existing sales channels to continue to drive sales. For example, we expanded our blindbox offerings, which have historicallyincluded figures, to plush products. We also continually evaluate product innovations and potential acquisition targets to complement our existingproduct categories, lines and brands. In June 2017, we completed the acquisition of Loungefly, LLC ( “Loungefly”), a designer of a variety oflicensed pop culture fashion handbags, small leather goods and accessories, to expand and diversify our product offerings in our accessoriescategory (the “Loungefly Acquisition”).Expand InternationallyWe believe that the forces at work first observed in the U.S. pop culture industry are global. We believe we are currently underpenetratedinternationally, and we generate the majority of our net sales in the United States; however, we are also focused on growing our internationalbusiness. Net sales generated from customers outside of the United States accounted for approximately 27%, 19% and 24% of our sales for theyears ended December 31, 2017, 2016 and 2015, respectively. We are continuing to invest in the growth of our international business both directlyand through third party distributors. In the future we may pursue similar acquisitions or expand our direct sales force or distributor relationships tofurther penetrate Asia Pacific, Latin America, Australia or other regions.7 Leverage the Funko Brand Across Multiple ChannelsWe believe there is a significant opportunity to leverage our distinctive style and designs across numerous underserved channels such as digitalcontent, as well as potentially movies and television. For example, we are in the process of creating an online portal for Funko that will serve as anonline destination for our consumers. This online community will allow consumers to create personal avatars, purchase digital products andinteract with other consumers. We believe this opportunity will drive brand awareness with new audience segments, deepen consumer engagementto drive customer lifetime value, strengthen our direct connection with our consumers and grow our direct-to-consumer business, as well assupport our retail customers.Product Lines and LicensesWe sell a broad array of licensed pop culture consumer products featuring characters from an extensive range of media and entertainment content,including movies, TV shows, video games, music and sports. Our products combine our proprietary brands and distinct designs and aestheticsensibilities into properties we license from content providers. We seek to license content that will allow us to capitalize on the popularity ofcurrent movies, TV shows, video games, music and other content releases, as well as classic evergreen properties, which are not tied to a currentrelease, and which are less subject to pop culture trends. We have also developed our own content and intellectual property, such as our WetmoreForest property.Our ProductsOur current products principally fall within the following product categories.Figures. Our figures category includes figures that celebrate pop culture icons in the form of stylized vinyl, bobble heads, blind-packed miniaturesand action figures. These figures combine the pop culture properties we license with our own distinctive designs to create pop culture figures thatappeal to a broad range of consumers at an affordable price point, often under one of our proprietary brands, such as Pop!, Mystery Minis, Dorbz,Pint Size Heroes and Rock Candy.Other. Our other category includes plush products that are soft-sculpt figures that blend licensed content with our distinctive designs to create anarray of product lines, intended for consumers of all ages; accessories products that mix pop culture fandom with functionality, and featureeverything from pens and pins to buttons and keychains, all based on pop culture icons; apparel (including t-shirts and hats); homewares (includingdrinkware, party lights and other home accessories); and stylized bags, purses and wallets.Our Brands and DesignsUnder the Funko brand, we have developed multiple proprietary brands under which we market most of our products. We also continuously developnew product designs and lines, which may develop into proprietary brands in the future. Our principal proprietary brands include: Pop!, MysteryMinis, Dorbz, Pint Size Heroes, Rock Candy, SuperCute and Loungefly.Pop!. Introduced in 2010, Pop! is our most well-recognized brand. The Pop! stylized design incorporates an equal head to body ratio with anoversized, rounded square head that typically consists of no mouth and a very simple nose. Pop! figures typically stand about four inches tall. ThePop! design has also been applied across all of our other product categories, including plush, accessories, apparel and homewares. As a brand,Pop! represented 70%, 64% and 75% of our 2017, 2016 and 2015 sales, respectively.Mystery Minis. Introduced in 2013, Mystery Minis are usually sets of 12 different figures per property sold individually in a blind box so that theconsumer does not know which figure from the set they have purchased. The figures are all highly stylized, but the style can vary based on thelicensor. The figures themselves are typically two and a half inches tall and can have varying rarity within the set to create a “treasure hunt”appeal.Dorbz. Introduced in 2015, Dorbz are adorable stylized figures with slightly sculpted round heads on uniform pad printed bodies. The figures standabout three inches tall and are packaged in a double window box. The designs incorporate an equal head to body ratio with smiling features.8 Pint Size Heroes. Introduced in 2015, Pint Size Heroes are slightly stylized figures with sculpted heads and uniform bodies. They stand one and ahalf inches tall and have an equal head to body ratio. Released in sets of 24 by property, they are packaged in a blind bag so that the consumerdoes not know which figure they are purchasing.Rock Candy. Introduced in 2015, Rock Candy figures are primarily based on female characters holding a strong pose. The figures stand fiveinches tall, are stylized and have slightly larger heads and eyes, with a head to body ratio of one to two.SuperCute. Introduced in 2016, SuperCute is a nostalgia storybook stylized design that has a head to body ratio of two to three. The figures havelarge round eyes, no nose and a small mouth. The bodies are very simple and have their arms at their sides and their legs pushed together. TheSuperCute brand and design have been applied to various Mystery Minis sets and certain plush figures.Loungefly. Acquired in June 2017, Loungefly products are fashion focused stylized handbags, backpacks, small leather goods and accessories.Loungefly products currently are based on a limited set of licenses, however, we anticipate expanding the licenses and content used to create ourLoungefly products in the future.In addition, we also develop product lines that we market under the broader Funko brand, rather than under any of our proprietary brands. Wetypically do so when we believe our speed to market or other competitive advantages uniquely position us to take advantage of certainopportunities. While these products may not initially be associated with one of our proprietary brands, they can still reflect our whimsical andcreative style, and may develop into a distinct brand over time. For example, in 2015, we entered into a master license in connection with thevideo game property Five Nights at Freddy’s, under which we created a broad array of products, including figures, plush and keychains. Sales ofproducts made under our Five Nights at Freddy’s license accounted for 8% and 15% of our sales for the years ended December 31, 2017 and2016, respectively. Similar to Five Nights at Freddy’s, in October 2016, we entered into a license agreement with Netflix for its Stranger Thingsproperty to create and sell a wide variety of products, including figures, blindbox, accessories and apparel. Our LicensesLicensors. We have strong licensing relationships with many established content providers, such as Disney, HBO, LucasFilm, Marvel, the NationalFootball League, Blizzard Entertainment and Warner Brothers. We also seek to establish licensing relationships with newer content providers inorder to capitalize on new and emerging trends in pop culture. For example, in recent years, we have established relationships and entered intolicensing arrangements with each of Dr. Seuss, Netflix and Riot Games related to the Dr. Seuss, Stranger Things and League of Legendsproperties, respectively. We believe we provide value to content providers by maximizing the lifetime value of their content by extending itsrelevance to consumers through ongoing fan engagement.License Agreements. Our license agreements permit us to use the intellectual property of our licensors in connection with the products we designand sell. These license agreements typically provide that our licensors own intellectual property rights in the products we design and sell under thelicense, and as a result, upon termination of the license, we no longer have the right to sell these products. A number of these license agreementsrelate to properties that are significant to our business and operations. Our license agreements typically have terms of between two and threeyears and are not automatically renewable. However, we believe we have strong relationships with our licensors, and have historically been able torenew productive licenses on commercially reasonable terms.Our license agreements require us to make royalty payments to the licensor based on our sales of the licensed product and, in some cases,require us to incur other charges. For the years ended December 31, 2017, 2016 and 2015, the average royalty rate was 15.0%, 15.2% and 14.9%,respectively. Our royalty expense for any given year will vary depending on the mix of products sold during that year. For the years endedDecember 31, 2017, 2016 and 2015, we incurred royalty expenses of $77.5 million, $64.7 million and $40.8 million, respectively.Our licenses are generally not exclusive. In addition, the rights that licensors grant to us are typically limited to specific properties, productcategories, territories and, in some cases, sales channels. In addition, our license agreements usually require us to obtain the licensor’s approvalof products we develop under the license prior to9 making any sales. They also typically provide for a minimum guarantee that covers all licensed properties under that license agreement, which isgenerally required to be paid in advance, and the amount of which is negotiated based on a variety of factors, including past and expected salesand the licensor’s expected line-up of new releases.Historically, we have a strong track record for meeting minimum guarantees under our license agreements. For the years ended December 31,2017, 2016 and 2015, we recorded reserves of $2.9 million, $0.3 million and $0.1 million, respectively, related to prepaid royalties we estimatedwould not be recovered through sales. The increase in the reserves from 2016 to 2017 was primarily due to our subscription box business, whichwe are phasing out in 2018.For the year ended December 31, 2017, there were no license agreements that accounted for more than 10% of sales. For the year endedDecember 31, 2016, 15% of sales were related to one license agreement. For the Successor 2015 Period, we had two license agreements thataccounted for 23% and 12% of sales.Licensed Properties. We strive to license every pop culture property that we believe is relevant to consumers. What we consider to be a propertywill vary based on the terms of the underlying license agreement. In general, we consider each content title to constitute a single property. In someinstances, however, a property may consist of an entire franchise or even a single character, particularly in our classic evergreen category. Wedivide our licensed properties into four main categories: classic evergreen, movie release, current TV and current video game. We also licensecertain properties that fall outside of these four main categories. •Classic Evergreen. Properties in the classic evergreen category are based on movies, TV shows, video games, music, sports orother entertainment content that is not tied to a new or current release at the time we release the product. As a result, products thatwe design and sell based on these properties generally do not have a defined duration of market demand. Examples of our classicevergreen properties include Star Wars, Harry Potter, DC Comics, Marvel Comics and WWE. •Movie Release. Properties in the movie release category are tied to new movie releases and are intended to capitalize on theexcitement of fans surrounding these releases. Products that we design and sell based on these properties are expected to have alimited duration of market demand, depending on the popularity of the movie release. Examples of our movie release propertiesinclude Star Wars Episode VIII, Guardians of the Galaxy 2, Justice League, Spiderman: Homecoming and Thor: Ragnarok. •Current TV. Properties in the current TV category are tied to TV shows that are currently airing new content. These properties areexpected to have a market demand depending on the popularity and longevity of the TV show, which is generally expected to bebetween three and seven years. Examples of our current TV properties currently include Stranger Things, Rick & Morty, Game ofThrones, The Walking Dead and Dragonball Z. •Current Video Game. Properties in the current video game category are tied to new video game releases that are intended tocapitalize on the excitement of fans surrounding these releases. Products that we design and sell based on these properties areexpected to have a market demand depending on the popularity and longevity of the video game, which is generally expected to bethree to seven years. Examples of our current video game properties currently include Five Nights at Freddy’s, Overwatch andKingdom Hearts. •Other. We also occasionally license properties that do not fit within the four categories described above, including those associatedwith current events and limited-duration pop culture phenomena, which we are able to capitalize on due to our speed to market andlow cost of production. For example, in connection with the 2016 presidential election, we produced a line of Pop! branded and otherfigures featuring stylized versions of selected presidential candidates.We expect these categories and the properties they encompass to evolve over time as current content becomes classic evergreen and as newforms of pop culture content emerge. In addition, while the percentage of sales attributable to our classic evergreen properties has been betweenapproximately 42% and 49% over the past three years, it may fluctuate in any given year based on the number and popularity of new contentreleases.10 Product Design and DevelopmentWe believe our creative product designs and nimble speed to market are key reasons why content providers trust us with their properties andconsumers passionately engage with our brands and products. We leverage our creative, art and sculpting teams to design and develop productsin-house from inception to production. Our creative team layers our whimsical, fun and unique style onto the content we license to create productdesigns that resonate with consumers. Our creative team is passionate about pop culture, and we have a strong pipeline of talent given our cultureand the opportunity we provide to work with the most relevant pop culture content. Our designers often work collaboratively with content providersin advance of new content releases to create unique, stylized products to maximize the value of their properties and, in some cases, the input wehave provided has influenced the content provider’s creative choices for their original content.Our product development team oversees all aspects of new product development in order to ensure a timely product design and developmentprocess, including submitting the initial design to the content provider for approval, developing the product prototype, receiving final contentprovider approval and coordinating manufacturing with our third-party manufacturer. Our flexible and low-fixed cost production model enables us tomove from product design of a figure to the store shelf in as few as 70 days and typically between 110 and 200 days, with a minimal upfrontinvestment for most figures of $5,000 to $7,500 in tooling, molds and internal design costs. Because of the strength of our in-house creative team,we are able to move from product design to pre-selling a new product in as few as 24 hours. This ability, coupled with the valuable data insights wehave developed over the past decade and the increasing use of repeated franchise properties by content providers, reduces potential product riskto us.Manufacturing and MaterialsOur products are produced by third-party manufacturers primarily in China and Vietnam, which we choose on the basis of performance, capacity,capability and price. We also manufacture or assemble certain apparel and other products in the United States and Mexico. The use of third-partymanufacturers enables us to avoid incurring fixed manufacturing costs, while maximizing flexibility, capacity and capability. Though ourmanufacturing base has diversified over time as we have grown our sales and expanded our product offerings, we have historically concentratedproduction with a small number of manufacturers and factories as part of a continuing effort to monitor quality, reduce manufacturing costs andensure speed to market. In the case of most of the factories in which our products are manufactured, our products represent a significantpercentage of each factory’s total capacity, which we believe provides us greater flexibility in supply chain management. We do not have long-termcontracts with our manufacturers. We believe that alternative sources of supply are available to us although we cannot be assured that we canobtain adequate supplies of manufactured products on a timely basis or at all.We base our production schedules for products on our internal forecasts, taking into account historical trends of similar products and properties,current market information and communications with customers. The accuracy of our forecasts is affected by consumer acceptance of ourproducts, which is based on the strength of the underlying licensed property, the strength of competing products, the marketing strategies ofretailers, changes in buying patterns of both our retail customers and our consumers, and overall economic conditions. Unexpected changes inthese factors could result in a lack of product availability or excess inventory of a particular product.Although we do not conduct the day-to-day manufacturing of our products, we are responsible for designing both the product and the packaging.We seek to ensure quality control by actively reviewing the product, both in-house and via image at multiple stages in development and samplefinished goods to validate the quality control process. In addition to quality control testing, safety testing of our products is done by independentthird-party testing laboratories.While we purchase finished products from our manufacturers, the cost of our products is impacted by the cost of labor, as well as the cost of theprincipal raw materials used in the production and sale of our products, including vinyl, fabric, ceramics and plastics. All of these materials arereadily available but may be subject to significant fluctuations in price. Although we do not manufacture our products, we own most of the toolsand molds used in the manufacturing process, and generally these are transferable among manufacturers if we choose to employ alternativemanufacturers.11 SalesWe sell our products to a diverse network of customers throughout the world. Domestically, we sell our products to specialty retailers, mass-market retailers and e-commerce sites. Our key retail partners in the United States include Amazon, GameStop, Hot Topic, Target and Walmart.We also plan to target new or underdeveloped sales channels, including dollar, drug, grocery and convenience stores. Internationally, we sell ourproducts directly to similar retailers, primarily in Europe, through our subsidiary Funko UK, Ltd. Our key international retail customers includeMicromania, E.M.P. Merchandising and Smyths Toys.In addition to retailers, we also sell our products to distributors for sale to small retailers in the United States and in certain countriesinternationally, typically where we do not currently have a direct presence. We also sell certain of our products directly to consumers through our e-commerce business and, to a lesser extent, at specialty licensing and comic book shows, conventions and exhibitions in cities throughout theUnited States, including at Comic-Con events. Our direct-to-consumer sales accounted for approximately 6% of both our 2017 and 2016 net sales.Though our direct-to-consumer efforts have historically represented a small portion of our net sales, we intend to increase these efforts in thefuture.We believe we have a diverse customer base, with our top ten customers representing approximately 45%, 63%, 62% and 60% of our 2017, 2016,Successor 2015 Period and Predecessor 2015 Period sales, respectively. GameStop represented approximately 8%, 12%, 12% and 11% of our2017, 2016, Successor 2015 Period and Predecessor 2015 Period sales, respectively. Additionally, Underground Toys Limited representedapproximately 8%, 18% and 10% of our 2016, Successor 2015 Period and Predecessor 2015 Period sales, respectively, prior to our acquisition ofUnderground Toys Limited in January 2017 (the “Underground Toys Acquisition”). Hot Topic represented approximately 9%, 9%, 8% and 11% ofour 2017, 2016, Successor 2015 Period and Predecessor 2015 Period sales, respectively. Other than GameStop, Underground Toys Limited andHot Topic, no single customer represented more than 10% of our sales during the same periods.We maintain a full-time sales staff, many of whom make on-site visits to our customers for the purpose of showing products and soliciting orders.Many of our retail customers view us as experts in pop culture and, in some cases, we help manage their growing pop culture category within theirstores, providing a curated experience by catering to their particular customer bases. For example, we can curate products based on Dr. Seussand Harry Potter books for Barnes & Noble, and gaming-based products, such as Fallout and Overwatch, for GameStop. We believe this creates amutually beneficial relationship between us and our retail customers by providing us with an opportunity to enhance the productivity of the popculture category within their stores, which may also result in expanded shelf space for our products. In addition to our full-time sales staff, we alsoretain a number of independent sales representatives to sell and promote our products both domestically and internationally.We sell our products to our customers with payment terms typically varying from 30 to 90 days. As discussed above, we contract the manufactureof most of our products to third-party unaffiliated manufacturers primarily located in China, Vietnam and Mexico and ship those products to ourwarehouse facilities in the United States and the United Kingdom. While most of our sales originate in the United States and the United Kingdomfrom inventory we hold in our warehouses, certain of our customers may from time to time take title to our products upon shipment from thefactory or at the port.We establish reserves for sales allowances, including promotional and other allowances, at the time of sale. The reserves are determined as apercentage of sales based upon either historical experience or upon estimates or programs agreed upon by our customers and us. As of December31, 2017 and 2016, we had reserves for sales allowances of $4.6 million and $4.5 million, respectively.MarketingThe desire for people to connect with their favorite movies, TV shows, video games, music, sports and other passions is global. Because of thisdesire, which is fueled by the proliferation of online consumer access, we have experienced significant growth in brand penetration in recent years.We believe that our expansive retailer presence, industry-leading engagement rates across our owned channels, and devout fan base createunique opportunities to re-engage and remind consumers to purchase our products. 12 Funko has established a significant social media presence, using channels such as Facebook, Twitter, Instagram and YouTube. We havecontinued to look for ways to provide our consumers with what we believe is industry-leading engagement through our variety of owned channels.In January 2018, our YouTube channel hosted its highest month ever with over 6 million minutes in viewing time. In November 2017, we acquiredA Large Evil Corporation Ltd. (“A Large Evil Corporation Acquisition”) now renamed Funko Animation Studios, to produce proprietary online videosand other media content to showcase our products and globally-recognizable licenses. We also engage with our consumers through online fan pages, including Funko Fanatics, which are run by our fans and our active blog. We intendto continue to expand our reach through different social media outlets, our websites and internet-based advertising.This deep connection with our consumers allows us to communicate quickly with a large number of fans and we believe will also help us grow ourown e-commerce business. This deep connection with our consumers also creates a unique opportunity for established retailers to increase theirown store traffic by featuring our products. We frequently co-market our products across the largest retailers, both online and in-store, includingAmazon, Wal-Mart, Target and GameStop. Many of these retailers join with us to release exclusive products only available to fans at theirlocations. In addition to our social media reach, our brand cultivates a strong and authentic core of users in part because of our commitment to interactdirectly with our fans at specialty licensing and comic book shows, conventions and exhibits, including Comic-Con events across the UnitedStates, many of which draw over 100,000 attendees.In August 2017, we opened a flagship retail store location at our headquarters in Everett, Washington. We opened this one-of-a-kind location toshowcase our products and brands, to demonstrate retail merchandising for our retail customers, and to serve as a unique destination andexperience for our fans of all ages.CompetitionWe are a worldwide leader in the design, manufacture and marketing of licensed pop culture products, in a highly competitive industry. Wecompete with toy companies in many of our product categories, some of which have substantially more resources than us, stronger namerecognition, longer operating histories and benefit from greater economies of scale. We also increasingly compete with large toy companies forshelf space at leading mass market and other retailers. We also compete with numerous smaller domestic and foreign collectible productdesigners and manufacturers in each of our product categories. Our competitive advantage is based primarily on the creativity and quality of thedesign of our products and their perceived value, our price points, our license portfolio and our ability to bring new products to market quickly.We produce most of our products under trademarks and copyrights that we own, utilizing the intellectual property of our licensors. Certain of ourlicensors have reserved the rights to manufacture, distribute and sell identical or similar products. Some of these products could directly competewith our products and could be sold to our customers or directly to consumers at lower prices than those at which our products are sold.Although we believe we have one of the largest portfolios of licensed content in the pop culture industry, with strong relationships with many of ourlicensors, we must vigorously compete to obtain these licenses from leading content providers on commercially reasonable terms, and to expandour license rights into additional licensed product categories. This competition is based primarily on the creativity of our product designs, our abilityto bring new products to market quickly, our ability to increase fan engagement, the breadth of our sales channels and the quality of our products.See Item 1A, “Risk Factors.”Intellectual PropertyWe believe that our trademarks, copyrights and other intellectual property rights have significant value and are important to the marketing of ourbrand and the favorable perception of our products. As of December 31, 2017, we owned approximately 34 registered U.S. trademarks, 105registered international trademarks, 12 pending U.S. trademark applications and 21 pending international trademark applications. Most of ourproducts are produced and sold under trademarks owned by or licensed to us. We register many of our trademarks related to our brands and seekprotection under the trademark and copyright laws of the United States and other countries where our13 products are produced or sold. These intellectual property rights can be significant assets. Accordingly, while we believe we are sufficientlyprotected, the failure to obtain or the loss of some of these rights could have an adverse effect on our business, financial condition and results ofoperations. See Item 1A, “Risk Factors.”Government RegulationOur products sold in the United States are subject to the provisions of the Consumer Product Safety Act (“CPSA”), the Federal HazardousSubstances Act (“FHSA”), the Consumer Product Safety Improvement Act of 2008 (“CPSIA”) and the Flammable Fabrics Act (“FFA”), and theregulations promulgated pursuant to such statutes. These statutes and the related regulations ban from the market any consumer products that failto comply with applicable product safety laws, regulations, and standards. The Consumer Product Safety Commission may require the recall,repurchase, replacement, or repair of any such banned products or products that otherwise create a substantial risk of injury and may seekpenalties for regulatory noncompliance under certain circumstances. Similar laws exist in some U.S. states and our products sold worldwide aresubject to the provisions of similar laws and regulations in many jurisdictions, including Canada, Australia, Europe and Asia.We maintain a quality control program to help ensure compliance with applicable product safety requirements. We use independent third-partylaboratories that employ testing and other procedures intended to maintain compliance with the CPSA, the FHSA, the CPSIA, the FFA, otherapplicable domestic and international product standards, as well as our own standards and those of some of our larger retail customers andlicensors. Nonetheless, there can be no assurance that our products are or will be hazard free, and we may in the future experience issues inproducts that result in recalls, withdrawals, or replacements of products. A product recall could have a material adverse effect on our results ofoperations and financial condition, depending on the product affected by the recall and the extent of the recall efforts required. A product recallcould also negatively affect our reputation and the sales of other Funko products. See Item 1A, “Risk Factors.”We are subject to various other federal, state, local and international laws and regulations applicable to our business, including export controls, andhave established processes for compliance with these laws and regulations.EmployeesAs of December 31, 2017, we employed 586 full-time employees and two part-time employees. We employed 429 people in the United States and159 people in Europe. None of our employees are represented by a labor union or are party to a collective bargaining agreement, and we have hadno labor-related work stoppages. We believe that we have good relationships with our employees.SeasonalityWhile our customers in the retail industry typically operate in highly seasonal businesses, we have historically experienced only moderateseasonality in our business. For the years ended December 31, 2017, 2016 and 2015, approximately 60.5%, 58.7% and 64.6%, respectively, ofour net sales were made in the third and fourth quarters, as our customers build up their inventories in anticipation of the holiday season.Generally, the first quarter of the year represents the lowest volume of shipments and sales in our business and in the retail and toy industriesgenerally, and it is also the least profitable quarter due to the various fixed costs of the business. However, the rapid growth we have experiencedin recent years may have masked the full effects of seasonal factors on our business to date, and as such, seasonality may have a greater effecton our results of operations in future periods. See Item 1A, “Risk Factors.”14 Executive Officers of the Registrant and Board of DirectorsThe following table provides information regarding our executive officers and members of our board of directors (ages as of March 16, 2018): Name Age Position(s)Brian Mariotti 50 Chief Executive Officer, DirectorRussell Nickel 43 Chief Financial OfficerAndrew Perlmutter 40 PresidentTracy Daw 52 Senior Vice President, General Counsel and SecretaryKen Brotman 52 Chairman of the Board of DirectorsGino Dellomo 39 DirectorCharles Denson 61 DirectorDiane Irvine 59 DirectorAdam Kriger 51 DirectorRichard McNally 62 DirectorExecutive OfficersBrian Mariotti has served as Funko, Inc.’s Chief Executive Officer and as a member of Funko, Inc.’s board of directors since its formation in April2017, as the Chief Executive Officer of FAH, LLC and as a member of FAH, LLC’s board of directors since October 2015, and as Chief ExecutiveOfficer of FHL and as a member of FHL’s board of directors since May 2013. Mr. Mariotti has also served as Chief Executive Officer of Funko,LLC since he acquired the business with a small group of investors in 2005. We believe Mr. Mariotti’s knowledge of the pop culture industry andmany years of experience as our Chief Executive Officer make him well-qualified to serve as a member of our board of directors.Russell Nickel has served as Funko, Inc.’s Chief Financial Officer since its formation in April 2017, and as the Chief Financial Officer andSecretary of FAH, LLC since October 2013. Mr. Nickel was Vice President of Finance at ClipCard from May 2013 until October 2013, and theInstitute for Corporate Productivity (i4cp) from 2011 until 2013, where he was responsible for all finance, accounting, and legal matters. Beforejoining i4cp, Mr. Nickel held various senior finance and accounting positions in other companies and also worked in public accounting, including asan Audit Manager at KPMG, LLP. Mr. Nickel received a B.A. in Accounting from the University of Washington.Andrew Perlmutter has served as the President of Funko, Inc. and FAH, LLC since October 2017. Mr. Perlmutter was the Senior Vice Presidentof Sales of FAH, LLC from June 2013 until October 2017. Prior to that, he was a co-founder of Bottle Rocket Collective, a board and travel gamescompany, where he oversaw product manufacturing and sales from December 2012 until December 2013. Prior to that, he was a National AccountManager at The Wilko Group from August 2001 until December 2012, where he managed sales to a variety of major mass-market, specialty andonline retailers. Mr. Perlmutter received a B.A. in Interpersonal Communications from Southern Illinois University.Tracy Daw has served as Funko, Inc.’s Senior Vice President, General Counsel and Secretary since its formation in April 2017, and as the SeniorVice President and General Counsel of FAH, LLC since July 2016. Mr. Daw served as the General Counsel of INRIX, Inc. from April 2012 untilJuly 2016, where he was responsible for global legal affairs, with emphasis on corporate and intellectual property matters. He also previouslyserved in various roles at RealNetworks, Inc. from February 2000 until April 2012, including as Senior Vice President, Chief Legal Officer andCorporate Secretary, where he managed the company’s global legal affairs and corporate development efforts. From 1990 to 2000, Mr. Daw was amember of the law firm of Sidley Austin LLP, where he was a partner. Mr. Daw received a J.D. from the University of Michigan Law School and aB.S. in Industrial and Labor Relations from Cornell University.15 DirectorsKen Brotman has served on the board of directors of Funko, Inc. since its formation in April 2017, and on the board of directors of FAH, LLCsince October 2015. Mr. Brotman is a Founder and Managing Partner at ACON Investments, which he co-founded in 1996. Before that, Mr.Brotman was a partner at Veritas Capital, Inc. from 1993 until 1996, and, between 1987 and 1993, held positions at various private equity firmsincluding Bain Capital and Wasserstein Perella Management Partners. Mr. Brotman has served on the board of directors of various ACONInvestments portfolio companies since 1997 including several in the retail and consumer products sectors. Mr. Brotman received an M.B.A. fromHarvard Business School and a B.S. in Economics from The Wharton School of the University of Pennsylvania. We believe Mr. Brotman’sextensive private equity investment and company strategy and oversight experience and background with respect to acquisitions, debt financingsand equity financings makes him well-qualified to serve as a member and as the chairman of our board of directors.Gino Dellomo has served on the board of directors of Funko, Inc. since its formation in April 2017, and on the board of directors of FAH, LLCsince October 2015. Mr. Dellomo is a Director at ACON Investments, which he joined in October 2006. Since October 2006, he has also served onthe board of directors of various ACON Investments portfolio companies. Between 2001 and 2006, Mr. Dellomo held various positions at variousinvestment banks, including Deutsche Bank Securities, Inc., FBR Capital Markets & Co. and MCG Capital Corp. Mr. Dellomo received a B.S. inFinance from Georgetown University. We believe Mr. Dellomo’s private equity investment and company oversight experience and background withrespect to acquisitions, debt financings and equity financings makes him well-qualified to serve as a member of our board of directors.Charles Denson has served on the board of directors of Funko, Inc. since its formation in April 2017, and on the board of directors of FAH, LLCsince June 2016. Mr. Denson has served as the President and Chief Executive Officer of Anini Vista Advisors, an advisory and consulting firm,since March 2014. From February 1979 until January 2014, Mr. Denson held various positions at NIKE, Inc., where he was appointed to severalmanagement roles, including, in 2001, President of the NIKE Brand, a position he held until January 2014. Mr. Denson also serves on the board ofdirectors of the Naismith Memorial Basketball Hall of Fame, Inc. Mr. Denson serves on the board of directors of several privately heldorganizations. Mr. Denson received a B.A. in Business from Utah State University. We believe Mr. Denson’s extensive experience in brandbuilding, brand management and organizational leadership in the public company context makes him well-qualified to serve on our board ofdirectors.Diane Irvine has served on the board of directors of Funko, Inc. and FAH, LLC since August 2017. Ms. Irvine previously served as ChiefExecutive Officer of Blue Nile, Inc., an online retailer of diamonds and fine jewelry, from February 2008 until November 2011, as President fromFebruary 2007 until November 2011, and as Chief Financial Officer from December 1999 until September 2007. From February 1994 until May1999, Ms. Irvine served as Vice President and Chief Financial Officer of Plum Creek Timber Company, Inc., and from September 1981 untilFebruary 1994, she worked at accounting firm Coopers & Lybrand LLP in various capacities, most recently as partner. Ms. Irvine currently serveson the boards of directors of XO Group Inc. (on whose board she has served since November 2014), Yelp Inc. (on whose board she has servedsince September 2011), and D.A. Davidson & Co. (on whose board she has served since January 2018), and previously served on the boards ofdirectors of Rightside Group Ltd. from August 2014 until July 2017, CafePress, Inc. from July 2012 until May 2015, and Blue Nile, Inc. from May2001 until November 2011. Ms. Irvine received an M.S. in Taxation and a Doctor of Humane Letters from Golden Gate University, and a B.S. inAccounting from Illinois State University. We believe Ms. Irvine’s extensive public company management experience and financial expertise makeher well-qualified to serve on our board of directors.Adam Kriger has served on the board of directors of Funko, Inc. since its formation in April 2017, and on the board of directors of FAH, LLC sinceJune 2016. Mr. Kriger is an Executive Partner at ACON Investments, which he joined in August 2017. Before that, Mr. Kriger served as the SeniorVice President of Global Strategy for McDonald’s Corporation from December 2001 until March 2015. He also previously served as the Senior VicePresident of Global Strategy for Starwood Hotels & Resorts Worldwide from 1998 until 1999, and as the Vice President of Strategy andDevelopment for The Walt Disney Company from 1988 until 1990, and then again from 1992 until 1998. Mr. Kriger serves on the boards of severalnon-profit organizations and private companies. Mr. Kriger received an M.B.A. from Harvard Business School and a B.A. in QuantitativeEconomics from Stanford University. We believe Mr. Kriger’s extensive strategic, risk management and organizational leadership experience in thepublic company context make him well-qualified to serve on our board of directors.16 Richard McNally has served on the board of directors of Funko, Inc. since its formation in April 2017, on the board of directors of FAH, LLC sinceOctober 2015, and on the Board of Directors of FHL since May 2013, when he also served as Chairman of the Board. Mr. McNally was a foundinginvestor in Fundamental, where he was an Operating Partner from 2003 to 2005 and has been a Partner since 2006. From 1999 until 2005, Mr.McNally held several consulting, advisory and executive roles. From 1994 until 1998, Mr. McNally served as the President of Armani Exchangeand, from 1981 until 1993, held various management roles with The Gap, including Executive Vice president of its Banana Republic Division.Since 2008, Mr. McNally has served on the board of directors of various Fundamental portfolio companies and non-profit organizations. Mr.McNally received a B.A. in History and Latin American Studies from Princeton University. We believe Mr. McNally’s extensive brand- building,organizational leadership and private equity investment experience makes him well-qualified to serve on our board of directors.Segment and Geographic InformationWe identify our reportable segments according to how the business activities are managed and evaluated, for which discrete financial informationis available and is regularly reviewed by our Chief Operating Decision Maker (“CODM”) to allocate resources and assess performance. Becauseour CODM reviews financial performance and allocates resources at a consolidated level on a regular basis, we have one reportable segment.For more information regarding our segment and for financial information by geographic area, see Note 13, Segments of the notes to ourconsolidated financial statements.Our HistoryFunko, Inc. was formed as a Delaware corporation on April 21, 2017 for the purpose of completing our IPO. FAH LLC, a holding company with nooperating assets or operations, was formed on September 24, 2015. On October 30, 2015, ACON Funko Investors, L.L.C., through FAH, LLC andthe ACON Acquisition, acquired a controlling interest in FHL, which is also a holding company with no operating assets or operations. FAH, LLCowns 100% of FHL and FHL owns 100% of Funko, LLC, which is its operating entity.Available InformationOur Internet address is www.funko.com. At our Investor Relations website, www.investor.funko.com, we make available free of charge a variety ofinformation for investors, including: •our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports,as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC; •press releases on quarterly earnings, product and service announcements, events and legal developments; •corporate governance information including our corporate governance guidelines, codes of conduct and ethics and committeecharters; •other news and announcements that we may post from time to time that investors might find useful or interesting; and •opportunities to sign up for email alerts and RSS feeds to have information pushed in real time.The information found on our website is not part of this or any other report we file with, or furnish to, the SEC.17 ITEM 1A. RISK FACTORSOur business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects,financial condition and results of operations, and they should be carefully considered. Accordingly, in evaluating our business, we encourage youto consider the following discussion of risk factors, in its entirety in addition to other information contained in or incorporated by reference into thisAnnual Report on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deemimmaterial may also affect our business, prospects, financial condition and results of operations.Risks Related to Our BusinessOur success depends on our ability to execute our business strategy.Our net sales and profitability have grown rapidly in recent periods; however, this should not be considered indicative of our future performance.Our future growth, profitability and cash flows depend upon our ability to successfully execute our business strategy, which is dependent upon anumber of factors, including our ability to: •expand our market presence in existing sales channels and enter additional sales channels; •anticipate, gauge and respond to rapidly changing consumer preferences and pop culture trends; •acquire or enter into new licenses in existing product categories or in new product categories; •expand our geographic presence to take advantage of opportunities outside of the United States; •enhance and maintain favorable brand recognition for our Company and product offerings; •maintain and expand margins through sales growth and efficiency initiatives; •effectively manage our relationships with third-party manufacturers; •effectively manage our debt, working capital and capital investments to maintain and improve the generation of cash flow; and •execute any acquisitions quickly and efficiently and integrate businesses successfully.There can be no assurance that we can successfully execute our business strategy in the manner or time period that we expect. Further,achieving these objectives will require investments which may result in short-term costs without generating any current sales or countervailing costsavings and, therefore, may be dilutive to our earnings, at least in the short term. In addition, we may decide to divest or discontinue certainbrands or products or streamline operations and incur other costs or special charges in doing so. We may also decide to discontinue certainprograms or sales to certain retailers based on anticipated strategic benefits. The failure to realize the anticipated benefits from our businessstrategy could have a material adverse effect on our prospects, business, financial condition and results of operations.Our business is dependent upon our license agreements, which involve certain risks.Products from which we generate substantially all of our net sales are produced under license agreements which grant us the right to use certainintellectual property in such products. These license agreements typically have short terms (between two and three years), are not automaticallyrenewable, and, in some cases, give the licensor the right to terminate the license agreement at will. Our license agreements typically provide thatour licensors own the intellectual property rights in the products we design and sell under the license, and as a result, upon termination of thelicense, we would no longer have the right to sell these products, while our licensors could engage a competitor to do so. We believe our ability toretain our license agreements depends, in large part, on the strength of our relationships with our licensors. Any events or developments adverselyaffecting those relationships, or the loss of one or more members of our management team, particularly our Chief Executive Officer, couldadversely affect our ability to maintain and renew our license agreements on similar terms or at all. Our top ten licensors collectively accounted forapproximately 72%, 77% and 81% of our sales for the years ended December 31, 2017, 2016 and 2015, respectively. Moreover, while we haveseparate licensing arrangements with Disney, LucasFilm and Marvel, these parties are all under common ownership and collectively18 these licensors accounted for approximately 33%, 31% and 45% of our sales for the years ended December 31, 2017, 2016 and 2015,respectively. The termination or lack of renewal of one or more of our license agreements, or the renewal of a license agreement on less favorableterms, could have a material adverse effect on our business, financial condition and results of operations. While we may enter into additionallicense agreements in the future, the terms of such license agreements may be less favorable than the terms of our existing license agreements.Our license agreements are complex, and typically grant our licensors the right to audit our compliance with the terms and conditions of suchagreements. Any such audit could result in a dispute over whether we have paid the proper royalties, which could require us to pay additionalroyalties, and the amounts involved could be material. For example, as of December 31, 2017, we had a reserve of $5.0 million on our balancesheet related to ongoing and future royalty audits. In addition to royalty payments, these agreements as a whole impose numerous otherobligations on us, including obligations to, among other things: •maintain the integrity of the applicable intellectual property; •obtain the licensor’s approval of the products we develop under the license prior to making any sales; •permit the licensor’s involvement in, or obtain the licensor’s approval of, advertising, packaging and marketing plans; •maintain minimum sales levels or make minimum guaranteed royalty payments; •actively promote the sale of the licensed product and maintain the availability of the licensed product throughout the license term; •spend a certain percentage of our sales of the licensed product on marketing and advertising for the licensed product; •sell the products we develop under the license only within a specified territory or within specified sales channels; •indemnify the licensor in the event of product liability or other claims related to the licensed product and advertising or othermaterials used to promote the licensed product; •obtain the licensor’s approval of the retail price of the licensed products; •sell the licensed products to the licensor at a discounted price or at the lowest price charged to our customers; •obtain the licensor’s consent prior to assigning or sub-licensing to third parties; and •provide notice to the licensor or obtain its approval of certain changes in control.If we breach any of these obligations or any other obligations set forth in any of our license agreements, we could be subject to monetary penaltiesand our rights under such license agreements could be terminated, either of which could have a material adverse effect on our business, financialcondition and results of operations.Our success is also partially dependent on the reputation of our licensors and the goodwill associated with their intellectual property, and the abilityof our licensors to protect and maintain the intellectual property rights that we use in connection with our products, all of which may be harmed byfactors outside our control. See also “If we are unable to obtain, maintain and protect our intellectual property rights, in particular trademarks andcopyrights, or if our licensors are unable to maintain and protect their intellectual property rights that we use in connection with our products, ourability to compete could be negatively impacted.”As a purveyor of licensed pop culture consumer products, we cannot assure you that we will be able to design and develop productsthat will be popular with consumers, or that we will be able to maintain the popularity of successful products.The interests of consumers evolve extremely quickly and can change dramatically from year to year. To be successful we must correctlyanticipate both the products and the movies, TV shows, video games, music, sports and other content releases (including the related characters),that will appeal to consumers and quickly develop19 and introduce products that can compete successfully for consumers’ limited time, attention and spending. Evolving consumer tastes and shiftinginterests, coupled with an ever changing and expanding pipeline of consumer products and content that compete for consumers’ interest andacceptance, create an environment in which some products and content can fail to achieve consumer acceptance, while others can be popularduring a certain period of time but then be rapidly replaced. As a result, consumer products, particularly those based on pop culture such as ours,can have short life cycles. In addition, given the growing market for digital products and the increasingly digital nature of pop culture, there is alsoa risk that consumer demand for physical products may decrease over time. If we devote time and resources to developing and marketingproducts that consumers do not find appealing enough to buy in sufficient quantities of our products to be profitable to us, our sales and profitsmay decline, and our business performance may be damaged. Similarly, if our product offerings fail to correctly anticipate consumer interests, oursales and earnings will be adversely affected.Additionally, our business is increasingly global and depends on interest in and acceptance of our products and our licensors’ brands byconsumers in diverse markets around the world with different tastes and preferences. As such, our success depends on our ability to successfullypredict and adapt to changing consumer tastes and preferences in multiple markets and geographies and to design products that can achievepopularity globally over a broad and diverse consumer audience. There is no guarantee that we will be able to successfully develop and marketproducts with global appeal.Consumer demand for pop culture products can and does shift rapidly and without warning. As a result, even if our product offerings are initiallysuccessful, there can be no guarantee that we will be able to maintain their popularity with consumers. Accordingly, our success will depend, inpart, on our ability to continually design and introduce new products that consumers find appealing. To the extent we are unable to do so, our salesand profitability will be adversely affected. This is particularly true given the concentration of our sales under certain of our brands, particularlyPop!. Sales of our Pop! branded products accounted for approximately 70%, 64% and 75% of our sales for the years ended December 31, 2017,2016 and 2015, respectively. If consumer demand for our Pop! branded products were to decrease, our business, financial condition and results ofoperations could be adversely affected unless we were able to develop and market additional products that were successful in achieving a similarlevel of consumer acceptance and that generated an equivalent amount of net sales at a comparable gross margin, which there is no guarantee wewould be able to do.Changes in the retail industry and markets for consumer products affecting our retail customers or retailing practices could negativelyimpact our business, financial condition and results of operations.Our products are primarily sold to consumers through retailers that are our direct customers or customers of our distributors. As such, changes inthe retail industry can negatively impact our business, financial condition and results of operations.Due to the challenging environment for traditional “brick-and-mortar” retail locations caused by declining in-store traffic, many retailers are closingphysical stores, and some traditional retailers are engaging in significant reorganizations, filing for bankruptcy and going out of business. Forexample, in September 2017, Toys “R” Us, Inc. and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of Title 11 of theUnited States Bankruptcy Code, and in March 2018, Toys “R” Us, Inc. announced the wind down of its U.S. operations and the potentialinsolvency proceedings of certain of its subsidiaries. Toys “R” Us, Inc. accounted for approximately 3.4%, 3.4% and 2.8% of our sales for theyears ended December 31, 2017, 2016 and 2015, respectively. In addition to furthering consolidation in the retail industry, such a trend could havea negative effect on the financial health of our retail customers and distributors, potentially causing them to experience difficulties in fulfilling theirpayment obligations to us or our distributors, reduce the amount of their purchases, seek extended credit terms or otherwise change theirpurchasing patterns, alter the manner in which they promote our products or the resources they devote to promoting and selling our products orcease doing business with us or our distributors. If any of our retail customers were to file for bankruptcy, we could be unable to collect amountsowed to us and could even be required to repay certain amounts paid to us prior to the bankruptcy filing. The occurrence of any of these eventswould have an adverse effect on our business, cash flows, financial condition and results of operations.20 If we do not effectively maintain and further develop our relationships with retail customers and distributors, our growth prospects,business and results of operations could be harmed.Historically, substantially all of our net sales have been derived from our retail customers and distributors, upon which we rely to reach theconsumers who are the ultimate purchasers of our products. In the United States, we primarily sell our products directly to specialty retailers,mass-market retailers and e-commerce sites. In international markets, we sell our products directly to similar retailers, primarily in Europe, throughour subsidiary Funko UK, Ltd. We also sell our products to distributors for sale to retailers in the United States and in certain countriesinternationally, typically in those countries in which we do not currently have a direct presence. Our top ten customers represented approximately45%, 63% and 60% of our sales for the years ended December 31, 2017, 2016 and 2015, respectively. GameStop, represented approximately 8%of our sales for the years ended December 31, 2017 and 12% of our sales for each of the years ended December 31, 2016 and 2015. Hot Topicrepresented approximately 9%, 9% and 10% of our sales for the years ended December 31, 2017, 2016 and 2015, respectively.We depend on retailers to provide adequate and attractive space for our products and point of purchase displays in their stores. We further dependon our retail customers to employ, educate and motivate their sales personnel to effectively sell our products. If our retail customers do notadequately display our products or choose to promote competitors’ products over ours, our sales could decrease, and our business could beharmed. Similarly, we depend on our distributors to reach retailers in certain market segments in the United States and to reach internationalretailers in countries where we do not have a direct presence. Our distributors generally offer products from several different companies, includingour competitors. Accordingly, we are at risk that these distributors may give higher priority to selling other companies’ products. If we were to losethe services of a distributor, we might need to find another distributor in that area, and there can be no assurance of our ability to do so in a timelymanner or on favorable terms.In addition, our business could be adversely affected if any of our retail customers or distributors were to reduce purchases of our products. Ourretail customers and distributors generally build inventories in anticipation of future sales and will decrease the size of their future product orders ifsales do not occur as rapidly as they anticipate. Our customers make no long-term commitments to us regarding purchase volumes and cantherefore freely reduce their purchases of our products. Any reduction in purchases of our products by our retail customers and distributors, or theloss of any key retailer or distributor, could adversely affect our net sales, operating results and financial condition.Furthermore, consumer preferences have shifted, and may continue to shift in the future, to sales channels other than traditional retail, including e-commerce, in which we have more limited experience, presence and development. Consumer demand for our products may be less in thesechannels than in traditional retail channels. In addition, our entry into new product categories and geographies has exposed, and may continue toexpose, us to new sales channels in which we have less expertise. If we are not successful in developing our e-commerce channel and other newsales channels, our net sales and profitability may be adversely affected.Our industry is highly competitive and the barriers to entry are low. If we are unable to compete effectively with existing or newcompetitors, our sales, market share and profitability could decline.Our industry is, and will continue to be, highly competitive. We compete with toy companies in many of our product categories, some of whichhave substantially more resources than us, stronger name recognition, longer operating histories and greater economies of scale. We alsocompete with numerous smaller domestic and foreign collectible product designers and manufacturers. Across our business, we face competitorswho are constantly monitoring and attempting to anticipate consumer tastes and trends, seeking ideas which will appeal to consumers andintroducing new products that compete with our products for consumer acceptance and purchase.In addition to existing competitors, the barriers to entry for new participants in our industry are low, and the increasing use of digital technology,social media and the internet to spark consumer interest has further increased the ability for new participants to enter our markets and hasbroadened the array of companies we compete with. New participants can gain access to retail customers and consumers and become asignificant source of competition for our products in a very short period of time. Additionally, since we do not have exclusive rights to any of theproperties we license or the related entertainment brands, our competitors, including those with more resources and greater economies of scale,can obtain licenses to design and sell products based on21 the same properties that we license, potentially on more favorable terms. Any of these competitors may be able to bring new products to marketmore quickly, respond more rapidly than us to changes in consumer preferences and produce products of higher quality or that can be sold at moreaccessible price points. To the extent our competitors’ products achieve greater market acceptance than our products, our business, financialcondition and results of operations will be adversely affected.In addition, certain of our licensors have reserved the rights to manufacture, distribute and sell identical or similar products to those we design andsell under our license agreements. These products could directly compete with our products and could be sold at lower prices than those at whichour products are sold, resulting in higher margins for our customers compared to our products, potentially lessening our customers’ demand for ourproducts and adversely affecting our sales and profitability.Furthermore, competition for access to the properties we license is intense, and we must vigorously compete to obtain licenses to the intellectualproperty we need to produce our products. This competition could lessen our ability to secure, maintain, and renew our existing licenses, or requireus to pay licensors higher royalties and higher minimum guaranteed payments in order to obtain new licenses or retain our existing licenses. Tothe extent we are unable to license properties on commercially reasonable terms, or on terms at least as favorable as our competitors, ourcompetitive position and demand for our products will suffer. Because our ability to compete for licensed properties is based largely on our abilityto increase fan engagement and generate royalty revenues for our licensors, any reduction in the demand for and sales of our products will furtherinhibit our ability to obtain licenses on commercially reasonable terms or at all. As a result, any such reduction in the demand for and sales of ourproducts could have a material adverse effect on our business, financial condition and results of operations.We also increasingly compete with toy companies and other product designers for shelf space at specialty, mass-market and other retailers. Ourretail customers will allocate shelf space and promotional resources based on the margins of our products for our customers, as well as their salesvolumes. If toy companies or other competitors produce higher margin or more popular merchandise than our products, our retail customers mayreduce purchases of our products and, in turn, devote less shelf space and resources to the sale of our products, which could have a materialadverse effect on our sales and profitability.We have experienced rapid growth in recent periods. If we fail to manage our growth effectively, our financial performance may suffer.We have experienced rapid growth over the last several years, which has placed a strain on our managerial, operational, product design anddevelopment, sales and marketing, administrative and financial infrastructure. For example, we increased our total number of full-time employeesfrom 66 as of December 31, 2013 to 586 as of December 31, 2017. As a result of the Underground Toys Acquisition in January 2017, we now havedistribution operations in the United Kingdom, our first distribution center outside of our headquarters in Everett, Washington. In June 2017, withthe Loungefly Acquisition, we added an additional distribution center in Chatsworth, California. Our success will depend in part upon our ability tomanage our growth effectively. To do so, we must continue to increase the productivity of our existing employees and to hire, train and managenew employees as needed, which we may not be able to do successfully or without compromising our corporate culture. See “Our success iscritically dependent on the efforts and dedication of our officers and other employees, and the loss of any one or more key employees, or ourinability to attract and retain qualified personnel and maintain our corporate culture, could adversely affect our business.” To manage domestic andinternational growth of our operations and personnel, we will need to continue to improve our product development, supply chain, financial andmanagement controls and our reporting processes and procedures and implement more extensive and integrated financial and businessinformation systems. These additional investments will increase our operating costs, which will make it more difficult for us to offset any futurerevenue shortfalls by reducing expenses in the short term. Moreover, if we fail to scale our operations or manage our growth successfully, ourbusiness, financial condition and operating results could be adversely affected.Our gross margin may not be sustainable and may fluctuate over time.Our gross margin has historically fluctuated, primarily as a result of changes in product mix, changes in our costs, price competition andacquisitions. For the years ended December 31, 2017, 2016 and 2015, our gross margins (exclusive of depreciation and amortization) were 38.5%,34.3% and 35.7%, respectively. Our current gross22 margin may not be sustainable, and our gross margin may decrease over time. A decrease in gross margin can be the result of numerous factors,including, but not limited to: •changes in customer, geographic, or product mix; •introduction of new products, including our expansion into additional product categories; •increases in the royalty rates under our license agreements; •inability to meet minimum guaranteed royalties; •increases in, or our inability to reduce, our costs; •entry into new markets or growth in lower margin markets; •increases in raw materials, labor or other manufacturing- and inventory-related costs; •increases in transportation costs, including the cost of fuel; •increased price competition; •changes in the dynamics of our sales channels, including those affecting the retail industry and the financial health of ourcustomers; •increases in sales discounts and allowances provided to our customers; •acquisitions of companies with a lower gross margin than ours; and •overall execution of our business strategy and operating plan.If any of these factors, or other factors unknown to us at this time, occur, then our gross margin could be adversely affected, which could have amaterial adverse effect on our business, financial condition and results of operations.Our business is largely dependent on content development and creation by third parties.We spend considerable resources in designing and developing products in conjunction with planned movie, TV show, video game, music and othercontent releases by various third-party content providers. The timing of the development and release, and the ultimate consumer interest in andsuccess of, such content depends on the efforts of these third parties, as well as conditions in the media and entertainment industry generally. Wedo not control when or if any particular project will be greenlit, developed or released, and the creators of such projects may change their plans withrespect to release dates or cancel development altogether. This can make it difficult for us to successfully develop and market products inconjunction with a given content release, given the lead times involved in product development and successful marketing efforts. Additionally,unforeseen factors in the media and entertainment industry, including labor strikes and unforeseen developments with talent, including accusationsof a star’s wrongdoing, may also delay or cancel the release of such projects. Any such delay or cancellation may decrease the number ofproducts we sell and harm our business.We may not realize the full benefit of our licenses if the properties we license have less market appeal than expected or if sales from theproducts that use those properties are not sufficient to satisfy the minimum guaranteed royalties.We seek to fulfill consumer preferences and interests by designing and selling products based on properties owned by third parties and licensed tous. The popularity of the properties we license can significantly affect our sales and profitability. If we produce products based on a particularcontent release, the success of the movie, TV show or video game has a critical impact on the level of consumer interest in the associatedproducts we are offering. Although we license a wide variety of properties, sales of products tied to major movie franchises have been significantcontributors to our business. In addition, the theatrical duration of movie releases has decreased over time and we expect this trend to continue.This may make it increasingly difficult for us to sell products based on such properties or lead our customers to reduce demand for our products tominimize inventory risk. If the performance of one or more of such movie franchises failed to meet expectations or if there was a shift in consumertastes away from such franchises generally, our results of operations could be adversely affected. In addition, competition in our industry foraccess to licensed properties can lessen our ability to secure, maintain,23 and renew our existing licenses on commercially reasonable terms, if at all, and to attract and retain the talented employees necessary to design,develop and market successful products based on these properties.Our license agreements usually also require us to pay minimum royalty guarantees, which may in some cases be greater than what we areultimately able to recoup from actual sales. When our licensing agreements require minimum royalty guarantees, we accrue a royalty liabilitybased on the contractually required percentage, as revenues are earned. In the case that a minimum royalty guarantee is not expected to be metthrough sales, we will accrue up to the minimum amount required to be paid. For the years ended December 31, 2017, 2016 and 2015, we recordedreserves of $2.9 million, $0.3 million and $0.1 million, respectively, related to prepaid royalties we estimated would not be recovered through sales.Acquiring or renewing licenses may require the payment of minimum guaranteed royalties that we consider to be too high to be profitable, whichmay result in losing licenses that we currently hold when they become available for renewal, or missing business opportunities for new licenses.Additionally, we have no guarantee that any particular property we license will translate into a successful product. Products tied to a particularcontent release may be developed and released before demand for the underlying content is known. The underperformance of any such productmay result in reduced sales and operating profit for us.Our success depends, in part, on our ability to successfully manage our inventories.We must maintain sufficient inventory levels to operate our business successfully, but we must also avoid accumulating excess inventory, whichincreases working capital needs and lowers gross margin. We obtain substantially all of our inventory from third-party manufacturers locatedoutside the United States and must typically order products well in advance of the time these products will be offered for sale to our customers. Asa result, it may be difficult to respond to changes in consumer preferences and market conditions, which, for pop culture products, can changerapidly. If we do not accurately anticipate the popularity of certain products, then we may not have sufficient inventory to meet demand.Alternatively, if demand or future sales do not reach forecasted levels, we could have excess inventory that we may need to hold for a long periodof time, write down, sell at prices lower than expected or discard. If we are not successful in managing our inventory, our business, financialcondition and results of operations could be adversely affected.We may also be negatively affected by changes in retailers’ inventory policies and practices. As a result of the desire of retailers to more closelymanage inventory levels, there is a growing trend to make purchases on a “just-in-time” basis. This requires us to more closely anticipate demandand could require us to carry additional inventory. Policies and practices of individual retailers may adversely affect us as well, including thoserelating to access to and time on shelf space, price demands, payment terms and favoring the products of our competitors. Our retail customersmake no binding long-term commitments to us regarding purchase volumes and make all purchases by delivering purchase orders. Any retailercan therefore freely reduce its overall purchase of our products, including the number and variety of our products that it carries, and reduce theshelf space allotted for our products. If demand or future sales do not reach forecasted levels, we could have excess inventory that we may needto hold for a long period of time, write down, sell at prices lower than expected or discard. If we are not successful in managing our inventory, ourbusiness, financial condition and results of operations could be adversely affected.An inability to develop and introduce products in a timely and cost-effective manner may damage our business.Our sales and profitability depend on our ability to bring products to market to meet customer demands and before consumers begin to loseinterest in a given property. There is no guarantee that we will be able to manufacture, source and ship new or continuing products in a timelymanner and on a cost-effective basis to meet constantly changing consumer demands. This risk is heightened by our customers’ increasinglycompressed shipping schedules and the seasonality of our business. Furthermore, our license agreements typically require us to obtain thelicensor’s approval of the products we develop under a particular license prior to making any sales, which can have the effect of delaying ourproduct releases. Additionally, for products based on properties in our movie, TV show and video game categories, this risk may also beexacerbated by our need to introduce new products on a timeframe that corresponds with a particular content release. These time constraints maylead our customers to reduce their demand for these products in order to minimize their inventory risk. Moreover, unforeseen delays or difficultiesin the development process, significant increases in the planned cost of24 development, manufacturing delays or changes in anticipated consumer demand for our products and new brands may cause the introduction datefor products to be later than anticipated, may reduce or eliminate the profitability of such products or, in some situations, may cause a product ornew brand introduction to be discontinued.If we are unable to obtain, maintain and protect our intellectual property rights, in particular trademarks and copyrights, or if ourlicensors are unable to maintain and protect their intellectual property rights that we use in connection with our products, our ability tocompete could be negatively impacted.Our intellectual property is a valuable asset of our business. As of December 31, 2017, we owned approximately 34 registered U.S. trademarks,105 registered international trademarks, 12 pending U.S. trademark applications and 21 pending international trademark applications. The marketfor our products depends to a significant extent upon the value associated with our product design, our proprietary brands and the properties welicense. Although certain of our intellectual property is registered in the United States and in several of the foreign countries in which we operate,there can be no assurances with respect to the rights associated with such intellectual property in those countries, including our ability to register,use, maintain or defend key trademarks and copyrights. We rely on a combination of trademark, trade dress, copyright and trade secret laws, aswell as confidentiality procedures and contractual restrictions, to establish and protect our intellectual property or other proprietary rights. However,these laws, procedures and restrictions provide only limited and uncertain protection and any of our intellectual property rights may be challenged,invalidated, circumvented, infringed or misappropriated, including by counterfeiters and parallel importers. In addition, our intellectual propertyportfolio in many foreign countries is less extensive than our portfolio in the United States, and the laws of foreign countries, including manyemerging markets in which our products are produced or sold, may not protect our intellectual property rights to the same extent as the laws of theUnited States. The costs required to protect our trademarks and copyrights may be substantial.In addition, we may fail to apply for, or be unable to obtain, protection for certain aspects of the intellectual property used in or beneficial to ourbusiness. Further, we cannot provide assurance that our applications for trademarks, copyrights and other intellectual property rights will begranted, or, if granted, will provide meaningful protection. In addition, third parties have in the past and could in the future bring infringement,invalidity or similar claims with respect to any of our current trademarks and copyrights, or any trademarks or copyrights that we may seek toobtain in the future. Any such claims, whether or not successful, could be extremely costly to defend, divert management’s attention andresources, damage our reputation and brands, and substantially harm our business and results of operations.In order to protect or enforce our intellectual property and other proprietary rights, or to determine the enforceability, scope or validity of theintellectual or proprietary rights of others, we may initiate litigation or other proceedings against third parties. Any lawsuits or proceedings that weinitiate could be expensive, take significant time and divert management’s attention from other business concerns. Litigation and otherproceedings also put our intellectual property at risk of being invalidated, or if not invalidated, may result in the scope of our intellectual propertyrights being narrowed. In addition, our efforts to try to protect and defend our trademarks and copyrights may be ineffective. Additionally, we mayprovoke third parties to assert claims against us. We may not prevail in any lawsuits or other proceedings that we initiate, and the damages orother remedies awarded, if any, may not be commercially valuable. The occurrence of any of these events may have a material adverse effect onour business, financial condition and results of operations.In addition, most of our products bear the trademarks and other intellectual property rights of our licensors, and the value of our products isaffected by the value of those rights. Our licensors’ ability to maintain and protect their trademarks and other intellectual property rights is subjectto risks similar to those described above with respect to our intellectual property. We do not control the protection of the trademarks and otherintellectual property rights of our licensors and cannot ensure that our licensors will be able to secure or protect their trademarks and otherintellectual property rights. The loss of any of our significant owned or licensed trademarks, copyrights or other intellectual property could have amaterial adverse effect on our business, financial condition and results of operations. In addition, our licensors may engage in activities orotherwise be subject to negative publicity that could harm their reputation and impair the value of the intellectual property rights we license fromthem, which could reduce consumer demand for our products and adversely affect our business financial condition and results of operations.25 Our success depends on our ability to operate our business without infringing, misappropriating or otherwise violating the trademarks,copyrights and proprietary rights of other parties.Our commercial success depends at least in part on our ability to operate without infringing, misappropriating or otherwise violating the trademarks,copyrights and other proprietary rights of others. However, we cannot be certain that the conduct of our business does not and will not infringe,misappropriate or otherwise violate such rights. Many companies have employed intellectual property litigation as a way to gain a competitiveadvantage, and to the extent we gain greater visibility and market exposure as a public company, we may also face a greater risk of being thesubject of such litigation. For these and other reasons, third parties may allege that our products or activities, including products we make underlicense, infringe, misappropriate or otherwise violate their trademark, copyright or other proprietary rights. While we typically receive intellectualproperty infringement indemnities from our licensors, the indemnities are often limited to third-party copyright infringement claims to the extentarising from our use of the licensed material. Defending against allegations and litigation could be expensive, take significant time, divertmanagement’s attention from other business concerns, and delay getting our products to market. In addition, if we are found to be infringing,misappropriating or otherwise violating third-party trademark, copyright or other proprietary rights, we may need to obtain a license, which may notbe available on commercially reasonable terms or at all, or may need to redesign or rebrand our products, which may not be possible. We mayalso be required to pay substantial damages or be subject to a court order prohibiting us and our customers from selling certain products orengaging in certain activities. Any claims of violating others’ intellectual property, even those without merit, could therefore have a materialadverse effect on our business, financial condition and results of operations.Our success is critically dependent on the efforts and dedication of our officers and other employees, and the loss of one or more keyemployees, or our inability to attract and retain qualified personnel and maintain our corporate culture, could adversely affect ourbusiness.Our officers and employees are at the heart of all of our efforts. It is their skill, creativity and hard work that drive our success. In particular, oursuccess depends to a significant extent on the continued service and performance of our senior management team, including our Chief ExecutiveOfficer, Brian Mariotti. We are dependent on his talents and believe he is integral to our relationships with our licensors and certain of our key retailcustomers. The loss of any member of our senior management team, or of any other key employees, could impair our ability to execute ourbusiness plan and could therefore have a material adverse effect on our business, financial condition and results of operations. We do notcurrently maintain key man life insurance policies on any member of our senior management team or on our other key employees.In addition, competition for qualified personnel is intense. We compete with many other potential employers in recruiting, hiring and retaining oursenior management team and our many other skilled officers and other employees around the world. Our headquarters is located near Seattle andcompetition in the Seattle area for qualified personnel, particularly those with technology-related skills and experience, is intense due to theincreasing number of technology and e-commerce companies with a large or growing presence in Seattle, some of whom have greater resourcesthan us and may be located closer to the city than we are.Furthermore, as we continue to grow our business and hire new employees, it may become increasingly challenging to hire people who willmaintain our corporate culture. We believe our corporate culture, which fosters speed, teamwork and creativity, is one of our key competitivestrengths. As we continue to grow, we may be unable to identify, hire or retain enough people who will maintain our corporate culture, includingthose in management and other key positions. Our corporate culture could also be adversely affected by the increasingly global distribution of ouremployees, as well as their increasingly diverse skill sets. If we are unable to maintain the strength of our corporate culture, our competitive abilityand our business may be adversely affected.Our operating results may fluctuate from quarter to quarter and year to year due to the seasonality of our business, as well as due to thetiming of new product releases.The businesses of our retail customers are highly seasonal, with a majority of retail sales occurring during the period from October throughDecember in anticipation of the holiday season. As a consequence, we have experienced moderate seasonality in our business. Approximately60.5%, 58.7% and 64.6%, of our net sales for the years ended December 31, 2017, 2016 and 2015, respectively, were made in the third and fourthquarters, as our customers build up their inventories in anticipation of the holiday season.26 This seasonal pattern requires significant use of working capital, mainly to manufacture inventory during the portion of the year prior to the holidayseason, and requires accurate forecasting of demand for products during the holiday season in order to avoid losing potential sales of popularproducts or producing excess inventory of products that are less popular with consumers. In addition, as a result of the seasonal nature of ourbusiness, we would be significantly and adversely affected, in a manner disproportionate to the impact on a company with sales spread moreevenly throughout the year, by unforeseen events such as a terrorist attack or economic shock that harm the retail environment or consumerbuying patterns during our key selling season, or by events such as strikes or port delays that interfere with the shipment of goods during thecritical months leading up to the holiday shopping season.In addition, our results of operations may fluctuate significantly from quarter to quarter or year to year depending on the timing of new productreleases and related content releases. Sales of a certain product or group of products tied to a particular content release can dramatically increaseour net sales in any given quarter or year. For example, in 2016, we introduced products based on the video game property “Five Nights atFreddy’s,” sales of which accounted for approximately 8% and 15% of 2017 and 2016 net sales, respectively. The timing and mix of products wesell in any given year will depend on various factors, including the timing and popularity of new releases by third-party content providers and ourability to license properties based on these releases.Our results of operations may also fluctuate as a result of factors such as the delivery schedules set by our customers and holiday shut downschedules set by our third-party manufacturers. Additionally, the rapid growth we have experienced in recent years may have masked the fulleffects of seasonal factors on our business to date, and as such, these factors may have a greater effect on our results of operations in futureperiods.Our use of third-party manufacturers to produce our products presents risks to our business.We use third-party manufacturers to manufacture all of our products, and have historically concentrated production with a small number ofmanufacturers and factories. As a result, the loss or unavailability of one of our manufacturers or one of the factories in which our products areproduced, even on a temporary basis, could have a negative impact on our business, financial condition and results of operations. This risk isexacerbated by the fact that we do not have written contracts with our manufacturers. While we believe our external sources of manufacturingcould be shifted, if necessary, to alternative sources of supply, we would require a significant period of time to make such a shift. Because webelieve our products represent a significant percentage of the total capacity of each factory in which they are produced, such a shift may requireus to establish relationships with new manufacturers, which we may not be able to do on a timely basis, on similar terms, or at all. We may alsobe required to seek out additional manufacturers in response to increased demand for our products, as our current manufacturers may not have thecapacity to increase production. If we were prevented from or delayed in obtaining a material portion of the products produced by ourmanufacturers, or if we were required to shift manufacturers (assuming we would be able to do so), our sales and profitability could be significantlyreduced.In addition, while we require that our products supplied by third-party manufacturers be produced in compliance with all applicable laws andregulations, and we have the right to monitor compliance by our third-party manufacturers with our manufacturing requirements and to oversee thequality control process at our manufacturers’ factories, there is always a risk that one or more of our third-party manufacturers will not comply withour requirements, and that we will not immediately discover such non-compliance. For example, the Consumer Product Safety Improvement Act of2008, or the CPSIA, limits the amounts of lead and phthalates that are permissible in certain products and requires that our products be tested toensure that they do not contain these substances in amounts that exceed permissible levels. In the past, products manufactured by certain of ourthird-party manufacturers have tested positive for phthalates. Though the amount was not in excess of the amount permissible under the CPSIA,we cannot guarantee that products made by our third-party manufacturers will not in the future contain phthalates in excess of permissibleamounts, or will not otherwise violate the CPSIA, other consumer or product safety requirements, or labor or other applicable requirements. Anyfailure of our third-party manufacturers to comply with such requirements in manufacturing products for us could result in damage to our reputation,harm our brand image and sales of our products and potentially create liability for us.Monitoring compliance by independent manufacturers is complicated by the fact that expectations of ethical business practices continually evolve,may be substantially more demanding than applicable legal requirements and are driven in part by legal developments and by diverse groupsactive in publicizing and organizing public27 responses to perceived ethical shortcomings. Accordingly, we cannot predict how such expectations might develop in the future and cannot becertain that our manufacturing requirements, even if complied with, would satisfy all parties who are active in monitoring and publicizing perceivedshortcomings in labor and other business practices worldwide.Additionally, the third-party manufacturers that produce most of our products are located in China, Vietnam and Mexico. As a result, we aresubject to various risks resulting from our international operations. See “Our substantial sales and manufacturing operations outside the UnitedStates subject us to risks associated with international operations.”Our operations, including our corporate headquarters, primary distribution facilities and third-party manufacturers, are concentrated incertain geographic regions, which makes us susceptible to adverse conditions in those regions.Our corporate headquarters and primary distribution facilities are located in Everett, Washington. We also have additional warehouse facilities andoffices located in Maldon, England and Chatsworth, California. In addition, the factories that produce most of our products are located in China,Vietnam and Mexico. As a result, our business may be more susceptible to adverse conditions in these regions than the operations of moregeographically diverse competitors. Such conditions could include, among others, adverse economic and labor conditions, as well as demographictrends. Furthermore, Everett is the location from which most of the products we sell are received, stored and shipped to our customers. Wedepend heavily on ocean container delivery to receive products from our third-party manufacturers located in Asia and contracted third-partydelivery service providers to deliver our products to our Everett distribution facilities. Any disruption to or failures in these delivery services,whether as a result of extreme or severe weather conditions, natural disasters, labor unrest or otherwise, affecting western Washington in particularor the West Coast in general, could significantly disrupt our operations, damage or destroy our equipment and inventory and cause us to incuradditional expenses, any of which could have a material adverse effect on our business, financial condition and results of operations. For example,in the fall of 2014, longshoreman work stoppages created a significant backlog of cargo containers at ports. We experienced delays in theshipment of our products as a result of this backlog and were unable to meet our planned inventory allocations for a limited period of time.Although we possess insurance for damage to our property and the disruption of our business, this insurance, and in particular earthquakeinsurance, which is subject to various limitations and requires large deductibles or co-payments, may not be sufficient to cover all of our potentiallosses, and may be cancelled by us in the future or otherwise cease to be available to us on reasonable terms or at all. Similarly, natural disastersand other adverse events or conditions affecting east or southeast Asia, where most of our products are produced, could halt or disrupt theproduction of our products, impair the movement of finished products out of those regions, damage or destroy the molds and tooling necessary tomake our products and otherwise cause us to incur additional costs and expenses, any of which could also have a material adverse effect on ourbusiness, financial condition and results of operations.Our substantial sales and manufacturing operations outside the United States subject us to risks associated with internationaloperations.We operate facilities and sell products in numerous countries outside the United States. Sales to our international customers comprisedapproximately 27%, 19% and 24% of our sales for the years ended December 31, 2017, 2016 and 2015, respectively. We expect sales to ourinternational customers to account for an increasing portion of our sales in future fiscal years, including as a result of the Underground ToysAcquisition and the formation of our subsidiary Funko UK, Ltd., through which we now sell directly to certain of our customers in Europe, theMiddle East and Africa. In fact, over time, we expect our international sales and operations to continue to grow both in dollars and as a percentageof our overall business as a result of a key business strategy to expand our presence in emerging and underserved international markets.Additionally, as discussed above, we use third-party manufacturers located in China, Vietnam and Mexico to produce most of our products. Theseinternational sales and manufacturing operations, including operations in emerging markets, are subject to risks that may significantly harm oursales, increase our costs or otherwise damage our business, including: •currency conversion risks and currency fluctuations; •limitations on the repatriation of earnings;28  •potential challenges to our transfer pricing determinations and other aspects of our cross-border transactions, which can materiallyincrease our taxes and other costs of doing business; political instability, civil unrest and economic instability; •greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; •complications in complying with different laws and regulations in varying jurisdictions, including the U.S. Foreign Corrupt PracticesAct (“FCPA”), the U.K. Bribery Act of 2010, similar anti-bribery and anti-corruption laws and local and international environmental,health and safety laws, and in dealing with changes in governmental policies and the evolution of laws and regulations and relatedenforcement; •difficulties understanding the retail climate, consumer trends, local customs and competitive conditions in foreign markets whichmay be quite different from the United States; •natural disasters and the greater difficulty and cost in recovering therefrom; •transportation delays and interruptions; •difficulties in moving materials and products from one country to another, including port congestion, strikes and other transportationdelays and interruptions; •increased investment and operational complexity to make our products compatible with systems in various countries and compliantwith local laws; •changes in international labor costs and other costs of doing business internationally; and •the imposition of and changes in tariffs, quotas, border adjustment taxes or other protectionist measures by any major country ormarket in which we operate, which could make it significantly more expensive and difficult to import products into that country ormarket, raise the cost of such products, decrease our sales of such products or decrease our profitability.Because of the importance of international sales, sourcing and manufacturing to our business, our financial condition and results of operationscould be significantly harmed if any of the risks described above were to occur or if we are otherwise unsuccessful in managing our increasinglyglobal business.The results of the United Kingdom’s referendum on withdrawal from the European Union may have a negative effect on global economicconditions, financial markets and our business.We make sales to our European customers primarily through our subsidiary Funko UK, Ltd. In June 2016, a majority of voters in the UnitedKingdom elected to withdraw from the European Union in a national referendum and, in March 2017, the government of the United Kingdomformally initiated the withdrawal process. The terms of any withdrawal are subject to a negotiation period that could last at least two years after thewithdrawal process was initiated. These events have created significant uncertainty about the future relationship between the United Kingdom andthe European Union, and have given rise to calls for certain regions within the United Kingdom to preserve their place in the European Union byseparating from the United Kingdom, as well as for the governments of other European Union member states to consider withdrawal.These developments, or the perception that any of them could occur, have had and may continue to have a material adverse effect on globaleconomic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of keymarket participants to operate in certain financial markets. Asset valuations, currency exchange rates and credit ratings may be especially subjectto increased market volatility. Lack of clarity about future United Kingdom laws and regulations as the United Kingdom determines which EuropeanUnion laws to replace or replicate in the event of a withdrawal, including financial laws and regulations, tax and free trade agreements, intellectualproperty rights, privacy and data protection, environmental, health and safety laws and regulations and employment laws, could increase costs anddepress economic activity. If the United Kingdom and the European Union are unable to negotiate acceptable withdrawal terms or if otherEuropean Union member states pursue withdrawal, barrier-free access between the United Kingdom and other European Union member states oramong the European economic area overall could be diminished or eliminated. Any of these factors could have a material adverse effect on ourbusiness, financial condition and results of operations.29 Recent U.S. tax legislation significantly changed U.S. federal income tax rules and may materially adversely affect our financialcondition, results of operations and cash flows.Recently enacted U.S. tax legislation, the Tax Cuts and Jobs Act (the “Tax Act”) has significantly changed U.S. federal income taxation, includingreducing the U.S. corporate income tax rate, limiting certain interest deductions, imposing a one-time transition tax on all undistributed earningsand profits of certain non-U.S. entities and other additional taxes with respect to certain non-U.S. earnings, permitting full expensing of certaincapital expenditures, adopting elements of a territorial tax system, revising the rules governing net operating losses and the rules governing foreigntax credits, and introducing new anti-base erosion provisions. Many of these changes are effective immediately, without any transition periods orgrandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technicalcorrections, as well as interpretations and implementing regulations by the Treasury and Internal Revenue Service, any of which could lessen orincrease certain adverse impacts of the legislation. In addition, it is unclear how these U.S. federal income tax changes may affect state and localtaxation.While our analysis and interpretation of this legislation is preliminary and ongoing, based on our current evaluation, we expect a meaningful impactfrom the Tax Act primarily due to the lower U.S. federal rate of 21%. Of the $1.5 million income tax expense for the year ended December 31,2017, $4.7 million is a provisional amount associated with the items relating to the Tax Act that we could reasonably estimate. This expenseincludes the revaluation of our net deferred tax assets based on the new U.S. federal income tax rate of 21%. We are still analyzing the Tax Actand refining our calculations, which could potentially impact the measurement of our tax balances and reduce any anticipated benefits of the TaxAct.Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns couldadversely affect our operating results and financial condition.We are subject to income taxes in the United States and the United Kingdom, and our tax liabilities will be subject to the allocation of expenses indiffering jurisdictions. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: •changes in the valuation of our deferred tax assets and liabilities; •expected timing and amount of the release of any tax valuation allowances; •tax effects of equity-based compensation; •costs related to intercompany restructurings; or •changes in tax laws, regulations or interpretations thereof.In addition, we may be subject to audits of our income, sales and other transaction taxes by the U.K., U.S. federal and state authorities.Outcomes from these audits could have an adverse effect on our operating results and financial condition.Changes in foreign currency exchange rates can significantly impact our reported financial performance.Our increasingly global operations mean we produce and buy products, and sell products, in many different markets with many differentcurrencies. As a result, if the exchange rate between the U.S. dollar and a local currency for an international market in which we have significantsales or operations changes, our financial results as reported in U.S. dollars may be meaningfully impacted even if our business in the localcurrency is not significantly affected. Similarly, our expenses can be significantly impacted, in U.S. dollar terms, by exchange rates, meaning theprofitability of our business in U.S. dollar terms can be negatively impacted by exchange rate movements which we do not control. In recent years,certain key currencies, such as the euro and the British pound sterling, depreciated significantly compared to the U.S. dollar. Depreciation in keycurrencies during 2018 and beyond may have a significant negative impact on our sales and earnings as they are reported in U.S. dollars.30 Global and regional economic downturns that negatively impact the retail and credit markets, or that otherwise damage the financialhealth of our retail customers and consumers, can harm our business and financial performance.We design, manufacture and market a wide variety of consumer products worldwide through sales to our retail customers and directly toconsumers. Our financial performance is impacted by the level of discretionary consumer spending in the markets in which we operate.Recessions, credit crises and other economic downturns, or disruptions in credit markets, in the United States and in other markets in which ourproducts are sold can result in lower levels of economic activity, lower employment levels, less consumer disposable income, and lower consumerconfidence. The retail industry is subject to volatility, especially during uncertain economic conditions. A downturn in the retail industry in particularmay disproportionately affect us because a substantial majority of our net sales are to retail customers. Significant increases in the costs of otherproducts which are required by consumers, such as gasoline, home heating fuels, or groceries, may reduce household spending on our products.Such cost increases and weakened economic conditions may result from any number of factors, including terrorist attacks, wars and otherconflicts, natural disasters, increases in critical commodity prices or labor costs, or the prospect of such events. Such a weakened economic andbusiness climate, as well as consumer uncertainty created by such a climate, could harm our sales and profitability. Similarly, reductions in thevalue of key assets held by consumers, such as their homes or stock market investments, can lower consumer confidence and consumerspending power. Any of these factors can reduce the amount which consumers spend on the purchase of our products. This in turn can reduce oursales and harm our financial performance and profitability.In addition to experiencing potentially lower sales of our products during times of economic difficulty, in an effort to maintain sales during suchtimes, we may need to reduce the price of our products, increase our promotional spending or sales allowances, or take other steps to encourageretailer and consumer purchases of our products. Those steps may lower our net sales or increase our costs, thereby decreasing our operatingmargins and lowering our profitability.Our business depends in large part on our vendors and outsourcers, and our reputation and ability to effectively operate our businessmay be harmed by actions taken by these third parties outside of our control.We rely significantly on vendor and outsourcing relationships with third parties for services and systems including manufacturing, transportation,logistics and information technology. Any shortcoming of one of our vendors or outsourcers, particularly one affecting the quality of these servicesor systems, may be attributed by customers to us, thus damaging our reputation and brand value, and potentially affecting our results ofoperations. In addition, problems with transitioning these services and systems to, or operating failures with, these vendors and outsourcers couldcause delays in product sales, reduce the efficiency of our operations and require significant capital investments to remediate.We are subject to various government regulations and may be subject to additional regulations in the future, violation of which couldsubject us to sanctions or otherwise harm our business.As a company that designs and sells consumer products, we are subject to significant government regulation, including, in the United States,under the Consumer Product Safety Act, the Federal Hazardous Substances Act, the CPSIA and the Flammable Fabrics Act, as well as underproduct safety and consumer protection statutes in our international markets. There can be no assurance that we will be in compliance, and failureto comply with these acts could result in sanctions which could have a negative impact on our business, financial condition and results ofoperations. This risk is exacerbated by our reliance on third parties to manufacture our products. See “Our use of third-party manufacturers toproduce our products presents risks to our business.”Governments and regulatory agencies in the markets in which we manufacture and sell products may enact additional regulations relating toproduct safety and consumer protection in the future and may also increase the penalties for failing to comply with such regulations. In addition,one or more of our customers might require changes in our products, such as the non-use of certain materials, in the future. Complying with anysuch additional regulations or requirements could impose increased costs on our business. Similarly, increased penalties for non-compliance couldsubject us to greater expense in the event any of our products were found to not comply with such regulations. Such increased costs or penaltiescould harm our business.31 As discussed above, our international operations subject us to a host of other governmental regulations throughout the world, including antitrust,customs and tax requirements, anti-boycott regulations, environmental regulations and the FCPA. Complying with these regulations imposes costson us which can reduce our profitability, and our failure to successfully comply with any such legal requirements could subject us to monetaryliabilities and other sanctions that could further harm our business and financial condition. See “Our substantial sales and manufacturingoperations outside the United States subject us to risks associated with international operations.”We could be subject to future product liability suits or product recalls which could have a significant adverse effect on our financialcondition and results of operations.As a company that designs and sells consumer products, we may be subject to product liability suits or involuntary product recalls, or may chooseto voluntarily conduct a product recall. While costs associated with product liability claims and product recalls have generally not been material toour business, the costs associated with future product liability claims or product recalls in any given fiscal year, individually or in the aggregate,could be significant. In addition, any product recall, regardless of the direct costs of the recall, could harm consumer perceptions of our products,subject us to additional government scrutiny, divert development and management resources, adversely affect our business operations andotherwise put us at a competitive disadvantage compared to other companies in our industry, any of which could have a significant adverse effecton our financial condition and results of operations.We are currently subject to securities class action litigation and may be subject to similar or other litigation in the future, all of whichwill require significant management time and attention, result in significant legal expenses and may result in unfavorable outcomes,which may have a material adverse effect on our business, operating results and financial condition, and negatively affect the price ofour Class A common stock.We are, and may in the future become, subject to various legal proceedings and claims that arise in or outside the ordinary course of business.For example, on November 16, 2017, a purported stockholder of the Company filed a putative class action lawsuit in the Superior Court ofWashington in and for King County against us, certain of our officers and directors, and the underwriters of our IPO, entitled Robert Lowinger v.Funko, Inc., et. al. In January and March 2018, four additional putative class action lawsuits were filed, three in the Superior Court of Washingtonin and for King County and one in the Superior Court of Washington in and for Snohomish County. Two of the lawsuits, Surratt v. Funko, Inc. et. al.(filed on January 16, 2018) and Baskin v. Funko, Inc. et. al. (filed on January 30, 2018) were filed against us and certain of our officers anddirectors. The third, The Ronald and Maxine Linde Foundation v. Funko et. al. (filed on January 18, 2018) was filed against us, certain of ourofficers and directors, ACON, Fundamental and certain other defendants. The fourth, Berkelhammer v. Funko, Inc. et. al. (filed on March 13, 2018)was filed against us, certain of our officers and directors, and ACON. The complaints allege that we violated Sections 11, 12, and 15 of theSecurities Act of 1933, as amended, by making allegedly materially misleading statements, and by omitting material facts necessary to make thestatements made therein not misleading. The lawsuits seek, among other things, compensatory statutory damages and rescissory damages inaccount of the consideration paid for our Class A common stock by plaintiff and members of the putative class, as well as attorneys’ fees andcosts.The results of the securities class action lawsuit and any future legal proceedings cannot be predicted with certainty. Also, our insurance coveragemay be insufficient, our assets may be insufficient to cover any amounts that exceed our insurance coverage, and we may have to pay damageawards or otherwise may enter into settlement arrangements in connection with such claims. Any such payments or settlement arrangements in current or future litigation could have a material adverse effect on our business, operating results or financial condition. Even if the plaintiffs’claims are not successful, current or future litigation could result in substantial costs and significantly and adversely impact our reputation anddivert management’s attention and resources, which could have a material adverse effect on our business, operating results and financialcondition, and negatively affect the price of our Class A common stock. In addition, such lawsuits may make it more difficult to finance ouroperations.32 Failure to comply with anti-corruption and anti-bribery laws could result in fines, criminal penalties and materially adversely affect ourbusiness, financial condition and results of operations.A significant risk resulting from our global operations is compliance with a wide variety of U.S. federal and state and non-U.S. laws, regulationsand policies, including laws related to anti-corruption, anti-bribery and laundering. The FCPA, the U.K. Bribery Act of 2010 and similar anti-corruption and anti-bribery laws in other jurisdictions generally prohibit companies, their officers, directors, employees and third-partyintermediaries, business partners, and agents from making improper payments or other improper things of value to government officials or otherpersons. There has been an increase in anti-bribery and anti-corruption law enforcement activity in recent years, with more frequent and aggressiveinvestigations and enforcement proceedings by both the U.S. Department of Justice and the SEC, increased enforcement activity by non-U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals. We operate in parts of the world thatare considered high-risk from an anti-bribery and anti-corruption perspective, and strict compliance with anti-bribery and anti-corruption laws mayconflict with local customs and practices. We cannot assure you that our internal controls, policies and procedures will protect us from improperconduct by our officers, directors, employees, third-party intermediaries, business partners or agents. To the extent that we learn that any of theseparties do not adhere to our internal control policies, we are committed to taking appropriate remedial action. In the event that we believe or havereason to believe that any such party has or may have violated such laws, we may be required to investigate or have outside counsel investigatethe relevant facts and circumstances, and detecting, investigating and resolving actual or alleged violations can be expensive and require asignificant diversion of time, resources and attention from senior management. Any violation of U.S. federal and state and non-U.S. anti-briberyand anti-corruption laws, regulations and policies could result in substantial fines, sanctions, civil or criminal penalties, and curtailment ofoperations in the U.S. or other applicable jurisdictions. In addition, actual or alleged violations could damage our reputation and ability to dobusiness. Any of the foregoing could materially adversely affect our business, financial condition and results of operations.We are subject to governmental economic sanctions requirements and export and import controls that could impair our ability tocompete in international markets or subject us to liability if we are not in compliance with applicable laws.As a U.S. company, we are subject to U.S. export control and economic sanctions laws and regulations, and we are required to export ourproducts in compliance with those laws and regulations, including the U.S. Export Administration Regulations and economic and trade sanctionsprograms administered by the Treasury Department’s Office of Foreign Assets Control. U.S. economic sanctions and export control laws andregulations prohibit the shipment of specified products and services to countries, governments and persons that are the subject of U.S. sanctions.While we take precautions against doing any business, directly or indirectly, in or with countries, governments and persons subject to U.S.sanctions, such measures may be circumvented. There can be no assurance that we will be in compliance with U.S. export control or economicsanctions laws and regulations in the future. Any such violation could result in criminal or civil fines, penalties or other sanctions andrepercussions, including reputational harm that could materially adversely affect our business.We may not realize the anticipated benefits of acquisitions or investments, or those benefits may be delayed or reduced in theirrealization.Acquisitions have been a component of our growth and the development of our business, and are likely to continue in the future. Acquisitions canbroaden and diversify our brand holdings and product offerings, expand our distribution capabilities and allow us to build additional capabilities andcompetencies. For example, in the case of the Underground Toys Acquisition, we looked to strengthen our ability to sell our products directly tointernational retailers, primarily those located in Europe, and reduce our reliance on third-party distributors in Europe and certain other internationaljurisdictions. However, we cannot be certain that the products and offerings of companies we may acquire, or acquire an interest in, will achieve ormaintain popularity with consumers in the future or that any such acquired companies or investments will allow us to more effectively distribute ourproducts, market our products, develop our competencies or to grow our business.In some cases, we expect that the integration of the companies that we may acquire into our operations will create production, distribution,marketing and other operating synergies which will produce greater sales growth and profitability and, where applicable, cost savings, operatingefficiencies and other advantages. However, we cannot be certain that these synergies, efficiencies and cost savings will be realized. Even ifachieved, these benefits may be delayed or reduced in their realization. In other cases, we may acquire or invest in companies33 that we believe have strong and creative management, in which case we may plan to operate them more autonomously rather than fully integratingthem into our operations. We cannot be certain that the key talented individuals at these companies would continue to work for us after theacquisition or that they would develop popular and profitable products, in the future. There is no guarantee that any acquisition or investment wemay make will be successful or beneficial or that we will be able to manage the integration process successfully, and acquisitions can consumesignificant amounts of management attention and other resources, which may negatively impact other aspects of our business.Our e-commerce business is subject to numerous risks that could have an adverse effect on our business and results of operations.Although sales through our websites have constituted a small portion of our net sales historically, we expect to continue to grow our e-commerce business in the future. Though sales through our websites generally have higher profit margins and provide us useful insight on thesales impact of certain of our marketing campaigns, further development of our e-commerce business also subjects us to a number of risks. Ouronline sales may negatively impact our relationships with our retail customers and distributors if they perceive that we are competing with them. Inaddition, online commerce is subject to increasing regulation by states, the federal government and various foreign jurisdictions. Compliance withthese laws will increase our costs of doing business, and our failure to comply with these laws could also subject us to potential fines, claims fordamages and other remedies, any of which would have an adverse effect on our business, financial condition and results of operations.Additionally, some jurisdictions have implemented, or may implement, laws that require remote sellers of goods and services to collect and remittaxes on sales to customers located within the jurisdiction. In particular, the Streamlined Sales Tax Project (an ongoing, multi-year effort by U.S.state and local governments to pursue federal legislation that would require collection and remittance of sales tax by out-of-state sellers) couldallow states that meet certain simplification and other criteria to require out-of-state sellers to collect and remit sales taxes on goods purchasedby in-state residents. This collection responsibility and the complexity associated with use tax collection, remittance and audit requirements wouldalso increase the costs associated with our e-commerce business.Furthermore, our e-commerce operations subject us to risks related to the computer systems that operate our websites and related supportsystems, such as system failures, viruses, computer hackers and similar disruptions. If we are unable to continually add software and hardware,effectively upgrade our systems and network infrastructure and take other steps to improve the efficiency of our systems, system interruptions ordelays could occur that adversely affect our operating results and harm our brand. While we depend on our technology vendors to manage “up-time” of the front-end e-commerce store, manage the intake of our orders, and export orders for fulfillment, we could begin to run all or a greaterportion of these components ourselves in the future. Any failure on the part of our third-party e-commerce vendors or in our ability to transitionthird-party services effectively could result in lost sales and harm our brand.There is a risk that consumer demand for our products online may not generate sufficient sales to make our e-commerce business profitable, asconsumer demand for physical products online may be less than in traditional retail sales channels. To the extent our e-commerce business doesnot generate more net sales than costs, our business, financial condition and results of operations will be adversely affected.Use of social media may materially and adversely affect our reputation or subject us to fines or other penalties.We rely to a large extent on our online presence to reach consumers and use third-party social media platforms as marketing tools. For example,we maintain Facebook, Twitter, Instagram and YouTube accounts. As e-commerce and social media platforms continue to rapidly evolve, we mustcontinue to maintain a presence on these platforms and establish presences on new or emerging popular social media platforms. If we are unableto cost-effectively use social media platforms as marketing tools, our ability to acquire new consumers and our financial condition may suffer.Furthermore, as laws and regulations rapidly evolve to govern the use of these platforms, the failure by us, our employees or third parties acting atour direction to abide by applicable laws and regulations in the use of these platforms could subject us to regulatory investigations, class actionlawsuits,34 liability, fines or other penalties and have a material adverse effect on our business, financial condition and result of operations.Failure to successfully operate our information systems and implement new technology effectively could disrupt our business or reduceour sales or profitability.We rely extensively on various information technology systems and software applications to manage many aspects of our business, includingproduct development, management of our supply chain, sale and delivery of our products, financial reporting and various other processes andtransactions. We are critically dependent on the integrity, security and consistent operations of these systems and related back-up systems.These systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, malwareand other security breaches, catastrophic events such as hurricanes, fires, floods, earthquakes, tornadoes, acts of war or terrorism and usageerrors by our employees. The efficient operation and successful growth of our business depends on these information systems, including ourability to operate them effectively and to select and implement adequate disaster recovery systems successfully. The failure of these informationsystems to perform as designed, our failure to operate them effectively, or a security breach or disruption in operation of our information systemscould disrupt our business, require significant capital investments to remediate a problem or subject us to liability.In addition, we have recently implemented, and expect to continue to invest in and implement, modifications and upgrades to our informationtechnology systems and procedures to support our growth and the development of our e-commerce business. These modifications and upgradescould require substantial investment, and may not improve our profitability at a level that outweighs their costs, or at all. In addition, the process ofimplementing any new technology systems involves inherent costs and risks, including potential delays and system failures, the potentialdisruption of our internal control structure, the diversion of management’s time and attention, and the need to re-train or hire new employees, anyof which could disrupt our business operations and have a material adverse effect on our business, financial condition and results of operations.If our electronic data is compromised our business could be significantly harmed.We maintain significant amounts of data electronically. This data relates to all aspects of our business, including current and future products andentertainment under development, and also contains certain customer, consumer, supplier, partner and employee data. We maintain systems andprocesses designed to protect the data within our control, but notwithstanding such protective measures, there is a risk of intrusion or tamperingthat could compromise the integrity and privacy of this data. In addition, we provide confidential and proprietary information to our third-partybusiness partners in certain cases where doing so is necessary or appropriate to conduct our business. While we obtain assurances from thoseparties that they have systems and processes in place to protect such data, and where applicable, that they will take steps to assure theprotections of such data by third parties, nonetheless those partners may also be subject to data intrusion or otherwise compromise the protectionof such data. Any compromise of the confidential data of our customers, consumers, suppliers, partners, employees or ourselves, or failure toprevent or mitigate the loss of or damage to this data through breach of our information technology systems or other means could substantiallydisrupt our operations, harm our customers, consumers and other business partners, damage our reputation, violate applicable laws andregulations and subject us to additional costs and liabilities and loss of business that could be material.A failure to comply with laws and regulations relating to privacy and the protection of data relating to individuals may result in negativepublicity, claims, investigations and litigation, and adversely affect our financial performance.We are subject to laws, rules, and regulations in the United States and other countries relating to the collection, use, and security of personalinformation and data. Such data privacy laws, regulations, and other obligations may require us to change our business practices, and maynegatively impact our ability to expand our business and pursue business opportunities. We may incur significant expenses to comply with thelaws, regulations and other obligations that apply to us. Additionally, the privacy- and data protection-related laws, rules, and regulations applicableto us are subject to significant change. Several jurisdictions have passed new laws and regulations in this area, and other jurisdictions areconsidering imposing additional restrictions. These laws and regulations also may be interpreted and enforced inconsistently over time and fromjurisdiction to jurisdiction. In addition to government regulation, privacy advocates and industry groups may propose new and different self-35 regulatory standards that either legally or contractually apply to us. One example of such self-regulatory standards to which we may becontractually bound is the Payment Card Industry Data Security Standard, or PCI DSS. Though we currently use third-party vendors to processand store credit card data in connection with our e-commerce business, to the extent we process or store such data ourselves in the future, wemay be subject to various aspects of the PCI DSS, and fines, penalties, and a loss of the ability to process credit card payments could result fromany failure to comply with the PCI DSS. Any actual or perceived inability to comply with applicable privacy or data protection laws, regulations, orother obligations could result in significant cost and liability, litigation or governmental investigations, damage our reputation, and adversely affectour business.Our indebtedness could adversely affect our financial health and competitive position.As of December 31, 2017, we had $233.9 million of indebtedness outstanding under our Senior Secured Credit Facilities, consisting of$223.1 million outstanding under our Term Loan A Facility (net of unamortized discount of $5.3 million) and $10.8 million outstanding under ourRevolving Credit Facility.In order to service this indebtedness and any additional indebtedness we may incur in the future, we need to generate cash. Our ability to generatecash is subject, to a certain extent, to our ability to successfully execute our business strategy, as well as general economic, financial,competitive, regulatory and other factors beyond our control. We cannot assure you that our business will be able to generate sufficient cash flowfrom operations or that future borrowings or other financing will be available to us in an amount sufficient to enable us to service our indebtednessand fund our other liquidity needs. To the extent we are required to use our cash flow from operations or the proceeds of any future financing toservice our indebtedness instead of funding working capital, capital expenditures or other general corporate purposes, we will be less able to planfor, or react to, changes in our business, industry and in the economy generally. This will place us at a competitive disadvantage compared to ourcompetitors that have less indebtedness.In addition, the credit agreement governing our Senior Secured Credit Facilities contains, and any agreements evidencing or governing other futureindebtedness may contain, certain restrictive covenants that limit our ability, among other things, to engage in certain activities that are in ourlong-term best interests, including our ability to: •incur additional indebtedness; •incur certain liens; •consolidate, merge or sell or otherwise dispose of our assets; •alter the business conducted by us and our subsidiaries; •make investments, loans, advances, guarantees and acquisitions; •enter into sale and leaseback transactions; •pay dividends or make other distributions on equity interests, or redeem, repurchase or retire equity interests; •enter into transactions with our affiliates; •enter into agreements restricting our subsidiaries’ ability to pay dividends; •issue or sell equity interests or securities convertible into or exchangeable for equity interests; •redeem, repurchase or refinance our other indebtedness; and •amend or modify our governing documents.The restrictive covenants in the credit agreement governing our Senior Secured Credit Facilities also require us to maintain specified financialratios. While we have not previously breached and are not in breach of any of these covenants, there can be no guarantee that we will not breachthese covenants in the future. Our ability to comply with these covenants and restrictions may be affected by events and factors beyond ourcontrol. Our failure to comply with any of these covenants or restrictions could result in an event of default under our Senior Secured CreditFacilities. This would permit the lending banks under such facilities to take certain actions, including terminating all outstanding commitments anddeclaring all amounts due under our credit agreement to be immediately due and payable, including all outstanding borrowings, accrued and unpaidinterest thereon, and36 prepayment premiums with respect to such borrowings and any terminated commitments. In addition, the lenders would have the right to proceedagainst the collateral we granted to them, which includes substantially all of our assets. The occurrence of any of these events could have amaterial adverse effect on our business, financial condition and results of operations.We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs.In the future, we may require additional capital to respond to business opportunities, challenges, acquisitions or unforeseen circumstances, andmay determine to engage in equity or debt financings or enter into credit facilities or refinance existing indebtedness for other reasons. We may notbe able to timely secure additional debt or equity financing on favorable terms, or at all. As discussed above, the credit agreement governing ourSenior Secured Credit Facilities contains restrictive covenants that limit our ability to incur additional indebtedness and engage in other capital-raising activities. Any debt financing obtained by us in the future could involve covenants that further restrict our capital raising activities and otherfinancial and operational matters, which may make it more difficult for us to operate our business, obtain additional capital and pursue businessopportunities, including potential acquisitions. Furthermore, if we raise additional funds through the issuance of equity or convertible debt or otherequity-linked securities, our existing stockholders could suffer significant dilution. If we are unable to obtain adequate financing or financing onterms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could besignificantly limited.Any impairment in the value of our goodwill or other assets would adversely affect our financial condition and results of operations.We are required, at least annually, or as facts and circumstances warrant, to test goodwill and other assets to determine if impairment hasoccurred. Impairment may result from any number of factors, including adverse changes in assumptions used for valuation purposes, such asactual or projected net sales growth rates, profitability or discount rates, or other variables. If the testing indicates that impairment has occurred,we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or other assets and theimplied fair value of the goodwill or the fair value of other assets in the period the determination is made. We cannot always predict the amount andtiming of any impairment of assets. Should the value of goodwill or other assets become impaired, it would have an adverse effect on our financialcondition and results of operations.Risks Relating to Our Organizational StructureACON has significant influence over us, including over decisions that require the approval of stockholders, and its interests, along withthe interests of our other Continuing Equity Owners, in our business may conflict with the interests of our other stockholders.Each share of our Class A common stock and Class B common stock entitles its holders to one vote per share on all matters presented to ourstockholders. As of the date of this report, ACON holds approximately 48.5% of the combined voting power of our common stock through itsownership of 12,921,039 shares of our Class A common stock and 10,495,687 shares of our Class B common stock. Accordingly, ACON will havesignificant influence over substantially all transactions and other matters submitted to a vote of our stockholders, such as a merger, consolidation,dissolution or sale of all or substantially all of our assets, the issuance or redemption of certain additional equity interests, and the election ofdirectors. This influence may increase the likelihood that we will consummate transactions that are not in the best interests of holders of ourClass A common stock or, conversely, prevent the consummation of transactions that are in the best interests of holders of our Class A commonstock.Additionally, the Continuing Equity Owners who, as of the date of this report, collectively hold approximately 51.7% of the combined voting powerof our common stock, may receive payments from us under the Tax Receivable Agreement in connection with our purchase of common units ofFAH, LLC directly from certain of the Continuing Equity Owners upon a redemption or exchange of their common units in FAH, LLC, including theissuance of shares of our Class A common stock upon any such redemption or exchange. As a result, the37 interests of the Continuing Equity Owners may conflict with the interests of holders of our Class A common stock. For example, the ContinuingEquity Owners may have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets,whether and when to incur new or refinance existing indebtedness, and whether and when we should terminate the Tax Receivable Agreement andaccelerate our obligations thereunder. In addition, the structuring of future transactions may take into consideration tax or other considerations ofthe Continuing Equity Owners even in situations where no similar considerations are relevant to us.In addition, pursuant to the Stockholders Agreement between Funko, Inc., ACON, Fundamental and Brian Mariotti, our Chief Executive Officer (the“Stockholders Agreement”), ACON has the right to designate certain of our directors, which we refer to as the ACON Directors, which will be threeACON Directors for as long as ACON directly or indirectly, beneficially owns, in the aggregate 35% or more of our Class A common stock, twoACON Directors for so long as ACON, directly or indirectly, beneficially owns, in the aggregate, less than 35% but at least 25% or more of ourClass A common stock and one ACON Director for as long as ACON, directly or indirectly, beneficially owns, in the aggregate, less than 25% butat least 15% or more of our Class A common stock (assuming in each such case that all outstanding common units in FAH, LLC are redeemed fornewly issued shares of our Class A common stock on a one-for-one basis). In addition, Fundamental will also have the right to designate one ofour directors, which we refer to as the Fundamental Director, until the earlier of (1) Fundamental no longer directly or indirectly, beneficially owns,in the aggregate, at least 10% or more of our Class A common stock (assuming that all outstanding common units in FAH, LLC are redeemed fornewly issued shares of our Class A common stock on a one-for-one basis) and (2) October 1, 2018. Each of ACON, Fundamental, and BrianMariotti, our Chief Executive Officer, will also agree to vote, or cause to vote, all of their outstanding shares of our Class A common stock andClass B common stock at any annual or special meeting of stockholders in which directors are elected, so as to cause the election of the ACONDirectors, the Fundamental Director and Mr. Mariotti for as long as he is our Chief Executive Officer. Additionally, pursuant to the StockholdersAgreement, we shall take all commercially reasonable action to cause (1) the board of directors to be comprised of at least seven directors or suchother number of directors as our board of directors may determine; (2) the individuals designated in accordance with the terms of the StockholdersAgreement to be included in the slate of nominees to be elected to the board of directors at the next annual or special meeting of our stockholdersat which directors are to be elected and at each annual meeting of our stockholders thereafter at which a director’s term expires; (3) the individualsdesignated in accordance with the terms of the Stockholders Agreement to fill the applicable vacancies on the board of directors; and (4) an ACONDirector to be the chairperson of the board of directors (as defined in the amended and restated bylaws).In addition, the Stockholders Agreement provides that for as long as the ACON Related Parties beneficially own, directly or indirectly, in theaggregate, 30% or more of all issued and outstanding shares of our Class A common stock (assuming that all outstanding common units in FAH,LLC are redeemed for newly issued shares of our Class A common stock on a one-for-one basis), we will not take, and will cause our subsidiariesnot to take, certain actions or enter into certain transactions (whether by merger, consolidation, or otherwise) without the prior written approval ofACON and each of its affiliated funds that hold common units of FAH, LLC or our Class A common stock, including: •entering into any transaction or series of related transactions in which any person or group (other than the ACON Related Parties andany group that includes the ACON Related Parties, Fundamental (or certain of its affiliates or permitted transferees) or Mr. Mariotti)acquires, directly or indirectly, in excess of 50% of the then outstanding shares of any class of our or our subsidiaries’ capital stock,or following which any such person or group has the direct or indirect power to elect a majority of the members of our board ofdirectors or to replace us as the sole manager of FAH, LLC (or to add another person as co-manager of FAH, LLC); •the reorganization, recapitalization, voluntary bankruptcy, liquidation, dissolution or winding up of us or any of our subsidiaries; •the sale, lease or exchange of all or substantially all of our and our subsidiaries’ property and assets; •the resignation, replacement or removal of us as the sole manager of FAH, LLC, or the appointment of any additional person as amanager of FAH, LLC;38  •any acquisition or disposition of our or any of our subsidiaries’ assets for aggregate consideration in excess of $10.0 million in asingle transaction or series of related transactions (other than transactions solely between or among us and our direct or indirectwholly owned subsidiaries); •the creation of a new class or series of capital stock or other equity securities of us or any of our subsidiaries; •the issuance of additional shares of Class A common stock, Class B common stock, preferred stock or other equity securities of usor any of our subsidiaries other than (1) under any stock option or other equity compensation plan approved by our board of directorsor the compensation committee, (2) pursuant to the exercise or conversion of any options, warrants or other securities existing as ofthe date of the Stockholders Agreement and (3) in connection with any redemption of common units of FAH, LLC pursuant to theFAH LLC Agreement; •any amendment or modification of our or any of our subsidiaries’ organizational documents, other than the FAH LLC Agreement,which shall be subject to amendment or modification solely in accordance with the terms set forth herein; and •any increase or decrease of the size of our board of directors.We are a “controlled company” within the meaning of the Nasdaq rules and, as a result, will qualify for, and intend to rely on,exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders ofcompanies that are subject to such corporate governance requirements.Pursuant to the terms of the Stockholders Agreement, ACON, Fundamental and Brian Mariotti, our Chief Executive Officer, in the aggregate, havemore than 50% of the voting power for the election of directors, and, as a result, we are considered a “controlled company” for the purposes of theNasdaq rules. As such, we qualify for, and rely on, exemptions from certain corporate governance requirements, including the requirements tohave a majority of “independent directors” as defined under the Nasdaq rules on our board of directors, an entirely independent nominating andcorporate governance committee with a written charter addressing the committee’s purpose and responsibilities, and an entirely independentcompensation committee with a written charter addressing the committee’s purpose and responsibilities.The corporate governance requirements and specifically the independence standards are intended to ensure that directors who are consideredindependent are free of any conflicting interest that could influence their actions as directors. As a result of our reliance on the foregoing “controlledcompany” exemptions, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporategovernance requirements of the Nasdaq rules.Our amended and restated certificate of incorporation provides that the doctrine of “corporate opportunity” does not apply with respectto any director or stockholder who is not employed by us or our subsidiaries.The doctrine of corporate opportunity generally provides that a corporate fiduciary may not develop an opportunity using corporate resources,acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to the present or prospective business of thecorporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented to the corporation and thecorporation chooses not to pursue that opportunity. The doctrine of corporate opportunity is intended to preclude officers or directors or otherfiduciaries from personally benefiting from opportunities that belong to the corporation. Our amended and restated certificate of incorporation,provides that the doctrine of “corporate opportunity” does not apply with respect to any director or stockholder who is not employed by us or oursubsidiaries. Any director or stockholder who is not employed by us or our subsidiaries therefore has no duty to communicate or present corporateopportunities to us, and has the right to either hold any corporate opportunity for their (and their affiliates’) own account and benefit or torecommend, assign or otherwise transfer such corporate opportunity to persons other than us, including to any director or stockholder who is notemployed by us or our subsidiaries.As a result, certain of our stockholders, directors and their respective affiliates are not prohibited from operating or investing in competingbusinesses. We therefore may find ourselves in competition with certain of our39 stockholders, directors or their respective affiliates, and we may not have knowledge of, or be able to pursue, transactions that could potentially bebeneficial to us. Accordingly, we may lose a corporate opportunity or suffer competitive harm, which could negatively impact our business orprospects.Our principal asset consists of our interest in FAH, LLC, and accordingly, we depend on distributions from FAH, LLC to pay taxes andexpenses, including payments under the Tax Receivable Agreement. FAH, LLC’s ability to make such distributions may be subject tovarious limitations and restrictions.Upon consummation of the IPO, we became a holding company and have no material assets other than our ownership of 23,337,705 commonunits of FAH, LLC, representing approximately 48.3% of the economic interest in FAH, LLC. We have no independent means of generatingrevenue or cash flow, and our ability to pay dividends in the future, if any, is dependent upon the financial results and cash flows of FAH, LLC andits subsidiaries and distributions we receive from FAH, LLC. There can be no assurance that our subsidiaries will generate sufficient cash flow todividend or distribute funds to us or that applicable local law and contractual restrictions, including negative covenants in our debt instruments, willpermit such dividends or distributions.FAH, LLC is treated as a partnership for U.S. federal income tax purposes and, as such, generally is not subject to entity-level U.S. federalincome tax. Instead, taxable income is allocated to holders of its common units, including us. As a result, we incur income taxes on our allocableshare of net taxable income of FAH, LLC. Under the terms of the FAH LLC Agreement, FAH, LLC is obligated to make tax distributions to itsmembers, including us, except to the extent such distributions would render FAH, LLC insolvent or are otherwise prohibited by law or anylimitations or restrictions in our debt agreements. The amount of such tax distribution is calculated based on the highest combined federal, stateand local tax rate that may potentially apply to any one of FAH, LLC’s members, regardless of the actual final tax liability of any such member. Asa result of the foregoing, FAH, LLC may be obligated to make tax distributions in excess of some or all of its members’ actual tax liability, whichcould reduce its cash available for its business operations. In addition to tax expenses, we also incur expenses related to our operations, ourinterests in FAH, LLC and related party agreements, including payment obligations under the Tax Receivable Agreement and expenses and costsof being a public company, all of which could be significant. We intend, as its managing member, to cause FAH, LLC to make distributions in anamount sufficient to allow us to pay our taxes and operating expenses, including any ordinary course payments due under the Tax ReceivableAgreement. However, FAH, LLC’s ability to make such distributions may be subject to various limitations and restrictions including, but not limitedto, restrictions on distributions that would either violate any contract or agreement to which FAH, LLC is then a party, including debt agreements,or any applicable law, or that would have the effect of rendering FAH, LLC insolvent. If FAH, LLC does not have sufficient funds to pay taxdistributions or other liabilities to fund our operations, we may have to borrow funds, which could materially adversely affect our liquidity andfinancial condition and subject us to various restrictions imposed by any such lenders. To the extent that we are unable to make payments underthe Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid; provided, however, thatnonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and thereforemay accelerate payments due under the Tax Receivable Agreement. If FAH, LLC does not have sufficient funds to make distributions, our abilityto declare and pay cash dividends may also be restricted or impaired. See “Risks Relating to Ownership of Our Class A Common Stock.”Our Tax Receivable Agreement with the Continuing Equity Owners requires us to make cash payments to them in respect of certain taxbenefits to which we may become entitled, the amounts that we may be required to pay could be significant, and we may not realizesuch tax benefits.In connection with the consummation of the IPO, we entered into a Tax Receivable Agreement with FAH, LLC and each of the Continuing EquityOwners. Pursuant to the Tax Receivable Agreement, we will be required to make cash payments to the Continuing Equity Owners equal to 85% ofthe tax benefits, if any, that we realize, or in some circumstances are deemed to realize as a result of (1) any future redemptions funded by us orexchanges (or deemed exchanges in certain circumstances) of common units for Class A common stock or cash, and (2) certain additional taxbenefits attributable to payments under the Tax Receivable Agreement. The amount of the cash payments that we may be required to make underthe Tax Receivable Agreement could be significant. Payments under the Tax Receivable Agreement will generally be based on the tax reportingpositions that we determine, which are subject to challenge by taxing authorities. Payments made under the Tax Receivable Agreement will not bereturned upon a successful challenge by a taxing authority to our reporting positions. Any payments made by us to the Continuing Equity Ownersunder the Tax Receivable Agreement will generally40 reduce the amount of overall cash flow that might have otherwise been available to us. To the extent that we are unable to make timely paymentsunder the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid by us. Nonpayment fora specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement and therefore may acceleratepayments due under the Tax Receivable Agreement. Furthermore, our future obligation to make payments under the Tax Receivable Agreementcould make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits thatmay be deemed realized under the Tax Receivable Agreement upon a change of control. The payments under the Tax Receivable Agreement arealso not conditioned upon the Continuing Equity Owners maintaining a continued ownership interest in FAH, LLC.The amounts that we may be required to pay to the Continuing Equity Owners under the Tax Receivable Agreement may be acceleratedin certain circumstances and may also significantly exceed the actual tax benefits that we ultimately realize.The Tax Receivable Agreement provides that if certain mergers, asset sales, other forms of business combination, or other changes of controlwere to occur, if we materially breach any of our material obligations under the Tax Receivable Agreement or if, at any time, we elect an earlytermination of the Tax Receivable Agreement, then the Tax Receivable Agreement will terminate and our obligations, or our successor’sobligations, to make future payments under the Tax Receivable Agreement would accelerate and become immediately due and payable. In thosecircumstances members of FAH, LLC would be deemed to exchange any remaining outstanding common units of FAH, LLC for Class A commonstock and would generally be entitled to payments under the Tax Receivable Agreement resulting from such deemed exchange. The amount dueand payable in those circumstances is determined based on certain assumptions, including an assumption that we would have sufficient taxableincome to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement. We may need to incur debt to financepayments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax ReceivableAgreement.As a result of the foregoing, we would be required to make an immediate cash payment equal to the present value of the anticipated future taxbenefits that are the subject of the Tax Receivable Agreement, which payment may be made significantly in advance of the actual realization, ifany, of such future tax benefits. We could also be required to make cash payments to the Continuing Equity Owners that are greater than thespecified percentage of the actual benefits we ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement.Our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect ofdelaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control. There can be noassurance that we will be able to finance our obligations under the Tax Receivable Agreement.41 We will not be reimbursed for any payments made to the Continuing Equity Owners under the Tax Receivable Agreement in the eventthat any tax benefits are disallowed.We will not be reimbursed for any cash payments previously made to the Continuing Equity Owners pursuant to the Tax Receivable Agreement ifany tax benefits initially claimed by us are subsequently challenged by a taxing authority and are ultimately disallowed. Instead, any excess cashpayments made by us to a Continuing Equity Owner will be netted against any future cash payments that we might otherwise be required to makeunder the terms of the Tax Receivable Agreement. However, a challenge to any tax benefits initially claimed by us may not arise for a number ofyears following the initial time of such payment or, even if challenged early, such excess cash payment may be greater than the amount of futurecash payments that we might otherwise be required to make under the terms of the Tax Receivable Agreement and, as a result, there might not befuture cash payments from which to net against. The applicable U.S. federal income tax rules are complex and factual in nature, and there can beno assurance that the IRS or a court will not disagree with our tax reporting positions. As a result, it is possible that we could make cashpayments under the Tax Receivable Agreement that are substantially greater than our actual cash tax savings.If we were deemed to be an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act, as a result ofour ownership of FAH, LLC, applicable restrictions could make it impractical for us to continue our business as contemplated and couldhave a material adverse effect on our business, financial condition and results of operations.Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading insecurities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns orproposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securitiesand cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of thosesections of the 1940 Act.As the sole managing member of FAH, LLC, we control and operate FAH, LLC. On that basis, we believe that our interest in FAH, LLC is not an“investment security” as that term is used in the 1940 Act. However, if we were to cease participation in the management of FAH, LLC, our interestin FAH, LLC could be deemed an “investment security” for purposes of the 1940 Act.We and FAH, LLC intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed aninvestment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates,could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financialcondition and results of operations.Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Continuing Equity Owners thatwill not benefit Class A common stockholders to the same extent as it will benefit the Continuing Equity Owners.Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Continuing Equity Owners that will notbenefit the holders of our Class A common stock to the same extent as it will benefit such Continuing Equity Owners. We have entered into theTax Receivable Agreement with FAH, LLC and the Continuing Equity Owners and it provides for the payment by us to the Continuing EquityOwners of 85% of the amount of tax benefits, if any, that we realize, or in some circumstances are deemed to realize, as a result of (1) any futureredemptions funded by us or exchanges (or deemed exchanges in certain circumstances) of common units for Class A common stock or cash and(2) certain additional tax benefits attributable to payments under the Tax Receivable Agreement. This and other aspects of our organizationalstructure may adversely impact the future trading market for our Class A common stock.42 Risks Relating to Ownership of Our Class A Common StockThe Continuing Equity Owners own common units in FAH, LLC, and the Continuing Equity Owners will have the right to redeem theircommon units in FAH, LLC pursuant to the terms of the FAH LLC Agreement for shares of Class A common stock or cash.We have an aggregate of 176,662,295 shares of Class A common stock authorized but unissued, as well as approximately 24,975,932 shares ofClass A common stock issuable, at our election, upon redemption of FAH, LLC common units held by the Continuing Equity Owners. FAH, LLChas entered into the FAH LLC Agreement, and subject to certain restrictions set forth in such agreement, the Continuing Equity Owners areentitled to have their common units redeemed from time to time at each of their options (subject in certain circumstances to time-based vestingrequirements) for, at our election, newly-issued shares of our Class A common stock on a one-for-one basis or a cash payment equal to a volumeweighted average market price of one share of Class A common stock for each common unit redeemed, in each case, in accordance with theterms of the FAH LLC Agreement; provided that, at our election, we may effect a direct exchange by us of such Class A common stock or suchcash, as applicable, for such common units. The Continuing Equity Owners may exercise such redemption right for as long as their common unitsremain outstanding. We also entered into a Registration Rights Agreement pursuant to which the shares of Class A common stock issued tocertain of the Continuing Equity Owners (including each of our executive officers) upon such redemption and the shares of Class A common stockissued to the Former Equity Owners in connection with the Transactions will be eligible for resale, subject to certain limitations set forth in theRegistration Rights Agreement.We cannot predict the size of future issuances of our Class A common stock or the effect, if any, that future issuances and sales of shares of ourClass A common stock may have on the market price of our Class A common stock. Sales or distributions of substantial amounts of our Class Acommon stock, including shares issued in connection with an acquisition, or the perception that such sales or distributions could occur, maycause the market price of our Class A common stock to decline.You may be diluted by future issuances of additional Class A common stock or common units in connection with our incentive plans,acquisitions or otherwise; future sales of such shares in the public market, or the expectations that such sales may occur, could lowerour stock price.Our amended and restated certificate of incorporation authorizes us to issue shares of our Class A common stock and options, rights, warrantsand appreciation rights relating to our Class A common stock for the consideration and on the terms and conditions established by our board ofdirectors in its sole discretion, whether in connection with acquisitions or otherwise. In addition, we, FAH, LLC and the Continuing Equity Ownersare party to the FAH LLC Agreement under which the Continuing Equity Owners (or certain permitted transferees thereof) have the right (subject tothe terms of the FAH LLC Agreement) to have their common units redeemed from time to time at each of their options (subject in certaincircumstances to time-based vesting requirements) by FAH, LLC in exchange for, at our election, newly-issued shares of our Class A commonstock on a one-for-one basis or a cash payment equal to a volume-weighted average market price of one share of Class A common stock for eachcommon unit redeemed, in each case, in accordance with the terms of the FAH LLC Agreement; provided that, at our election, we may effect adirect exchange by us of such Class A common stock or such cash, as applicable, for such common units. The Continuing Equity Owners mayexercise such redemption right for as long as their common units remain outstanding. The market price of shares of our Class A common stockcould decline as a result of these redemptions or exchanges or the perception that a redemption or exchange could occur. These redemptions orexchanges, or the possibility that these redemptions or exchanges may occur, also might make it more difficult for holders of our Class A commonstock to sell such stock in the future at a time and at a price that they deem appropriate.43 We have reserved for issuance under our 2017 Plan 5,518,518 shares of Class A common stock, including 1,028,500 shares of Class A commonstock issuable pursuant to stock options we granted to certain of our directors, executive officers and other employees in connection with the IPO.Any shares of Class A common stock that we issue, including under our 2017 Plan or other equity incentive plans that we may adopt in the future,would dilute the percentage ownership held by the holders of our Class A common stock.We, our officers and directors and the Original Equity Owners subject to certain exceptions, have agreed that, without the prior written consent ofGoldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, on behalf of the underwriters, weand they will not, during the period ending 180 days after the date of the final prospectus filed with the SEC in connection with the IPO: (1) offer,sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, anyshares of Class A common stock or any securities convertible into, exchangeable for or that represent the right to receive shares of Class Acommon stock; (2) file any registration statement with the SEC relating to the offering of any shares of Class A common stock or any securitiesconvertible into or exercisable or exchangeable for Class A common stock; or (3) enter into any swap or other arrangement that transfers, in wholeor in part, any of the economic consequences of ownership of Class A common stock, subject to certain exceptions. Goldman Sachs & Co. LLC,J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, in their sole discretion, may release the Class A commonstock and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice.The market price of our Class A common stock may decline significantly when the restrictions on resale by our existing stockholders lapse. Adecline in the market price of our Class A common stock might impede our ability to raise capital through the issuance of additional shares ofClass A common stock or other equity securities.In connection with the completion of the IPO, we entered into a Registration Rights Agreement with certain of the Original Equity Owners (includingeach of our executive officers). Any sales in connection with the Registration Rights Agreement, or the prospect of any such sales, couldmaterially impact the market price of our Class A common stock and could impair our ability to raise capital through future sales of equitysecurities.In the future, we may also issue additional securities if we need to raise capital, including, but not limited to, in connection with acquisitions, whichcould constitute a material portion of our then-outstanding shares of Class A common stock.Our Class A common stock price may be volatile or may decline regardless of our operating performance and you may not be able toresell your shares at or above the price you paid for them.Volatility in the market price of our Class A common stock may prevent you from being able to sell your shares at or above the price you paid forthem. Many factors, which are outside our control, may cause the market price of our Class A common stock to fluctuate significantly, includingthose described elsewhere in this “Risk Factors” section, as well as the following: •our operating and financial performance and prospects; •our quarterly or annual earnings or those of other companies in our industry compared to market expectations; •conditions that impact demand for our products; •future announcements concerning our business, our customers’ businesses or our competitors’ businesses; •the public’s reaction to our press releases, other public announcements and filings with the SEC; •the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under theJumpstart Our Business Startups Act (“JOBS Act”); •the size of our public float; •coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;44  •market and industry perception of our success, or lack thereof, in pursuing our growth strategy; •strategic actions by us or our competitors, such as acquisitions or restructurings; •changes in laws or regulations which adversely affect our industry, our licensors or us; •changes in accounting standards, policies, guidance, interpretations or principles; •changes in senior management or key personnel; •issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; •changes in our dividend policy; •adverse resolution of new or pending litigation against us; and •changes in general market, economic and political conditions in the United States and global economies or financial markets,including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.As a result, volatility in the market price of our Class A common stock may prevent investors from being able to sell their Class A common stockat or above the price they paid for them or at all. These broad market and industry factors may materially reduce the market price of our Class Acommon stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of ourClass A common stock is low. As a result, you may suffer a loss on your investment.We do not intend to pay dividends on our Class A common stock for the foreseeable future.We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repayindebtedness. As a result, we do not anticipate declaring or paying any cash dividends on our Class A common stock in the foreseeable future.Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among otherthings, our business prospects, results of operations, financial condition, cash requirements and availability, industry trends and other factors thatour board of directors may deem relevant. Any such decision will also be subject to compliance with contractual restrictions and covenants in theagreements governing our current and future indebtedness. Our Senior Secured Credit Facilities contain certain covenants that restrict the abilityof FAH, LLC and its subsidiaries to pay dividends or make distributions. Because we are a holding company, our ability to pay dividends on ourClass A common stock depends on our receipt of cash distributions from FAH, LLC and, through FAH, LLC, cash distributions and dividends fromour other direct and indirect wholly owned subsidiaries. In addition, we may incur additional indebtedness, the terms of which may further restrict orprevent us from paying dividends on our Class A common stock. As a result, you may have to sell some or all of your Class A common stockafter price appreciation in order to generate cash flow from your investment, which you may not be able to do. Our inability or decision not to paydividends, particularly when others in our industry have elected to do so, could also adversely affect the market price of our Class A commonstock.Delaware law and certain provisions in our amended and restated certificate of incorporation and our amended and restated bylaws mayprevent efforts by our stockholders to change the direction or management of our company.We are a Delaware corporation, and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party toacquire control of us, even if a change of control would be beneficial to our existing stockholders. In addition, our amended and restated certificateof incorporation and our amended and restated bylaws contain provisions that may make the acquisition of our company more difficult without theapproval of our board of directors, including, but not limited to, the following: •our board of directors is classified into three classes, each of which serves for a staggered three-year term; •only the chairperson of our board of directors or a majority of our board of directors may call special meetings of our stockholders,except that at such time as ACON, certain of its affiliates and their permitted transferees, which we collectively refer to as theACON Related Parties, directly or indirectly, beneficially own in the aggregate, 35% or more of all shares of Class A common stock(including for this purpose all shares of Class A common stock issuable upon redemption of common units,45  assuming all such common units are redeemed for Class A common stock on a one-for-one basis) issued and outstanding, theholders of a majority in voting power of the outstanding shares of our capital stock may also call special meetings of ourstockholders; •we have authorized undesignated preferred stock, the terms of which may be established and shares of which may be issuedwithout stockholder approval; •any action required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may betaken without a meeting, without prior notice and without a vote, if a written consent is signed by the holders of our outstandingshares of common stock representing not less than the minimum number of votes that would be necessary to authorize such actionat a meeting at which all outstanding shares of common stock entitled to vote thereon were present and voted, provided that at suchtime as the ACON Related Parties, directly or indirectly, beneficially own in the aggregate, less than 35% of all shares of Class Acommon stock (including for this purpose all shares of Class A common stock issuable upon redemption of common units,assuming all such common units are redeemed for Class A common stock on a one-for-one basis) issued and outstanding, anyaction required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may not betaken by written consent in lieu of a meeting; •our amended and restated certificate of incorporation may be amended or repealed by the affirmative vote of a majority of the voteswhich all our stockholders would be eligible to cast in an election of directors and our amended and restated bylaws may beamended or repealed by a majority vote of our board of directors or by the affirmative vote of a majority of the votes which all ourstockholders would be eligible to cast in an election of directors, provided that at such time as the ACON Related Parties, directly orindirectly, beneficially own in the aggregate, less than 35% of all shares of Class A common stock (including for this purpose allshares of Class A common stock issuable upon redemption of common units, assuming all such common units are redeemed forClass A common stock on a one-for-one basis) issued and outstanding, our amended and restated certificate of incorporation andour amended and restated bylaws may be amended or repealed by the affirmative vote of the holders of at least 662/3% of the voteswhich all our stockholders would be entitled to cast in any annual election of directors and our amended and restated bylaws mayalso be amended or repealed by a majority vote of our board of directors; •we require advance notice and duration of ownership requirements for stockholder proposals; and •we have opted out of Section 203 of the Delaware General Corporation Law of the State of Delaware, or the DGCL, however, ouramended and restated certificate of incorporation will contain provisions that are similar to Section 203 of the DGCL (except withrespect to ACON and Fundamental and any of their respective affiliates and any of their respective direct or indirect transferees ofClass B common stock).These provisions could discourage, delay or prevent a transaction involving a change in control of our company. These provisions could alsodiscourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take othercorporate actions you desire, including actions that you may deem advantageous, or negatively affect the trading price of our Class A commonstock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions could inturn affect any attempt by our stockholders to replace current members of our management team.Please see “Risks Relating to Our Organizational Structure—ACON has significant influence over us, including over decisions that require theapproval of stockholders, and its interests, along with the interests of our other Continuing Equity Owners, in our business may conflict with theinterests of our other stockholders.”46 Our amended and restated certificate of incorporation provides, subject to certain exceptions, that the Court of Chancery of the State ofDelaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability toobtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delawarewill, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf; (2) anyaction asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders; (3) anyaction asserting a claim against us, any director or our officers and employees arising pursuant to any provision of the DGCL, our amended andrestated certificate of incorporation or our amended and restated bylaws, or as to which the DGCL confers exclusive jurisdiction on the Court ofChancery; or (4) any action asserting a claim against us, any director or our officers or employees that is governed by the internal affairs doctrine.Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to haveconsented to the provisions of our amended and restated certificate of incorporation described above. This choice of forum provision may limit astockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employeesor stockholders which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision thatwill be contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additionalcosts associated with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition andresults of operations.We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwiseadversely affect holders of our Class A common stock, which could depress the price of our Class A common stock.Our amended and restated certificate of incorporation authorizes us to issue one or more series of preferred stock. Our board of directors has theauthority to determine the preferences, limitations and relative rights of the shares of preferred stock and to fix the number of shares constitutingany series and the designation of such series, without any further vote or action by our stockholders. Our preferred stock could be issued withvoting, liquidation, dividend and other rights superior to the rights of our Class A common stock. The potential issuance of preferred stock maydelay or prevent a change in control of us, discouraging bids for our Class A common stock at a premium to the market price, and materially andadversely affect the market price and the voting and other rights of the holders of our Class A common stock.Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” may make our Class A commonstock less attractive to investors.The JOBS Act provides that, for so long as a company qualifies as an “emerging growth company,” it will, among other things: •be required to initially have only two years of audited financial statements and only two years of related selected financial data andManagement’s Discussion and Analysis of Financial Condition and Results of Operations disclosure; •be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act,requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internalcontrol over financial reporting; •be exempt from the “say on pay” and “say on golden parachute” advisory vote requirements of the Dodd-Frank Wall Street Reformand Customer Protection Act, or the Dodd-Frank Act; •be exempt from certain disclosure requirements of the Dodd-Frank Act relating to compensation of its executive officers and bepermitted to omit the detailed compensation discussion and analysis from the proxy statements and reports it files under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”); and •be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firmrotations or a supplement to the auditor’s report on our financial statements.47 We currently have chosen to take advantage of each of the exemptions described above. We have irrevocably elected not to take advantage ofthe extension of time to comply with new or revised financial accounting standards available under Section 107(b) of the JOBS Act. We could bean emerging growth company until December 31, 2022. We cannot predict if investors will find our Class A common stock less attractive if weelect to rely on these exemptions, or if taking advantage of these exemptions would result in less active trading or more volatility in the price of ourClass A common stock.The obligations associated with being a public company require significant resources and management attention, which may divert fromour business operations.As a result of our IPO, we became subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange Actrequires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires,among other things, that we establish and maintain effective internal control over financial reporting. As a result, we now incur significant legal,accounting and other expenses that we did not previously incur. Additionally, most of our management team, including our Chief Executive Officerand Chief Financial Officer, have not previously managed a publicly traded company, and as a result, have little experience in complying with theincreasingly complex and changing legal and regulatory landscape in which public companies operate. Furthermore, while certain members of ourboard of directors have been officers and other employees of public companies, only one of our directors has served on the board of directors of apublic company. Our entire management team and many of our other employees now need to devote substantial time to compliance, and may notbe able to effectively or efficiently manage us our transition into a public company.In addition, the need to establish the corporate infrastructure demanded of a public company may also divert management’s attention fromimplementing our business strategy, which could prevent us from improving our business, results of operations and financial condition. We havemade, and will continue to make, changes to our internal control over financial reporting, including information technology controls, and proceduresfor financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not besufficient to satisfy our obligations as a public company. If we do not continue to develop and implement the right processes and tools to manageour changing enterprise and maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, whichcould negatively impact our business, financial condition and results of operations. In addition, we cannot predict or estimate the amount ofadditional costs we may incur to comply with these requirements. We anticipate that these costs will materially increase our general andadministrative expenses.Furthermore, as a public company, we have incurred and will continue to incur additional legal, accounting and other expenses that have not beenreflected in historical financial statements. In addition, rules implemented by the SEC have imposed various requirements on public companies,including establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Ourmanagement and other personnel will need to devote a substantial amount of time to these compliance initiatives. These rules and regulationsresult in our incurring legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expectthese rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may berequired to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it maybe more difficult for us to attract and retain qualified people to serve on our board of directors and our board committees or as executive officers.48 As a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internalcontrol over financial reporting. If we fail to establish and maintain effective internal control over financial reporting and disclosurecontrols and procedures, we may not be able to accurately report our financial results, or report them in a timely manner.We are a public reporting company subject to the rules and regulations established from time to time by the SEC and The Nasdaq Stock Market.These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal controlover financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and managementsystems, processes and controls, as well as on our personnel.In addition, as a public company, we are required to document and test our internal control over financial reporting pursuant to Section 404 ofthe Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting. Though we arerequired to disclose changes made to our internal controls and procedures on a quarterly basis, we are not required to make our first annualassessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filedwith the SEC. Furthermore, as an emerging growth company, our independent registered public accounting firm is not required to formally attest tothe effectiveness of our internal control over financial reporting pursuant to Section 404 until the later of the year following our first annual reportrequired to be filed with the SEC and the date we are no longer an emerging growth company.If our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness ofsuch controls, or if our independent registered public accounting firm cannot render an unqualified opinion on management’s assessment and theeffectiveness of our internal control over financial reporting at such time as it is required to do so, or if material weaknesses in our internal controlover financial reporting are identified, we could be subject to regulatory scrutiny, a loss of public and investor confidence, and to litigation frominvestors and stockholders, which could have a material adverse effect on our business and our stock price. In addition, if we do not maintainadequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accuratelyreport our financial performance on a timely basis, which could cause a decline in our Class A common stock price and adversely affect ourresults of operations and financial condition. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions orinvestigations by the SEC, the Nasdaq Stock Market or other regulatory authorities, which would require additional financial and managementresources.We may fail to meet analyst expectations, or analysts may issue unfavorable commentary about us or our industry or downgrade ourClass A common stock, which could cause the price of our Class A common stock to declineOur Class A common stock is traded publicly and various securities analysts follow our company and issue reports on us. These reports includeinformation about our historical financial results as well as the analysts’ estimates of our future performance. The analysts’ estimates are basedupon their own independent opinions and may be different from our own estimates or expectations. If our operating results are below the estimatesor expectations of public market analysts and investors, the trading price of our Class A common stock could decline. In addition, one or moreanalysts could cease to cover our company, which could cause us to lose visibility in the market, and one or more analysts could downgrade ourClass A common stock or issue other negative commentary about our company or our industry. As a result of one or more of these factors, thetrading price of our Class A common stock could decline.49 ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESOur leased properties primarily consist of office space, warehouses and distribution facilities. The table below sets forth certain informationregarding these properties, all of which are leased. Property Location ApproximateSquareFootage Lease Expiration DateCorporate Headquarters Everett, Washington 84,000 January 31, 2027Offices, Main Warehouse and Distribution Facility Everett, Washington 201,000 January 31, 2026Warehouse and Distribution Facility Everett, Washington 119,000 July 31, 2021Warehouse and Distribution Facility Everett, Washington 83,000 July 31, 2021Offices, Apparel Design Team San Diego, California 7,000 December 1, 2018Sales Office Bentonville, Arkansas 1,000 November 30, 2019Warehouse Maldon, Essex, United Kingdom 52,000 March 31, 2019Warehouse and Administrative Offices Maldon, Essex, United Kingdom 38,000 July 12, 2021Sales Office London, United Kingdom 1,100 February 1, 2022Warehouse and Administrative Offices Chatsworth, California 46,000 June 28, 2020Offices, Licensing and Apparel Sales Burbank, California 7,161 February 28, 2023Administrative Office Bath, United Kingdom 1,760 Month-to-monthSales Office Minneapolis, Minnesota 3,900 September 30, 2023 For leases that are scheduled to expire during the next 12 months, we may negotiate new lease agreements, renew existing lease agreements oruse alternate facilities. We believe that our facilities are adequate for our needs and believe that we should be able to renew any of the aboveleases or secure similar property without an adverse impact on our operations.ITEM 3. LEGAL PROCEEDINGSWe are, and may in the future become, subject to various legal proceedings and claims that arise in or outside the ordinary course of business.For example, on November 16, 2017, a purported stockholder of the Company filed a putative class action lawsuit in the Superior Court ofWashington in and for King County against us, certain of our officers and directors, and the underwriters of our IPO, entitled Robert Lowinger v.Funko, Inc., et. al. In January and March 2018, four additional putative class action lawsuits were filed, three in the Superior Court of Washingtonin and for King County and one in the Superior Court of Washington in and for Snohomish County. Two of the lawsuits, Surratt v. Funko, Inc. et. al.(filed on January 16, 2018) and Baskin v. Funko, Inc. et. al. (filed on January 30, 2018) were filed against us and certain of our officers anddirectors. The third, The Ronald and Maxine Linde Foundation v. Funko et. al. (filed on January 18, 2018) was filed against us, certain of ourofficers and directors, ACON, Fundamental and certain other defendants. The fourth, Berkelhammer v. Funko, Inc. et. al. (filed on March 13, 2018)was filed against us, certain of our officers and directors, and ACON. The complaints allege that we violated Sections 11, 12, and 15 of theSecurities Act of 1933, as amended, by making allegedly materially misleading statements, and by omitting material facts necessary to make thestatements made therein not misleading. The lawsuits seek, among other things, compensatory statutory damages and rescissory damages inaccount of the consideration paid for our Class A common stock by plaintiff and members of the putative class, as well as attorneys’ fees andcosts. The Company believes it has meritorious defenses to the claims of the plaintiff and members of the class and any liability for the allegedclaims is not currently probable or reasonably estimable.50 We are party to additional legal proceedings incidental to our business. While the outcome of these additional matters could differ frommanagement’s expectations, we do not believe that the resolution of such matters is reasonably likely to have a material effect on our results ofoperations or financial condition. ITEM 4. MINE SAFETY DISCLOSURESNot applicable51 PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFSECURITIESMarket InformationOn November 2, 2017, our Class A common stock began trading on the Nasdaq Global Market under the symbol “FNKO.” Prior to that time, therewas no public market for our stock. The high and low sales prices of our common stock as reported on the Nasdaq during the quarter endedDecember 31, 2017 were $9.90 and $5.81, respectively.Holders of RecordAs of March 9, 2018, there were 43 stockholders of record of our Class A common stock. As of March 9, 2018, there were 34 stockholders ofrecord of our Class B common stock.Dividend PolicyWe currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repayindebtedness, and therefore we do not anticipate declaring or paying any cash dividends on our Class A common stock in the foreseeable future.Holders of our Class B common stock are not entitled to participate in any dividends declared by our board of directors. Additionally, our ability topay any cash dividends on our Class A common stock is limited by restrictions on the ability of FAH, LLC and our other subsidiaries to paydividends or make distributions under the terms of our Senior Secured Credit Facilities. Furthermore, because we are a holding company, ourability to pay cash dividends on our Class A common stock depends on our receipt of cash distributions from FAH, LLC and, through FAH, LLC,cash distributions and dividends from our other direct and indirect wholly owned subsidiaries. Any future determination as to the declaration andpayment of dividends, if any, will be at the discretion of our board of directors, subject to compliance with contractual restrictions and covenants inthe agreements governing our current and future indebtedness. Any such determination will also depend upon our business prospects, results ofoperations, financial condition, cash requirements and availability and other factors that our board of directors may deem relevant.FAH, LLC paid cash tax distributions to its members during the years ended December 31, 2017 and 2016 of $23.7 million and $21.3 million,respectively. Additionally, FAH, LLC paid a special distribution to its members during the years ended December 31, 2017 and 2016 of $49.2 and$49.2 million (of which $49.0 million consisted of cash and $0.2 million consisted of a reduction in interest and principal under loans to certainmembers of management for both periods).52 Stock Performance GraphThe following graph and table illustrate the total return from November 2, 2017 through December 31, 2017, for (i) our Class A common stock, (ii)the Russell 2000 Index, and (iii) the Russell 2000 Consumer Discretionary Index. The graph and the table assume that $100 was invested onNovember 2, 2017 in each of our Class A common stock, the Russell 2000 Index, and the Russell 2000 Consumer Discretionary Index, and thatany dividends were reinvested. The comparisons reflected in the graph and table are not intended to forecast the future performance of our stockand may not be indicative of our future performance. 11/2/2017 11/30/2017 12/29/2017 Funko, Inc. 100.00 125.60 94.06 Russell 2000 100.00 103.30 102.89 Russell 2000 Consumer Discretionary 100.00 106.47 108.40 53 ITEM 6. SELECTED FINANCIAL DATAThe following tables present the selected historical consolidated financial and other data for Funko, Inc. The selected consolidated statements ofoperations and cash flows data for the year ended December 31, 2017 (Successor), the year ended December 31, 2016 (Successor) and theperiod from October 31, 2015 through December 31, 2015 (Successor) and the period from January 1, 2015 through October 30, 2015(Predecessor) and the selected consolidated balance sheets data as of December 31, 2017 and 2016 are derived from the audited consolidatedfinancial statements contained in Part II, Item 8 of this Annual Report on Form 10-K.Subsequent to the IPO and related reorganization transactions, Funko, Inc. has been a holding company whose principal asset is its equityinterest in FAH, LLC. As the sole managing member of FAH, LLC, Funko, Inc. operates and controls all of the business and affairs of FAH, LLC,and through FAH, LLC, conducts its business. As a result, the Company consolidates FAH, LLC’s financial results and reports a non-controllinginterest related to the common units not owned by Funko, Inc. Such consolidation has been reflected for all periods presented. Our selectedhistorical consolidated financial and other data does not reflect what our financial position and results of operations would have been had we beena separate, stand-alone public company during those periods.54 Our selected historical consolidated financial and other data may not be indicative of our future results of operations or future cash flows. Youshould read the information set forth below in conjunction with our historical consolidated financial statements and the notes to those statements,Item 1A. - “Risk Factors” and Item 7. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includedelsewhere in this Form 10-K. Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 (In thousands, except per share amounts) Consolidated Statements of Operations Data: Net sales $516,084 $426,717 $56,565 $217,491 Cost of sales (exclusive of depreciation and amortization shown separately below) 317,379 280,396 44,485 131,621 Selling, general, and administrative expenses 120,944 77,525 13,894 37,145 Acquisition transaction costs 3,641 1,140 7,559 13,301 Depreciation and amortization 31,975 23,509 3,370 5,723 Total operating expenses 473,939 382,570 69,308 187,790 Income (loss) from operations 42,145 44,147 (12,743) 29,701 Interest expense, net 30,636 17,267 2,818 2,202 Loss on extinguishment of debt 5,103 — — — Other income, net (734) — — — Income (loss) before income taxes 7,140 26,880 (15,561) 27,499 Income tax expense 1,540 — — — Net income (loss) 5,600 26,880 (15,561) 27,499 Less: net income attributable to non-controlling interests 1,875 — — — Net income (loss) attributable to Funko, Inc. $3,725 $26,880 $(15,561) $27,499 Earnings per share of Class A common stock (1): Basic $0.04 Diluted $0.04 Consolidated Statements of Cash Flows Data: Net cash provided by operating activities $23,837 $49,468 $14,110 $8,538 Net cash used in investing activities $(65,215) $(22,105) $(244,421) $(10,043)Net cash provided by (used in) financing activities $43,012 $(45,613) $244,456 $11,390 Selected Other Data: EBITDA (2) $69,751 $67,656 $(9,373) $35,424 Adjusted EBITDA (2) $89,919 $96,960 $13,170 $61,996 December 31, 2017 2016 2015 Consolidated Balance Sheets Data: (In thousands) Cash and cash equivalents $7,728 $6,161 $24,411 Total assets $630,313 $522,237 $505,330 Total debt (3) $233,899 $217,753 $169,846 Total members' / stockholders' equity $281,155 $217,377 $243,556 55 (1)Basic and diluted earnings per share of Class A common stock is applicable only for periods after the Company’s IPO. See Note 18,Earnings per Share of the notes to our consolidated financial statements.(2)EBITDA and Adjusted EBITDA are supplemental measures of our performance that are not required by, or presented in accordance with,U.S. GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under U.S. GAAP and should not beconsidered as an alternative to net income (loss) or any other performance measure derived in accordance with U.S. GAAP. See “Non-GAAPFinancial Measures” in Part II, Item 7 of this Form 10-K for additional information and a reconciliation to the most directly comparable U.S.GAAP financial measure.(3)Total debt consists of borrowing under our Senior Secured Credit Facilities, as applicable, net of unamortized discount costs as of December31, 2017, 2016 and 2015 of $5.3 million, $6.4 million and $5.2 million, respectively. 56 ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSYou should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidatedfinancial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materiallyfrom those anticipated in these forward-looking statements as a result of various important factors, including those set forth under “Risk Factors”included in this Annual Report on Form 10-K.OverviewWe are a leading pop culture consumer products company. Our business is built on the principle that almost everyone is a fan of something andthe evolution of pop culture is leading to increasing opportunities for fan loyalty. We create whimsical, fun and unique products that enable fans toexpress their affinity for their favorite “something”—whether it is a movie, TV show, video game, musician or sports team. We infuse our distinctdesigns and aesthetic sensibility into one of the industry’s largest portfolios of licensed content over a wide variety of product categories, includingfigures, plush, accessories, apparel and homewares.SummaryOn November 6, 2017, we completed our IPO of 10,416,666 shares of Class A common stock at an initial public offering price of $12.00 per shareand received approximately $117.3 million in net proceeds after deducting underwriting discounts and commissions. We used the net proceeds topurchase 10,416,666 newly issued common units directly from FAH, LLC at a price per unit equal to the price per share of Class A common stockin the IPO less underwriting discounts and commissions. Immediately following the completion of the IPO and related Transactions, we held23,337,705 common units, representing an approximately 48.3% interest in FAH, LLC.Key Performance IndicatorsWe consider the following metrics to be key performance indicators to evaluate our business, develop financial forecasts, and make strategicdecisions. Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 (amounts in thousands) Net sales $516,084 $426,717 $56,565 $217,491 Net income (loss) $5,600 $26,880 $(15,561) $27,499 EBITDA (1) $69,751 $67,656 $(9,373) $35,424 Adjusted EBITDA (1) $89,919 $96,960 $13,170 $61,996 (1)Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA are financial measures not calculated inaccordance with U.S. GAAP, or non-GAAP financial measures. For a reconciliation of EBITDA and Adjusted EBITDA to net income (loss),the most closely comparable U.S. GAAP financial measure, see “Non-GAAP Financial Measures” in this item.57 Factors Affecting our BusinessGrowth in the Market for Pop Culture Consumer ProductsOur operating results and prospects will be impacted by developments in the market for pop culture consumer products. Our business hasbenefitted from pop culture trends including (1) technological innovation that has facilitated content consumption and engagement, (2) creation ofmore quality content, (3) greater cultural prevalence and acceptance of pop culture fandom and (4) increased engagement by fans with pop culturecontent beyond mere consumption driven by social media and demonstrated by fan-centric experiences, such as Comic-Con International: SanDiego and New York Comic Con, and the popularity of eSports. These trends have contributed to significant recent growth in the demand for popculture products like ours in recent years; however, consumer demand for pop culture products and pop culture trends can and does shift rapidlyand without warning. To the extent we are unable to offer products that appeal to consumers, our operating results will be adversely affected. Thisis particularly true given the concentration of our sales under certain of our brands, particularly Pop!, which represented approximately 70%, 64%and 75% of our sales for the years ended December 31, 2017, 2016 and 2015, respectively, and which is sold across multiple product categories.Relationships with Content ProvidersWe generate substantially all of our net sales from products based on intellectual property we license from others. We have strong relationshipswith many established content providers and seek to establish licensing relationships with newer content providers. For example, in 2016, weintroduced a line of products based on the video game property “Five Nights at Freddy’s.” This property and the sequel property released in the fallof 2016 accounted for sales of approximately $40.0 million, or 8%, of our net sales for the year ended December 31, 2017, and approximately$63.1 million, or 15%, of our net sales for the year ended December 31, 2016. Our content provider relationships are highly diversified, allowing usto license a wide array of properties and thereby reduce our exposure to any individual property or license.We believe there is a trend of content providers consolidating their relationships to do more business with fewer licensees. We believe our ability tohelp maximize the value and extend the relevance of our content providers’ properties has allowed us to benefit from this trend. Although we havea successful track record of renewing and extending the scope of licenses, our license agreements typically have short terms (between two andthree years), are not automatically renewable, and, in some cases, give the licensor the right to terminate the license agreement at will. In addition,the efforts of our senior management team have been integral to our relationships with our licensors. Inability to license newer pop cultureproperties, the termination or lack of renewal of one or more of our license agreements, or the renewal of a license agreement on less favorableterms, could adversely affect our business.Retail Industry Dynamics; Relationships with Retail CustomersHistorically, substantially all of our net sales have been derived from our retail customers and distributors, upon which we rely to reach theconsumers who are the ultimate purchasers of our products. Our top ten customers represented approximately 45%, 63% and 62% of our netsales for the years ended December 2017, 2016 and 2015, respectively. We depend on retailers to provide adequate and attractive space for ourproducts and point of purchase displays in their stores. In recent years, traditional retailers have been affected by a shift in consumer preferencestowards other channels, particularly e-commerce. We believe that this shift may have benefitted our business in recent periods as brick and mortarretailers dedicated additional shelf space to our products and pop culture consumer products generally to drive additional traffic to their stores andimprove sales in previously less productive shelf space. In addition, we have seen an increase in sales for our product on retailers’ ecommerceplatforms.Our customers do not make long-term commitments to us regarding purchase volumes and can therefore easily reduce their purchases of ourproducts. Any reduction in purchases of our products by our retail customers and distributors, or the loss of any key retailer or distributor for anyreason could adversely affect our business. In addition, our future growth depends upon our ability to successfully execute our business strategy.See Item 1A, “Risk Factors.”58 Content MixThe timing and mix of products we sell in any given quarter or year will depend on various factors, including the timing and popularity of newreleases by third-party content providers and our ability to license properties based on these releases. We have diversified our product offeringsacross property categories. We have visibility into the new release schedule of many our content providers and our expansive license portfolioallows us to dynamically manage new product creation. This insight allows us to adjust the mix of products based on classic evergreen propertiesand new releases, depending on the media release cycle. In addition, over time, we have continued to increase our number of active properties. Anactive property is a property from which we generate sales of products during a given period. For the years ended December 31, 2017, 2016 and2015, we had sales of our products across 500, 396 and 285 properties, respectively.Our results of operations may also fluctuate significantly from quarter to quarter or year to year depending on the timing and popularity of newproduct releases and related content releases. Sales of a certain product or group of products tied to particular content can dramatically increaseour net sales in any given quarter or year. For example, our net sales for the year ended December 31, 2016 were positively impacted by theintroduction of a new line of products based on the video game property “Five Nights at Freddy’s,” described above. A sequel to Five Nights atFreddy’s was released in the fall of 2016. The sales of this property continued in 2017 and represented 8% of sales for the year ended December31, 2017. Our license for “Five Nights at Freddy’s” expires at the end of 2021. While we expect to see growth in the number of properties andproducts over time, we expect that the number of active properties and the sales per active property will fluctuate from quarter to quarter or yearover year based on what is relevant in pop culture at that time and the types of properties we are producing against. In addition, despite our effortsto diversify the properties on which we base our products, if the performance of one or more of these properties fails to meet expectations or aredelayed in their release, our operating results could be adversely affected.Taxation and ExpensesAfter consummation of our IPO on November 6, 2017, we became subject to U.S. federal, state and local income taxes with respect to ourallocable share of any taxable income of FAH, LLC, and we will be taxed at the prevailing corporate tax rates. In addition to tax expenses, we alsowill incur expenses related to our operations, as well as payments under the Tax Receivable Agreement, which we expect to be significant. Weintend to cause FAH, LLC to make distributions in an amount sufficient to allow us to pay our tax obligations and operating expenses, includingdistributions to fund any ordinary course payments due under the Tax Receivable Agreement.In addition, as a public company, we are implementing additional procedures and processes for the purpose of addressing the standards andrequirements applicable to public companies. We expect to incur additional annual expenses related to these steps and, among other things,additional directors’ and officers’ liability insurance, director fees, reporting requirements of the SEC, transfer agent fees, hiring additionalaccounting, legal and administrative personnel, increased auditing and legal fees and similar expenses. We also expect to recognize certain non-recurring costs as part of our transition to a publicly traded company, consisting of professional fees and other expenses.Components of our Results of OperationsNet SalesWe sell a broad array of licensed pop culture consumer products across a variety of categories, including figures, plush, accessories, apparel andhomewares, primarily to retail customers and distributors. We also sell our products directly to consumers through our e-commerce operations and,to a lesser extent, at specialty licensing and comic book conventions and exhibitions.Revenue from the sale of our products is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, thereare no uncertainties regarding customer acceptance, the selling price is fixed or determinable, and collectability is reasonably assured. Weroutinely enter into arrangements with our customers to provide for markdown co-operation advertising and other various allowances and anestimate for those allowances is recorded when revenue is recognized. Sales terms typically do not allow for a right of return59 except in relation to a manufacturing defect. Shipping costs billed to our customers are included in net sales, while shipping and handling costs,which include inbound freight costs and the cost to ship products to our customers, are typically included in cost of sales.Cost of SalesCost of sales consists primarily of product costs, royalty expenses paid to our licensors and the cost to ship our products, including both inboundfreight and outbound products to our customers. Our cost of sales excludes depreciation and amortization.Our products are produced by third-party manufacturers primarily in China, Vietnam and Mexico. The use of third-party manufacturers enables usto avoid incurring fixed manufacturing costs, while maximizing flexibility, capacity and capability. As part of a continuing effort to reducemanufacturing costs and ensure speed to market, we have historically kept our production concentrated with a small number of manufacturers andfactories even as we have grown and diversified. In recent years, we have worked to improve the efficiency of our supply chain to improve ourgross margins.Our product costs and gross margins will be impacted from period to period based on the product mix in any given period. Our plush products tendto have a higher product cost and lower gross margins than our figures.Our royalty costs and gross margins will also be impacted from period to period based on our mix of licensed products sold, as well as a variety ofother factors. For the years ended December 31, 2017, 2016, the Successor 2015 Period and the Predecessor 2015 Period, our weighted averageroyalty rate was 15.0%, 15.2%, 16.2% and 14.6% respectively.Our shipping costs, both inbound and outbound, will fluctuate from period to period based on customer mix due to varying shipping terms and otherfactors.Selling, General and Administrative ExpensesSelling, general and administrative expenses are primarily driven by wages, commissions and benefits, warehouse, fulfillment (internal andexternal) and facilities costs, infrastructure and technology costs, advertising and marketing expenses of our products, including the costs toparticipate at specialty licensing and comic book conventions and exhibitions, as well as costs to develop promotional video and other onlinecontent created for advertising purposes. Credit card fees, insurance, legal expenses, other professional expenses and other miscellaneousoperating costs are also included in selling, general and administrative expenses. Selling costs generally correlate to revenue timing and thereforeexperience similar moderate seasonal trends. We expect general and administrative costs to increase as our business evolves, including thecosts of being a public company.We have invested considerably in general and administrative costs to support the growth and anticipated growth of our business and anticipatecontinuing to do so in the future. Following the IPO, we anticipate a significant increase in accounting, legal and professional fees associated withbeing a public company as further described above under “—Factors Affecting Our Business—Taxation and Expenses.”Acquisition Transaction CostsAcquisition transaction costs represent costs incurred for potential and completed acquisitions. In 2015, we incurred costs related to the ACONAcquisition. In 2016, we incurred costs related to various potential acquisitions, including the Underground Toys Acquisition. In 2017, we incurredcosts related to the Underground Toys Acquisition, the Loungefly Acquisition, and A Large Evil Corporation Acquisition.Depreciation and AmortizationDepreciation expense is recognized on a straight-line basis over the estimated useful lives of our property and equipment. Amortization relates todefinite-lived intangible assets that are recognized as expensed on a straight-line basis over the estimated useful lives. Our intangible assets,which are being amortized over a range of two to60 20 years, are mainly comprised of trade names, customer relationships and intellectual property we recognized as part of the ACON Acquisitionand, to a lesser extent, the Underground Toys Acquisition and the Loungefly Acquisition.Interest Expense, NetInterest expense, net includes the cost of our short-term borrowings and long-term debt, including the amortization of debt issuance costs andoriginal issue discounts, net of any interest income earned. Interest expense increased in 2017, primarily as a result of the incurrence of anadditional $50.0 million in long-term debt under our Term Loan A Facility (as defined below) in September 2016, the incurrence of $50.0 million inlong-term debt under our Term Loan B Facility (as defined below) in January 2017, the incurrence of an additional $20.0 million in long-term debtunder our Term Loan A Facility in June 2017 and the issuance of the Subordinated Promissory Notes in the aggregate principal amount of $20.0million effective June 26, 2017.Results of OperationsYear Ended December 31, 2017 Compared to Year Ended December 31, 2016The following table sets forth information comparing the components of net income for the years ended December 31, 2017 and 2016: Year Ended December 31, Period over Period Change 2017 2016 Dollar Percentage (amounts in thousands, except percentages) Net sales $516,084 $426,717 $89,367 20.9%Cost of sales (exclusive of depreciation and amortization shown separately below) 317,379 280,396 36,983 13.2%Selling, general, and administrative expenses 120,944 77,525 43,419 56.0%Acquisition transaction costs 3,641 1,140 2,501 219.4%Depreciation and amortization 31,975 23,509 8,466 36.0%Total operating expenses 473,939 382,570 91,369 23.9%Income (loss) from operations 42,145 44,147 (2,002) -4.5%Interest expense, net 30,636 17,267 13,369 77.4%Loss on extinguishment of debt 5,103 — 5,103 na Other income, net (734) — (734) na Income (loss) before income taxes 7,140 26,880 (19,740) -73.4%Income tax expense 1,540 — 1,540 na Net income (loss) 5,600 26,880 (21,280) -79.2%Less: net income attributable to non-controlling interests 1,875 — 1,875 na Net income (loss) attributable to Funko, Inc. $3,725 $26,880 $(23,155) -86.1%Net SalesNet sales were $516.1 million for the year ended December 31, 2017, an increase of 20.9% compared to $426.7 million for the year endedDecember 31, 2016. Net sales increased primarily as a result of the continued expansion of properties in our portfolio that we sold against.In the year ended December 31, 2017, the number of active properties increased 26% to 500 from 396 in the year ended December 31, 2016, andaverage net sales per active property declined slightly to $1.0 million in the year ended December 31, 2017 compared to $1.1 million in average netsales per active property for the year ended December 31, 2016. While we expect to see growth in the number of properties and products overtime, we expect that the number of active properties and the average sales per active property will fluctuate from year to year or quarter to quarterbased on what is relevant in pop culture at that time and the types of properties we are producing against.61 On a geographical basis, net sales in the United States increased 6.7% to $376.1 million in the year ended December 31, 2017 as compared to$352.4 million in the year ended December 31, 2016, and net sales in all foreign countries increased 88.5% to $140.0 million in the year endedDecember 31, 2017 from $74.3 million in the year ended December 31, 2016, primarily from the increased focus and strong demand in Europeresulting from the move to a direct distribution model with the Underground Toys Acquisition. On a product category basis, net sales of figuresincreased 20.8% to $422.0 million in the year ended December 31, 2017 and net sales of other products increased 21.8% to $94.1 million ascompared to the year ended December 31, 2016.Cost of Sales and Gross Margin (exclusive of depreciation and amortization)Cost of sales (exclusive of depreciation and amortization) was $317.4 million for the year ended December 31, 2017, an increase of 13.2%,compared to $280.4 million for the year ended December 31, 2016. Cost of sales (exclusive of depreciation and amortization) increased primarilyas a result of the continued growth in sales, as discussed above. In 2017, cost of sales included $3.2 million related to the application of purchaseaccounting in connection with the Underground Toys Acquisition and the Loungefly Acquisition, which required inventory to be recorded atestimated fair value at the time of acquisition. In 2016, cost of sales included $13.4 million related to the application of purchase accounting inconnection with the ACON Acquisition, which required inventory to be recorded at estimated fair value at the time of acquisition. This step-up invalue resulted in an increase to inventory of $22.1 million, $2.6 million, and $0.6 million based on the estimated fair value as of the date of theACON Acquisition, the Underground Toys Acquisition and Loungefly Acquisition, respectively.Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of sales, was 38.5% for theyear ended December 31, 2017, compared to 34.3% for the year ended December 31, 2016. Gross margin for the year ended December 31, 2017was positively impacted primarily by the absence of recording of inventory at estimated fair value in connection with the ACON Acquisition and, toa lesser extent, by improved product margins from Funko UK.Selling, General, and Administrative ExpensesSelling, general, and administrative expenses were $120.9 million for the year ended December 31 2017, an increase of 56.0%, compared to$77.5 million for the year ended December 31, 2016. The increase was largely driven by additional expenses related to becoming a publiccompany, as well as additional expenses related to the Underground Toys Acquisition, the Loungefly Acquisition, and investments in key areas tosupport future growth, including direct-to-consumer initiatives. Specifically, the increase was primarily due to a $24.3 million increase in personnelexpenses, a $6.9 million increase in professional fees and other costs, a $5.3 million increase in advertising, marketing and product developmentexpenses, a $4.2 million increase in rent and related facilities costs, a $3.2 million increase in equity-based compensation expenses. In addition,we recorded a $2.8 million increase in bad debt expense primarily as a result of the Toy’s “R” Us wind down and potential insolvency. Theseincreases were partially offset by a decrease in expense related to contingent consideration of $8.5 million, which was related to the ACONAcquisition, and which was recorded in 2016.Selling, general, and administrative expenses were 23.4% of sales for the year ended December 31, 2017, compared to 18.2% of sales for theyear ended December 31, 2016. As noted above, we have invested considerably in general and administrative costs to support the growth andanticipated growth of our business and anticipate continuing to do so in the future. Specifically, we anticipate a significant increase in accounting,legal and professional fees associated with being a public company in future periods.Acquisition Transaction CostsTransaction costs related to acquisitions were $3.6 million for the year ended December 31, 2017, compared to $1.1 million for the year endedDecember 31, 2016. Transaction costs for the year ended December 31, 2017 related to the Underground Toys Acquisition, the LoungeflyAcquisition and A Large Evil Corporation Acquisition. Transaction costs for the year ended December 31, 2016 were related to the UndergroundToys Acquisition and other potential acquisition targets.62 Depreciation and AmortizationDepreciation and amortization expense was $17.6 million and $14.4 million, respectively, for the year ended December 31, 2017, compared to$10.6 million and $12.9 million, respectively, for the year ended December 31, 2016. The increase in depreciation and amortization primarily relatedto the increase in depreciation on tooling and molds as a result of the expanded product offerings and leasehold improvements at our corporateoffices and warehouse facilities, and an increase in amortization related to the Underground Toys Acquisition and the Loungefly Acquisition.Interest Expense, NetInterest expense, net was $30.6 million for the year ended December 31, 2017, an increase of 77.4%, compared to $17.3 million for the year endedDecember 31, 2016. The increase in interest expense, net primarily related to the incurrence of an additional $50.0 million in long-term debt underour Term Loan A Facility in September 2016, the incurrence of $50.0 million in long-term debt under our Term Loan B Facility in January 2017, andthe incurrence of $20.0 million in long-term debt under our Term Loan A Facility and issuance of the Subordinated Promissory Notes in theaggregate principal amount of $20.0 million, both of which occurred in June 2017.Loss on extinguishment of debtLoss on extinguishment of debt was $5.1 million for the year ended December 31, 2017 and represented the write-off of unamortized discountcosts on our Term Loan B Facility which was repaid in full in November 2017 in connection with the IPO.Income Tax ExpenseIncome tax expense was $1.5 million for the year ended December 31, 2017 and was a result of our IPO in November 2017, as we are now subjectto corporate income tax. See Note 11, Income Taxes.Year Ended December 31, 2016 Compared to the Successor 2015 Period and the Predecessor 2015 PeriodThe following discussion and analysis presents operations and cash flows for two periods, Predecessor and Successor, which relate to the periodpreceding the ACON Acquisition and the period succeeding the ACON Acquisition, respectively. References to the Successor 2015 Period refer tothe period from October 31, 2015 through December 31, 2015 and references to the Predecessor 2015 Period refer to the period from January 1,2015 through October 30, 2015.The following table sets forth information comparing the components of net income (loss) for the year ended December 31, 2016 and theSuccessor 2015 Period and the Predecessor 2015 Period. Successor Predecessor Period from Period from October 31, January 1, Year Ended 2015 through 2015 through December 31, December 31, October 30, Period over Period Change 2016 2015 2015 Dollar Percentage (amounts in thousands, except percentages) Net sales $426,717 $56,565 $217,491 $152,661 55.7%Cost of sales (exclusive of depreciation and amortization shown separately below) 280,396 44,485 131,621 104,290 59.2%Selling, general, and administrative expenses 77,525 13,894 37,145 26,486 51.9%Acquisition transaction costs 1,140 7,559 13,301 (19,720) -94.5%Depreciation and amortization 23,509 3,370 5,723 14,416 158.5%Total operating expenses 382,570 69,308 187,790 125,472 48.8%Income (loss) from operations 44,147 (12,743) 29,701 27,189 160.3%Interest expense, net 17,267 2,818 2,202 12,247 244.0%Net income (loss) $26,880 $(15,561) $27,499 $14,942 125.2%63 Net SalesNet sales were $426.7 million for the year ended December 31, 2016, an increase of 55.7%, compared to $56.6 million for the Successor 2015Period and $217.5 million for the Predecessor 2015 Period. Net sales increased primarily as a result of the continued development of our productsacross more properties. For the year ended December 31, 2016, we had an average of $1.1 million net sales per active property, a 12% increasecompared to our average net sales per active property for the year ended December 31, 2015. For the year ended December 31, 2016, we hadsales of our products across 396 properties, an increase of 39% compared to the 285 properties across which we had sales in the year endedDecember 31, 2015. This increase in average net sales per active property along with the increase in total properties was a key driver of our netsales increase. This expansion across our product and property portfolio also led to an increased footprint within our retail customers, primarily asa result of increased shelf space, as well as growth in the number of our retail customers. For example, we experienced a $63.1 million increaseas a result of a line of products based on the video game property “Five Nights at Freddy’s,” which was introduced in 2016.Cost of Sales (exclusive of depreciation and amortization)Cost of sales (exclusive of depreciation and amortization) was $280.4 million for the year ended December 31, 2016. Cost of sales (exclusive ofdepreciation and amortization) was $44.5 million for the Successor 2015 Period and $131.6 million for the Predecessor 2015 Period. Cost of salesincreased primarily as a result of continued sales growth, due primarily to an increase in total active properties as discussed above. Cost of saleswas further impacted by the application of purchase accounting in connection with the ACON Acquisition, which required inventory to be recordedat estimated fair value. This step up in value resulted in an increase to inventory of $22.1 million based on the estimated fair value as of the dateof the ACON Acquisition. As a result, during the year ended December 31, 2016 and the Successor 2015 Period, cost of sales increased by $13.4million and $8.7 million, respectively.Gross margin (exclusive of depreciation and amortization), calculated as net sales less cost of sales as a percentage of sales, was 34.3% for theyear ended December 31, 2016. Gross margin (exclusive of depreciation and amortization) was 21.4% for the Successor 2015 Period and 39.5%for the Predecessor 2015 Period. For the year ended December 31, 2016 and the Successor 2015 Period, gross margin was negatively impactedby 3.1 percentage points and 15.4 percentage points, respectively, due to recording inventory at the estimated fair value in connection with theACON Acquisition.Selling, General and Administrative ExpensesSelling, general and administrative expenses were $77.5 million for the year ended December 31, 2016. Selling, general and administrativeexpenses were $13.9 million for the Successor 2015 Period and $37.1 million for the Predecessor 2015 Period. The increase was primarily due toan increase in personnel costs of $14.2 million, contingent consideration of $7.0 million, administrative costs of $3.0 million, advertising costs of$2.7 million, bad debt expense of $2.6 million, sales commissions of $1.6 million, and other costs of $7.4 million. These increases were partiallyoffset by a decrease in equity-based compensation of $12.0 million. The increase in contingent consideration was a result of the ACON Acquisitionand represents the adjustment to the fair value of the contingent consideration recorded in the year ended December 31, 2016. Other increases inpersonnel costs, professional fees and other costs were primarily due to our overall growth, which required additional headcount, facilities andinfrastructure to support our historical growth and anticipated future growth of the business. Commissions and advertising costs increased in linewith the increase in net sales. The decrease in equity-based compensation was primarily due to a significant amount of expense recorded in thePredecessor 2015 Period related to the ACON Acquisition.Selling, general and administrative expenses were 18.2% of sales for the year ended December 31, 2016. Selling, general and administrativeexpenses were 24.6% of sales for the Successor 2015 Period and 17.1% of sales for the Predecessor 2015 Period. This decrease was primarilydue to our significant revenue growth in excess of the cost increases, partially offset by the impact of the ACON Acquisition and continuedinvestment in headcount, facilities and infrastructure.64 Acquisition Transaction CostsTransaction costs related to acquisitions were $1.1 million for the year ended December 31, 2016. Transaction costs related to acquisitions were$7.6 million for the Successor 2015 Period and $13.3 million for the Predecessor 2015 Period. Transaction costs for the year ended December 31,2016 related to the Underground Toys Acquisition and other potential acquisition targets. Transaction costs in both the Successor 2015 Period andPredecessor 2015 Period related to the costs incurred in connection with the ACON Acquisition, which were comprised of change of control feesrelated to our license agreements, legal fees and other professional costs for due diligence and other work.Depreciation and AmortizationDepreciation and amortization expense was $23.5 million for the year ended December 31, 2016. Depreciation and amortization expense was $3.4million for the Successor 2015 Period and $5.7 million for the Predecessor 2015 Period. The increase in depreciation and amortization primarilyrelated to the amortization of our intangible assets from the ACON Acquisition. During the application of the acquisition method of accounting, werecorded the fair value of certain intangible assets. The impact of such adjustments increased depreciation and amortization expense for the yearended December 31, 2016 and the Successor 2015 Period by $12.9 million and $3.6 million, respectively.Interest Expense, NetInterest expense, net was $17.3 million for the year ended December 31, 2016. Interest expense, net was $2.8 million for the Successor 2015Period and $2.2 million for the Predecessor 2015 Period. The increase in interest expense, net was primarily attributable to $175.0 million in long-term debt incurred under our Term Loan A Facility in connection with the ACON Acquisition, along with a $50.0 million increase in Term Loan AFacility borrowings in September 2016.Non-GAAP Financial MeasuresEBITDA, Adjusted EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Earnings per Diluted Share (collectively the “Non-GAAPFinancial Measures”) are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. TheNon-GAAP Financial Measures are not measurements of our financial performance under U.S. GAAP and should not be considered as analternative to net income (loss) or any other performance measure derived in accordance with U.S. GAAP. We define EBITDA as net income(loss) before interest expense, net, income tax expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA further adjustedfor monitoring fees, non-cash charges related to equity-based compensation programs, earnout fair market value adjustments, inventory step-ups,loss on extinguishment of debt, acquisition transaction costs, foreign currency transaction gains and losses and other unusual or one-time items.We define Adjusted Pro Forma Net Income as net income attributable to Funko, Inc adjusted for the reallocation of income attributable to non-controlling interests from the assumed exchange of all outstanding common units and options in FAH, LLC (or the common unit equivalent of profitinterests in FAH, LLC for periods prior to the IPO) for newly issued-shares of Class A common stock of Funko, Inc. and further adjusted for theimpact of certain non-cash charges and other items that we do not consider in our evaluation of ongoing operating performance. These itemsinclude, among other things, reallocation of net income attributable to non-controlling interests, monitoring charges, loss on extinguishment of debt,non-cash charges related to equity-based compensation programs, earnout fair market value adjustments, inventory step-ups, acquisitiontransaction costs, foreign currency transaction gains and losses and other unusual or one-time items, and the income tax expense effect of (1)these adjustments and (2) the pass-through entity taxable income as if the parent company was a subchapter C corporation in periods prior to theIPO. We define Adjusted Pro Forma Earnings per Diluted Share as Adjusted Pro Forma Net Income divided by the weighted-average shares ofClass A common stock outstanding, assuming (1) the full exchange of all outstanding common units and options in FAH, LLC (or the common unitequivalent of profit interest in FAH, LLC for periods prior to the IPO) for newly issued-shares of Class A common stock of Funko, Inc and (2) thedilutive effect of stock options and unvested common units, if any. We caution investors that amounts presented in accordance with ourdefinitions of the Non-GAAP Financial Measures may not be comparable to similar measures disclosed by our competitors, because not allcompanies and analysts calculate the Non-GAAP Financial Measures in the same manner. We present the Non-GAAP Financial Measuresbecause we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts,investors, and other interested parties in the evaluation of65 companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these Non-GAAPFinancial Measures as a reasonable basis for comparing our ongoing results of operations.Management uses the Non-GAAP Financial Measures: •as a measurement of operating performance because they assist us in comparing the operating performance of our business on aconsistent basis, as they remove the impact of items not directly resulting from our core operations; •for planning purposes, including the preparation of our internal annual operating budget and financial projections; •as a consideration to assess incentive compensation for our employees; •to evaluate the performance and effectiveness of our operational strategies; and •to evaluate our capacity to expand our business.By providing these Non-GAAP Financial Measures, together with reconciliations, we believe we are enhancing investors’ understanding of ourbusiness and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. In addition,our Senior Secured Credit Facilities use Adjusted EBITDA to measure our compliance with covenants such as senior leverage ratio. The Non-GAAP Financial Measures have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute fornet income (loss) or other financial statement data presented in our consolidated financial statements included elsewhere in this Annual Report onForm 10-K as indicators of financial performance. Some of the limitations are: •such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; •such measures do not reflect changes in, or cash requirements for, our working capital needs; •such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments onour debt; •although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to bereplaced in the future and such measures do not reflect any cash requirements for such replacements; and •other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparativemeasures.Due to these limitations, Non-GAAP Financial Measures should not be considered as measures of discretionary cash available to us to invest inthe growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using these non-GAAP measures only supplementally. As noted in the table below, the Non-GAAP Financial Measures include adjustments for non-cash chargesrelated to equity-based compensation programs, earnout fair market value adjustments, inventory step-ups, loss on extinguishment of debt,acquisition transaction costs, foreign currency transaction gains and losses and other unusual or one-time items. It is reasonable to expect thatthese items will occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can varysignificantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internaloperating results and operating results of other companies over time. In addition, the Non-GAAP Financial Measures include adjustments for otheritems, such as monitoring fees, that we do not expect to regularly record following our IPO. Each of the normal recurring adjustments and otheradjustments described herein and in the reconciliation table below help management with a measure of our core operating performance over timeby removing items that are not related to day-to-day operations.66 The following tables reconcile the Non-GAAP Financial Measures to the most directly comparable U.S. GAAP financial performance measure,which is net income (loss), for the periods presented: Three Months EndedDecember 31, Year Ended December 31, 2017 2016 2017 2016 Net income (loss) attributable to Funko, Inc. $5,626 $15,754 $3,725 $26,880 Reallocation of net income attributable to non-controlling interests from the assumed exchange of common units of FAH, LLC for Class A common stock (7) 1,875 — 1,875 — Monitoring fees (1) 206 374 1,676 1,498 Equity-based compensation (2) 1,246 618 5,574 2,369 Loss on extinguishment of debt 5,103 — 5,103 — Earnout fair market value adjustment (3) — 503 30 8,561 Inventory step-up (4) 552 — 3,182 13,434 Acquisition transaction costs and other expenses (5) 1,025 1,663 5,336 3,442 Foreign currency transaction (gain) loss (6) (588) — (733) — Income tax expense (8) (5,131) (6,846) (8,345) (20,339)Adjusted pro forma net income $9,914 $12,066 $17,423 $35,845 Weighted-average shares of Class A common stock outstanding-basic 23,338 23,338 Dilutive common units of FAH, LLC that are convertible into Class A common stock 27,297 27,297 Adjusted pro forma weighted-average shares of Class A stock outstanding - diluted 50,635 50,635 Adjusted pro forma earnings per diluted share $0.20 $0.34 Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 (amounts in thousands) Net income (loss) $5,600 $26,880 $(15,561) $27,499 Interest expense, net 30,636 17,267 2,818 2,202 Income tax expense 1,540 — — — Depreciation and amortization 31,975 23,509 3,370 5,723 EBITDA $69,751 $67,656 $(9,373) $35,424 Adjustments: Monitoring fees (1) 1,676 1,498 272 3,346 Equity-based compensation (2) 5,574 2,369 4,484 9,925 Earnout fair market value adjustment (3) 30 8,561 1,540 — Loss on extinguishment of debt 5,103 — — — Inventory step-up (4) 3,182 13,434 8,688 — Acquisition transaction costs and other expenses (5) 5,336 3,442 7,559 13,301 Foreign currency transaction gain (6) (733) — — — Adjusted EBITDA $89,919 $96,960 $13,170 $61,99667  (1)Represents monitoring fees paid pursuant to a management services agreement with Fundamental Capital, LLC, which was terminated in2015 in connection with the ACON Acquisition, and a management services agreement with ACON that was entered into in connection withthe ACON Acquisition, which terminated upon the consummation of the IPO in November 2017.(2)Represents non-cash charges related to equity-based compensation programs, which vary from period to period depending on timing ofawards.(3)Reflects the increase in the fair value of contingent liabilities incurred in connection with the ACON Acquisition and the Underground ToysAcquisition.(4)Represents a non-cash adjustment to cost of sales resulting from acquisitions.(5)Represents legal, accounting, and other related costs incurred in connection with the IPO, the ACON Acquisition, the Underground ToysAcquisition, the Loungefly Acquisition, A Large Evil Corporation Acquisition and other potential acquisitions.(6)Represents both unrealized and realized foreign currency (gains) losses on transactions other than in U.S. dollars.(7)Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of common units of FAH,LLC in periods in which income was attributable to non-controlling interests.(8)Represents the income tax expense effect of (i) the above adjustments and (ii) the pass-through entity taxable income as if the parent werecompany was a subchapter C corporation in periods prior to the IPO. This assumption uses an effective tax rate of 36.2% for theadjustments and the pass-through entity taxable income. Liquidity and Financial ConditionIntroductionOur primary requirements for liquidity and capital are working capital, inventory management, capital expenditures, debt service and generalcorporate needs. In the year ended December 31, 2017 and 2016, we also received contributions from members of FAH, LLC as further describedbelow under “Liquidity;” however, we do not anticipate receiving any additional contributions from members of FAH, LLC.On November 6, 2017, we completed our IPO of 10,416,666 shares of our Class A common stock at a public offering price of $12.00 per share.We received approximately $117.3 million in net proceeds after deducting underwriting discounts and commissions. We used the net proceeds topurchase 10,416,666 common units directly from FAH, LLC at a price per unit equal to the initial public offering price per share of Class A commonstock sold in the IPO, less underwriting discounts and commissions. FAH, LLC used the net proceeds from the sale of common units to Funko,Inc., together with cash on hand, to repay all of the outstanding aggregate principal balance and accrued interest of $20.9 million on ourSubordinated Promissory Notes, repay all of the outstanding aggregate principal balance and accrued interest of $46.1 million on our Term Loan BFacility and repay all of the outstanding principal balance and accrued interest of $55.6 million on our Revolving Credit Facility.68 Liquidity and Capital ResourcesThe following table shows summary cash flow information for the years ended December 31, 2017 and 2016 and the Successor 2015 andPredecessor 2015 Periods (in thousands): Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 Net cash provided by operating activities $23,837 $49,468 $14,110 $8,538 Net cash used in investing activities (65,215) (22,105) (244,421) (10,043)Net cash provided by (used in) financing activities 43,012 (45,613) 244,456 11,390 Effect of exchange rates on cash and cash equivalents (67) — — — Net increase (decrease) in cash and cash equivalents $1,567 $(18,250) $14,145 $9,885 Operating Activities. Our net cash provided by (used in) operating activities consists of net income (loss) adjusted for certain non-cash items,including depreciation and amortization, equity-based compensation and fair value adjustments to contingent consideration, accretion of discounton long-term debt, as well as the effect of changes in working capital and other activities.Net cash provided by operating activities was $23.8 million for the year ended December 31, 2017, compared to $49.5 million for the year endedDecember 31, 2016. The decrease was primarily due to changes in working capital, which reduced cash provided by operating activities by $18.0million. Changes in working capital reduced cash provided by operating activities primarily due to an increase in inventory of $22.7 million and adecrease in accrued royalties of $4.6 million, partially offset by an increase in accounts receivables and decreases in income taxes payable andaccounts payable of $5.2 million, $2.3 million and $4.3 million, respectively. In addition, non-cash adjustments increased net cash provided byoperating activities by $13.6 million in the year ended December 31, 2017, due primarily to a $8.5 million increase in depreciation and amortization,loss on extinguishment of debt of $5.1 million, a $3.2 million increase in equity-based compensation and a $2.7 million increase in accretion ofdiscount on long-term debt, when compared to the year ended December 31, 2016. These increases were partially offset by a $5.5 milliondecrease in non-cash adjustments related to contingent consideration. Additionally, the decreases in net cash provided by operating activities wasimpacted by a decline in net income of $21.3 million in the year ended December 31, 2017 compared to $26.9 million in the year ended December31, 2016.For the year ended December 31, 2016, net cash provided by operating activities was $49.5 million and was comprised of net income of $26.9million, increased by $32.8 million related to non-cash adjustments, primarily related to depreciation and amortization, contingent consideration andequity-based compensation. Other operating changes in working capital decreased cash provided by operating activities by $10.2 million. Thedecrease in working capital unfavorably impacted net cash through increases in accounts receivable of $33.6 million and in prepaid expenses andother assets of $8.5 million, partially offset by decreases in accounts payable and accrued royalties of $14.7 million and $7.7 million, respectively.For the Successor 2015 Period, net cash provided by operating activities was $14.1 million and was comprised of a net loss of $15.6 million,increased by $9.8 million related to non-cash adjustments, primarily related to depreciation and amortization, contingent consideration and equity-based compensation. Changes in working capital increased cash provided by operating activities by $19.9 million. The increase in working capitalfavorably impacted net cash through a decrease in inventory of $10.2 million and a decrease in accounts receivable of $6.1 million, and furtherfavorably impacted net cash through an increase in accrued royalties of $8.0 million, partially offset by a $1.9 million increase in accounts payableand a $2.6 million increase in other accrued expenses.For the Predecessor 2015 Period, net cash provided by operating activities was $8.5 million and was comprised of net income of $27.5 million,increased by $16.4 million related to non-cash adjustments, primarily depreciation and amortization and equity-based compensation. Changes inworking capital decreased cash provided by operating activities by $35.3 million. The decrease in working capital unfavorably impacted net cashthrough an69 increase in accounts receivable of $36.1 million, an increase in inventory of $18.0 million, and an increase in prepaid expenses and other assets of$6.0 million, partially offset by increases in accounts payable of $16.7 million and other accrued expenses of $8.1 million.Investing Activities. Our net cash used in investing activities primarily consists of acquisitions, net of cash, and purchase of property andequipment. For the year ended December 31, 2017, net cash used in investing activities was $65.2 million and was primarily comprised of initialcash consideration of $12.6 million, $16.1 million and $3.9 million for the Underground Toys Acquisition, the Loungefly Acquisition and A Large EvilCorporation Acquisition, respectively. Additionally, $33.6 million of net cash used in investing activities was for the purchase of property andequipment and primarily consisted of $21.1 million for the purchase of property and equipment related to tooling and molds for the expansion ofproduct lines and $6.6 million for leasehold improvements related to the buildout of our new headquarters.For the year ended December 31, 2016, net cash used in investing activities was $22.1 million and was primarily comprised of the purchase ofproperty and equipment related to tooling and molds as a result of our expansion of product lines and, to a lesser extent, from leaseholdimprovements to our former and new headquarters.For the Successor 2015 Period, net cash used in investing activities was $244.4 million, which was primarily related to the ACON Acquisition.For the Predecessor 2015 Period, net cash used in investing activities was $10.0 million and was primarily comprised of $9.0 million for thepurchase of property and equipment related to tooling and molds as a result of our expansion of product lines.Financing Activities. Our financing activities primarily consist of proceeds from stock issuances, the issuance of long-term debt, net of debtissuance costs, the repayment of long-term debt, payments and borrowings under our line of credit facility, contributions from, and distributions to,members and the payment of contingent consideration. We do not anticipate any financing activity related to contributions from members goingforward.For the year ended December 31, 2017, net cash provided by financing activities was $43.0 million, primarily related to proceeds from theissuance of Class A common stock sold in the IPO net of underwriter’s discounts and commissions of $117.3 million, proceeds from the TermLoan A Facility, Term Loan B Facility and Subordinated Promissory Notes of $86.3 million, contribution from members of FAH, LLC of $5.0 million,partially offset by payments on the Term Loan B Facility and Subordinated Promissory Notes of $79.0 million, $72.8 million in distributions tomembers of FAH, LLC and payments for contingent consideration of $18.0 million. During 2017, we also had net borrowings on the RevolvingCredit Facility of $4.1 million.For the year ended December 31, 2016, net cash used in financing activities was $45.6 million, primarily related to $70.4 million of distributions tothe members of FAH, LLC and $36.9 million of cash used for contingent consideration payments related to the ACON Acquisition, partially offsetby a net increase of $40.0 million of net cash proceeds from Term Loan A Facility borrowings, a net increase of $6.7 million of Revolving CreditFacility borrowings and a $15.0 million contribution from certain members of FAH, LLC.For the Successor 2015 Period, net cash provided by financing activities was $244.5 million, primarily from $125.6 million of contributions frommembers, and $149.7 million of net cash from proceeds from Term Loan A Facility borrowings, partially offset by a net decrease in borrowingsunder our Revolving Credit Facility and other debt issuance costs and related party note repayments.For the Predecessor 2015 Period net cash provided by financing activities was $11.4 million, primarily from $20.9 million of cash proceeds fromnet borrowing under our then existing revolving credit facility and $3.2 million of cash proceeds from the exercise of equity based options, partiallyoffset by distributions to members of $12.2 million.Financial ConditionNotwithstanding our obligations under the Tax Receivable Agreement, we believe that our sources of liquidity and capital will be sufficient tofinance our continued operations, growth strategy, our planned capital expenditures and the additional expenses we expect to incur as a publiccompany for at least the next 12 months. However, we cannot assure you that our cash provided by operating activities, cash and cashequivalents or cash available70 under our Revolving Credit Facility will be sufficient to meet our future needs. If we are unable to generate sufficient cash flows from operations inthe future, and if availability under our Revolving Credit Facility is not sufficient, we may have to obtain additional financing. If we obtain additionalcapital by issuing equity, the interests of our existing stockholders will be diluted. If we incur additional indebtedness, that indebtedness maycontain significant financial and other covenants that may significantly restrict our operations. We cannot assure you that we could obtainrefinancing or additional financing on favorable terms or at all. As of December 31, 2017, we were in compliance with all covenants in our SeniorSecured Credit Facilities.The credit agreement governing the Senior Secured Credit Facilities contains a number of covenants that, among other things and subject tocertain exceptions, restrict our ability to: •incur additional indebtedness; •incur certain liens; •consolidate, merge or sell or otherwise dispose of their assets; •alter the business conducted by them and their subsidiaries; •make investments, loans, advances, guarantees and acquisitions; •enter into sale and leaseback transactions; •pay dividends or make other distributions on equity interests, or redeem, repurchase or retire equity interests; •enter into transactions with affiliates; •enter into agreements restricting their subsidiaries’ ability to pay dividends; •issue or sell equity interests or securities convertible into or exchangeable for equity interests; •redeem, repurchase or refinance other indebtedness; and •amend or modify their governing documents.In addition, the credit agreement requires FAH, LLC and its subsidiaries to comply on a quarterly basis with a maximum senior leverage ratio and aminimum fixed charge coverage ratio (in each case, measured on a trailing four-quarter basis). The maximum senior leverage ratio will becomemore restrictive over time, decreasing to 3.08:1.00 for the quarter ended December 31, 2017, and 2.83:1.00 for the quarter ending March 31, 2018and each following quarter.The credit agreement also contains certain customary representations and warranties and affirmative covenants, and certain reporting obligations.In addition, the lenders under the Senior Secured Credit Facilities will be permitted to accelerate all outstanding borrowings and other obligations,terminate outstanding commitments and exercise other specified remedies upon the occurrence of certain events of default (subject to certaingrace periods and exceptions), which include, among other things, payment defaults, breaches of representations and warranties, covenantdefaults, certain cross-defaults and cross-accelerations to other indebtedness, certain events of bankruptcy and insolvency, certain judgments andchanges of control. The credit agreement defines “change of control” to include, among other things, ACON and its affiliates ceasing to own andcontrol, directly or indirectly, (a) at least 25.0% of the aggregate outstanding voting and economic power of FAH, LLC, and (b) a greater percentageof the voting power of FAH, LLC than any other person or group.As of December 31, 2017, we had $7.7 million of cash and cash equivalents and $94.1 million of working capital, compared with $6.2 million ofcash and cash equivalents and $54.9 million of working capital as of December 31, 2016. Working capital is impacted by the current portion of ourlong-term debt, which decreased as of December 31, 2017 as compared to December 31, 2016, due to the seasonal trends of our business andthe timing of new product releases. For further discussion of changes in our debt, see below, and Note 10, Debt of the notes to our consolidatedfinancial statements.On March 7, 2018, we entered into an amendment to our credit agreement which provides for, among other things, (i) a $13.0 million prepayment ofthe amounts owing under the Term Loan A Facility on the effective date71 of the amendment, with no changes in the amount of future amortization payments, (ii) a reduction in the interest rate margins (a) for the TermLoan A Facility, from 6.25% to 5.50% for base rate loans and 7.25% to 6.50% for LIBOR rate loans and (b) for the Revolving Credit Facility, from2.50% to 1.75% for LIBOR rate loans, (iii) a 1% prepayment premium on prepayments under both the Term Loan A Facility and the RevolvingCredit Facility for 180 days after the effective date of the amendment, and (iv) a $20.0 million increase to the borrowing base under the RevolvingCredit Facility, so long as no loan party formed under the laws of England and Wales or Funko UK, Ltd. incurs secured indebtedness for borrowedmoney.Future Sources and Uses of LiquiditySourcesAs noted above, historically, our primary sources of cash flows have been cash flows from operating activities and borrowings under our SeniorSecured Credit Facilities and Subordinated Promissory Notes (see Note 10, Debt of the notes to our consolidated financial statements). OnNovember 6, 2017, we completed our IPO of 10,416,666 shares of our Class A common stock at a public offering price of $12.00 per share. Wereceived approximately $117.3 million in net proceeds after deducting underwriting discounts and commissions. We used the net proceeds topurchase 10,416,666 common units directly from FAH, LLC at a price per unit equal to the initial public offering price per share of Class A commonstock sold in the IPO, less underwriting discounts and commissions.Senior Secured Credit Facilities. For a discussion of our Senior Secured Credit Facilities, see Note 10, Debt of the notes to our consolidatedfinancial statements Using the net proceeds from the IPO and cash on hand, in November 2017, we repaid all of the outstanding aggregateprincipal balance and accrued interest of $46.1 million on our Term Loan B Facility and repaid all of the outstanding principal balance and accruedinterest of $55.6 million on our Revolving Credit Facility.Subordinated Promissory Notes. For a discussion of our Subordinated Promissory Notes, see Note 10, Debt of the notes to our consolidatedfinancial statements. Using the net proceeds from the IPO and cash on hand, in November 2017, we repaid all of the outstanding aggregateprincipal balance and accrued interest of $20.9 million on our Subordinated Promissory Notes.UsesAdditional future liquidity needs may include public company costs, the redemption right held by the Continuing Equity Owners that they mayexercise from time to time (should we elect to exchange their common units for a cash payment), payments under the Tax Receivable Agreementand general cash requirements for operations and capital expenditures. The Continuing Equity Owners may exercise their redemption right for aslong as their common units remain outstanding. Although the actual timing and amount of any payments that may be made under the TaxReceivable Agreement will vary, we expect that the payments we will be required to make to the Continuing Equity Owners will be significant. Anypayments made by us to the Continuing Equity Owners under the Tax Receivable Agreement will generally reduce the amount of overall cash flowthat might have otherwise have been available to us or to FAH, LLC and, to the extent that we are unable to make payments under the TaxReceivable Agreement for any reason, the unpaid amounts generally will be deferred and will accrue interest until paid by us; provided however,that nonpayment for a specified period may constitute a material breach under the Tax Receivable Agreement and therefore may acceleratepayments due under the Tax Receivable Agreement.SeasonalityWhile our customers in the retail industry typically operate in highly seasonal businesses, we have historically experienced only moderateseasonality in our business. Historically, over 50% of our net sales are made in the third and fourth quarters, primarily in the period from Augustthrough November, as our customers build up their inventories in anticipation of the holiday season. Generally, the first quarter of the yearrepresents the lowest volume of shipment and sales in our business and in the retail and toy industries generally and it is also the least profitablequarter due to the various fixed costs of the business. However, the rapid growth we have experienced in recent years may have masked the fulleffects of seasonal factors on our business to date, and as such, seasonality may have a greater effect on our results of operations in futureperiods.72 Contractual Obligations 2018 2019 2020 2021 2022 Thereafter Total Long term debt and related interest (1) $28,983 $28,164 $27,396 $214,516 $— $— $299,059 Operating leases 6,691 5,953 5,922 4,999 3,911 14,364 41,840 Minimum royalty obligations (2) 28,587 1,804 358 — — — 30,749 Revolving Credit Facility (3) 10,801 — — — — — 10,801 Total $75,062 $35,921 $33,676 $219,515 $3,911 $14,364 $382,449 (1)We estimated interest payments through the maturity of our Senior Secured Credit Facilities by applying the effective interest rate of 9.2%in effect as of December 31, 2017 under our Term Loan A Facility. See Note 10, Debt of the notes to our consolidated financial statements.(2)Represents minimum guaranteed royalty payments under licensing arrangements.(3)Represents the amount owed as of December 31, 2017 under our Revolving Credit Facility.Off-Balance Sheet ArrangementsAs of December 31, 2017, we did not have any off-balance sheet arrangements.Recent Accounting PronouncementsSee discussion of recently adopted and recently issued accounting pronouncements in Note 2, Significant Accounting Policies of the notes to ourconsolidated financial statements.Critical Accounting Policies and EstimatesDiscussion and analysis of our financial condition and results of operations are based on our consolidated financial statements which have beenprepared in accordance with U.S. GAAP. The preparation of these financial statements require us to make estimates and judgements that affectthe reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities, revenue and expenses at the date of theconsolidated financial statements. We base our estimates on historical experience and on various other assumptions in accordance with U.S.GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions orconditions.Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and operatingresults and require management’s most difficult, subjective or complex judgements, often as a result of the need to make estimates about theeffect of matters that are inherently uncertain. Our critical accounting policies and estimates include those related to revenue recognition and salesallowances, royalties, inventory, goodwill and intangible assets, equity-based compensation and income taxes. Changes to these estimates couldhave a material adverse effect on our results of operations and financial condition.The JOBS Act permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revisedaccounting standards applicable to public companies. We have chosen to “opt out” of this provision and, as a result, we will adopt new or revisedaccounting standards upon or prior to required public company adoption dates. This decision to opt out of the extended transition period under theJOBS Act is irrevocable.Revenue Recognition and Sales Allowance. Revenue from the sale of our products is recognized when all of the following criteria are met: (1)persuasive evidence of an arrangement exists; (2) there are no uncertainties regarding customer acceptance; (3) the selling price is fixed ordeterminable; and (4) collectability is reasonably assured. The majority of revenue is recognized upon shipment of products to the customer.We routinely enter into arrangements with our customers to provide sales incentives, and provide allowances for returns and defectivemerchandise. Such programs are based primarily on customer purchases and specified73 factors relating to sales to consumers. While the majority of sales adjustments are readily determinable at period end and do not require estimates,certain sales adjustments require us to make estimates. In making these estimates, we consider all available information, including the overallbusiness environment, historical trends and information from customers. Sales incentives and allowances for returns and defective merchandiseare recorded as sales adjustments and reduce revenue in the period the related revenue is recognized.Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on our consolidated balance sheets.Deferred revenue is classified as a current liability based on the expectation of recognition within 12 months following the date of each balancesheet. Sales terms do not allow for a right of return except in relation to a manufacturing defect.Sales taxes collected on behalf of governmental authorities are recorded on a net basis and excluded from revenue.Royalties. We enter into agreements for rights to licensed trademarks, copyrights and likenesses for use in our products. These licensingagreements require the payment of royalty fees to the licensor based on a percentage of revenue. Many licensing agreements also requireminimum royalty commitments. When royalty fees are paid in advance, we record these payments as a prepaid asset, either current or long- termbased on when we expect to receive revenues under the related licensing agreement. If we determine that it is probable that the expected revenuewill not be realized, a reserve is recorded against the prepaid asset for the non-recoverable portion. As of December 31, 2017, we recorded aprepaid asset of $6.4 million, net of a reserve of $2.9 million. As of December 31, 2016, we recorded a prepaid asset of $6.9 million, net of areserve of $0.6 million.We record a royalty liability as revenues are earned based on the terms of the licensing agreement. In situations where a minimum commitment isnot expected to be met based on expected revenues, we will accrue up to the minimum amount when it is reasonably certain that revenuesgenerated will not meet the minimum commitment. Royalty and license expense is recorded as cost of sales on the consolidated statements ofoperations. Royalty expenses for the years ended December 31, 2017, 2016, the Successor 2015 Period and the Predecessor 2015 Period were$77.5 million, $64.7 million, $9.2 million and $31.6 million, respectively.Inventory. Inventory consists primarily of figures, plush and accessories and other finished goods, and is accounted for using the first-in, first-out,or FIFO, method. We maintain reserves for excess and obsolete inventories to reflect the inventory balance at the lower of cost or market value.This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as throughsales to customers, or liquidation, and expected recoverable value of each disposition category. We estimate obsolescence based onassumptions regarding future demand.Inventory costs include direct product costs and freight costs. As a result of the ACON Acquisition, the Underground Toys Acquisition and theLoungefly Acquisition, inventory was adjusted to fair value as of October 31, 2015, January 27, 2017 and June 28, 2017, respectively. See Note 3,Acquisitions of the notes to our consolidated financial statements.Goodwill and Intangible Assets. Goodwill represents the excess of the purchase price over the net amount of identifiable assets acquired andliabilities assumed in a business combination measured at fair value. We evaluate goodwill for impairment annually on October 1 of each year andupon the occurrence of triggering events or substantive changes in circumstances that could indicate a potential impairment by assessingqualitative factors or performing a quantitative analysis in determining whether it is more likely than not that the fair value of the net assets isbelow their carrying amounts.Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at theacquisition date. Intangible assets acquired include intellectual property (product design), customer relationships, and trade names. These aredefinite-lived assets and are amortized on a straight-line basis over their useful lives. Intangible assets are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitatean impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner inwhich an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets maynot be recoverable.74 Income Taxes. We apply the provisions of Accounting Standards Codification (“ASC”) Topic No. 740, “Income Taxes” (“ASC 740”). Under ASC740, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilitiesand are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We record a valuationallowance against our deferred tax assets when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Inevaluating our ability to recover our deferred tax assets, we consider all available positive and negative evidence, including our operating results,ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. If we determine we will not be able to fully utilizeall or part of these deferred tax assets, we would record a valuation allowance through earnings in the period the determination was made, whichwould have an adverse effect on our results of operations and earnings. In accordance with ASC 740, we recognize, in our consolidated financialstatements, the impact of our tax positions that are more likely than not to be sustained upon examination based on the technical merits of thepositions. We recognize interest and penalties for uncertain tax positions in selling, general and administrative expenses.We are subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of FAH, LLC and are taxedat the prevailing corporate tax rates. FAH, LLC is treated as a partnership for U.S. federal income tax purposes and, as such, generally is notsubject to any entity‑level U.S. federal income tax. Instead, taxable income is allocated to holders of its common units, including us. As a result,we incur income taxes on our allocable share of any net taxable income of FAH, LLC. Pursuant to the Second Amended and Restated FAH, LLCAgreement, FAH, LLC will generally make pro rata tax distributions to holders of common units in an amount sufficient to fund all or part of theirtax obligations with respect to the taxable income of FAH, LLC that is allocated to them.In connection with the consummation of the IPO, we entered into a Tax Receivable Agreement (“TRA”) with FAH, LLC and each of the ContinuingEquity Owners. Pursuant to the Tax Receivable Agreement, we will be required to make cash payments to the Continuing Equity Owners equal to85% of the tax benefits, if any, that we realize, or in some circumstances are deemed to realize, as a result of (1) any future redemptions fundedby us or exchanges (or deemed exchanges in certain circumstances) of common units for Class A common stock or cash, and (2) certainadditional tax benefits attributable to payments under the Tax Receivable Agreement (“TRA Payments”). Amounts payable under the TRA arecontingent upon, among other things, (i) generation of future taxable income over the term of the TRA and (ii) future changes in tax laws. If we donot generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then we would not be required to makethe related TRA Payments. Therefore, we would only recognize a liability for TRA Payments if we determine if it is probable that we will generatesufficient future taxable income over the term of the TRA to utilize the related tax benefits. Estimating future taxable income is inherently uncertainand requires judgment. In projecting future taxable income, we consider our historical results and incorporate certain assumptions, includingprojected revenue growth, and operating margins, among others. During the year ended December 31, 2017, there were no redemptions orexchanges of common units in FAH, LLC under the TRA. As such, we have not recorded any liabilities relating to our obligations under the TRA.Upon redemption or exchange of common units in FAH, LLC, we will record a liability relating to the obligation if we believe that it is probable thatwe would have sufficient future taxable income to utilize the related tax benefits. If we determine in the future that we will not be able to fully utilizeall or part of the related tax benefits, we would derecognize any portion of the liability related to the benefits not expected to be utilized.Additionally, we will estimate the amount of TRA Payments expected to be paid within the next 12 months and classify this amount as current onour Consolidated Balance Sheets. This determination is based on our estimate of taxable income for the next fiscal year. To the extent ourestimate differs from actual results, we may be required to reclassify portions of our liabilities under the TRA between current and non-current.Refer to Note 2, Significant Accounting Policies of the notes to our consolidated financial statements for a discussion of recent accountingpronouncements.75 ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.We are exposed to market risk from changes in interest rates, foreign currency and inflation. All of these market risks arise in the normal course ofbusiness, as we do not engage in speculative trading activities. The following analysis provides quantitative information regarding these risks.Interest Rate Risk. Our operating results are subject to risk from interest rate fluctuations on our Senior Secured Credit Facilities, which carryvariable interest rates. Interest rate risk is the exposure to loss resulting from changes in the level of interest rates and the spread betweendifferent interest rates. Our Senior Secured Credit Facilities include a Term Loan A Facility and a Revolving Credit Facility with advances tied to aborrowing base and which bear interest at a variable rate. Because our Senior Secured Credit Facilities bear interest at variable rates, we areexposed to market risks relating to changes in interest rates. Interest rate risk is highly sensitive due to many factors, including U.S. monetaryand tax policies, U.S. and international economic factors and other factors beyond our control. As of December 31, 2017, we had $233.9 million ofvariable rate debt outstanding under our Senior Secured Credit Facilities, consisting of $223.1 million outstanding under the Term Loan A Facility(net of unamortized discount of $5.3 million) and $10.8 million in outstanding variable rate borrowings under our Revolving Credit Facility. Basedupon a sensitivity analysis of our debt levels on December 31, 2017, an increase or decrease of 1% in the effective interest rate would cause anincrease or decrease in interest expense of approximately $2.2 million over the next 12 months. We do not use derivative financial instruments forspeculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.Foreign Currency Risk. In January 2017, we acquired certain assets of Underground Toys Limited and now sell directly to certain of our customersin Europe, the Middle East and Africa through our newly formed subsidiary, Funko UK, Ltd. In addition, in November 2017, we acquired A LargeEvil Corporation Ltd. (“A Large Evil Corporation”), an animation studio based in Bath, United Kingdom. The functional currency of all of our entitiesis the U.S. dollar, other than Funko UK, Ltd. and A Large Evil Corporation, which are the British pound. While currently our inventory purchases forFunko UK, Ltd. are in U.S. dollars, their product sales are primarily in British pounds and euros. Additionally, Funko UK, Ltd. incurs a portion of itsoperating expenses in British pounds. Most of A Large Evil Corporation’s operating expenses are denominated in British pounds. Therefore, ourresults of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, principally the British poundand euro. However, we believe that the exposure to foreign currency fluctuation from product sales and operating expenses is not significant atthis time. As we grow our operations, our exposure to foreign currency risk could become more significant. To date, we have not entered into anyforeign currency exchange contracts and currently do not expect to enter into foreign currency exchange contracts for trading or speculativepurposes. Prior to December 31, 2016, all of our product sales, inventory purchases, and operating expenses were denominated in U.S. dollars.We therefore did not have any foreign currency risk associated with these activities.Impact of Inflation. Our results of operations and financial condition are presented based on historical cost. While it is difficult to accuratelymeasure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our historicalresults of operations and financial condition have been immaterial. We cannot assure you, however, that our results of operations and financialcondition will not be materially impacted by inflation in the future. 76 ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAFUNKO, INC. AND SUBSIDIARIESCONSOLIDATED FINANCIAL STATEMENTSYEARS ENDED DECEMBER 31, 2017, 2016 AND 2015CONTENTS Report of Independent Registered Public Accounting Firm78 Consolidated Financial Statements: Consolidated Statements of Operations79Consolidated Statements of Comprehensive Income (Loss)80Consolidated Balance Sheets81Consolidated Statements of Stockholders’ and Members’ Equity82Consolidated Statements of Cash Flows84Notes to Consolidated Financial Statements85 77 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and Board of Directors ofFunko, Inc. and Subsidiaries Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Funko, Inc. and subsidiaries (the Company) as of December 31, 2017 and2016, the related consolidated statements of operations, comprehensive income (loss), stockholders‘ equity, and cash flows, for each of the twoyears in the period ended December 31, 2017 and 2016, for the period from October 31, 2015 through December 31, 2015 (Successor), and theperiod from January 1, 2015 through October 30, 2015 (Predecessor), and the related notes (collectively referred to as the “consolidated financialstatements“). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company atDecember 31, 2017 and 2016, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2017and 2016, for the period from October 31, 2015 through December 31, 2015 (Successor), and the period from January 1, 2015 through October 30,2015 (Predecessor), in conformity with US generally accepted accounting principles.Basis for OpinionThese financial statements are the responsibility of the Company‘s management. Our responsibility is to express an opinion on the Company‘sfinancial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (UnitedStates) (“PCAOB“) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is notrequired to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required toobtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of theCompany's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud,and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts anddisclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis forour opinion./s/ Ernst & Young LLPWe have served as the Company‘s auditor since 2015.Seattle, WashingtonMarch 16, 2018 78 FUNKO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 (In thousands, except per share data) Net sales $516,084 $426,717 $56,565 $217,491 Cost of sales (exclusive of depreciation and amortization shown separately below) 317,379 280,396 44,485 131,621 Selling, general, and administrative expenses 120,944 77,525 13,894 37,145 Acquisition transaction costs 3,641 1,140 7,559 13,301 Depreciation and amortization 31,975 23,509 3,370 5,723 Total operating expenses 473,939 382,570 69,308 187,790 Income (loss) from operations 42,145 44,147 (12,743) 29,701 Interest expense, net 30,636 17,267 2,818 2,202 Loss on extinguishment of debt 5,103 Other income, net (734) — — — Income (loss) before income taxes 7,140 26,880 (15,561) 27,499 Income tax expense 1,540 — — — Net income (loss) 5,600 26,880 (15,561) 27,499 Less: net income attributable to non-controlling interests 1,875 — — — Net income (loss) attributable to Funko, Inc. $3,725 $26,880 $(15,561) $27,499 Earnings per share of Class A common stock (1): Basic $0.04 Diluted $0.04 Weighted average shares of Class A common stock outstanding (1): Basic 23,338 Diluted 50,635 (1)Basic and diluted earnings per Class A common stock is applicable only for the period after the Company’s IPO. See Note 18, Earnings PerShare.See accompanying notes to consolidated financial statements.79 FUNKO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 (In thousands) Net income (loss) $5,600 $26,880 $(15,561) $27,499 Other comprehensive income: Foreign currency translation gain 802 — — — Comprehensive income (loss) 6,402 26,880 (15,561) 27,499 Less: Comprehensive income (loss) attributable to non-controlling interests 859 — — — Comprehensive income (loss) attributable to Funko, Inc. $5,543 $26,880 $(15,561) $27,499 See accompanying notes to consolidated financial statements.80 FUNKO, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31, 2017 2016 (In thousands, except share amounts) Assets Current assets: Cash and cash equivalents $7,728 $6,161 Accounts receivable, net 115,478 83,607 Inventory 79,082 43,616 Prepaid expenses and other current assets 21,727 19,040 Total current assets 224,015 152,424 Property and equipment, net 40,438 25,473 Goodwill 110,902 97,453 Intangible assets, net 250,649 243,796 Deferred tax asset 51 — Other assets 4,258 3,091 Total assets $630,313 $522,237 Liabilities and Stockholders' / Members' Equity Current liabilities: Line of credit $10,801 $6,729 Current portion long-term debt, net of unamortized discount 7,928 7,130 Accounts payable 53,428 23,653 Income taxes payable 2,268 — Accrued royalties 25,969 21,284 Accrued expenses and other current liabilities 27,032 13,746 Current portion of contingent consideration 2,500 25,000 Total current liabilities 129,926 97,542 Long-term debt, net of unamortized discount 215,170 203,894 Deferred tax liability 588 — Deferred rent and other long-term liabilities 3,474 3,424 Commitments and contingencies Stockholders' / Members' equity: Member's equity — 219,311 Class A common stock, par value $0.0001 per share, 200,000,000 shares authorized; 23,337,705 shares issued and outstanding as of December 31, 2017 2 — Class B common stock, par value $0.0001 per share, 50,000,000 shares authorized; 24,975,932 shares issued and outstanding at December 31, 2017 2 — Additional paid-in-capital 129,320 58,090 Accumulated other comprehensive income 802 — Retained earnings (deficit) 1,041 (60,024)Total stockholders' equity attributable to Funko, Inc. / members' equity 131,167 217,377 Non-controlling interests 149,988 — Total stockholders' equity / members' equity 281,155 217,377 Total liabilities and stockholders' / members' equity $630,313 $522,237See accompanying notes to consolidated financial statements. 81 FUNKO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ AND MEMBERS’ EQUITY(In thousands) Members'Accumulated Accumulated Member Units RecourseLoans To OtherComprehensive Members'Earnings Class A CommonStock Class B CommonStock AdditionalPaid-In OtherComprehensive RetainedEarnings Non-Controlling Units Amounts Management Income (Deficit) Shares Amount Shares Amount Capital Income (Deficit) Interests Total Predecessor - January1, 2015 14,000 $18,257 $— $— $18,494 — $— — $— $— $— $— $— $36,751 Equity-basedcompensation 9,925 $- - $- - - - - - - - $- 9,925 Options exercised,settled in cash 688 3,170 $- - $- - - - - - - - $- 3,170 Net income — — $- - 27,499 - - - - - - - $- 27,499 Distributions tomembers - - $- - (12,171) - - - - - - - $- (12,171)Predecessor - October30, 2015 $14,688 $31,352 $— $— $33,822 0 $— 0 $— $— $— $— $— $65,174 Successor - October31, 2015 Members'contributions 125 116,120 - - 9,431 - - - - - - - - 125,551 Fair Value ofcarryover equity instruments 78 128,433 - - - - - - - - - - - 128,433 Equity instrumentsissued at purchaseconsideration 12 649 - - - - - - - - - - - 649 Equity-basedcompensation 8 4,484 - - - - - - - - - - - 4,484 Net loss - - - - (15,561) - - - - - - - - (15,561)Recourse loans to management 1 915 (915) $- - - $- - $- $- $- $- $- - Period endedDecember 31, 2015 224 $250,601 $(915) $— $(6,130) — $— — $— $— $— $— $— $243,556 Members'contributions 15 24,431 — — (9,431) — — — — — — - — 15,000 Equity-basedcompensation 4 2,369 — — — — — — — — — — — 2,369 Net income — — — — 26,880 — — — — — — - — 26,880 Recourse loans to management — — 142 — — — — — — — — — — 142 Distribution tomembers — — — — (70,570) — — — — — — - — (70,570)Period endedDecember 31, 2016 243 $277,401 $(773) $— $(59,251) — $— — $— $— $— $— $— $217,377See accompanying notes to consolidated financial statements. 82 FUNKO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ AND MEMBERS’ EQUITY (CONTINUED)(In thousands) Members'Accumulated Accumulated Member Units RecourseLoans To OtherComprehensive Members'Earnings Class A CommonStock Class B CommonStock AdditionalPaid-In OtherComprehensive RetainedEarnings Non-Controlling Units Amounts Management Income (Deficit) Shares Amount Shares Amount Capital Income (Deficit) Interests Total Period endedJanuary 1, 2017 243 $277,401 $(773) $— $(59,251) — $— — $— $— $— $— $— $217,377 Equity issued inconnection with acquisitionprior to Transactions 2 5,313 — — — — — — — — — — — 5,313 Warrants issuedin connection with long-termdebt prior to Transactions — — — — 5,726 — — — — — — — — 5,726 Equity-basedcompensation prior toTransactions — 4,571 159 — — — — — — — — — — 4,730 Net income priorto Transactions — — — — 2,684 — — — — — — — — 2,684 Cumulativetranslation adjustmentprior to Transactions — — — 1,184 — — — — — — — — — 1,184 Distribution tomembers prior toTransactions — — — — (72,965) — — — — — — — — (72,965)Contributionsfrom members prior toTransactions 5 5,000 — — — — — — — — — — — 5,000 Recourse loansto managementprior to Transactions — — 188 — — — — — — — — — — 188 Effect ofTransactions (250) (292,285) 426 (1,184) 123,806 12,921 1 168,052 572 612 - Sale of Class Acommon stock in initial publicoffering, net — — — — — 10,417 1 — — 108,919 — — — 108,920 Issuance ofClass B common stock — — — — — — — 24,976 2 — — — — 2 Net deferred taxadjustments resulting fromthe Transactions — — — — — — — — — (1,241) — — — (1,241)Non-controllinginterests related topurchase of common unitsfrom FAH, LLC — — — — — — — — — (147,254) — — 147,254 - Equity-basedcompensation subsequent toTransactions — — — — — — — — — 844 — — — 844 Cumulativetranslation adjustment — — — — — — — — — — 230 — 247 477 Net incomesubsequent tothe Transactions — — — — — — — — — — — 1,041 1,875 2,916 Period endedDecember 31, 2017 — $— $— $— $— 23,338 $2 24,976 $2 $129,320 $802 $1,041 $149,988 $281,155See accompanying notes to consolidated financial statements.83  FUNKO, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 (In thousands) Operating Activities Net income (loss) $5,600 $26,880 $(15,561) $27,499 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 31,975 23,509 3,370 5,723 Equity-based compensation 5,574 2,369 4,484 9,925 Contingent consideration 30 5,503 1,540 — Accretion of discount on long-term debt 3,887 1,150 164 — Amortization of debt issuance costs 534 248 253 732 Loss on debt extinguishment 5,103 — — — Deferred tax benefit (718) — — — Changes in operating assets and liabilities: Accounts receivable, net (28,473) (33,624) 6,111 (36,133)Inventory (16,703) 6,013 10,239 (17,980)Prepaid expenses and other assets (9,737) (8,549) 52 (6,000)Accounts payable 18,998 14,652 (1,858) 16,692 Income taxes payable 2,268 — — — Accrued royalties 3,073 7,720 7,956 (54)Accrued expenses and other liabilities 2,426 3,597 (2,640) 8,134 Net cash provided by operating activities 23,837 49,468 14,110 8,538 Investing Activities Purchase of property and equipment (33,562) (21,202) (2,942) (8,953)Acquisitions, net of cash (31,653) (903) (241,479) (1,090)Net cash used in investing activities (65,215) (22,105) (244,421) (10,043) Financing Activities Borrowings on line of credit 153,383 57,741 11,513 198,607 Payments on line of credit (149,311) (51,012) (38,270) (177,741)Proceeds from long-term debt, net 66,336 47,628 169,682 — Payment of long-term debt (59,000) (7,600) (20,000) (475)Payment of subordinated debt, net (20,000) — — — Proceeds from subordinated debt, net 20,000 — — — Repayment of related-party note — — (2,500) — Debt issuance costs — — (1,520) — Contingent consideration (17,958) (36,942) — — Contributions from members 5,000 15,000 125,551 — Proceeds from initial public offering, net of underwriters discount and commissions 117,337 — — — Proceeds from issuance of Class B common stock 2 — — — Distribution to members (72,777) (70,428) — (12,171)Proceeds from exercise of equity-based options — — — 3,170 Net cash provided by (used in) financing activities 43,012 (45,613) 244,456 11,390 Effect of exchange rates on cash and cash equivalents (67) — — — Net increase (decrease) in cash and cash equivalents 1,567 (18,250) 14,145 9,885 Cash and cash equivalents at beginning of period 6,161 24,411 10,266 381 Cash and cash equivalents at end of period $7,728 $6,161 $24,411 $10,266 Supplemental Cash Flow Information Cash paid for interest $25,360 $12,455 $1,496 $1,756 Accrual for purchases of property and equipment $1,607 $(489) $1,377 $512 Issuance of Class A units for acquisitions $5,313 $— $— $— Issuance of warrants for Class A units in connection with long-term debt $5,061 $— $— $— Issuance of warrants for common units in connection with long-term debt $665 $— $— $— Reimbursement (issuance) of management recourse loans $773 $142 $(915) $— Tenant allowance $— $2,041 $— $— Issuance of common units for acquisitions $— $— $129,997 $—See accompanying notes to consolidated financial statements.84 FUNKO, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 20171. Basis of Presentation and Description of BusinessThe consolidated financial statements include Funko, Inc. and its subsidiaries (together with its subsidiaries, the “Company”) and have beenprepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). All intercompany balances and transactions have beeneliminated.The Company was formed as a Delaware corporation on April 21, 2017. The Company was formed for the purpose of completing an initial publicoffering (“IPO”) of its Class A common stock and related transactions in order to carry on the business of Funko Acquisition Holdings, L.L.C.(“FAH, LLC”) and its subsidiaries. FAH, LLC, a holding company with no operating assets or operations, was formed on September 24, 2015. OnOctober 30, 2015, ACON Funko Investors, L.L.C., through FAH, LLC and an acquisition referred to as the “ACON Acquisition”, acquired acontrolling interest in Funko Holdings LLC (“FHL”), a Delaware limited liability company formed on May 28, 2013, which is also a holding companywith no operating assets or operations. FAH, LLC owns 100% of FHL and FHL owns 100% of Funko, LLC, a limited liability company formed in thestate of Washington, which is its operating entity. Funko, LLC is headquartered in Everett, Washington and is a leading pop culture consumerproducts company. Funko, LLC designs, sources, and distributes licensed pop culture products.In these consolidated financial statements, the financial information for the period after October 30, 2015 represents the consolidated financialinformation of the “Successor” company. Prior to and including October 30, 2015, the consolidated financial statements include the accounts ofthe “Predecessor” company. Financial information in the Predecessor period principally relates to FHL and its subsidiary Funko, LLC. Referencesto the “Successor 2015 Period” refer to the period from October 31, 2015 through December 31, 2015. References to the “Predecessor 2015Period” refer to the period from January 1, 2015 through October 30, 2015, prior to the ACON Acquisition. Due to the change in the basis ofaccounting resulting from the application of the acquisition method of accounting, the Predecessor’s consolidated financial statements and theSuccessor’s consolidated financial statements are not necessarily comparable. On November 6, 2017, the Company completed an IPO of 10,416,666 shares of its Class A common stock at a public offering price of $12.00 pershare (the “IPO”), receiving approximately $117.3 million in net proceeds, after deducting underwriting discounts and commissions, which wereused to purchase 10,416,666 of FAH, LLC’s newly-issued common units at a price per unit equal to the price per share of Class A common stocksold in the IPO, less underwriting discounts and commissions. The IPO and related reorganization transactions (the “Transactions”) resulted in theCompany being the sole managing member of FAH, LLC. The Company has a minority economic interest in FAH, LLC. As of December 31, 2017,Funko, Inc. owned 48.3% of FAH, LLC. Accordingly, the Company consolidates the financial results of FAH, LLC and reports a non-controllinginterest in its consolidated financial statements representing the FAH, LLC interests held by ACON Funko Investors, L.L.C., a Delaware limitedliability company (“ACON Funko Investors”) and certain of its affiliates, Fundamental (as defined herein), and certain current and former executiveofficers, employees and directors, in each case, who held profits interests in FAH, LLC and who received common units of FAH, LLC in exchangefor their profits interests in connection with the Transactions (as defined herein) (collectively, the “Original Equity Owners”), the former holders ofwarrants to purchase ownership interests in FAH, LLC, which were converted into common units of FAH, LLC in connection with the Transactions,and, in each case, each of their permitted transferees that own common units in FAH, LLC and who may redeem at each of their options (subjectin certain circumstances to time-based vesting requirements) their common units for, at the Company’s election, cash or newly-issued shares ofthe Company’s Class A common stock (collectively, the “Continuing Equity Owners”).As the Transactions, discussed further in Note 16, Stockholders’ Equity are considered transactions between entities under common control, thefinancial statements reflect the combined entities for all periods presented.85 2. Significant Accounting PoliciesCertain of the significant accounting policies are discussed within the note to which they specifically relate.Use of EstimatesThe preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of theconsolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differfrom these estimates and assumptions.Cash EquivalentsCash equivalents include amounts due from third-party financial institutions for credit and debit card transactions. These receivables typicallysettle in less than five days and were $0.1 million for both December 31, 2017 and 2016.Concentrations of Business and Credit RiskThe Company grants credit to its customers on an unsecured basis. As of December 31, 2017 and 2016, the balance of accounts receivableconsisted of 9% and 17%, respectively, of amounts owed from the largest customer for the given period. The collection of these receivables hasbeen within the terms of the associated customer agreement.For the year ended December 31, 2017, there was no individual customer that generated net sales over 10%. For the year ended December 31,2016, approximately 12% of sales was generated from one customer. For the Successor 2015 Period, approximately 24%, 20%, and 13% of saleswere generated from three customers. For the Predecessor 2015 Period, there was no individual customer that generated net sales over 10%.For the year ended December 31, 2017, there were no license agreements that account for more than 10% of sales. For the year ended December31, 2016, 15% of sales was related to one license agreement. For the Successor 2015 Period, we had two license agreements that accounted for23% and 12% of sales. For the Predecessor 2015 Period, there were no license agreements that accounted for more than 10% of sales. There areno significant license agreements that expired during 2017.The Company maintains its cash within bank deposit accounts at high quality, accredited financial institutions. These amounts at times mayexceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed tosignificant credit risk on cash.InventoryInventory consists primarily of figures, plush, accessories and other finished goods, and is accounted for using the first-in, first-out (“FIFO”)method. The Company maintains reserves for excess and obsolete inventories to reflect the inventory balance at the lower of cost or net realizablevalue. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such asthrough sales to customers, or liquidation, and expected recoverable value of each disposition category. The Company estimates obsolescencebased on assumptions regarding future demand. Inventory costs include direct product costs and freight costs.86 Property and EquipmentProperty and equipment is stated at historical cost, net of accumulated depreciation, and, if applicable, impairment charges. Depreciation ofproperty and equipment is recorded using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. Theestimated useful lives of our property and equipment are generally as follows:Asset Lives (in years)Tooling and molds 2Furniture, fixtures, and warehouse equipment 5 to 7Computer equipment, software and other 3 to 5Leasehold improvements Lesser of useful life or term of lease Revenue Recognition and Sales AllowanceRevenue from the sale of Company products is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangementexists; (2) there are no uncertainties regarding customer acceptance; (3) the selling price is fixed or determinable; and (4) collectability isreasonably assured. The majority of revenue is recognized upon shipment of products.The Company routinely enters into arrangements with its customers to provide sales incentives, and provides allowances for returns and defectivemerchandise. Such programs are based primarily on customer purchases and specified factors relating to sales to consumers. While the majorityof sales adjustments are readily determinable at period end and do not require estimates, certain sales adjustments require management to makeestimates. In making these estimates, management considers all available information, including the overall business environment, historicaltrends and information from customers. Sales incentives and allowances for returns and defective merchandise are recorded as sales adjustmentsand reduce revenue in the period the related revenue is recognized.Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue on the consolidated balance sheets.Deferred revenue is classified as a current liability based on the expectation of recognition within 12 months following the date of each balancesheet. Sales terms do not allow for a right of return except in relation to a manufacturing defect.Sales taxes collected on behalf of governmental authorities are recorded on a net basis and excluded from revenue.Shipping Revenue and CostsShipping and handling costs include inbound freight costs and the cost to ship product to the customer and are included in cost of sales. Shippingcosts billed to customers are included in net sales.Advertising and Marketing CostsAdvertising and marketing costs are expensed when the advertising or marketing event takes place. These costs include the fees to participate intrade shows and Comic-Cons, as well as costs to develop promotional video and other online content created for advertising purposes. Thesecosts are included in selling, general and administrative expenses and for the years ended December 31, 2017 and 2016, the Successor 2015Period and the Predecessor 2015 Period were $9.1 million, $6.8 million, $0.5 million and $3.3 million, respectively.The Company enters into cooperative advertising arrangements with customers. The fees related to these arrangements are recorded as areduction of net sales in the accompanying consolidated statements of operations because the Company has determined it does not receive anidentifiable benefit and cannot reasonably estimate the fair value of these arrangements.Product Design and Development CostsProduct design and development costs are recognized in selling, general and administrative expenses in the statements of operations as incurred.Product design and development costs for the years ended December 31,87 2017 and 2016, the Successor 2015 Period and the Predecessor 2015 Period were $4.7 million, $2.3 million, $0.3 million and $0.8 million,respectively.Recently Adopted Accounting StandardsEquity-based Compensation. In March 2016, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”)which simplifies several aspects of accounting for employee share-based payment transactions, including the accounting for income taxes,forfeitures, and classification in the statement of cash flows. The guidance also allows for a policy election to account for forfeitures as they occurrather than on an estimated basis. The Company adopted the new standard effective January 1, 2017 and has elected to account for forfeitures asthey occur. The amendment related to accounting for excess tax benefits and deficiencies was adopted prospectively and did not have an impacton the Company’s financial statements, as the Company had a limited liability company flow through structure prior to the IPO. Based upon theCompany's history of forfeitures, the election to account for forfeitures as they occur did not have a material impact on its consolidated financialstatements, however, going forward, the actual impact could differ from the Company’s expectation, as any impact will be based on futureforfeitures. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.Acquisition Accounting. In September 2015, the FASB issued an ASU to simplify the accounting for adjustments made to provisional amountsrecognized in a business combination. The guidance eliminates the requirement to retrospectively account for those adjustments and requirescompanies to recognize the adjustments to provisional amounts identified during the measurement period in the reporting period in which theadjustments are determined. The Company adopted the new standard in the first quarter of 2017. The adoption of this standard did not have amaterial impact on the Company’s consolidated financial statements.Inventory. In July 2015, the FASB issued guidance simplifying the measurement of inventory. This standard requires entities that use inventorymethods other than the last-in, first-out (“LIFO”) or retail inventory method to measure inventory at the lower of cost or net realizable value. TheCompany adopted the new standard effective January 1, 2017. The adoption of this standard did not have a material impact on the Company’sconsolidated financial statements.Goodwill Impairment. In January 2017, the FASB issued an ASU to simplify the test for goodwill impairment and removes step 2 from the goodwillimpairment test. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. The Companyadopted this standard on October 1, 2017 for the year beginning January 1, 2017, in connection with its annual impairment testing. The adoption ofthis standard did not have a material impact on the Company’s consolidated financial statements.Recent Accounting Pronouncements Not Yet AdoptedLease Accounting. In February 2016, the FASB issued guidance related to lease accounting to increase transparency and comparability amongorganizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.The new guidance requires lessees to recognize all leases with a term of more than 12 months as lease assets and lease liabilities. A modifiedretrospective transition approach is required for leases existing at, or entered into after, the earliest period presented. The new standard is effectivefor the Company beginning January 1, 2019. Early adoption is permitted. The Company is evaluating the impact the adoption of this standard willhave on its consolidated financial statements.Revenue Recognition. In May 2014, the FASB issued a comprehensive new revenue recognition standard. The new standard allows for a fullretrospective approach to transition or a modified retrospective approach. This guidance is effective for the Company beginning January 1, 2018.The Company adopted the new standard on January 1, 2018 using the modified retrospective basis. Revenue recognition from the sale of finishedproduct to our customers, which is the majority of our revenues, is not expected to change under the new standard in the periods followingadoption.Statement of Cash Flows. In August 2016, the FASB issued a standard which clarifies how entities should classify certain cash receipts and cashpayments in the statement of cash flows. The standard is effective for the88 Company beginning January 1, 2018, and it is currently evaluating the effect the standard will have on its consolidated statement of cash flows.Definition of a Business. In January 2017, the FASB issued a standard which provides a new framework for determining whether transactionsshould be accounted for as acquisitions (or dispositions) of assets or a business. The standard is effective for the Company beginning January 1,2018, and it is currently evaluating the effect the standard will have on its consolidated financial statements.Stock Compensation Modifications. In May 2017, the FASB issued a standard which clarifies the accounting for a stock-based compensationaward that has been modified. The standard is effective for awards modified by the Company on or after January 1, 2018. The Company iscurrently evaluating the effect the standard will have on its consolidated financial statements.3. AcquisitionsDuring 2017, the Company completed three acquisitions, and it applied the acquisition method of accounting, where the total purchase price wasallocated, or preliminarily allocated, to tangible and intangible assets acquired and liabilities assumed based on their respective fair values.A Large Evil Corporation Limited. On November 28, 2017, the Company acquired all of the outstanding equity of A Large Evil Corporation Limited(“A Large Evil Corporation Acquisition”), an animation studio based in the United Kingdom. The preliminary purchase consideration included$3.9 million paid in cash and additional $1.0 million due to the sellers based on certain working capital adjustments and other conditions as per theagreement. As of December 31, 2017, the Company has recorded a preliminary purchase price allocation based on information received todate. The Company is still in the process of completing its analysis of the opening balance sheet balances and finalizing its analysis andassumption over the fair value of assets and liabilities acquired, the difference between the estimated and final values could be material. Costs,such as advisory, legal and accounting fees the Company incurred related to A Large Evil Corporation Acquisition were $0.1 million for the yearended December 31, 2017 and are recorded within acquisition transaction costs in the consolidated statements of operations.The activity of A Large Evil Corporation included in the Company’s consolidated statements of operations from the acquisition date to December31, 2017 was not material.Loungefly. On June 28, 2017, the Company acquired all of the outstanding equity interests of Loungefly, LLC (“Loungefly”), a designer of licensedpop culture fashion handbags, small leather goods and accessories (the “Loungefly Acquisition”). The preliminary purchase consideration included$17.9 million paid in cash, which included $1.8 million in transaction fees paid on behalf of the seller, and the issuance of $2.1 million of FAH,LLC’s Class A units. As of December 31, 2017, the Company has recorded certain adjustments to the purchase price allocation, including a$1.4 million increase to inventory. The purchase price allocation is not yet final as the Company is completing its analysis of the opening workingcapital balances and finalizing the valuation and related assumptions over the intangible assets acquired. The estimated fair value of the assetsacquired and liabilities assumed is preliminary and differences between the preliminary and final estimated fair value could be material. Costs,such as advisory, legal, accounting fees and change of control fees, the Company incurred related to the Loungefly Acquisition were $1.1 millionfor the year ended December 31, 2017, and are recorded within acquisition transaction costs in the consolidated statements of operations.The activity of Loungefly included in the Company’s consolidated statements of operations from the acquisition date to December 31, 2017 wasnet sales of $17.0 million and net income of $2.2 million.Underground Toys Limited. On January 27, 2017, the Company acquired certain assets of Underground Toys Limited, a manufacturer anddistributor of licensed products based in the United Kingdom (the “Underground Toys Acquisition”). The acquired assets primarily consisted ofinventory and identifiable intangible assets, which are now used by the Company’s newly formed subsidiary Funko UK, Ltd. The purchaseconsideration included $12.6 million in cash, the issuance of $3.2 million of FAH, LLC’s Class A units, an additional payment in cash of up to$2.5 million contingent upon the assignment of certain license agreements and certain working capital adjustments estimated to be $1.8 million.As of December 31, 2017, the Company has recorded certain adjustments to the working capital assumed, including a $1.3 million decrease toinventory. The purchase price89 allocation has been finalized. Costs, such as advisory, legal, accounting fees and change of control fees, the Company incurred related to theacquisition of certain assets of Underground Toys Limited were $1.8 million for the year ended December 31, 2017, and are recorded withinacquisition transaction costs in the consolidated statements of operations.Foreign currency transaction gains and losses are included in other income, net on the consolidated statements of operations. Foreign currencytransaction gain, net for the year ended December 31, 2017 was $0.7 million.Prior to the Underground Toys Acquisition, the Company recognized net sales to Underground Toys Limited of $35.0 million for the year endedDecember 31, 2016. The Company had $14.7 million of accounts receivable attributable to Underground Toys Limited as of December 31, 2016.The activity of Funko UK, Ltd. included in the Company’s consolidated statements of operations from the acquisition date to December 31, 2017was net sales of $93.4 million and a net income of $1.8 million for the year ended December 31, 2017. The Company’s U.K. operations are subjectto U.K. income taxes, which were $0.9 million for the period from the acquisition date to December 31, 2017 and are included within income taxexpense on the consolidated statements of operations.For the acquisitions described above, the Company recorded goodwill amounting to $13.7 million in the aggregate, which relates to a number offactors, including the future earnings and cash flow potential of the businesses, the multiple to earnings, cash flow and other factors at whichsimilar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired thebusinesses, the avoidance of the time and costs which would be required (and the associated risks that would be encountered) to enhance itsexisting offerings to key target markets and develop new and profitable businesses, and the complimentary strategic fit and resulting expectedsynergies to be achieved. Goodwill is not deductible for tax purposes.The purchase consideration for the acquisitions was as follows: Purchase Consideration Loungefly UndergroundToys Limited A Large EvilCorporationLimited (in thousands) Cash paid $16,113 $12,554 $3,862 Transaction fees paid (incurred) on behalf ofseller 1,777 — — Working capital adjustment to be paid in cash — 1,784 1,003 Fair value of Class A Units issued 2,131 3,182 — Fair value of contingent consideration — 2,470 — Estimated purchase consideration $20,021 $19,990 $4,86590 The purchase price allocations for the acquisitions were as follows: Assets (Liabilities) Acquired (Assumed) at FairValue Loungefly UndergroundToys Limited A Large EvilCorporationLimited (in thousands) Cash $1,501 $— $645 Accounts receivable 3,315 — 30 Inventory 1,799 15,263 — Other current assets 205 1,122 321 Property and equipment 214 289 76 Intangible assets 14,295 6,500 — Goodwill 6,655 2,999 4,000 Current liabilities (7,963) (6,183) (207)Estimated consideration transferred $20,021 $19,990 $4,865 The following table summarizes the estimated identifiable intangible assets acquired in connection with the transactions described above and theirestimated useful lives: Estimated Fair Value ofAssets Acquired Loungefly UndergroundToys Limited EstimatedUseful Life (in thousands) (Years) Intangible asset type: Customer relationships $960 $3,700 10 Licensor relationships 11,225 2,500 10 Trade name 2,110 — 10 Supplier relationships — 300 2 Intangible assets $14,295 $6,500 4. Goodwill and Intangible AssetsGoodwill represents the excess of the purchase price over the net amount of identifiable assets acquired and liabilities assumed in a businesscombination measured at fair value. The Company evaluates goodwill for impairment annually on October 1 of each year and upon the occurrenceof triggering events or substantive changes in circumstances that could indicate a potential impairment by assessing qualitative factors orperforming a quantitative analysis in determining whether it is more likely than not that the fair value of the net assets is below their carryingamounts.No impairment charges relating to goodwill were recorded in the years ended December 31, 2017 and 2016 and for the Successor and Predecessor2015 Periods.The following table presents the balances of goodwill as of December 31, 2017 and 2016 (in thousands). Goodwill Balance as of January 1, 2016 $97,453 Acquisitions — Balance as of December 31, 2016 $97,453 Acquisitions 13,654 Foreign currency remeasurement (205)Balance as of December 31, 2017 $110,902 91 Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at theacquisition date. Intangible assets acquired include intellectual property (product design), customer relationships, and trade names. These aredefinite-lived assets and are amortized on a straight-line basis over their useful lives. Intangible assets are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Conditions that would necessitatean impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner inwhich an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets maynot be recoverable. No impairment charges relating to intangible assets were recorded in the years ended December 31, 2017 and 2016 and for theSuccessor and Predecessor 2015 Periods.The following table provides the details of identified intangible assets, by major class, for the periods indicated (in thousands): December 31, 2017 December 31, 2016 EstimatedUseful Life(Years) GrossCarryingAmount AccumulatedAmortization IntangibleAssets,Net GrossCarryingAmount AccumulatedAmortization IntangibleAssets,Net Intangible assets subject to amortization: Intellectual property 20 $114,411 $(12,395) $102,016 $114,411 $(6,674) $107,737 Trade names 10 - 20 83,468 (9,375) 74,093 81,358 (4,746) 76,612 Customer relationships 10 - 20 68,060 (7,268) 60,792 63,129 (3,682) 59,447 Licensor relationships 10 - 20 13,908 (341) 13,567 — — — Supplier relationships 2 322 (141) 181 — — — Balance at December 31, 2017 $280,169 $(29,520) $250,649 $258,898 $(15,102) $243,796 Amortization expense for the years ended December 31, 2017 and 2016, the Successor 2015 Period and the Predecessor 2015 Period was $14.4million, $12.9 million, $2.2 million and $1.4 million respectively. The future five-year amortization of intangibles subject to amortization atDecember 31, 2017 was as follows (in thousands): Amortization 2018 $15,200 2019 15,052 2020 15,039 2021 15,039 2022 15,039 Thereafter 175,280 Total $250,649 5. Accounts Receivable, NetAccounts receivable, net, primarily represent customer receivables, recorded at invoiced amount, net of a sales allowance and an allowance fordoubtful accounts. An allowance for doubtful accounts is determined based on various factors, including specific identification of balances at riskfor not being collected, historical experience and existing economic conditions. Receivables are written-off when all reasonable collection effortshave been exhausted and it is probable the balance will not be collected.92 Accounts receivable, net consisted of the following (in thousands): December 31, 2017 2016 Accounts receivable $119,333 $86,342 Less: Allowance for doubtful accounts (3,855) (2,735)Accounts receivable, net $115,478 $83,607 Accounts receivable includes a $2.0 million tenant improvement receivable from a lessor. The remaining balance is customer receivables. Baddebt expense was $5.5 million and $2.7 million for the years ended December 31, 2017 and 2016, and de minimis and $0.2 million for theSuccessor 2015 Period and the Predecessor 2015 Period, respectively.Activity in our allowance for doubtful accounts was as follows: December 31, 2017 2016 Allowance for doubtful accounts - beginning $2,735 $205 Charged to costs and other 5,457 2,702 Write offs (4,337) (172)Allowance for doubtful accounts - ending $3,855 $2,735 6. Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets consisted of the following (in thousands): December 31, 2017 2016 Prepaid deposits for inventory and molds $10,916 $10,473 Prepaid royalties, net 6,391 6,903 Other prepaid expenses and current assets 4,420 1,664 Prepaid expenses and other current assets $21,727 $19,040 7. Property and Equipment, NetProperty and equipment, net consisted of the following (in thousands): December 31, 2017 2016 Tooling and molds $50,125 $28,942 Leasehold improvements 14,894 4,970 Computer equipment, software and other 5,628 2,346 Furniture, fixtures and warehouse equipment 7,282 4,220 Construction in progress 363 5,452 $78,292 $45,930 Less: Accumulated depreciation (37,854) (20,457)Property and equipment, net $40,438 $25,473 Depreciation expense for the years ended December 31, 2017 and 2016 and the Successor 2015 Period and Predecessor 2015 Period was $17.6million, $10.6 million, $1.2 million and $4.3 million respectively.93 8. Accrued Expenses and Other Current LiabilitiesAccrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2017 2016 Accrued payroll and compensation $8,209 $4,768 Deferred revenue 3,283 3,754 Accrued shipping & freight costs 3,235 2,811 Acquisition related current liabilities 3,685 - Other current liabilities 8,620 2,413 Accrued liabilities and other current liabilities $27,032 $13,746 9. Fair Value MeasurementsThe Company’s financial instruments, other than those discussed below, include cash, accounts receivable, accounts payable, and accruedliabilities. The carrying amount of these financial instruments approximate fair value due to the short-term nature of these instruments. Forfinancial instruments measured at fair value on a recurring basis, the Company prioritizes the inputs used in measuring fair value according to athree-tier fair value hierarchy defined by U.S. GAAP. These tiers include Level 1, defined as observable inputs such as quoted prices in activemarkets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, definedas unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset orliability.Contingent Consideration. The Company measures contingent consideration obligations at the acquisition date of a business combination, and ateach balance sheet date, at fair value, with changes in fair value recognized in its consolidated statements of operations. Fair value is measuredusing the discounted cash flow method and based on assumptions the Company believes would be made by a market participant. Significantmarket inputs used to determine fair value as of December 31, 2017 and 2016 included probabilities of successful achievement of the EBITDAthreshold that would trigger contingent purchase consideration, the timing of when the payments will be made, and the discount rate. Significantchanges to these assumptions would result in a significantly lower or higher fair value measurement. The valuation represents a Level 3measurement within the fair value hierarchy.The Company recorded $54.9 million in contingent consideration which represented the fair value at the time of the ACON Acquisition,$40.0 million of which was paid out during the year ended December 31, 2016, and the remaining $25.0 million of which was paid out during theyear ended December 31, 2017. The Company recorded an estimated $2.5 million in contingent consideration at the time the Company acquiredUnderground Toys Limited. The fair value of contingent consideration related to the acquisition of Underground Toys Limited was $2.5 million atDecember 31, 2017.The following table sets forth the fair value and a summary of changes to the fair value of these Level 3 financial liabilities (in thousands): ContingentConsideration Balance at December 31, 2016 $25,000 Additions 2,470 Payments (25,000)Changes in fair value 30 Balance at December 31, 2017 $2,500 Changes in fair value reflect changes to the Company’s assumptions regarding probabilities of successful achievement of the earnings-basedmetrics, the timing of when the payment will be made, and the discount rate used to estimate the fair value of the obligation, and are recordedwithin selling, general and administrative expense in the consolidated statements of operations.94 Debt. The estimated fair values of the Company’s debt instruments, which are classified as Level 3 financial instruments, at December 31, 2017and 2016, was approximately $196.4 million and $196.3 million, respectively. The carrying values of the Company’s debt instruments at December31, 2017 and 2016, was $228.4 million and $217.4 million, respectively. Management’s estimate of the discount rate, using inputs observable inthe market, as of December 31, 2017 and 2016 was 13.5% and 11.0%, respectively.10. DebtDebt consists of the following (in thousands): December 31, 2017 2016 Line of credit $10,801 $6,729 Term Loan A Facility 228,400 $217,400 Debt issuance costs (5,302) (6,376)Total term debt 223,098 211,024 Less: current portion 7,928 7,130 Long-term debt, net $215,170 $203,894 Maturities of long-term debt for each of the next five years and thereafter are as follows (in thousands): Term Loan AFacility 2018 $9,400 2019 9,400 2020 9,400 2021 200,200 2022 — Thereafter — Total $228,400 Senior Secured Credit FacilitiesIn October 2015, the Company entered into a credit agreement which provided for a $175.0 million term loan facility (the “Term Loan A Facility”)and revolving credit facility, including a $3.0 million subfacility for the issuance of letters of credit (the “Revolving Credit Facility”). On January 17,2017, the Company entered into an amendment to its credit agreement which provided for, among other things, an additional $50.0 million termloan facility (the “Term Loan B Facility” and, together with the Term Loan A Facility and Revolving Credit Facility, the “Senior Secured CreditFacilities”), providing for interest rate options that can be chosen by the Company and an increase in commitments under the Revolving CreditFacility to $80.0 million. Proceeds from the Term Loan B Facility were used to fund a $49.0 million special cash distribution to the holders of FAH,LLC’s Class A units, $0.8 million in cash bonus payments to certain of FAH, LLC’s executive officers and other employees and a $0.2 millionreduction in interest and principal under loans to certain members of management. In conjunction with this amendment, the Company issued thelenders warrants to purchase 1,774 of FAH, LLC’s Class A units and 94 of FAH, LLC’s common units.The debt and warrants were measured at their relative fair value at the date of issuance and, as the warrants were determined to be an equityinstrument, the relative fair value of the warrants, net of the allocated portion of issuance costs was recorded as additional paid-in capital. Therelative fair value assigned to the warrants to purchase FAH, LLC’s Class A units was $5.0 million, and $0.7 million for the warrants to purchasecommon units. The total amount assigned to warrants was recorded as a debt discount and is accreted to interest expense using the effectiveinterest rate method over the life of the debt.95 In June 2017, the Company entered into additional amendments to its credit agreement to, among other things, (1) permit the Company to enterinto certain subordinated loan documents, and (2) increase borrowings under the Term Loan A Facility by $20.0 million, increase commitmentsunder the Revolving Credit Facility to $100.0 million and make certain changes to certain covenants and definitions. Proceeds from the additionalTerm Loan A Facility borrowings were used to fund a portion of the purchase price for the Loungefly Acquisition and to pay related fees andexpenses.Borrowings under the Revolving Credit Facility accrue interest at a rate equal to the one-month LIBOR published in The Wall Street Journal plus amargin of 2.50% per year. The Company is required to pay an unused line fee to the lenders under the Revolving Credit Facility in respect of theunutilized commitments thereunder at a rate of 0.375% per year.The Senior Secured Credit Facilities also provide for an excess cash flow payment following the end of each fiscal year that requires the Companyto prepay the outstanding principal amount of all loans under the Senior Secured Credit Facilities in an aggregate amount equal to 60% of excesscash flow for such fiscal year, subject to certain step-downs and other reductions based on the Company’s senior leverage ratio and the amount ofcertain voluntary prepayments. The Company did not make any excess cash flow prepayments for the year ended December 31, 2017 or 2016.Borrowings under the Term Loan A Facility accrue interest at an annual rate equal to, at the Company’s option, either (1) the Reference Rate plusa margin of 6.25%, or (2) the LIBOR Rate plus a margin of 7.25%. The “Reference Rate” is defined as the greatest of (1) a commercial lending ratepublicly announced by the reference bank, (2) the federal funds open rate plus 0.50% per year, and (3) the one-month LIBOR published in the WallStreet Journal plus 1.00% per year, subject to a 3.00% floor. The “LIBOR Rate” is defined as the applicable London Interbank Offered Rate forU.S. dollar deposits, subject to a 1.00% floor, divided by 1.00 minus the maximum effective reserve percentage for Eurocurrency funding.Borrowings under the Term Loan B Facility accrue interest at an annual rate equal to, at the Company’s option, either (1) the Reference Rate plusa margin of 9.00% per year, or (2) the LIBOR Rate plus a margin of 10.00% per year. In November 2017, all of the outstanding aggregate principalbalance and accrued interest of $46.1 million on the Company’s Term Loan B Facility was repaid in connection with the IPO, and the Companyrecorded a $5.1 million loss on debt extinguishment as a result of the write-off of unamortized discount.The Senior Secured Credit Facilities are collateralized by substantially all of the assets of, and the equity interests held by, the borrowers and anysubsidiary guarantor that may become party to the credit agreement in the future, subject to certain exceptions. The Senior Secured CreditFacilities also contain certain financial and restrictive covenants. As of December 31, 2017 and 2016, the Company was in compliance with allcovenants under the Senior Secured Credit Facilities.The Company had $10.8 million and $6.7 million of borrowings outstanding under the Revolving Credit Facility as of December 31, 2017 and 2016,respectively. In November 2017, all of the then outstanding aggregate principal balance and accrued interest of $55.6 million was repaid on theRevolving Credit Facility in connection with the IPO. There were no outstanding letters of credit as of December 31, 2017 and 2016.See Note 20, Subsequent Events for a description of the March 2018 amendment to the credit agreement.Subordinated Promissory NotesOn June 26, 2017, FAH, LLC issued promissory notes payable to certain of its members, including several members of management and itsmajority owner, in the aggregate principal amount of $20.0 million (the “Subordinated Promissory Notes”). Borrowings under the SubordinatedPromissory Notes accrued interest at a rate equal to 11.0% per year for the first 90 days after their effective date, increasing to 13.0% per year 91days after such effective date and 15.0% per year 181 days after such effective date. Proceeds from the Subordinated Promissory Notes wereused to finance a portion of the contingent consideration related to the ACON Acquisition that was paid out during the year ended December 31,2017. In November 2017, all of the outstanding aggregate principal balance and accrued interest on the Subordinated Promissory Notes of $20.9 millionwas repaid in connection with Funko, Inc.’s IPO.96 11. Income TaxesAccounting for the Tax Cuts and Jobs ActIn December 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was passed. The Tax Act changes existing U.S. tax law, including changes to U.S.corporate tax rates, business-related exclusions, and deductions and credits. The Tax Act also has international tax consequences. Also inDecember 2017, the SEC Issued Staff Accounting Bulletin No. 118 to address situations where the accounting under ASC Topic 740 is incompletefor certain income tax effects of the Tax Act upon issuance of an entity’s financial statements for the reporting period in which the Tax Act wasenacted. This guidance addresses the recognition of taxes payable or refundable for the current year and the recognition of deferred tax assetsand liabilities for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. ASC Topic740 also addresses the accounting for income taxes upon a change in tax laws or tax rates. The income tax accounting effect of a change in taxlaws or tax rates includes, for example, adjusting (or re-measuring) deferred tax assets and liabilities, as well as evaluating whether a valuationallowance is needed for deferred tax assets. This guidance also clarifies that disclosure should be provided when a registrant does not have thenecessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting under ASC Topic740 for certain income tax effects of the Tax Act for the reporting period in which the Tax Act was enacted. This guidance is effective uponpublication.While analysis and interpretation of this legislation is provisional, based on the Company’s current evaluation, the significant impacts from the TaxAct are primarily due to the lower U.S. federal corporate tax rate of 21%. The impact to the consolidated statement of operations was an additional$4.6 million of provisional income tax expense recorded for the year ended December 31, 2017. This expense reflects the revaluation of our netdeferred tax assets based on a U.S. federal corporate tax rate of 21%. The Company continues to assess and analyze the potential impacts of theTax Act which could potentially impact the measurement of our tax balances.Income (loss) before income taxes consisted of (in thousands): Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 Domestic $4,471 $26,880 $(15,561) $27,499 Foreign 2,669 — — — Income (loss) before income taxes $7,140 $26,880 $(15,561) $27,49997  Income TaxesThe components of the Company’s income tax expense consisted of the following (in thousands): Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 Current income taxes: Federal $941 $— $— $— State and local 365 — — — Foreign 952 — — — Current income taxes $2,258 $— $— $— Deferred income taxes: Federal $(651) — — — State and local (16) — — — Foreign (51) — — — Deferred income taxes $(718) $— $— $— Income tax expense $1,540 $— $— $— A reconciliation of income tax expense from operations computed at the U.S. federal statutory income tax rate to the Company’s effective incometax rate is as follows: Successor Predecessor Period from Period from October 31, January 1, 2015 through 2015 through Year Ended December 31, December 31, October 30, 2017 2016 2015 2015 Expected U.S. federal income taxes at statutory rate 34.0% 34.0% 34.0% 34.0%State and local income taxes, net of federal benefit 4.6% 0.0% 0.0% 0.0%Foreign taxes 12.6% 0.0% 0.0% 0.0%Non-deductible expenses 1.7% 0.0% 0.0% 0.0%Enactment of the Tax Cuts and Jobs Act 65.7% 0.0% 0.0% 0.0%Change in valuation allowance -70.3% Non-controlling interest -9.6% 0.0% 0.0% 0.0%LLC flow-through structure -17.1% -34.0% -34.0% -34.0%Income tax expense 21.6% 0.0% 0.0% 0.0% Our effective income tax rate for 2017 was 21.6%. The decrease in our effective income tax rate in 2017 compared to the statutory rate wasprimarily due to the Tax Act, the non-controlling interest, and the LLC flow-through structure. The Tax Act reduces the U.S. federal corporate taxrate to 21%, which negatively impacted our effective tax rate by reducing our deferred tax assets. The non-controlling interest benefited oureffective tax rate by reducing our allocable share of taxable income subject to U.S. federal, state and local income taxes. The LLC flow-throughstructure benefited our effective tax rate as prior to the IPO we were subject to certain LLC entity-level taxes and foreign taxes but generally notsubject to entity-level U.S. federal income taxes.98 Deferred Income TaxesThe significant items comprising deferred tax assets and liabilities is as follows (in thousands): December 31, 2017 2016 Deferred tax assets: Investment in partnership $13,403 $— Stock-based compensation 85 — Intangibles 151 — Gross deferred tax assets 13,639 — Valuation allowance (8,862) — Deferred tax assets, net of valuation allowance 4,777 — Deferred tax liabilities: Investment in partnership (5,290) — Property and equipment (24) Gross deferred tax liabilities (5,314) — Net deferred tax liabilities $(537) $— As of December 31, 2017, the Company did not have any federal or state net operating loss carryforwards for income tax purposes.The Company evaluates its ability to realize deferred tax assets on a quarterly basis and establishes a valuation allowance when it is more likelythan not that all or a portion of a deferred tax asset may not be realized. The Company recognized a deferred tax asset of $13.4 million associatedwith the basis difference in its investment in FAH, LLC upon acquiring these LLC interests. However, a portion of the total basis difference will onlyreverse upon the eventual sale of its interest in FAH, LLC, which we expect would result in a capital loss. As of December 31, 2017, the Companyestablished a valuation allowance in the amount of $8.9 million against the deferred tax asset.Uncertain Tax PositionsThe Company regularly evaluates the likelihood of realizing the benefit from income tax positions that we have taken in various federal, state andforeign filings by considering all relevant facts, circumstances and information available. If the Company determines it is more likely than not thatthe position will be sustained, a benefit will be recognized at the largest amount that we believe is cumulatively greater than 50% likely to berealized. Interest and penalties related to income tax matters are classified as a component of income tax expense. Unrecognized tax benefits arerecorded in other long-term liabilities on the consolidated balance sheets. We had no uncertain tax positions as of December 31, 2017.Other MattersThe Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is subject to U.S.federal, state, and local income tax examinations by tax authorities for years after 2013 and subject to examination for all foreign income taxreturns for fiscal 2017. There were no open tax examinations at December 31, 2017.Tax Receivable AgreementOn November 1, 2017, the Company entered into the Tax Receivable Agreement with FAH, LLC and each of the Continuing Equity Owners thatprovides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that it realizes, or in somecircumstances, is deemed to realize, as a result of (i) future redemptions funded by the Company or exchanges, or deemed exchanges in certaincircumstances, of common units for Class A common stock or cash, and (ii) certain additional tax benefits attributable to payments made underthe Tax Receivable Agreement. FAH, LLC intends to have in effect an election under Section 754 of99 the Internal Revenue Code effective for each taxable year in which a redemption or exchange (including deemed exchange) of common units forcash or stock occurs. These tax benefit payments are not conditioned upon one or more of the Continuing Equity Owners maintaining a continuedownership interest in FAH, LLC. In general, the Continuing Equity Owners’ rights under the Tax Receivable Agreement are assignable, including totransferees of common units in FAH, LLC (other than the Company as transferee pursuant to a redemption or exchange of common units in FAH,LLC). The Company expects to benefit from the remaining 15% of the tax benefits, if any, that the Company may realize. At December 31, 2017,the Company did not have any obligations recorded under the Tax Receivable Agreement.12. Commitments and ContingenciesThe following table summarizes the Company’s future minimum commitments as of December 31, 2017 (in thousands): 2018 2019 2020 2021 2022 Thereafter Total Long term debt and related interest (1) $28,983 $28,164 $27,396 $214,516 $— $— $299,059 Operating leases 6,691 5,953 5,922 4,999 3,911 14,364 41,840 Minimum royalty obligations (2) 28,587 1,804 358 — — — 30,749 Revolving Credit Facility (3) 10,801 — — — — — 10,801 Total $75,062 $35,921 $33,676 $219,515 $3,911 $14,364 $382,449 (1)We estimated interest payments through the maturity of our Senior Secured Credit Facilities by applying the effective interest rate of 9.2%in effect as of December 31, 2017 under our Term Loan A Facility. See Note 10, Debt.(2)Represents minimum guaranteed royalty payments under licensing arrangements.(3)Represents the amount owed as of December 31, 2017 under our Revolving Credit Facility. License AgreementsThe Company enters into license agreements with various licensors of copyrighted and trademarked characters and design in connection with theproducts that it sells. The agreements generally require royalty payments based on product sales and in some cases may require minimum royaltyand other related commitments.Employment AgreementsThe Company has employment agreements with certain officers. The agreements include, among other things, an annual bonus based on certainperformance metrics of the Company, as defined by the board, and up to one year’s severance pay beyond termination date.DebtThe Company has entered into a credit agreement which includes a term loan facility and a revolving credit facility. See Note 10, Debt.LeasesThe Company has entered into non-cancellable operating leases for office, warehouse, and distribution facilities, with original lease periods expiringthrough 2027. Some operating leases also contain the option to renew for five-year periods at prevailing market rates at the time of renewal. Inaddition to minimum rent, certain of the leases require payment of real estate taxes, insurance, common area maintenance charges, and otherexecutory costs. Differences between rent expense and rent paid is recorded as deferred rent on the consolidated balance sheets. For certainleases we receive tenant improvement allowances and record those as deferred rent on the consolidated balance sheets and amortize the tenantimprovement allowances on a straight-line basis over the lease term as a reduction of rent expense. Rent expense, net of sublease income, was$6.1 million, $3.7 million, $0.3 million and $1.2 million for the years ended December 31, 2017 and 2016 and the Successor 2015 Period andPredecessor 2015 Period.100 Legal ContingenciesThe Company is involved in claims and litigation in the ordinary course of business, some of which seek monetary damages, including claims forpunitive damages, which are not covered by insurance. For certain pending matters, accruals have not been established because such mattershave not progressed sufficiently through discovery, and/or development of important factual information and legal information is insufficient toenable the Company to estimate a range of possible loss, if any. An adverse determination in one or more of these pending matters could have anadverse effect on the Company’s consolidated financial position, results of operations or cash flows.We are, and may in the future become, subject to various legal proceedings and claims that arise in or outside the ordinary course of business.For example, on November 16, 2017, a purported stockholder of the Company filed a putative class action lawsuit in the Superior Court ofWashington in and for King County against us, certain of our officers and directors, and the underwriters of our IPO, entitled Robert Lowinger v.Funko, Inc., et. al. In January and March 2018, four additional putative class action lawsuits were filed, three in the Superior Court of Washingtonin and for King County and one in the Superior Court of Washington in and for Snohomish County. Two of the lawsuits, Surratt v. Funko, Inc. et. al.(filed on January 16, 2018) and Baskin v. Funko, Inc. et. al. (filed on January 30, 2018) were filed against us and certain of our officers anddirectors. The third, The Ronald and Maxine Linde Foundation v. Funko et. al. (filed on January 18, 2018) was filed against us, certain of ourofficers and directors, ACON, Fundamental and certain other defendants. The fourth, Berkelhammer v. Funko, Inc. et. al. (filed on March 13, 2018)was filed against us, certain of our officers and directors, and ACON. The complaints allege that we violated Sections 11, 12, and 15 of theSecurities Act of 1933, as amended, by making allegedly materially misleading statements, and by omitting material facts necessary to make thestatements made therein not misleading. The lawsuits seek, among other things, compensatory statutory damages and rescissory damages inaccount of the consideration paid for our Class A common stock by plaintiff and members of the putative class, as well as attorneys’ fees andcosts.13. SegmentsThe Company identifies its reportable segments according to how the business activities are managed and evaluated and for which discretefinancial information is available and for which is regularly reviewed by its Chief Operating Decision Maker (“CODM”) to allocate resources andassess performance. Because its CODM reviews financial performance and allocates resources at a consolidated level on a regular basis, it hasone reportable segment. The following table is a summary of product categories as a percent of sales: Successor Predecessor Year ended December 31, Period fromOctober 31,2015 throughDecember 31, Period fromJanuary 1,2015 throughOctober 30, 2017 2016 2015 2015 Figures 81.8% 82.0% 88.6% 91.1%Other 18.2% 18.0% 11.4% 8.9% The following tables present summarized geographical information (in thousands): Successor Predecessor Year ended December 31, Period fromOctober 31,2015 throughDecember 31, Period fromJanuary 1,2015 throughOctober 30, 2017 2016 2015 2015 Net sales: United States $376,087 $352,436 $40,906 $170,239 Foreign 139,997 74,281 15,659 47,252 Total net sales $516,084 $426,717 $56,565 $217,491 101  December 31, 2017 2016 Long-lived assets: United States $24,637 $14,773 China and Vietnam 18,865 13,791 United Kingdom 1,194 — Total long-lived assets $44,696 $28,564 14. Related Party TransactionsMembers’ Equity ContributionOn June 26, 2017, the Company issued 5,000 Class A units in exchange for a contribution of $5.0 million from several members of managementand ACON. As a result of this issuance, the Company recorded equity-based compensation expense in the consolidated statements of operationsof $2.2 million.ACON Equity Management AgreementOn October 31, 2015, the Company entered into a management services agreement with ACON Equity Management, L.L.C. (“ACON EquityManagement”), which requires payment of a monitoring fee equal to the greater of (1) $500,000 and (2) 2% prior year Adjusted EBITDA, up to amaximum fee of $2.0 million. Pursuant to the management services agreement, Funko, LLC also agreed to pay ACON Equity Management a one-time advisory fee of $2.0 million, and agreed to reimburse ACON Equity Management for certain costs and expenses in connection with ACONEquity Management’s performance under the agreement. In connection with the IPO, on November 6, 2017, the management fee agreementterminated. ACON Equity Management waived the $5.8 million termination fee.The Company recognized $1.7 million, $1.5 million and $0.3 million in management fees for the years ended December 31, 2017, 2016 and theSuccessor 2015, respectively. These fees are recorded within selling, general and administrative expenses. As of December 31, 2017 and 2016,$0.0 million and $0.4 million, respectively, of these fees and other amounts due to ACON Equity Management, were included within accruedexpenses and other current liabilities. In addition, the Company recorded an expense for ACON Equity Management’s reimbursable expensestotaling $0.2 million for the year ended December 31, 2016; expense recorded related to the Successor 2015 Period was nominal.Promissory and Subordinated Promissory NotesIn October 2015, the Company entered into subscription agreements with several members of management (the “Purchasers”) to purchase FAH,LLC Class A units having an aggregate purchase price of $0.9 million. Funko, LLC entered into a secured promissory note with each Purchaser inan amount equal to the purchase price of the Class A units purchased by such individual. Amounts outstanding under the promissory notes werecollateralized by all direct or indirect ownership interests of the Purchasers in FAH, LLC. The promissory notes had an 8% interest ratecompounded on an annual basis, and were recorded as a non-cash transaction within members’ equity. The Company recognized interest on acash basis when principal payments were made, and recorded a nominal amount of interest income for the years ended December 31, 2017 and2016. On October 5, 2017, outstanding aggregate principal and accrued interest of $0.2 million was forgiven for certain of FAH, LLC’s officers andexecutives. The remaining promissory notes were repaid as part of the reorganization Transactions, as defined below in “ReorganizationTransactions.”See discussion of the Subordinated Promissory Notes in Note 10, Debt. The Subordinated Promissory Notes were repaid in November 2017, withproceeds from the IPO.Other AgreementsIn June 2017, in connection with the Loungefly Acquisition, the Company assumed a lease for the Loungefly headquarters and warehouseoperations with 20310 Plummer Street LLC and entered into a global sourcing agreement with Sure Star Development Ltd. Both entities are ownedby certain of the Company’s employees, who were the former owners of Loungefly. For the year ended December 31, 2017, the Company recorded$0.2 million102 in rental expense related to the lease, which was recorded in selling, general and administrative expenses in the Company’s consolidatedstatements of operations. At December 31, 2017, amounts owed to those entities were $5.7 million and were recorded in accounts payable andaccrued liabilities on the consolidated balance sheet.The Company sells products to Forbidden Planet, a U.K. retailer through its wholly owned subsidiary Funko UK, Ltd. One of the investors inForbidden Planet is an employee of Funko UK, Ltd. For the year ended December 31, 2017, the Company recorded approximately $4.2 million innet sales from business with Forbidden Planet. At December 31, 2017, accounts receivable from Forbidden Planet were $0.5 million on theconsolidated balance sheet.15. Employee Benefit PlansWe currently maintain the Funko 401(k) Plan, a defined contribution retirement and savings plan, for the benefit of our employees, including ournamed executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) Plan onthe same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits,on a pre-tax basis through contributions to the 401(k) Plan. Currently, we match contributions made by participants in the 401(k) Plan up to 4% ofthe employee earnings, and these matching contributions are fully vested as of the date on which the contribution is made. We believe thatproviding a vehicle for tax-deferred retirement savings though our 401(k) Plan, and making fully vested matching contributions, adds to the overalldesirability of our executive compensation package and further incentivizes our employees, including our named executive officers, in accordancewith our compensation policies.16. Stockholders’ EquityIn connection with the Company’s IPO, the Company’s board of directors approved an amended and restated certificate of incorporation (the“Amended and Restated Certificate of Incorporation”), which became effective on November 1, 2017. The Amended and Restated Certificate ofIncorporation authorizes the issuance of up to 200,000,000 shares of Class A common stock, up to 50,000,000 shares of Class B common stockand 20,000,000 shares of preferred stock, each having a par value of $0.0001 per share. Shares of Class A common stock have both economicand voting rights. Shares of Class B common stock have no economic rights, but do have voting rights. Holders of shares of Class A commonstock and Class B common stock are entitled to one vote per share on all matters presented to stockholders. The Company’s board of directorshas the discretion to determine the rights, preferences, privileges, restrictions and liquidation preferences of any series of preferred stock.Reorganization TransactionsOn November 1, 2017, in connection with the completion of the IPO, the Company completed a series of reorganization transactions (the“Transactions”). The Transactions included the following: •The amendment and restatement of the existing FAH, LLC limited liability company agreement (the “FAH LLC Agreement”) to,among other things, (i) convert all existing ownership interests (including vested profits interests and all unvested profits interestsand existing warrants to purchase ownership interests in FAH, LLC) into common units of FAH, LLC (subject to common unitsreceived in exchange for unvested profits interests remaining subject to time-based vesting requirements), and (ii) appoint theCompany as FAH, LLC’s sole managing member upon its acquisition of common units in connection with the IPO; •The amendment and restatement of the Company’s certificate of incorporation to, among other things, provide (i) for Class Acommon stock, with each share of Class A common stock entitling its holders to one vote per share on all matters presented tostockholders generally and (ii) for Class B common stock, with each share of Class B common stock entitling its holders to one voteper share on all matters presented to stockholders generally and that shares of Class B common stock may only be held by theContinuing Equity Owners and their permitted transferees;103  •Certain funds affiliated with ACON Funko Investors (the “Former Equity Owners”) exchanged their indirect ownership interests incommon units of FAH, LLC for 12,921,039 shares of Class A common stock on a one-for-one basis; and •The Company entered into (i) a stockholders’ agreement with ACON Funko Investors and the Former Equity Owners, FundamentalCapital, LLC and Funko International, LLC (collectively, “Fundamental”) and Brian Mariotti, the Company’s Chief Executive Officer,(ii) a registration rights agreement with certain of the Original Equity Owners (including each of the Company’s executive officers),and (iii) a tax receivable agreement (the “Tax Receivable Agreement”) with FAH, LLC and each of the Continuing Equity Owners.The Transactions were effected on November 1, 2017, prior to the time the Company’s Class A common stock was registered under the ExchangeAct, and prior to the completion of the IPO.FAH, LLC RecapitalizationAs noted above, the FAH LLC Agreement, among other things, appointed the Company as FAH, LLC’s sole managing member and reclassified alloutstanding membership interests in FAH, LLC as non-voting common units. As the sole managing member of FAH, LLC, the Company controlsthe management of FAH, LLC. As a result, the Company consolidates FAH, LLC’s financial results and reports a non-controlling interest related tothe economic interest of FAH, LLC held by the Continuing Equity Owners.The Amended and Restated Certificate of Incorporation and the FAH LLC Agreement discussed above requires FAH, LLC and the Company to, atall times, maintain (i) a one-to-one ratio between the number of shares of Class A common stock issued by the Company and the number ofcommon units owned by the Company and (ii) a one-to-one ratio between the number of shares of Class B common stock owned by the ContinuingEquity Owners and the number of common units owned by the Continuing Equity Owners (other than common units issuable upon the exercise ofoptions and common units that are subject to time-based vesting requirements (the “Excluded Common Units”)). The Company may issue sharesof Class B common stock only to the extent necessary to maintain the one-to-one ratio between the number of common units of FAH, LLC held bythe Continuing Equity Owners (other than the Excluded Common Units) and the number of shares of Class B common stock issued to theContinuing Equity Owners. Shares of Class B common stock are transferable only together with an equal number of common units of FAH, LLC.Only permitted transferees of common units held by the Continuing Equity Owners will be permitted transferees of Class B common stock.The Continuing Equity Owners may from time to time at each of their options (subject, in certain circumstances, to time-based vestingrequirements) require FAH, LLC to redeem all or a portion of their common units in exchange for, at the Company’s election, newly-issued sharesof our Class A common stock on a one-for-one basis or a cash payment equal to a volume weighted average market price of one share of Class Acommon stock for each common unit redeemed, in each case in accordance with the terms of the FAH LLC Agreement; provided that, at theCompany’s election, the Company may effect a direct exchange of such Class A common stock or such cash, as applicable, for such commonunits. The Continuing Equity Owners may exercise such redemption right for as long as their common units remain outstanding. Simultaneouslywith the payment of cash or shares of Class A common stock, as applicable, in connection with a redemption or exchange of common unitspursuant to the terms of the FAH LLC Agreement, a number of shares of our Class B common stock registered in the name of the redeeming orexchanging Continuing Equity Owner will be cancelled for no consideration on a one-for-one basis with the number of common units so redeemedor exchanged.Initial Public OfferingAs noted above, on November 6, 2017, the Company completed its IPO of 10,416,666 shares of Class A common stock at a public offering priceof $12.00 per share and received approximately $117.3 million in net proceeds, after deducting underwriting discounts and commissions. TheCompany used the net proceeds to purchase 10,416,666 newly issued common units directly from FAH, LLC at a price per unit equal to the initialpublic offering price per share of Class A common stock sold in the IPO less underwriting discounts and commissions. Immediately following thecompletion of the IPO, there were 24,975,932 shares of Class B common stock outstanding and 23,337,705 shares of Class A common stockoutstanding, comprised of 10,416,666 shares104 issued in connection with the IPO and 12,921,039 shares issued in connection with the Transactions described above.Equity-Based CompensationFunko, Inc. 2017 Incentive Award Plan. On October 23, 2017, the Company adopted the Funko, Inc. 2017 Incentive Award Plan (the “2017 Plan”),which became effective on November 1, 2017, upon the effectiveness of the registration statement on Form S-1 (File No. 333-220856), asamended, filed with the SEC in connection with the IPO. The Company reserved a total of 5,518,518 shares of Class A common stock forissuance pursuant to the 2017 Plan. In connection with the IPO, the Company granted 1,028,500 options to purchase shares of Class A commonstock to certain of its directors, executive officers and employees.A summary of 2017 Plan stock option activity for the year ended December 31, 2017 is as follows: Weighted Aggregate Remaining Funko, Inc.StockOptions AverageExercise Price IntrinsicValue ContractualLife (in thousands) (in thousands) (years) Outstanding at December 31, 2016 — Granted 1,029 $12.00 Exercised — Forfeited — Cancelled 18 Outstanding at December 31, 2017 1,011 $6,720 9.83 Options exercisable at December 31, 2017 51 $12.00 $341 9.83 Options to purchase common units in FAH, LLC. In connection with the IPO, existing options to purchase Class A units in FAH, LLC wereconverted into 555,867 options to purchase common units in FAH, LLC.A summary of FAH, LLC stock option activity for the year ended December 31, 2017 is as follows: Weighted Aggregate Remaining FAH, LLCStockOptions AverageExercise Price IntrinsicValue ContractualLife (in thousands) (in thousands) (years) Outstanding at December 31, 2016 3,450 Recapitalization in connection with the Transactions 556 Exercised — Forfeited — Cancelled — Outstanding at December 31, 2017 556 $0.41 $3,696 5.92 Options exercisable at December 31, 2017 509 $0.32 $3,384 5.82 Unvested common units in FAH, LLC. In connection with the IPO, unvested common units to purchase profit interests in FAH, LLC wereconverted into 1,901,327 unvested common units of FAH, LLC.105 A summary of unvested common unit activity for the year ended December 31, 2017 is as follows: WeightedAverage CommonUnits Grant DateFairValue (in thousands) Unvested at December 31, 2016 9,651 Recapitalization in connection with the Transactions 1,901 $22,812 Vested 553 6,636 Forfeited — Cancelled — Unvested at December 31, 2017 1,348 $16,176 Equity-based compensation expense. The Company measures and recognizes expense for its equity-based compensation granted to employeesand directors based on the fair value of the awards on the grant date. The fair value of option awards is estimated at the grant date using theBlack-Scholes option pricing model that requires management to apply judgment and make estimates, including: •Volatility—this is estimated based on historical volatilities of a representative group of publicly traded consumer product companieswith similar characteristics •Risk-free interest rate—this is the U.S. Treasury rate as of the grant date having a term equal to the expected term of the award •Expected term—represents the estimated period of time until an award is exercised and was calculated based on the simplifiedmethod •Dividend yield—the Company does not plan to pay dividends in the foreseeable futureFor each of the options granted during 2017, the following were the option pricing model inputs: 2017 Plan Expected term (years) 6.25 Expected volatility 29.5%Risk-free interest rate 2.1%Dividend yield 0% Equity-based compensation expense is recognized on a straight-line basis over the vesting period of the award. The Company records equity-based compensation to selling, general and administrative expense on the consolidated statement of operations. Equity-based compensation forthe years ended December 31, 2017, 2016, the Successor 2015 Period and the 2015 Predecessor Period were $5.4 million, $2.4 million, $4.5million and $9.9 million. As of December 31, 2017, there was $9.3 million of total unrecognized equity-based compensation expense. Of this, $0.2 million is related tooptions to purchase common units in FAH, LLC, $3.8 million is related to options to purchase Class A units in Funko, Inc. and $5.3 million isrelated to unvested common units in FAH, LLC. As of December 31, 2017, the Company expected to recognize these costs over a remainingweighted average period of 1.0 years for options to purchase common units in FAH, LLC, 3.7 years options to purchase Class A units in Funko,Inc and 2.0 years for common units.17. Non-controlling InterestsIn connection with the Transactions described in Note 16, Stockholders’ Equity, the Company became the sole managing member of FAH, LLCand as a result consolidates the financial results of FAH, LLC. The Company reports a non-controlling interest representing the common units ofFAH, LLC held by the Continuing Equity Owners. Changes in Funko, Inc.’s ownership interest in FAH, LLC while Funko, Inc. retains its controllinginterest in FAH, LLC will be accounted for as equity transactions. As such, future redemptions or direct exchanges of106 common units of FAH, LLC by the Continuing Equity Owners will result in a change in ownership and reduce or increase the amount recorded asnon-controlling interest and increase or decrease additional paid-in capital when FAH, LLC has positive or negative net assets, respectively.The Company used the net proceeds from its IPO to purchase 10,416,666 newly-issued common units of FAH, LLC. Additionally, in connectionwith the Transactions, certain funds affiliated with the Former Equity Owners exchanged their indirect ownership interests in common units of FAH,LLC for 12,921,039 shares of Class A common stock on a one-for-one basis.As of December 31, 2017, Funko, Inc. owned 23,337,705 of FAH, LLC common units, representing a 48.3% economic ownership interest in FAH,LLC.18. Earnings per ShareBasic and Diluted Earnings per ShareBasic earnings per share of Class A common stock is computed by dividing net income available to Funko, Inc. by the weighted-average numberof shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividingnet income available to Funko, Inc. by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect topotentially dilutive securities.As described in Note 16, Stockholders’ Equity, on November 1, 2017, the LLC Agreement was amended and restated to, among other things, (i)provide for a new single class of common membership interests, the common units of FAH, LLC, and (ii) exchange all of the then-existingmembership interests of the Original Equity Owners for common units of FAH, LLC. This Recapitalization changed the relative membership rightsof the Original Equity Owners such that retroactive application of the Recapitalization to periods prior to the IPO for the purposes of calculatingearnings per share would not be appropriate.Prior to the IPO, the FAH, LLC membership structure included Class A Units, Profits Units and HR Units. The Company analyzed the calculationof earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningfulto the users of these consolidated financial statements. Therefore, earnings per share information has not been presented for periods prior to theIPO on November 6, 2017. The basic and diluted earnings per share period for the year ended December 31, 2017 represents only the period ofNovember 6, 2017 to December 31, 2017.107 The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class Acommon stock: Year Ended December 31, 2017 Numerator: Net income attributable to Funko, Inc. $2,916 Less: net income attributable to non-controlling interests 1,875 Net income attributable to Funko, Inc. — basic $1,041 Add: Reallocation of net income attributable to non- controlling interests from the assumed exchange of common units of FAH, LLC for Class A common stock 1,116 Net income attributable to Funko, Inc. — diluted $2,157 Denominator: Weighted-average shares of Class A common stock outstanding — basic 23,337,705 Add: Dilutive common units of FAH, LLC that are convertible into Class A common stock 27,297,348 Weighted-average shares of Class A common stock outstanding — diluted 50,635,053 Earnings per share of Class A common stock — basic $0.04 Earnings per share of Class A common stock — diluted $0.04 For the year ended December 31, 2017, 1.0 million stock options and 0.8 million unvested common units were excluded from the weighted-averagein the computation of diluted earnings per share of Class A common stock because the effect would have been anti-dilutive.Shares of the Company’s Class B common stock do not participate in the earnings or losses of the Company and are therefore not participatingsecurities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has notbeen presented. 19. Quarterly Financial Information (Unaudited) Three Months Ended Dec. 31,2017 Sept. 30,2017 June 30,2017 March 31,2017 Dec. 31,2016 Sept. 30,2016 June 30,2016 March 31,2016 (In thousands) Net sales $169,474 $142,812 $104,746 $99,052 $132,412 $118,044 $101,287 $74,974 Cost of sales (exclusive of depreciation and amortization) 102,926 84,387 66,005 64,061 82,813 71,784 70,310 55,489 Selling, general and administrative expenses 37,532 32,511 25,809 25,092 21,744 18,694 20,034 17,053 Net income (loss) 7,501 8,264 (4,538) (5,627) 15,754 17,153 1,009 (7,036)Net income attributable to non-controllinginterests 1,875 - - - - - - - Basic earnings per share $0.04 — - - - - - - Dilutive earnings per share $0.04 — - - - - - -108  20. Subsequent EventsOn March 7, 2018, the Company entered into an amendment to its credit agreement which provides for, among other things, (i) a $13.0 millionprepayment of the amounts owing under the Term Loan A Facility on the effective date of the amendment, with no changes in the amount of futureamortization payments, (ii) a reduction in the interest rate margins (a) for the Term Loan A Facility, from 6.25% to 5.50% for base rate loans and7.25% to 6.50% for LIBOR rate loans and (b) for the Revolving Credit Facility, from 2.50% to 1.75% for LIBOR rate loans, (iii) a 1% prepaymentpremium on prepayments under both the Term Loan A Facility and the Revolving Credit Facility for 180 days after the effective date of theamendment, and (iv) a $20.0 million increase to the borrowing base under the Revolving Credit Facility, so long as no loan party formed under thelaws of England and Wales or Funko UK, Ltd. incurs secured indebtedness for borrowed money.On March 15, 2018, Toys “R” Us, Inc. announced the wind down of its US operations and the potential insolvency proceedings of certain of itssubsidiaries. Based on the information available to management, the Company determined that it was appropriate as of December 31, 2017 toincrease the allowance for doubtful accounts in Accounts Receivable, net by $2.0 million which represents the unpaid accounts receivable balancerelated to sales prior to the balance sheet date. The Company also recorded $2.0 million of bad debt expense in selling, general, andadministrative expenses for the year ended December 31, 2017.109  ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENot Applicable. ITEM 9A. CONTROLS AND PROCEDURESLimitations on Effectiveness of Controls and ProceduresIn designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how welldesigned and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosurecontrols and procedures must reflect that there are resource constraints and that management is required to apply judgement in evaluating thebenefits of possible controls and procedures relative to their costs.Evaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosurecontrols and procedures (as such term is defined in Rules 13a–15(e) and 15d–15(e) under the Exchange Act). Based on this evaluation, our ChiefExecutive Officer and Chief Financial Officer concluded that our disclosure controls were effective at the reasonable assurance level as ofDecember 31, 2017.Exemption from Management’s Report on Internal Control Over Financial ReportingThis Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or anattestation report of our independent registered public accounting firm due to a transition period established by the SEC for newly publiccompanies. Item 9B. OTHER INFORMATIONNot applicable. 110 PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEPursuant to General Instruction G(3) to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K, information regarding our executive officersis provided in Item 1 of this Annual Report on Form 10-K under the caption “Executive Officers of the Registrant,” and will also appear in ourdefinitive proxy statement for our 2018 Annual Meeting of Stockholders. The remaining information required by Items 401, 405, 406 and 407(c)(3),(d)(4) and (d)(5) of Regulation S-K will be included under the headings “Election of Directors,” “Corporate Governance,” and “Section 16(a)Beneficial Ownership Reporting Compliance” in our definitive proxy statement for our 2018 Annual Meeting of Stockholders, and such requiredinformation is incorporated herein by reference.ITEM 11. EXECUTIVE COMPENSATIONThe information required by Items 402, 407(e)(4), and (e)(5) of Regulation S-K will be included under the headings “Executive Compensation” and“Compensation Committee Interlocks and Insider Participation” in our definitive proxy statement for our 2018 Annual Meeting of Stockholders, andsuch information is incorporated herein by reference.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSSecurities Authorized for Issuance Under Equity Compensation Plans (as of December 31, 2017) Plan category:Number ofSecurities to beIssued UponExercise ofOutstandingOptions, Warrants,and Rights Weighted-Average ExercisePrice ofOutstandingOptions,Warrants, andRights Number of SecuritiesAvailable for FutureIssuance UnderEquity CompensationPlans (excludessecurities Reflected infirst column) Equity compensation plans approved by securityholders 1,010,500 $12.00 4,508,018 Equity compensation plans not approved by securityholders— — — Total 1,010,500 $12.00 4,508,018OtherThe remaining information required by Item 403 of Regulation S-K will be included under the heading “Security Ownership of Certain BeneficialOwners and Management” in our definitive proxy statement for our 2018 Annual Meeting of Stockholders, and such required information isincorporated herein by reference.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe information required by Items 404 and 407(a) of Regulation S-K will be included under the headings “Certain Relationships and Related PersonTransactions,” “Corporate Governance” and “Director Independence” in our definitive proxy statement for our 2018 Annual Meeting of Stockholders,and such information is incorporated herein by reference.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information required by Item 9(e) of Schedule 14A of the Exchange Act will be included under the heading “Principal Accountant Fees andServices” in our definitive proxy statement for our 2018 Annual Meeting of Stockholders, and such information is incorporated herein by reference.111 PART IVITEM 15. EXHIBITSEXHIBIT INDEX ExhibitNumber Exhibit Description Incorporated by Reference Form File No. Exhibit FilingDate Filed/FurnishedHerewith 3.1 Amended and Restated Certificate ofIncorporation of Funko, Inc. S-8 333-221390 4.1 11/7/17 3.2 Amended and Restated Bylaws ofFunko, Inc. S-8 333-221390 4.2 11/7/17 4.1 Specimen Stock Certificateevidencing the shares of Class Acommon stock S-1 333-220856 4.1 10/23/17 10.1 † Funko Acquisition Holdings, L.L.C.2015 Option Plan, Amended andRestated as of November 1, 2017. * 10.2 † Form of Option Agreement underFunko Acquisition Holdings, L.L.C.2015 Option Plan. S-1 333-220856 10.15 10/6/17 10.3 † 2017 Incentive Award Plan, datedOctober 23, 2017. * 10.4 † Form of Stock Option Agreementunder 2017 Incentive Award Plan. S-1/A 333-220856 10.19 10/23/17 10.5 † 2017 Executive Annual IncentivePlan, dated October 23, 2017. * 10.6 † Employment Agreement, datedOctober 30, 2015, by and betweenFunko, LLC and Brian Mariotti. S-1 333-220856 10.18 10/6/17 10.7 † Offer letter, dated September 29,2013, by and between Funko, LLCand Russell Nickel. S-1 333-220856 10.19 10/6/17 10.8 † Employment Agreement, datedOctober 20, 2017, by and betweenFunko, Inc. and Russell Nickel. * 10.9 † Offer letter, dated June 15, 2016, byand between Funko, LLC and TracyDaw. S-1 333-220856 10.21 10/6/17 112 ExhibitNumber Exhibit Description Incorporated by Reference Form File No. Exhibit FilingDate Filed/FurnishedHerewith 10.10 † Employment Agreement, datedOctober 20, 2017, by and betweenFunko, Inc. and Tracy Daw. * 10.11 † Offer letter, dated July 15, 2016, byand between Funko, LLC and MichaelMcBreen. S-1 333-220856 10.23 10/6/17 10.12 † Separation Agreement, datedAugust 28, 2017, by and betweenFunko, LLC and Michael McBreen S-1 333-220856 10.24 10/6/17 10.13 † Employment Agreement, datedOctober 20, 2017, by and betweenFunko, Inc. and Andrew Perlmutter. * 10.14 † Form of Indemnification Agreementfor Directors and Officers. S-1/A 333-220856 10.27 10/12/17 10.15 Financing Agreement, dated as ofOctober 30, 2015, by and amongFunko Acquisition Holdings, L.L.C.,as Ultimate Parent and a Borrower,Funko Holdings LLC, as Parent and aBorrower, and Funko, LLC, as aBorrower, the guarantors that maybecome party thereto, the lendersfrom time to time party thereto,Cerberus Business Finance, LLC, asCollateral Agent, and PNC Bank,National Association, asAdministrative Agent. S-1 333-220856 10.5 10/6/17 113 ExhibitNumber Exhibit Description Incorporated by Reference Form File No. Exhibit FilingDate Filed/FurnishedHerewith 10.16 Amendment No. 1 to the FinancingAgreement, dated as of September 8,2016, by and among Funko AcquisitionHoldings, L.L.C., as Ultimate Parentand a Borrower, Funko Holdings LLC,as Parent and a Borrower, and Funko,LLC, as a Borrower, the guarantors thatmay become party thereto, the lendersfrom time to time party thereto,Cerberus Business Finance, LLC, asCollateral Agent, and PNC Bank,National Association, as AdministrativeAgent. S-1 333-220856 10.6 10/6/17 10.17 Amendment No. 2 to the FinancingAgreement, dated as of October 13,2016, by and among Funko AcquisitionHoldings, L.L.C., as Ultimate Parentand a Borrower, Funko Holdings LLC,as Parent and a Borrower, and Funko,LLC, as a Borrower, the guarantors thatmay become party thereto, the lendersfrom time to time party thereto,Cerberus Business Finance, LLC, asCollateral Agent, and PNC Bank,National Association, as AdministrativeAgent. S-1 333-220856 10.7 10/6/17 10.18 Amendment No. 3 to the FinancingAgreement, dated as of January 17,2017, by and among Funko AcquisitionHoldings, L.L.C., as Ultimate Parentand a Borrower, Funko Holdings LLC,as Parent and a Borrower, and Funko,LLC, as a Borrower, the guarantors thatmay become party thereto, the lendersfrom time to time party thereto,Cerberus Business Finance, LLC, asCollateral Agent, and PNC Bank,National Association, as AdministrativeAgent. S-1 333-220856 10.8 10/6/17 114 ExhibitNumber Exhibit Description Incorporated by Reference Form File No. Exhibit FilingDate Filed/FurnishedHerewith 10.19 Amendment No. 4 to the FinancingAgreement, dated as of June 26, 2017,by and among Funko AcquisitionHoldings, L.L.C., as Ultimate Parentand a Borrower, Funko Holdings LLC,as Parent and a Borrower, and Funko,LLC, as a Borrower, the guarantors thatmay become party thereto, the lendersfrom time to time party thereto,Cerberus Business Finance, LLC, asCollateral Agent, and PNC Bank,National Association, as AdministrativeAgent. S-1 333-220856 10.9 10/6/17 10.20 Amendment No. 5 to the FinancingAgreement, dated as of June 28, 2017,by and among Funko AcquisitionHoldings, L.L.C., as Ultimate Parentand a Borrower, Funko Holdings LLC,as Parent and a Borrower, and Funko,LLC, as a Borrower, the guarantors thatmay become party thereto, the lendersfrom time to time party thereto,Cerberus Business Finance, LLC, asCollateral Agent, and PNC Bank,National Association, as AdministrativeAgent. S-1 333-220856 10.10 10/6/17 10.21 Amendment No. 6 to the FinancingAgreement, dated as of October 12,2017, by and among Funko AcquisitionHoldings, L.L.C., as Ultimate Parentand a Borrower, Funko Holdings LLC,as Parent and a Borrower, and Funko,LLC, as a Borrower, the guarantors thatmay become party thereto, the lendersfrom time to time party thereto,Cerberus Business Finance, LLC, asCollateral Agent, and PNC Bank,National Association, as AdministrativeAgent. S-1/A 333-220856 10.11 10/12/17 115  ExhibitNumber Exhibit Description Incorporated by Reference Form File No. Exhibit FilingDate Filed/FurnishedHerewith 10.22 Amendment No. 7 to the FinancingAgreement, dated as of March 7, 2018,by and among Funko AcquisitionHoldings, L.L.C., as Ultimate Parentand a Borrower, Funko Holdings LLC,as Parent and a Borrower, and Funko,LLC and Loungefly, LLC, asBorrowers, the guarantors that maybecome party thereto, the lenders fromtime to time party thereto, CerberusBusiness Finance, LLC, as CollateralAgent, and PNC Bank, NationalAssociation, as Administrative Agent. 8-K 001-38274 10.1 3/8/18 10.23 Pledge and Security Agreement, datedas of October 30, 2015, by FunkoAcquisition Holdings, L.L.C., FunkoHoldings LLC and Funko, LLC, in favorof Cerberus Business Finance, LLC, asCollateral Agent. S-1 333-220856 10.11 10/6/17 10.24 Security Agreement Supplement, datedas of June 28, 2017, by Loungefly,LLC, in favor of Cerberus BusinessFinance, LLC, as Collateral Agent. S-1 333-220856 10.12 10/6/17 10.25 Tax Receivable Agreement, dated asof November 1, 2017, between Funko,Inc., Funko Acquisition Holdings,L.L.C., the Members of the LLC, andthe Management Representative. * 10.26 Stockholders Agreement, dated as ofNovember 1, 2017, between Funko,Inc., ACON Funko Investors, L.L.C.and related entities, FundamentalCapital, LLC, Funko International, LLC,and Brian Mariotti. * 116  ExhibitNumber Exhibit Description Incorporated by Reference Form File No. Exhibit FilingDate Filed/FurnishedHerewith 10.27 Second Amended and RestatedLLC Agreement of FunkoAcquisition Holdings, L.L.C., datedas of November 1, 2017. * 10.28 Registration Rights Agreement,dated as of November 1, 2017,between Funko, Inc., ACON FunkoInvestors, L.L.C. and relatedentities, Fundamental Capital, LLC,Funko International, LLC, BrianMariotti, Tracy Daw, The Jon P.and Trishawn P. Kipp Children’sTrust uad 5/31/14, Russell Nickel,and Andrew Perlmutter. * 21 List of Subsidiaries * 23.1 Consent of Independent RegisteredPublic Accounting Firm * 31.1 Certification of Chief ExecutiveOfficer pursuant to Rules 13a-14(a)/15d-14(a) under the SecuritiesExchange Act of 1934, asamended. * 31.2 Certification of Chief FinancialOfficer pursuant to Rules 13a-14(a)/15d-14(a) under the SecuritiesExchange Act of 1934, asamended. * 32.1 Certification of Chief ExecutiveOfficer pursuant to 18 U.S.C.Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002. ** 32.2 Certification of Chief FinancialOfficer pursuant to 18 U.S.C.Section 1350, as adopted pursuantto Section 906 of the Sarbanes-Oxley Act of 2002. ** 117 ExhibitNumber Exhibit Description Incorporated by Reference Form File No. Exhibit FilingDate Filed/FurnishedHerewith 101.INS XBRL Instance Document. *** 101.SCH XBRL Taxonomy ExtensionSchema Document. *** 101.CAL XBRL Taxonomy ExtensionCalculation Linkbase Document. *** 101.DEF XBRL Taxonomy DefinitionLinkbase Document. *** 101.LAB XBRL Taxonomy Label LinkbaseDocument. *** 101.PRE XBRL Taxonomy ExtensionPresentation Linkbase Document. *** *Filed herewith**Furnished herewith***Submitted electronically herewith†Management contract or compensation plan or arrangement ITEM 16. FORM 10-K SUMMARYNone.118  SIGNATURESPursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized. FUNKO, INC.(Registrant) Date: March 16, 2018 By: /s/ Russell Nickel Russell Nickel Chief Financial Officer (Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf ofRegistrant and in the capacities and on the dates indicated. Signature Title Date /s/ Brian Mariotti Chief Executive Officer and Director(Principal Executive Officer) March 16, 2018 Brian Mariotti /s/ Russell Nickel Chief Financial Officer(Principal Financial and Accounting Officer) March 16, 2018 Russell Nickel /s/ Ken Brotman Ken BrotmanChairman of the Board and Director March 16, 2018 /s/ Gino Dellomo Gino DellomoDirector March 16, 2018 /s/ Charles Denson Charles DensonDirector March 16, 2018 /s/ Diane Irvine Diane IrvineDirector March 16, 2018 /s/ Adam Kriger Adam KrigerDirector March 16, 2018 /s/ Richard McNally Richard McNallyDirector March 16, 2018 119  Exhibit 10.1FUNKO ACQUISITION HOLDINGS, L.L.C.2015 OPTION PLANAmended and Restated as of November 1, 2017Funko Acquisition Holdings, L.L.C., a Delaware limited liability company (the “Company”), originally adoptedthe Funko Acquisition Holdings, L.L.C. 2015 Option Plan (as amended by that certain Amendment No. 1 to FunkoAcquisition Holdings, L.L.C. 2015 Option Plan, dated April __ 2017, as amended and restated herein and as may beamended, supplemented, amended and restated or otherwise modified from time to time, the “Plan”), effective as ofOctober 30, 2015. The Plan is hereby amended and restated in its entirety, effective as of November 1, 2017, inconnection with the contemplated IPO and Recapitalization (each as defined in the LLC Agreement) and associatedconversion of each outstanding Award with respect to Class A Units into an Option with respect to Common Units. As ofthe Effective Time (as defined in the LLC Agreement), all outstanding Options, as so converted, will be governed by thisamendment and restatement of the Plan, and, notwithstanding anything to the contrary herein, no additional Options willbe granted under the Plan.ARTICLE IGENERAL PROVISIONS1.Purposes of the Plan. The purposes of this Plan are to attract and retain the best available personnel,to provide additional incentives to Employees and to promote the success of the Company’s business.2.Definitions. The following definitions shall apply as used herein and in the individual OptionAgreements except as defined otherwise in an individual Option Agreement. In the event a term is separately defined inan individual Option Agreement, such definition shall supersede the definition contained in this Paragraph 2.(a)“Administrator” means the Board or any of the Committees appointed toadminister the Plan.(b)“Applicable Laws” means the legal requirements relating to the Plan andOptions under applicable provisions of federal and state securities laws, the corporate laws of the State of Delaware and,to the extent other than State of Delaware, the corporate law of the state of the Company’s organization, the Code, therules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable toOptions granted to residents therein.(c)“Board” means the Board of Directors of the Company as described in the PriorLLC Agreement.  (d)“Cause” means, with respect to the termination by the Company or a RelatedEntity of the Grantee’s Continuous Service, that such termination is for “Cause” as such term (or word of like import) isexpressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, orin the absence of such then-effective written agreement and definition, is based on, in the determination of theAdministrator, the Grantee’s: (i) performance of any act or failure to perform any act in bad faith and to the detriment of theCompany or a Related Entity; (ii) dishonesty, intentional misconduct or material breach of any agreement with theCompany or a Related Entity; or (iii) commission of’ a crime involving dishonesty, breach of trust, or physical oremotional harm to any person; provided, however, that with regard to any agreement that defines “Cause” on theoccurrence of or in connection with a Company Transaction, such definition of “Cause” shall not apply until a CompanyTransaction actually occurs.(e)“Code” means the Internal Revenue Code of 1986, as amended.(f)“Committee” means any committee composed of members of the Boardappointed by the Board to administer the Plan.(g)“Company” means Funko Acquisition Holdings, L.L.C., a Delaware limitedliability company, or any successor entity that adopts the Plan.(h)“Company Transaction” means any of the following transactions, provided,however, (x) the Administrator shall determine under parts (iv) and (v) whether multiple transactions are related, and itsdetermination shall be final, binding and conclusive; and (y) the Company Transaction is consistent with the occurrenceof a change in ownership of the Company, change in effective control of the Company, or change in the ownership of asubstantial portion of the assets of the Company, as such terms are defined in Code Section 409A(a)(2)(A)(v), theregulations thereunder, and any other published interpretive authority, as issued or amended from time to time:(i)a merger or consolidation in which the Company is not thesurviving entity, except for a transaction the principal purpose of which is to change the state in which the Company isorganized;(ii)the sale, transfer or other disposition of all or substantially all ofthe assets of the Company;(iii)any reverse merger or series of related transactionsculminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which theCompany is the surviving entity but (A) the Units outstanding immediately prior to such merger are converted orexchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in whichsecurities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstandingsecurities are transferred to a person or persons different from those who held such securities immediately prior to suchmerger or the initial transaction culminating in such merger; or2 (iv)an acquisition in a single or series of related transactions byany person or related group of persons (other than the Company, a Company-sponsored employee benefit plan or any ofthe Members who hold Units immediately prior to the effective date of the Plan) of beneficial ownership (within themeaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combinedvoting power of the Company’s outstanding securities.(i)“Continuous Service” means that the provision of services to the Company or aRelated Entity in any capacity of Employee is not interrupted or terminated. In jurisdictions requiring notice in advance ofan effective termination as an employee, Continuous Service shall be deemed terminated upon the actual cessation ofproviding services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilledbefore a termination as an employee can be effective under Applicable Laws. A Grantee’s Continuous Service shall bedeemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which theGrantee provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in thecase of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, inany capacity of Employee, or (iii) any change in status as long as the individual remains in the Service of the Companyor a Related Entity in any capacity of Employee (except as otherwise provided in the Option Agreement). An approvedleave of absence shall include sick leave, military leave, or any other authorized personal leave.(j) “Disability” shall have the meaning set forth in the long term disability policy ofthe Company or the Related Entity to which the Grantee provides services regardless of whether the Grantee is coveredby such policy. If the Company or the Related Entity to which the Grantee provides service does not have a long-termdisability plan in place, “Disability” means that a Grantee is unable to carry out the responsibilities and functions of theposition held by the Grantee by reason of any medically determinable physical or mental impairment for a period of notless than ninety (90) consecutive days. A Grantee will not be considered to have incurred a Disability unless he or shefurnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.(k)“Employee” means any person, including an Officer, who is in the employ of theCompany or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both thework to be performed and the manner and method of performance. In addition, Members who provide services to theCompany and members of a Related Entity who provide services to such Related Entity shall be considered Employees.(l)“Exchange Act” means the Securities Exchange Act of 1934, as amended.(m)“Fair Market Value” means, as of any date, the value of the Units, asdetermined by the Board in good faith.3 (n)“Grantee” means an Employee who receives an Option under the Plan.(o)“Immediate Family” means any child, stepchild, grandchild, parent, stepparent,grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in law, daughter-in-law,brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Grantee’s household (other thana tenant or employee), a trust in which these persons (or the Grantee) have more than fifty percent (50%) of the beneficialinterest, a foundation in which these persons (or the Grantee) control the management of assets, and any other entity inwhich these persons (or the Grantee) own more than fitly percent (50%) of the voting interests.(p) “LLC Agreement” means the Second Amended and Restated Limited LiabilityCompany Agreement of Funko Acquisition Holdings, L.L.C., dated as of November 1, 2017, together with anysubsequent amendments or modifications thereto effected from time to time.(q)“Member” means a member of the Company as described in the LLCAgreement.(r)“Net-Exercise” means a procedure by which the Grantee will be issued anumber of whole Units upon the exercise of an Option determined in accordance with the following formula:N = X(A-B)/A, where“N” = the number of Units to be issued to the Grantee upon exercise of the Option;“X” = the total number of Units with respect to which the Grantee has elected to exercise theOption;“A” = the Fair Market Value of a Unit determined on the exercise date; and“B” = the exercise price per Unit (as defined in the Option Agreement)(s)“Officer” means a person who is an officer of the Company or a Related Entitywithin the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.(t)“Option” means a right or option granted under the Plan.(u)“Option Agreement” means the written agreement evidencing the grant of anOption executed by the Company and the Grantee, including any amendments thereto.4 (v)“Parent” means any entity (other than the employer entity) in an unbroken chainof entities ending with the employer entity if, at the time of the granting of an Option, each of the entities other than theemployer entity owns securities possessing 50% or more of the total combined voting power of all classes of securities inone of the other entities in such chain.(w)“Plan” means this Option Plan.(x)“Prior LLC Agreement” means the Amended and Restated Limited LiabilityCompany Agreement of Funko Acquisition Holdings, L.L.C., effective as of October 30, 2015, as amended byAmendment No. 1, dated as of January 10, 2017.(y) “Related Entity” means any Parent or Subsidiary of the Company and anybusiness, corporation, partnership, limited liability company or other entity in which the Company or a Parent or aSubsidiary of the Company holds a substantial ownership interest, directly or indirectly.(z)“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or anysuccessor thereto.(aa) “Subsidiary” means any entity (other than the employer entity) in an unbrokenchain of entities beginning with the employer entity if, at the time of the granting of an Option, each of the entities otherthan the last entity in the unbroken chain owns securities possessing 50% or more of the total combined voting power ofall classes of securities in one of the other entities in such chain.(bb)“Unit” means, for the purposes of this Plan, a Common Units as described inthe LLC Agreement.3.Units Subject to the Plan.(a)Number of Units. Subject to the provisions this Paragraph 3, the number ofUnits which may be issued pursuant to all Options is 555,867 Units.(b)Issuance of Units. Any Units covered by an Option (or portion of an Option)which are forfeited, canceled or expire (whether voluntarily or involuntarily) shall be deemed not to have been issued forpurposes of determining the maximum aggregate number of Units which may be issued under the Plan. Units subject toan Option that are exercised shall not be returned to the Plan and shall not become available for future issuance underthe Plan.4.Administration of the Plan.(a)Plan Administrator. The Board or a Committee designated by the Board shalladminister the Plan. The Plan may be administered by different bodies with respect to Officers and Employees.5 (b)Powers of the Administrator. Subject to Applicable Laws, the LLC Agreementand the provisions of the Plan (including any other powers given to the Administrator hereunder), and except asotherwise provided by the Board, the Administrator shall have the authority, in its discretion:(i)to select the Employees to whom Options may be granted fromtime to time hereunder;(ii)to determine whether and to what extent Options are grantedhereunder;(iii)to determine the number of Units or the amount of otherconsideration to be covered by each Option granted hereunder;(iv)to approve forms of Option Agreements for use under the Plan;(v)to determine the terms and conditions of any Option grantedhereunder;(vi)to amend the terms of any outstanding Option granted underthe Plan;(vii)to construe and interpret the terms of the Plan and Options,including without limitation, any notice of Option or Option Agreement, granted pursuant to the Plan; and (viii) to takesuch other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.Any decision made, or action taken, by the Administrator or in connection with this Plan shallbe final, conclusive and binding on all persons having an interest in the Plan.(c)Indemnification. In addition to such other rights of indemnification as they mayhave as Officers or Employees of the Company or a Related Entity, and any Officers or Employees of the Company or aRelated Entity to whom authority to act for the Board, the Administrator or the Company is delegated shall be defendedand indemnified by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses,including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim, investigation,action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party byreason of any action taken or failure to act under or in connection with the Plan, or any Option granted hereunder, andagainst all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paidby them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation tomatters as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liablefor gross negligence, had faith or intentional misconduct; provided, however, that within thirty (30) days after theinstitution of such6 claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at theCompany’s expense to defend the same.5.Eligibility. Options may be granted to Employees. Options may be granted to such Employees who areresiding in non-U.S. jurisdictions as the Administrator may determine from time to time.ARTICLE IIOPTIONS1.Option Agreement. Each Option shall be set forth in an Option Agreement, executed on behalf of theCompany and by the Grantee. To the extent of any conflict between the Plan and any Option Agreement, the terms ofsuch Option Agreement shall control.2.Option Exercise Price. The exercise price of the Units covered by each Option granted under the Planshall be determined in good faith by the Committee and shall be an amount not less than the Fair Market Value of theseUnits on the date of the grant of the Option. While each Option is intended to be exempt from Code Section 409A, neitherthe Company nor the Committee shall be liable to any Grantee for any tax consequences if an Option is found to besubject to that statute and not in compliance. Notwithstanding the foregoing, Fair Market Value shall be determined inaccordance with applicable regulations under Code Section 409A and, where the Units are not publicly-traded, suchvaluation shall involve the reasonable application of a reasonable valuation method taking into account the relevantfactors or, if elected by the Committee from time to time, by applying any valuation method presumed reasonable underthose regulations.3.Number of Units. Each Option Agreement shall state the number of Units to which it pertains.4.Term of Option. Unless otherwise stated in the Option Agreement, each Option shall terminate andexpire ten (10) years from the date of the grant thereof, but may be subject to earlier termination as herein provided.5.Date of Exercise. Upon the authorization of the grant of an Option, or at any time thereafter, theCommittee may prescribe the date or dates on which the Option becomes exercisable, and may provide that the Optionrights become exercisable in installments over a period of years, and/or upon the attainment of stated goals. Unless theCommittee otherwise provides in writing, the date or dates on which the Option becomes exercisable (and expires) shallbe tolled during any unpaid leave of absence. It is expressly understood that Options hereunder shall, unless otherwiseprovided for in writing by the Committee, be granted in contemplation of, and earned by the Grantee through thecompletion of, future employment or service with the Company.6.Payment of Exercise Price. Except as otherwise provided below, payment of the exercise price shallbe made on the date of exercise as follows: (a) in cash, by check or in cash equivalent, (b) Net Exercise, (c) by suchother consideration as may be7 approved by the Company from time to time to the extent permitted by Applicable Law, or (d) by any combination thereof.7.Termination of Continuous Service.(a)A Grantee who ceases to be an Employee for any reason other than death,Disability, or termination for Cause, may exercise any Option granted to such Grantee, to the extent that the right topurchase Units thereunder has become exercisable by the date of such termination, but only within three (3) months (orsuch other period of time as the Committee may determine) after such date, or, if earlier, within the originally prescribedterm of the Option, and subject to the conditions that (i) no Option shall be exercisable after the expiration of the term ofthe Option and (ii) unless the Committee otherwise provides, no Option that has not become exercisable by the date ofsuch termination shall at any time thereafter be or become exercisable. A Grantee's employment or service shall not bedeemed terminated by reason of a transfer to another employer or service recipient which is the Company or a RelatedEntity.(b)A Grantee who ceases to be an Employee for Cause shall, upon suchtermination, cease to have any right to exercise any Option. The determination of the Board or the Committee, in itsdiscretion, as to the existence of Cause shall be conclusive and binding upon the Grantee and the Company.(c)Except as the Board or Committee may otherwise expressly provide ordetermine, a Grantee who is absent from work with the Company because of temporary disability (any disability otherthan a permanent and total Disability), or who is on authorized leave of absence for any purpose permitted by theCompany shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to haveterminated his or her employment or relationship with the Company.(d)This Paragraph 7 shall control and fix the rights of a Grantee who ceases to bean Employee for any reason other than death, Disability, or termination for Cause, and who subsequently becomesdisabled or dies. Nothing in Paragraphs 8 and 9 shall be applicable in any such case. However, in the event of such asubsequent Disability or death within the three (3) month period after the termination of Continuous Service or, if earlier,within the originally prescribed term of the Option, the Grantee or the Grantee's estate or personal representative mayexercise the Option: (i) in the event of Disability, within twelve (12) months after the date that the Grantee termination ofContinuous Service as an Employee, and (ii) in the event of death, within twelve (12) months after the date of death ofsuch Grantee.8.Total and Permanent Disability.(a)A Grantee whose Continuous Service as an Employee ceases by reason ofDisability may exercise any Option granted to such Grantee to the extent that the right to purchase Units thereunder hasbecome exercisable on or before the date such Grantee becomes disabled as determined by the Committee.8 (b)A disabled Grantee, or his estate or personal representative, shall exercisesuch rights, if at all, only within a period of not more than the twelve (12) months after the date that the Grantee becamedisabled as determined by the Committee (notwithstanding that the Grantee might have been able to exercise the Optionas to some or all of the Units on a later date if the Grantee had not become disabled) or, if earlier, within the originallyprescribed term of the Option.9.Death. In the event that a Grantee to whom an Option has been granted ceases to be an Employee byreason of such Grantee's death, such Option, to the extent that the right is exercisable but not exercised on the date ofdeath, may be exercised by the Grantee's estate or representative, or by any beneficiary of the Grantee for purposes ofthis Plan, within the twelve (12) months after the date of death of such Grantee or, if earlier, within the originallyprescribed term of the Option, notwithstanding that the decedent might have been able to exercise the Option as to someor all of the Units on a later date if the Grantee were alive and had continued to provide Continuous Service to theCompany or of a Related Entity.10.Exercise of Options and Issue of Units. The exercise process shall be initiated by the Option holdergiving written notice to the Company on a form approved by the Board. On the date specified in such written notice(which date may be extended by the Company in order to comply with any law or regulation which requires the Companyto take any action with respect to the Units prior to the issuance thereof), the Company shall accept payment for theUnits, and shall deliver to the person or persons exercising the Option in exchange therefor an appropriate certificate orcertificates for fully paid non-assessable Units (or register such Units in such person’s name on the Company’smembership records, or both). In the event of any failure to pay for the number of Units specified in such written notice onthe date set forth therein (or on the extended date as above provided), the right to exercise the Option shall terminate andbe cancelled with respect to such number of Units, but shall continue in accordance with the Option Agreement withrespect to the remaining Units covered by the Option and not yet acquired pursuant thereto.11.Rights as a Member and Unit Holder. No Option holder shall have rights as a Member or holder ofUnits with respect to any Units covered by such Option except as to such Units as have been issued in the name of suchperson upon the due exercise of the Option, including payment and acceptance of the full exercise price.12.Assignability and Transferability of Option. Unless otherwise permitted by the Code and by Rule 16b-3 of the Exchange Act, if applicable, and approved in advance by the Committee, an Option granted to a Grantee (i) shallnot be transferable by the Grantee during his or her lifetime except to a family member on such terms and conditions asthe Committee may set forth in the Option Agreement, and (ii) shall be exercisable, during the Grantee's lifetime, only bysuch Grantee or, in the event of the Grantee’s incapacity, his guardian or legal representative. Except as otherwisepermitted herein, such Option shall not be assigned, pledged or hypothecated in any way (whether by operation of law orotherwise) and shall not be subject to execution, attachment, or similar process. Any attempted transfer, assignment,pledge, hypothecation or other disposition9 of any Option or of any rights granted thereunder contrary to the provisions of this Paragraph 12, or the levy of anyattachment or similar process upon an Option or such rights, shall be null and void. An Option may be transferredeffective upon or after the death of the Grantee (i) to the Grantee’s designated surviving beneficiary under this Plan, or (ii)to any other beneficiary in accordance with the applicable laws of descent and distribution.13.Company Repurchase Rights. Any Option Agreement may confer on the Company the right torepurchase outstanding Options (and Units acquired by exercise of an Option) held by a Grantee upon the termination ofthe Grantee’s Continuous Service with the Company (or any and all Related Entities), upon the Grantee’s breach of anyapplicable restrictive covenant, or upon any other event or condition as set forth in the Option Agreement. Unlessotherwise specified in the Option Agreement the Company shall have not less than ninety (90) days after the triggeringevent in which to give notice of intent to exercise or assign its repurchase rights with respect to all or part of theoutstanding Option. The repurchase shall take place at the Company’s principal executive office within sixty (60) daysafter such notice. The repurchase price for Units acquired by exercise of an Option shall be the Unit Fair Market Value.The repurchase price for outstanding vested but unexercised Options shall be the Fair Market Value of the underlyingUnit reduced by the exercise price for the Option as set forth in the Option Agreement. Portions of an outstanding Optionmay be cancelled in lieu of being repurchased, due to termination of employment for Cause, breach of a restrictivecovenant or other negative circumstance. Fair Market Value shall be determined, for purposes of repurchase rights, bythe Board in its sole discretion, but shall not be less than the Company’s book value for the Units involved absent clearevidence to the contrary. Payment may be made by a promissory note or in cash, at the Company’s discretion. Theprovisions of this Section 13 are supplemental to, and not in lieu of, any rights to repurchase Units or any other securityheld by Company pursuant to the LLC Agreement.14.Effect of Public Offering. Notwithstanding the foregoing, the Company shall cease to have rightspursuant to Paragraph 13 following the completion of an initial public offering of the Units or other Company securities.15.Adjustments Upon a Company Transaction.(a)If the outstanding Units of the Company are changed into or exchanged for adifferent number or kind of units or other securities of the Company or of another corporation or entity by reason of aCompany Transaction, the Company (or any successor thereto) shall make adjustments to outstanding Options(including, by way of example and not by way of limitation, the grant of substitute options under the Plan or under theplan of such other corporation or other entity) as it may determine to be appropriate under the circumstances, and, inaddition, appropriate adjustments shall be made in the number and kind of units (or other securities) and in the exerciseprice per unit (or share) subject to outstanding options under the Plan or under the plan of such successor corporation orentity. No such adjustment shall be made which shall, within the10 meaning of Section 424 of the Code, constitute such a modification, extension, or renewal of an option as to cause theadjustment to be considered as the grant of a new option.(b)Notwithstanding anything herein to the contrary, the Company may, in its solediscretion, accelerate the timing of the exercise provisions of any Option in the event of a Company Transaction.Alternatively, the Company may, in its sole discretion, cancel any or all Options upon a Company Transaction andprovide for the payment to Grantee in cash or other property in an amount equal in value to the difference between theexercise price and the Fair Market Value of a Unit, as determined in good faith by the Committee, at the close ofbusiness on the date of such event, multiplied by the number of Units subject to the Option so canceled.(c)Upon a business combination by the Company with any corporation or otherentity through the adoption of a plan of merger or consolidation or a unit exchange or through the purchase of all orsubstantially all of the equity or assets of such other corporation or entity, the Board may, in its sole discretion, grantOptions pursuant hereto to all or any persons who, on the effective date of such transaction, hold outstanding options topurchase securities of such other corporation or entity and who, on and after the effective date of such transaction, willbecome Employees. The number of Units subject to such substitute Options shall be determined in accordance with theterms of the transaction by which the business combination is effected. Upon the grant of substitute Options pursuanthereto, the options to purchase securities of such other corporation or entity for which such Options are substituted shallbe canceled immediately.16.Dissolution or Liquidation of the Company. Upon the dissolution or liquidation of the Company otherthan in connection with a Company Transaction to which Paragraph 15 is applicable, all Options granted hereundershall terminate and become null and void; provided, however, that if the rights of a Grantee under the Options have nototherwise terminated and expired, the Grantee shall have the right immediately prior to such dissolution or liquidation toexercise any Option granted hereunder to the extent that the right to purchase Units thereunder has become exercisableas of the date immediately prior to such dissolution or liquidation.ARTICLE IIIMISCELLANEOUS1.Taxes. Except as otherwise provided by the Board or Committee,(a)the Company shall have the power and right to deduct or withhold, or require aGrantee to remit to the Company, an amount sufficient to satisfy the minimum federal, state, and local taxes required bylaw to be withheld with respect to any grant, exercise, or payment made under or as a result of this Plan; and(b)in the case of any taxable event hereunder, a Grantee may elect, subject to theapproval in advance by the Committee, to satisfy the withholding11 requirement, if any, in whole or in part, by having the Company withhold Units that would otherwise be transferred to theGrantee having a Fair Market Value, on the date the tax is to be determined, equal to at least the minimum marginal taxthat could be imposed on the transaction. All elections shall be made in writing and signed by the Grantee.2.Changes in Units. Subject to any required action by the Members of the Company, the number of Unitscovered by each outstanding Option, and the number of Units which have been authorized for issuance under the Planbut as to which no Options have yet been granted or which have been returned to the Plan, as well as any other termsthat the Board determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in thenumber of issued Units resulting from a Unit split, reverse Unit split, Unit distribution, combination or reclassification ofthe Units or similar event affecting the Units, (ii) any other increase or decrease in the number of issued Units effectedwithout receipt of consideration by the Company, or (iii) as the Board may determine in its discretion, any othertransaction with respect to Units including a merger, consolidation, acquisition of property or Units, separation (includinga spin-off or other distribution of Units or property), reorganization, liquidation (whether partial or complete), capitalcontribution, or any similar transaction; provided, however that conversion of any convertible securities of the Companyshall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by theBoard and its determination shall be final, binding and conclusive. Except as the Board determines, no issuance by theCompany of units of any class, or securities convertible into units of any class, or distribution to the Members, shall affect,and no adjustment by reason hereof shall be made with respect to, the number or price of Units subject to an Option.3.Purchase for Investment. Unless the Units to be issued upon the particular exercise of an Option shallhave been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (“SecuritiesAct”), the Company shall be under no obligation to issue the Units covered by such exercise unless and until thefollowing conditions have been fulfilled. In accordance with the direction of the Committee, the persons who exercisesuch Option shall warrant to the Company that, at the time of such exercise, such persons are acquiring their Units forinvestment and not with a view to, or for sale in connection with, the distribution of any such Units, and shall make suchother representations, warranties, acknowledgments and/or affirmations, if any, as the Committee may require. In suchevent, the persons acquiring such Units shall be bound by the provisions of a legend as determined by the Companywhich shall be endorsed upon the certificate(s) evidencing their Units issued pursuant to such exercise.4.Amendment, Suspension or Termination of the Plan. The Board may at any time amend, suspend orterminate the Plan. To the extent necessary to comply with Applicable Laws and the LLC Agreement, the Company shallobtain Member approval of any Plan amendment in such a manner and to such a degree as required. No Option may begranted during any suspension of the Plan or after termination of the Plan.5.No Effect on Terms of Employment/Consulting Relationship. The Plan shall not confer upon anyGrantee any right with respect to the Grantee’s Continuous Service, nor shall it interfere in any way with his or her right orthe right of the Company or any12 Related Entity to terminate the Grantee’s Continuous Service at any time, with or without Cause, and with or withoutnotice. The ability of the Company or any Related Entity to terminate the employment of a Grantee who is employed atwill is in no way affected by its determination that the Grantee’s Continuous Service has been terminated for Cause forthe purposes of this Plan.6.No Effect on Retirement and Other Benefit Plans. Except as specifically provided in a retirement orother benefit plan of the Company or a Related Entity, Options shall not be deemed compensation for purposes ofcomputing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affectany benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which theavailability or amount of benefits is related to level of compensation. The Plan is not a “Retirement Plan” or “WelfarePlan” under the Employee Retirement Income Security Act of 1974, as amended.7.Unfunded Obligation. Grantees shall have the status of general unsecured creditors of the Company.Any amounts payable to Grantees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes,including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither theCompany nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts,or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficialownership of any investments, including trust investments, which the Company may make to fulfill its paymentobligations hereunder. Any investments or the creation or maintenance of any trust or any Grantee account shall notcreate or constitute a trust or fiduciary relationship between the Administrator, the Company or any Related Entity and aGrantee, or otherwise create any vested or beneficial interest in any Grantee or the Grantee’s creditors in any assets ofthe Company or a Related Entity. The Grantees shall have no claim against the Company or any Related Entity for anychanges in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.8.Mitigation of Excise Tax. Unless otherwise provided for in the Option Agreement or in any otheragreement between the Company (or a Related Entity Affiliate) and the Grantee, if any payment or right accruing underthis Plan (without the application of this Paragraph 8), either alone or together with other payments or rights accruing tothe Grantee the Company or a Related Entity would constitute a “parachute payment” (as defined in Section 280G of theCode and regulations thereunder), such payment or right shall be reduced to the largest amount or greatest right that willresult in no portion of the amount payable or right accruing under the Plan being subject to an excise tax under Section4999 of the Code or being disallowed as a deduction under Section 280G of the Code. The determination of whether anyreduction in the rights or payments under this Plan is to apply shall be made by the Company. The Grantee shallcooperate in good faith with the Company in making such determination and providing any necessary information for thispurpose. The Company, Board, Committee, and any members thereof individually, shall have no obligation or liability toany Grantee for any income or excise taxes arising under the Code, including Sections 4999 and 409A, in the event anyOptions granted under this Plan are found to violate any Code Sections, including 280G or 409A.13 9.Savings Clause. This Plan is intended to comply in all respects with Applicable Law and regulations,including, (i) with respect to those Grantee who are officers for purposes of Section 16 of the Exchange Act, Rule 16b-3of the Securities and Exchange Commission, if applicable, (ii) Section 402 of the Sarbanes-Oxley Act, and (iii) withrespect to executive officers, Code Section 162(m). In case any one or more provisions of this Plan shall be held invalid,illegal, or unenforceable in any respect under Applicable Law and regulation (including Rule 16b-3 and Code Section162(m)), the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impairedthereby and the invalid, illegal, or unenforceable provision shall be deemed null and void; however, to the extentpermitted by law, any provision that could be deemed null and void shall first be construed, interpreted, or revisedretroactively to permit this Plan to be construed in compliance with all Applicable Law (including Rule 16b-3 and CodeSection 162(m)) so as to foster the intent of this Plan. Notwithstanding anything herein to the contrary, with respect toGrantee who are officers for purposes of Section 16 of the Exchange Act, to the extent that Section 16 of the ExchangeAct is applicable to the Company, no grant of an Option to purchase Units shall permit unrestricted ownership of Units bythe Grantee for at least six (6) months from the date of the grant of such Option, unless the Board determines that thegrant of such Option to purchase Units otherwise satisfies the then current Rule 16b-3 requirements.10.Foreign Jurisdictions. To the extent the Committee determines that the restrictions imposed by orupon the Plan preclude the achievement of the material purposes of the Plan in jurisdictions outside the U.S., theCommittee in its discretion may modify those restrictions as it determines to be necessary or appropriate to conform toapplicable requirements or practices of jurisdictions outside of the U.S.11.LLC Agreement and Other Requirements. Notwithstanding anything herein to the contrary, as acondition to the receipt of Units pursuant to an Option under the Plan, to the extent required by the Committee, theGrantee shall execute and deliver a joinder to the Company’s LLC Agreement agreeing to be bound by the LLCAgreement in the capacity of a Member or such other documentation which shall set forth (in addition to, or in lieu of, theterms set forth in the Plan) certain restrictions on transferability of the Units acquired upon exercise, and such other termsas the Board or Committee shall from time to time establish. Such Unit holder’s agreement or other documentation shallapply to the Units acquired under the Plan and covered by such Unit holder’s agreement or other documentation. TheCompany may require, as a condition of exercise, the Grantee to become a party to any other existing Unit holderagreement (or other agreement).12.Lock-Up Period. As a condition to the grant of an Option, if requested by the Company prior to theEffective Time, Grantee shall irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer theeconomic risk ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Unitsor any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase oracquire Company securities (except securities included in such public offering or acquired on the public market aftersuch offering) during such period of time following the effective date of a registration statement of the Company filedunder the Securities Act that such lead underwriter shall specify. The Grantee shall further agree14 to sign such documents as may be required by such lead underwriter to effect the foregoing and agree that the Companymay impose stop-transfer instructions with respect to Units acquired pursuant to an Option until the end of such period asprovided for in this Paragraph 12.13.Member Approval. To the extent required by the LLC Agreement, the Plan shall be subject toapproval by the Members of the Company.14.Construction. Captions and titles contained herein are for convenience only and shall not affect themeaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shallinclude the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless thecontext clearly requires otherwise.15.Governing Law. This Plan, the rights and obligations of the Company and Grantee, and any claims ordisputes relating hereto or thereto, shall be governed by and construed in accordance with the laws of the State ofDelaware (excluding the choice of law rules thereof). 15 Exhibit 10.3FUNKO, INC.2017 INCENTIVE AWARD PLAN ARTICLE 1.PURPOSEThe purpose of the Funko, Inc. 2017 Incentive Award Plan (as it may be amended or restated from time to time,the “Plan”) is to promote the success and enhance the value of Funko, Inc. (the “Company”) by linking the individualinterests of the members of the Board, Employees, and Consultants to those of Company stockholders and by providingsuch individuals with an incentive for outstanding performance to generate superior returns to Company stockholders.The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the servicesof members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successfulconduct of the Company’s operation is largely dependent.ARTICLE 2.DEFINITIONS AND CONSTRUCTIONWherever the following terms are used in the Plan they shall have the meanings specified below, unless thecontext clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.2.1“Administrator” shall mean the entity that conducts the general administration of the Plan asprovided in Article 12. With reference to the duties of the Committee under the Plan which have been delegated to one ormore persons pursuant to Section 12.6, or as to which the Board has assumed, the term “Administrator” shall refer tosuch person(s) unless the Committee or the Board has revoked such delegation or the Board has terminated theassumption of such duties.2.2“Applicable Accounting Standards” shall mean Generally Accepted Accounting Principles inthe United States, International Financial Reporting Standards or such other accounting principles or standards as mayapply to the Company’s financial statements under United States federal securities laws from time to time.2.3“Applicable Law” shall mean any applicable law, including without limitation: (a) provisions ofthe Code, the Securities Act, the Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax orother laws, statutes, rules, requirements or regulations, whether federal, state, local or foreign; and (c) rules of anysecurities exchange or automated quotation system on which the Shares are listed, quoted or traded.1  2.4 “Award” shall mean an Option, a Stock Appreciation Right, a Restricted Stock award, aRestricted Stock Unit award, an Other Stock or Cash Based Award or a Dividend Equivalent award, which may beawarded or granted under the Plan.2.5“Award Agreement” shall mean any written notice, agreement, terms and conditions, contractor other instrument or document evidencing an Award, including through electronic medium, which shall contain suchterms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.2.6“Award Limit” shall mean with respect to Awards that shall be payable in Shares or in cash,as the case may be, the respective limit set forth in Section 3.2.2.7“Board” shall mean the Board of Directors of the Company.2.8“Change in Control” shall mean and includes each of the following:(a)A transaction or series of transactions (other than an offering of Common Stockto the general public through a registration statement filed with the Securities and Exchange Commission) whereby any“person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act)directly or indirectly acquires beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 under the ExchangeAct) of securities of the Company possessing more than 50% of the total combined voting power of the Company’ssecurities outstanding immediately after such acquisition; provided, however, that the following acquisitions shall notconstitute a Change in Control: (i) any acquisition by the Company or any of its Subsidiaries; (ii) any acquisition by anemployee benefit plan maintained by the Company or any of its Subsidiaries, (iii) any acquisition which complies withSections 2.8(c)(i), 2.8(c)(ii) or 2.8(c)(iii); or (iv) in respect of an Award held by a particular Holder, any acquisition by theHolder or any group of persons including the Holder (or any entity controlled by the Holder or any group of personsincluding the Holder); or(b)The Incumbent Directors cease for any reason to constitute a majority of theBoard; (c)The consummation by the Company (whether directly involving the Companyor indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, orbusiness combination, (y) a sale or other disposition of all or substantially all of the Company’s assets in any singletransaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case otherthan a transaction:(i)which results in the Company’s voting securities outstandingimmediately before the transaction continuing to represent (either by remaining outstanding or by being converted intovoting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, theCompany or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to thebusiness of the Company (the Company or such person, the “Successor Entity”))2  directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding votingsecurities immediately after the transaction, and(ii)after which no person or group beneficially owns votingsecurities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that noperson or group shall be treated for purposes of this Section 2.8(c)(ii) as beneficially owning 50% or more of thecombined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to theconsummation of the transaction; and(iii)after which at least a majority of the members of the board ofdirectors (or the analogous governing body) of the Successor Entity were Board members at the time of the Board'sapproval of the execution of the initial agreement providing for such transaction; or(d)The date which is 10 business days prior to the completion of a liquidation ordissolution of the Company.Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or anyportion of an Award) that provides for the deferral of compensation that is subject to Section 409A, to the extent requiredto avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (a), (b),(c) or (d) with respect to such Award (or portion thereof) shall only constitute a Change in Control for purposes of thepayment timing of such Award if such transaction also constitutes a “change in control event,” as defined in TreasuryRegulation Section 1.409A-3(i)(5).The Administrator shall have full and final authority, which shall be exercised in its sole discretion, to determineconclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence ofsuch Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunctionwith a determination of whether a Change in Control is a “change in control event” as defined in Treasury RegulationSection 1.409A-3(i)(5) shall be consistent with such regulation.2.9“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time,together with the regulations and official guidance promulgated thereunder, whether issued prior or subsequent to thegrant of any Award.2.10 “Committee” shall mean the Compensation Committee of the Board, or another committeeor subcommittee of the Board or the Compensation Committee of the Board described in Article 12 hereof.2.11“Common Stock” shall mean the Class A common stock of the Company, par value $0.0001per share.2.12“Company” shall have the meaning set forth in Article 1.3  2.13“Consultant” shall mean any consultant or adviser engaged to provide services to theCompany or any Subsidiary who qualifies as a consultant or advisor under the applicable rules of the Securities andExchange Commission for registration of shares on a Form S-8 Registration Statement.2.14“Covered Employee” shall mean any Employee who is, or could become, a “coveredemployee” within the meaning of Section 162(m) of the Code.2.15“Director” shall mean a member of the Board, as constituted from time to time.2.16“Director Limit” shall have the meaning set forth in Section 4.6.2.17“Dividend Equivalent” shall mean a right to receive the equivalent value (in cash or Shares)of dividends paid on Shares, awarded under Section 10.2.2.18“DRO” shall mean a “domestic relations order” as defined by the Code or Title I of theEmployee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.2.19“Effective Date” shall mean the day prior to the Public Trading Date.2.20“Eligible Individual” shall mean any person who is an Employee, a Consultant or a Non-Employee Director, as determined by the Administrator.2.21“Employee” shall mean any officer or other employee (as determined in accordance withSection 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or of any Subsidiary.2.22“Equity Restructuring” shall mean a nonreciprocal transaction between the Company and itsstockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large,nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the shareprice of Common Stock (or other securities) and causes a change in the per-share value of the Common Stockunderlying outstanding Awards.2.23“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time totime.2.24“Expiration Date” shall have the meaning given to such term in Section 13.1(c).2.25“Fair Market Value” shall mean, as of any given date, the value of a Share determined asfollows:(a)If the Common Stock is (i) listed on any established securities exchange (suchas the New York Stock Exchange, the NASDAQ Capital Market, the NASDAQ Global Market and the NASDAQ GlobalSelect Market), (ii) listed on any4  national market system or (iii) quoted or traded on any automated quotation system, its Fair Market Value shall be theclosing sales price for a Share as quoted on such exchange or system for such date or, if there is no closing sales pricefor a Share on the date in question, the closing sales price for a Share on the last preceding date for which suchquotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;(b)If the Common Stock is not listed on an established securities exchange,national market system or automated quotation system, but the Common Stock is regularly quoted by a recognizedsecurities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if thereare no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the lastpreceding date for which such information exists, as reported in The Wall Street Journal or such other source as theAdministrator deems reliable; or(c)If the Common Stock is neither listed on an established securities exchange,national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its FairMarket Value shall be established by the Administrator in good faith.Notwithstanding the foregoing, with respect to any Award granted after the effectiveness of the Company’sregistration statement relating to its initial public offering and prior to the Public Trading Date, the Fair Market Value shallmean the initial public offering price of a Share as set forth in the Company’s final prospectus relating to its initial publicoffering filed with the Securities and Exchange Commission.2.26 “Greater Than 10% Stockholder” shall mean an individual then owning (within the meaningof Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Companyor any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined inSection 424(e) of the Code).2.27“Holder” shall mean a person who has been granted an Award.2.28“Incentive Stock Option” shall mean an Option that is intended to qualify as an incentivestock option and conforms to the applicable provisions of Section 422 of the Code.2.29“Incumbent Directors’ shall mean for any period of 12 consecutive months, individuals who,at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designatedby a person who shall have entered into an agreement with the Company to effect a transaction described in Section2.8(a) or 2.8(c)) whose election or nomination for election to the Board was approved by a vote of at least a majority(either by a specific vote or by approval of the proxy statement of the Company in which such person is named as anominee for Director without objection to such nomination) of the Directors then still in office who either were Directors atthe beginning of the 12-month period or whose election or nomination for election was5  previously so approved. No individual initially elected or nominated as a director of the Company as a result of an actualor threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation ofproxies by or on behalf of any person other than the Board shall be an Incumbent Director.2.30“Non-Employee Director” shall mean a Director of the Company who is not an Employee.2.31“Non-Employee Director Equity Compensation Policy” shall have the meaning set forth inSection 4.6.2.32“Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option orwhich is designated as an Incentive Stock Option but does not meet the applicable requirements of Section 422 of theCode.2.33“Option” shall mean a right to purchase Shares at a specified exercise price, granted underArticle 6. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, thatOptions granted to Non-Employee Directors and Consultants shall only be Non-Qualified Stock Options.2.34“Option Term” shall have the meaning set forth in Section 6.4.2.35“Organizational Documents” shall mean, collectively, (a) the Company’s articles ofincorporation, certificate of incorporation, bylaws or other similar organizational documents relating to the creation andgovernance of the Company, and (b) the Committee’s charter or other similar organizational documentation relating tothe creation and governance of the Committee. 2.36“Other Stock or Cash Based Award” shall mean a cash payment, cash bonus award, stockpayment, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination ofboth, awarded under Section 10.1, which may include, without limitation, deferred stock, deferred stock units,performance awards, retainers, committee fees, and meeting-based fees.2.37Performance-Based Compensation” shall mean any compensation that is intended to qualifyas “performance-based compensation” as described in Section 162(m)(4)(C) of the Code.2.38“Performance Criteria” shall mean the criteria (and adjustments) that the Administratorselects for an Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period,determined as follows:(a)The Performance Criteria that shall be used to establish Performance Goals arelimited to the following: (i) net earnings or losses (either before or after one or more of the following: (A) interest, (B)taxes, (C) depreciation, (D) amortization and (E) non-cash equity-based compensation expense); (ii) gross or net sales orrevenue or sales or revenue growth; (iii) net income (either before or after taxes); (iv) adjusted net income; (v) operatingearnings or profit (either before or after taxes); (vi) cash flow6  (including, but not limited to, operating cash flow and free cash flow); (vii) return on assets; (viii) return on capital (orinvested capital) and cost of capital; (ix) return on stockholders’ equity; (x) total stockholder return; (xi) return on sales;(xii) gross or net profit or operating margin; (xiii) costs, reductions in costs and cost control measures; (xiv) funds fromoperations; (xv) expenses; (xvi) working capital; (xvii) earnings or loss per share; (xviii) adjusted earnings or loss pershare; (xix) price per share or dividends per share (or appreciation in and/or maintenance of such price or dividends);(xx) regulatory achievements or compliance (including, without limitation, regulatory body approval for commercializationof a product); (xxi) implementation or completion of critical projects; (xxii) market share; (xxiii) economic value; (xxiv)debt levels or reduction; (xxv) sales related goals; (xxvi) comparisons with other stock market indices; (xxvii) operatingefficiency; (xxviii) employee satisfaction; (xxix) financing and other capital raising transactions; (xxx) recruiting andmaintaining personnel; and (xxxi) year-end cash, any of which may be measured either in absolute terms or ascompared to any incremental increase or decrease or as compared to results of a peer group or to market performanceindicators or indices.(b)The Administrator, in its sole discretion, may provide that one or moreobjectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments mayinclude, but are not limited to, one or more of the following: (i) items related to a change in Applicable AccountingStandards; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquiredby the Company during the Performance Period; (vii) items related to the sale or disposition of a business or segment ofa business; (viii) items related to discontinued operations that do not qualify as a segment of a business underApplicable Accounting Standards; (ix) items attributable to any stock dividend, stock split, combination or exchange ofstock occurring during the Performance Period; (x) any other items of significant income or expense which aredetermined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events ordevelopments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope ofthe Company’s core, on-going business activities; (xiv) items related to acquired in-process research and development;(xv) items relating to changes in tax laws; (xvi) items relating to major licensing or partnership arrangements; (xvii) itemsrelating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractualsettlements; (xix) items attributable to expenses incurred in connection with a reduction in force or early retirementinitiative; (xx) items relating to foreign exchange or currency transactions and/or fluctuations; or (xxi) items relating to anyother unusual or nonrecurring events or changes in Applicable Law, Applicable Accounting Standards or businessconditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be madewithin the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.2.39“Performance Goals” shall mean, for a Performance Period, one or more goals establishedin writing by the Administrator for the Performance Period based upon one or more Performance Criteria. Depending onthe Performance Criteria used to7  establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performanceor the performance of a Subsidiary, division, business unit, or an individual. The achievement of each Performance Goalshall be determined, to the extent applicable, with reference to Applicable Accounting Standards.2.40“Performance Period” shall mean one or more periods of time, which may be of varying andoverlapping durations, as the Administrator may select, over which the attainment of one or more Performance Goals willbe measured for the purpose of determining a Holder’s right to, vesting of, and/or the payment in respect of, an Award.2.41“Permitted Transferee” shall mean, with respect to a Holder, any “family member” of theHolder, as defined in the General Instructions to Form S-8 Registration Statement under the Securities Act (or anysuccessor form thereto), or any other transferee specifically approved by the Administrator after taking into accountApplicable Law.2.42 “Plan” shall have the meaning set forth in Article 1.2.43 “Program” shall mean any program adopted by the Administrator pursuant to the Plancontaining the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant towhich such type of Award may be granted under the Plan.2.44“Public Trading Date” shall mean the first date upon which Common Stock is listed (orapproved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation)upon notice of issuance as a national market security on an interdealer quotation system.2.45“Restricted Stock” shall mean Common Stock awarded under Article 8 that is subject tocertain restrictions and may be subject to risk of forfeiture or repurchase.2.46“Restricted Stock Units” shall mean the right to receive Shares awarded under Article 9.2.47“Section 409A” shall mean Section 409A of the Code and the Department of Treasuryregulations and other interpretive guidance issued thereunder, including, without limitation, any such regulations or otherguidance that may be issued after the Effective Date.2.48“Securities Act” shall mean the Securities Act of 1933, as amended.2.49“Shares” shall mean shares of Common Stock.2.50“Stock Appreciation Right” shall mean an Award entitling the Holder (or other person entitledto exercise pursuant to the Plan) to exercise all or a specified portion thereof (to the extent then exercisable pursuant toits terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtractingthe exercise price per share of such Award from the Fair Market Value on the date of exercise8  of such Award by the number of Shares with respect to which such Award shall have been exercised, subject to anylimitations the Administrator may impose.2.51“SAR Term” shall have the meaning set forth in Section 6.4.2.52“Subsidiary” shall mean any entity (other than the Company), whether domestic or foreign, inan unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbrokenchain beneficially owns, at the time of the determination, securities or interests representing at least fifty percent (50%) ofthe total combined voting power of all classes of securities or interests in one of the other entities in such chain.2.53“Substitute Award” shall mean an Award granted under the Plan in connection with acorporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, in any case, uponthe assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity;provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made inconnection with the cancellation and repricing of an Option or Stock Appreciation Right.2.54“Termination of Service” shall mean:(a)As to a Consultant, the time when the engagement of a Holder as a Consultantto the Company or a Subsidiary is terminated for any reason, with or without cause, including, without limitation, byresignation, discharge, death or retirement, but excluding terminations where the Consultant simultaneously commencesor remains in employment or service with the Company or any Subsidiary.(b)As to a Non-Employee Director, the time when a Holder who is a Non-Employee Director ceases to be a Director for any reason, including, without limitation, a termination by resignation,failure to be elected, death or retirement, but excluding terminations where the Holder simultaneously commences orremains in employment or service with the Company or any Subsidiary.(c)As to an Employee, the time when the employee-employer relationshipbetween a Holder and the Company or any Subsidiary is terminated for any reason, including, without limitation, atermination by resignation, discharge, death, disability or retirement; but excluding terminations where the Holdersimultaneously commences or remains in employment or service with the Company or any Subsidiary.The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to anyTermination of Service, including, without limitation, whether a Termination of Service has occurred, whether aTermination of Service resulted from a discharge for cause and all questions of whether particular leaves of absenceconstitute a Termination of Service; provided, however, that, with respect to Incentive Stock Options, unless theAdministrator otherwise provides in the terms of any Program, Award Agreement or otherwise, or as otherwise requiredby Applicable Law, a leave of absence, change in status from an employee to an independent contractor or other changein the9  employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave ofabsence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code andthe then-applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relations shall be deemed to be terminated in the event that the Subsidiaryemploying or contracting with such Holder ceases to remain an Subsidiary following any merger, sale of stock or othercorporate transaction or event (including, without limitation, a spin-off).ARTICLE 3.SHARES SUBJECT TO THE PLAN3.1Number of Shares.(a)Subject to Sections 3.1(b) and 13.2, the aggregate number of Shares whichmay be issued or transferred pursuant to Awards (including, without limitation, Incentive Stock Options) under the Plan is5,518,518. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissuedCommon Stock, treasury Common Stock or Common Stock purchased on the open market.(b)If any Shares subject to an Award are forfeited or expire, are converted toshares of another Person in connection with a spin-off or other similar event, or such Award is settled for cash (in wholeor in part) (including Shares repurchased by the Company under Section 8.4 at the same price paid by the Holder), theShares subject to such Award shall, to the extent of such forfeiture, expiration, conversion or cash settlement, again beavailable for future grants of Awards under the Plan. Notwithstanding anything to the contrary contained herein, thefollowing Shares shall not be added to the Shares authorized for grant under Section 3.1(a) and shall not be available forfuture grants of Awards: (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price ofan Option; (ii) Shares tendered by the Holder or withheld by the Company to satisfy any tax withholding obligation withrespect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stocksettlement of the Stock Appreciation Right on exercise thereof; and (iv) Shares purchased on the open market by theCompany with the cash proceeds received from the exercise of Options. The payment of Dividend Equivalents in cash inconjunction with any outstanding Awards shall not be counted against the Shares available for issuance under the Plan.Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if suchaction would cause an Incentive Stock Option to fail to qualify as an incentive stock option under Section 422 of theCode.(c)Substitute Awards shall not reduce the Shares authorized for grant under thePlan, except as may be required by reason of Section 422 of the Code. Additionally, in the event that a companyacquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has sharesavailable under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition orcombination, the shares available for grant pursuant to the terms of such10  pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio orformula used in such acquisition or combination to determine the consideration payable to the holders of common stockof the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce theShares authorized for grant under the Plan; provided that Awards using such available Shares shall not be made afterthe date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition orcombination, and shall only be made to individuals who were not employed by or providing services to the Company orits Subsidiaries immediately prior to such acquisition or combination.3.2Limitation on Number of Shares Subject to Awards. Notwithstanding any provision in the Planto the contrary, and subject to Section 13.2, the maximum aggregate number of Shares with respect to one or moreAwards that may be granted to any one person during any calendar year shall be 1,655,555 and the maximum aggregateamount of cash that may be paid in cash to any one person during any calendar year with respect to one or more Awardspayable in cash shall be $5,000,000; provided, however, that the foregoing limitations shall not apply prior to the PublicTrading Date and, following the Public Trading Date, the foregoing limitations shall not apply until the earliest of: (a) thefirst material modification of the Plan (including any increase in the number of Shares reserved for issuance under thePlan in accordance with Section 3.1); (b) the issuance of all of the Shares reserved for issuance under the Plan; (c) theexpiration of the Plan; (d) the first meeting of stockholders at which members of the Board are to be elected that occursafter the close of the third calendar year following the calendar year in which occurred the first registration of an equitysecurity of the Company under Section 12 of the Exchange Act; or (e) such other date, if any, on which the “relianceperiod” described under U.S. Treasury Regulation 1.162-27(f)(2) expires pursuant to Section 162(m) of the Code and therules and regulations promulgated thereunder. To the extent required by Section 162(m) of the Code, Shares subject toAwards which are canceled shall continue to be counted against the Award Limit.ARTICLE 4.GRANTING OF AWARDS4.1Participation. The Administrator may, from time to time, select from among all EligibleIndividuals, those to whom an Award shall be granted and shall determine the nature and amount of each Award, whichshall not be inconsistent with the requirements of the Plan. Except for any Non-Employee Director’s right to Awards thatmay be required pursuant to the Non-Employee Director Equity Compensation Policy as described in Section 4.6, noEligible Individual or other Person shall have any right to be granted an Award pursuant to the Plan and neither theCompany nor the Administrator is obligated to treat Eligible Individuals, Holders or any other persons uniformly.Participation by each Holder in the Plan shall be voluntary and nothing in the Plan or any Program shall be construed asmandating that any Eligible Individual or other Person shall participate in the Plan.11  4.2Award Agreement. Each Award shall be evidenced by an Award Agreement that sets forththe terms, conditions and limitations for such Award as determined by the Administrator in its sole discretion (consistentwith the requirements of the Plan and any applicable Program). Award Agreements evidencing Awards intended toqualify as Performance-Based Compensation shall contain such terms and conditions as may be necessary to meet theapplicable provisions of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options shallcontain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.4.3Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of thePlan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the ExchangeAct, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of theExchange Act (including Rule 16b‑3 of the Exchange Act and any amendments thereto) that are requirements for theapplication of such exemptive rule. To the extent permitted by Applicable Law, the Plan and Awards granted or awardedhereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.4.4At-Will Service. Nothing in the Plan or in any Program or Award Agreement hereunder shallconfer upon any Holder any right to continue in the employ of, or as a Director or Consultant for, the Company or anySubsidiary, or shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which rights arehereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, andwith or without notice, or to terminate or change all other terms and conditions of employment or engagement, except tothe extent expressly provided otherwise in a written agreement between the Holder and the Company or any Subsidiary.4.5Foreign Holders. Notwithstanding any provision of the Plan or applicable Program to thecontrary, in order to comply with the laws in countries other than the United States in which the Company and itsSubsidiaries operate or have Employees, Non-Employee Directors or Consultants, or in order to comply with therequirements of any foreign securities exchange or other Applicable Law, the Administrator, in its sole discretion, shallhave the power and authority to: (a) determine which Subsidiaries shall be covered by the Plan; (b) determine whichEligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions ofany Award granted to Eligible Individuals outside the United States to comply with Applicable Law (including, withoutlimitation, applicable foreign laws or listing requirements of any foreign securities exchange); (d) establish subplans andmodify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable;provided, however, that no such subplans and/or modifications shall increase the share limitation contained in Section3.1, the Award Limit or the Director Limit; and (e) take any action, before or after an Award is made, that it deemsadvisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals orlisting requirements of any foreign securities exchange.12  4.6Non-Employee Director Awards.(a)Non-Employee Director Equity Compensation Policy. The Administrator, in itssole discretion, may provide that Awards granted to Non-Employee Directors shall be granted pursuant to a writtennondiscretionary formula established by the Administrator (the “Non-Employee Director Equity Compensation Policy”),subject to the limitations of the Plan. The Non-Employee Director Equity Compensation Policy shall set forth the type ofAward(s) to be granted to Non-Employee Directors, the number of Shares to be subject to Non-Employee DirectorAwards, the conditions on which such Awards shall be granted, become exercisable and/or payable and expire, andsuch other terms and conditions as the Administrator shall determine in its sole discretion. The Non-Employee DirectorEquity Compensation Policy may be modified by the Administrator from time to time in its sole discretion. (b)Director Limit. Notwithstanding any provision to the contrary in the Plan or inthe Non-Employee Director Equity Compensation Policy, the grant date fair value of equity-based Awards granted to aNon-Employee Director during any calendar year shall not exceed $600,000 (the “Director Limit”). ARTICLE 5.PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS PERFORMANCE-BASEDCOMPENSATION5.1Purpose. The Administrator may, in its sole discretion, (a) determine whether an Award isintended to qualify as Performance-Based Compensation and (b) at any time after any such determination, alter suchintent for any or no reason. If the Administrator, in its sole discretion, decides to grant an Award that is intended to qualifyas Performance-Based Compensation (other than an Option or Stock Appreciation Right), then the provisions of thisArticle 5 shall control over any contrary provision contained in the Plan or any applicable Program; provided that, if aftersuch decision the Administrator alters such intention for any reason, the provisions of this Article 5 shall no longer controlover any other provision contained in the Plan or any applicable Program. The Administrator, in its sole discretion, may(i) grant Awards to Eligible Individuals that are based on Performance Criteria or Performance Goals or any such othercriteria and goals as the Administrator shall establish, but that do not satisfy the requirements of this Article 5 and that arenot intended to qualify as Performance-Based Compensation and (ii) subject any Awards intended to qualify asPerformance-Based Compensation to additional conditions and restrictions unrelated to any Performance Criteria orPerformance Goals (including, without limitation, continued employment or service requirements) to the extent suchAwards otherwise satisfy the requirements of this Article 5 with respect to the Performance Criteria and PerformanceGoals applicable thereto. Unless otherwise specified by the Administrator at the time of grant, the Performance Criteriawith respect to an Award intended to be Performance-Based Compensation payable to a Covered Employee shall bedetermined on the basis of Applicable Accounting Standards.13  5.2Procedures with Respect to Performance-Based Awards. To the extent necessary to complywith the requirements of Section 162(m)(4)(C) of the Code, with respect to any Award which is intended to qualify asPerformance-Based Compensation, no later than 90 days following the commencement of any Performance Period orany designated fiscal period or period of service (or such earlier time as may be required under Section 162(m) of theCode), the Administrator shall, in writing, (a) designate one or more Eligible Individuals, (b) select the PerformanceCriteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, asapplicable, which may be earned for such Performance Period based on the Performance Criteria, and (d) specify therelationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable,to be earned by each Covered Employee for such Performance Period. Following the completion of each PerformancePeriod, the Administrator shall certify in writing whether and the extent to which the applicable Performance Goals havebeen achieved for such Performance Period. In determining the amount earned under such Awards, the Administrator (i)shall, unless otherwise provided in an Award Agreement, have the right to reduce or eliminate the amount payable at agiven level of performance to take into account additional factors that the Administrator may deem relevant, including theassessment of individual or corporate performance for the Performance Period, but (ii) shall in no event have the right toincrease the amount payable for any reason.5.3Payment of Performance-Based Awards. Unless otherwise provided in the applicableProgram or Award Agreement and only to the extent otherwise permitted by Section 162(m) of the Code, as to an Awardthat is intended to qualify as Performance-Based Compensation, the Holder must be employed by the Company or aSubsidiary throughout the Performance Period. Unless otherwise provided in the applicable Program or AwardAgreement, a Holder shall be eligible to receive payment pursuant to such Awards for a Performance Period only if andto the extent the Performance Goals for such Performance Period are achieved.5.4Additional Limitations. Notwithstanding any other provision of the Plan and except asotherwise determined by the Administrator, any Award which is granted to an Eligible Individual and is intended toqualify as Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) ofthe Code or any regulations or rulings issued thereunder that are requirements for qualification as Performance-BasedCompensation, and the Plan and the applicable Program and Award Agreement shall be deemed amended to the extentnecessary to conform to such requirements.ARTICLE 6.GRANTING OF OPTIONS AND STOCK APPRECIATION RIGHTS6.1Granting of Options and Stock Appreciation Rights to Eligible Individuals. The Administratoris authorized to grant Options and Stock Appreciation Rights to Eligible Individuals from time to time, in its solediscretion, on such terms and conditions as it may determine, which shall not be inconsistent with the Plan.14  6.2Qualification of Incentive Stock Options. The Administrator may grant Options intended toqualify as Incentive Stock Options only to employees of the Company, any of the Company’s present or future “parentcorporations” or “subsidiary corporations” as defined in Sections 424(e) or (f) of the Code, respectively, and any otherentities the employees of which are eligible to receive Incentive Stock Options under the Code. No person who qualifiesas a Greater Than 10% Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Optionconforms to the applicable provisions of Section 422 of the Code. To the extent that the aggregate fair market value ofstock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regardto Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, andall other plans of the Company and any parent corporation or subsidiary corporation thereof (as defined in Section 424(e)and 424(f) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options tothe extent required by Section 422 of the Code. The rule set forth in the immediately preceding sentence shall be appliedby taking Options and other “incentive stock options” into account in the order in which they were granted and the fairmarket value of stock shall be determined as of the time the respective options were granted. Any interpretations andrules under the Plan with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of theCode. Neither the Company nor the Administrator shall have any liability to a Holder, or any other Person, (a) if anOption (or any part thereof) which is intended to qualify as an Incentive Stock Option fails to qualify as an Incentive StockOption or (b) for any action or omission by the Company or the Administrator that causes an Option not to qualify as anIncentive Stock Option, including without limitation, the conversion of an Incentive Stock Option to a Non-Qualified StockOption or the grant of an Option intended as an Incentive Stock Option that fails to satisfy the requirements under theCode applicable to an Incentive Stock Option. 6.3Option and Stock Appreciation Right Exercise Price. The exercise price per Share subject toeach Option and Stock Appreciation Right shall be set by the Administrator, but shall not be less than 100% of the FairMarket Value of a Share on the date the Option or Stock Appreciation Right, as applicable, is granted (or, as to IncentiveStock Options, on the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). Inaddition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be lessthan 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified,extended or renewed for purposes of Section 424(h) of the Code). Notwithstanding the foregoing, in the case of anOption or Stock Appreciation Right that is a Substitute Award, the exercise price per share of the Shares subject to suchOption or Stock Appreciation Right, as applicable, may be less than the Fair Market Value per share on the date of grant;provided that the exercise price of any Substitute Award shall be determined in accordance with the applicablerequirements of Section 424 and 409A of the Code. 6.4Option and SAR Term. The term of each Option (the “Option Term”) and the term of eachStock Appreciation Right (the “SAR Term”) shall be set by the Administrator in its sole discretion; provided, however, thatthe Option Term or SAR Term,15  as applicable, shall not be more than (a) ten (10) years from the date the Option or Stock Appreciation Right, asapplicable, is granted to an Eligible Individual (other than, in the case of Incentive Stock Options, a Greater Than 10%Stockholder), or (b) five (5) years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder.Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and rulingsthereunder or the first sentence of this Section 6.4 and without limiting the Company’s rights under Section 11.7, theAdministrator may extend the Option Term of any outstanding Option or the SAR Term of any outstanding StockAppreciation Right, and may extend the time period during which vested Options or Stock Appreciation Rights may beexercised, in connection with any Termination of Service of the Holder or otherwise, and may amend, subject to Section11.7 and 13.1, any other term or condition of such Option or Stock Appreciation Right relating to such Termination ofService of the Holder or otherwise.6.5Option and SAR Vesting. The period during which the right to exercise, in whole or in part,an Option or Stock Appreciation Right vests in the Holder shall be set by the Administrator and set forth in the applicableAward Agreement. Unless otherwise determined by the Administrator in the Award Agreement, the applicable Programor by action of the Administrator following the grant of the Option or Stock Appreciation Right, (a) no portion of an Optionor Stock Appreciation Right which is unexercisable at a Holder’s Termination of Service shall thereafter becomeexercisable and (b) the portion of an Option or Stock Appreciation Right that is unexercisable at a Holder’s Terminationof Service shall automatically expire thirty (30) days following such Termination of Service.ARTICLE 7.EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS7.1Exercise and Payment. An exercisable Option or Stock Appreciation Right may be exercisedin whole or in part. However, an Option or Stock Appreciation Right shall not be exercisable with respect to fractionalShares and the Administrator may require that, by the terms of the Option or Stock Appreciation Right, a partial exercisemust be with respect to a minimum number of Shares. Payment of the amounts payable with respect to StockAppreciation Rights pursuant to this Article 7 shall be in cash, Shares (based on its Fair Market Value as of the date theStock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.7.2Manner of Exercise. All or a portion of an exercisable Option or Stock Appreciation Rightshall be deemed exercised upon delivery of all of the following to the Secretary of the Company, the stock planadministrator of the Company or such other person or entity designated by the Administrator, or his, her or its office, asapplicable:(a)A written or electronic notice complying with the applicable rules established bythe Administrator stating that the Option or Stock Appreciation Right, or a portion thereof, is exercised. The notice shallbe signed or otherwise acknowledge16  electronically by the Holder or other person then entitled to exercise the Option or Stock Appreciation Right or suchportion thereof;(b)Such representations and documents as the Administrator, in its sole discretion,deems necessary or advisable to effect compliance with Applicable Law.(c)In the event that the Option shall be exercised pursuant to Section 11.3 by anyperson or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Optionor Stock Appreciation Right, as determined in the sole discretion of the Administrator; and(d)Full payment of the exercise price and applicable withholding taxes for theShares with respect to which the Option or Stock Appreciation Right, or portion thereof, is exercised, in a mannerpermitted by the Administrator in accordance with Sections 11.1 and 11.2.7.3Notification Regarding Disposition. The Holder shall give the Company prompt written orelectronic notice of any disposition of Shares acquired by exercise of an Incentive Stock Option which occurs within (a)two years from the date of granting (including the date the Option is modified, extended or renewed for purposes ofSection 424(h) of the Code) such Option to such Holder, or (b) one year after the date of transfer of such Shares to suchHolder. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, otherproperty, assumption of indebtedness or other consideration, by the Holder in such disposition or other transfer.ARTICLE 8.AWARD OF RESTRICTED STOCK8.1Award of Restricted Stock. The Administrator is authorized to grant Restricted Stock toEligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award ofRestricted Stock, which terms and conditions shall not be inconsistent with the Plan or any applicable Program, and mayimpose such conditions on the issuance of such Restricted Stock as it deems appropriate. The Administrator shallestablish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase priceis charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unlessotherwise permitted by Applicable Law. In all cases, legal consideration shall be required for each issuance of RestrictedStock to the extent required by Applicable Law.8.2Rights as Stockholders. Subject to Section 8.4, upon issuance of Restricted Stock, the Holdershall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said Shares,subject to the restrictions in the Plan, any applicable Program and/or the applicable Award Agreement, including theright to receive all dividends and other distributions paid or made with respect to the Shares to the extent such dividendsand other distributions have a record date that is on or after the date on which the Holder to whom such Shares aregranted becomes the record holder17  of such Restricted Stock; provided, however, that, in the sole discretion of the Administrator, any extraordinarydistributions with respect to the Shares may be subject to the restrictions set forth in Section 8.3. In addition, unlessotherwise determined by the Administrator, with respect to a share of Restricted Stock with performance-based vesting,dividends which are paid prior to vesting shall only be paid out to the Holder to the extent that the performance-basedvesting conditions are subsequently satisfied and the share of Restricted Stock vests.8.3Restrictions. All shares of Restricted Stock (including any shares received by Holders thereofwith respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization)shall be subject to such restrictions and vesting requirements as the Administrator shall provide in the applicableProgram or Award Agreement. By action taken after the Restricted Stock is issued, the Administrator may, on such termsand conditions as it may determine to be appropriate, accelerate the vesting of such Restricted Stock by removing any orall of the restrictions imposed by the terms of the applicable Program or Award Agreement.8.4Repurchase or Forfeiture of Restricted Stock. Except as otherwise determined by theAdministrator, if no price was paid by the Holder for the Restricted Stock, upon a Termination of Service during theapplicable restriction period, the Holder’s rights in unvested Restricted Stock then subject to restrictions shall lapse, andsuch Restricted Stock shall be surrendered to the Company and cancelled without consideration on the date of suchTermination of Service. If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service duringthe applicable restriction period, the Company shall have the right to repurchase from the Holder the unvested RestrictedStock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stockor such other amount as may be specified in the applicable Program or Award Agreement. Notwithstanding theforegoing, the Administrator, in its sole discretion, may provide that upon certain events, including, without limitation, aChange in Control, the Holder’s death, retirement or disability or any other specified Termination of Service or any otherevent, the Holder’s rights in unvested Restricted Stock then subject to restrictions shall not lapse, such Restricted Stockshall vest and cease to be forfeitable and, if applicable, the Company shall cease to have a right of repurchase.8.5Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code to betaxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date ordates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall be requiredto deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Servicealong with proof of the timely filing thereof with the Internal Revenue Service.18  ARTICLE 9.AWARD OF RESTRICTED STOCK UNITS9.1Grant of Restricted Stock Units. The Administrator is authorized to grant Awards of RestrictedStock Units to any Eligible Individual selected by the Administrator in such amounts and subject to such terms andconditions as determined by the Administrator.9.2Term. Except as otherwise provided herein, the term of a Restricted Stock Unit award shall beset by the Administrator in its sole discretion.9.3Purchase Price. The Administrator shall specify the purchase price, if any, to be paid by theHolder to the Company with respect to any Restricted Stock Unit award; provided, however, that value of theconsideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law.9.4Vesting of Restricted Stock Units. At the time of grant, the Administrator shall specify the dateor dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify suchconditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holder’s duration ofservice to the Company or any Subsidiary, one or more Performance Criteria, Company performance, individualperformance or other specific criteria, in each case on a specified date or dates or over any period or periods, asdetermined by the Administrator.9.5Maturity and Payment. At the time of grant, the Administrator shall specify the maturity dateapplicable to each grant of Restricted Stock Units, which shall be no earlier than the vesting date or dates of the Awardand may be determined at the election of the Holder (if permitted by the applicable Award Agreement); provided that,except as otherwise determined by the Administrator, and subject to compliance with Section 409A, in no event shall thematurity date relating to each Restricted Stock Unit occur following the later of (a) the 15th day of the third monthfollowing the end of calendar year in which the applicable portion of the Restricted Stock Unit vests; or (b) the 15th day ofthe third month following the end of the Company’s fiscal year in which the applicable portion of the Restricted Stock Unitvests. On the maturity date, the Company shall, in accordance with the applicable Award Agreement and subject toSection 11.4(f), transfer to the Holder one unrestricted, fully transferable Share for each Restricted Stock Unit scheduledto be paid out on such date and not previously forfeited, or in the sole discretion of the Administrator, an amount in cashequal to the Fair Market Value of such Shares on the maturity date or a combination of cash and Common Stock asdetermined by the Administrator.9.6Payment upon Termination of Service. An Award of Restricted Stock Units shall only bepayable while the Holder is an Employee, a Consultant or a member of the Board, as applicable; provided, however, thatthe Administrator, in its sole discretion, may provide (in an Award Agreement or otherwise) that a Restricted Stock Unitaward may be paid subsequent to a Termination of Service in certain events, including a Change in19  Control, the Holder’s death, retirement or disability or any other specified Termination of Service.ARTICLE 10.AWARD OF OTHER STOCK OR CASH BASED AWARDS AND DIVIDEND EQUIVALENTS10.1Other Stock or Cash Based Awards. The Administrator is authorized to (a) grant Other Stockor Cash Based Awards, including awards entitling a Holder to receive Shares or cash to be delivered immediately or inthe future, to any Eligible Individual and (b) determine whether such Other Stock or Cash Based Awards shall bePerformance-Based Compensation. Subject to the provisions of the Plan and any applicable Program, the Administratorshall determine the terms and conditions of each Other Stock or Cash Based Award, including the term of the Award, anyexercise or purchase price, performance goals, including the Performance Criteria, transfer restrictions, vestingconditions and other terms and conditions applicable thereto, which shall be set forth in the applicable AwardAgreement. Other Stock or Cash Based Awards may be paid in cash, Shares, or a combination of cash and Shares, asdetermined by the Administrator, and may be available as a form of payment in the settlement of other Awards grantedunder the Plan, as stand-alone payments, as a part of a bonus, deferred bonus, deferred compensation or otherarrangement, and/or as payment in lieu of compensation to which an Eligible Individual is otherwise entitled.10.2Dividend Equivalents. Dividend Equivalents may be granted by the Administrator, eitheralone or in tandem with another Award, based on dividends declared on the Common Stock, to be credited as ofdividend payment dates during the period between the date the Dividend Equivalents are granted to a Holder and thedate such Dividend Equivalents terminate or expire, as determined by the Administrator. Such Dividend Equivalentsshall be converted to cash or additional Shares by such formula and at such time and subject to such restrictions andlimitations as may be determined by the Administrator. In addition, Dividend Equivalents with respect to an Award withperformance-based vesting that are based on dividends paid prior to the vesting of such Award shall be paid out to theHolder only to the extent that the performance-based vesting conditions are subsequently satisfied and the Award vests.Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock AppreciationRights.ARTICLE 11.ADDITIONAL TERMS OF AWARDS11.1Payment. The Administrator shall determine the method or methods by which payments byany Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash orcheck, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to theexercise of the Award) or Shares held for such minimum period of time as may be established by20  the Administrator, in each case, having a Fair Market Value on the date of delivery equal to the aggregate paymentsrequired, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a brokeracceptable to the Company with respect to Shares then issuable upon exercise or vesting of an Award, and that thebroker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of theaggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement ofsuch sale, (d) other form of legal consideration acceptable to the Administrator in its sole discretion, or (e) anycombination of the above permitted forms of payment. Notwithstanding any other provision of the Plan to the contrary, noHolder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the ExchangeAct shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension ofcredit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation ofSection 13(k) of the Exchange Act.11.2Tax Withholding. The Company or any Subsidiary shall have the authority and the right todeduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local andforeign taxes (including the Holder’s FICA, employment tax or other social security contribution obligation) required bylaw to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan or any Award.The Administrator may, in its sole discretion and in satisfaction of the foregoing requirement, or in satisfaction of suchadditional withholding obligations as a Holder may have elected, allow a Holder to satisfy such obligations by anypayment means described in Section 11.1 hereof, including without limitation, by allowing such Holder to elect to havethe Company or any Subsidiary withhold Shares otherwise issuable under an Award (or allow the surrender of Shares).The number of Shares that may be so withheld or surrendered shall be no greater than the number of Shares that have afair market value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on themaximum statutory withholding rates in such Holder’s applicable jurisdiction for federal, state, local and foreign incometax and payroll tax purposes that are applicable to such taxable income. The Administrator shall determine the fairmarket value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due inconnection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of Shares topay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.11.3Transferability of Awards.(a)Except as otherwise provided in Sections 11.3(b) and 11.3(c):(i)No Award under the Plan may be sold, pledged, assigned ortransferred in any manner other than (A) by will or the laws of descent and distribution or (B) subject to the consent of theAdministrator, pursuant to a DRO, unless and until such Award has been exercised or the Shares underlying suchAward have been issued, and all restrictions applicable to such Shares have lapsed;21  (ii)No Award or interest or right therein shall be liable for orotherwise subject to the debts, contracts or engagements of the Holder or the Holder’s successors in interest or shall besubject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any othermeans 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) unless and until such Award has beenexercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares havelapsed, and any attempted disposition of an Award prior to satisfaction of these conditions shall be null and void and ofno effect, except to the extent that such disposition is permitted by Section 11.3(a)(i); and(iii)During the lifetime of the Holder, only the Holder may exerciseany exercisable portion of an Award granted to such Holder under the Plan, unless it has been disposed of pursuant to aDRO. After the death of the Holder, any exercisable portion of an Award may, prior to the time when such portionbecomes unexercisable under the Plan or the applicable Program or Award Agreement, be exercised by the Holder’spersonal representative or by any person empowered to do so under the deceased Holder’s will or under the then-applicable laws of descent and distribution.(b)Notwithstanding Section 11.3(a), the Administrator, in its sole discretion, maydetermine to permit a Holder or a Permitted Transferee of such Holder to transfer an Award other than an Incentive StockOption (unless such Incentive Stock Option is intended to become a Nonqualified Stock Option) to any one or morePermitted Transferees of such Holder, subject to the following terms and conditions: (i) an Award transferred to aPermitted Transferee shall not be assignable or transferable by the Permitted Transferee other than (A) to anotherPermitted Transferee of the applicable Holder or (B) by will or the laws of descent and distribution or, subject to theconsent of the Administrator, pursuant to a DRO; (ii) an Award transferred to a Permitted Transferee shall continue to besubject to all the terms and conditions of the Award as applicable to the original Holder (other than the ability to furthertransfer the Award to any Person other than another Permitted Transferee of the applicable Holder); and (iii) the Holder(or transferring Permitted Transferee) and the receiving Permitted Transferee shall execute any and all documentsrequested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as aPermitted Transferee, (B) satisfy any requirements for an exemption for the transfer under Applicable Law and (C)evidence the transfer. In addition, and further notwithstanding Section 11.3(a), hereof, the Administrator, in its solediscretion, may determine to permit a Holder to transfer Incentive Stock Options to a trust that constitutes a PermittedTransferee if, under Section 671 of the Code and other Applicable Law, the Holder is considered the sole beneficialowner of the Incentive Stock Option while it is held in the trust. (c)Notwithstanding Section 11.3(a), a Holder may, in the manner determined bythe Administrator, designate a beneficiary to exercise the rights of the Holder and to receive any distribution with respectto any Award upon the Holder’s death. A beneficiary, legal guardian, legal representative, or other person claiming anyrights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program22  or Award Agreement applicable to the Holder and any additional restrictions deemed necessary or appropriate by theAdministrator. If the Holder is married or a domestic partner in a domestic partnership qualified under Applicable Lawand resides in a community property state, a designation of a person other than the Holder’s spouse or domestic partner,as applicable, as the Holder’s beneficiary with respect to more than 50% of the Holder’s interest in the Award shall notbe effective without the prior written or electronic consent of the Holder’s spouse or domestic partner. If no beneficiaryhas been designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to theHolder’s will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changedor revoked by a Holder at any time; provided that the change or revocation is delivered in writing to the Administratorprior to the Holder’s death.11.4Conditions to Issuance of Shares.(a)The Administrator shall determine the methods by which Shares shall bedelivered or deemed to be delivered to Holders. Notwithstanding anything herein to the contrary, the Company shall notbe required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise ofany Award, unless and until the Administrator has determined, with advice of counsel, that the issuance of such Sharesis in compliance with Applicable Law and the Shares are covered by an effective registration statement or applicableexemption from registration. In addition to the terms and conditions provided herein, the Administrator may require that aHolder make such reasonable covenants, agreements and representations as the Administrator, in its sole discretion,deems advisable in order to comply with Applicable Law.(b)All share certificates delivered pursuant to the Plan and all Shares issuedpursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administratordeems necessary or advisable to comply with Applicable Law. The Administrator may place legends on any sharecertificate or book entry to reference restrictions applicable to the Shares (including, without limitation, restrictionsapplicable to Restricted Stock).(c)The Administrator shall have the right to require any Holder to comply with anytiming or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.(d)No fractional Shares shall be issued and the Administrator, in its solediscretion, shall determine whether cash shall be given in lieu of fractional Shares or whether such fractional Sharesshall be eliminated by rounding down.(e)The Company, in its sole discretion, may (i) retain physical possession of anystock certificate evidencing Shares until any restrictions thereon shall have lapsed and/or (ii) require that the stockcertificates evidencing such Shares be held in custody by a designated escrow agent (which may but need not be theCompany) until23  the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to suchShares.(f)Notwithstanding any other provision of the Plan, unless otherwise determinedby the Administrator or required by Applicable Law, the Company shall not deliver to any Holder certificates evidencingShares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company(or, as applicable, its transfer agent or stock plan administrator).11.5Forfeiture and Claw-Back Provisions. All Awards (including any proceeds, gains or othereconomic benefit actually or constructively received by a Holder upon any receipt or exercise of any Award or upon thereceipt or resale of any Shares underlying the Award and any payments of a portion of an incentive-based bonus poolallocated to a Holder) shall, unless otherwise determined by the Administrator or required by Applicable Law, be subjectto the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-backpolicy adopted to comply with the requirements of Applicable Law, including, without limitation, the Dodd-Frank WallStreet Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, whether or not suchclaw-back policy was in place at the time of grant of an Award, to the extent set forth in such claw-back policy and/or inthe applicable Award Agreement. 11.6Prohibition on Repricing. Subject to Section 13.2, the Administrator shall not, without theapproval of the stockholders of the Company, (a) authorize the amendment of any outstanding Option or StockAppreciation Right to reduce its price per Share, or (b) cancel any Option or Stock Appreciation Right in exchange forcash or another Award when the Option or Stock Appreciation Right price per Share exceeds the Fair Market Value ofthe underlying Shares. Furthermore, for purposes of this Section 11.6, except in connection with a corporate transactioninvolving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend,recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination or exchange of shares), the terms ofoutstanding Awards may not be amended to reduce the exercise price per Share of outstanding Options or StockAppreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other Awards orOptions or Stock Appreciation Rights with an exercise price per Share that is less than the exercise price per Share ofthe original Options or Stock Appreciation Rights without the approval of the stockholders of the Company.11.7Amendment of Awards. Subject to Applicable Law, the Administrator may amend, modify orterminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or adifferent type, changing the date of exercise or settlement, and converting an Incentive Stock Option to a Non-QualifiedStock Option. The Holder’s consent to such action shall be required unless (a) the Administrator determines that theaction, taking into account any related action, would not materially and adversely affect the Holder, or (b) the change isotherwise permitted under the Plan (including, without limitation, under Section 13.2 or 13.10).24  11.8Data Privacy. As a condition of receipt of any Award, each Holder explicitly andunambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described inthis Section 11.8 by and among, as applicable, the Company and its Subsidiaries for the exclusive purpose ofimplementing, administering and managing the Holder’s participation in the Plan. The Company and its Subsidiariesmay hold certain personal information about a Holder, including but not limited to, the Holder’s name, home address andtelephone number, date of birth, social security or insurance number or other identification number, salary, nationality,job title(s), any shares of stock held in the Company or any of its Subsidiaries and details of all Awards, in each case, forthe purpose of implementing, managing and administering the Plan and Awards (the “Data”). The Company and itsSubsidiaries may transfer the Data amongst themselves as necessary for the purpose of implementation, administrationand management of a Holder’s participation in the Plan, and the Company and its Subsidiaries may each further transferthe Data to any third parties assisting the Company and its Subsidiaries in the implementation, administration andmanagement of the Plan. These recipients may be located in the Holder’s country, or elsewhere, and the Holder’scountry may have different data privacy laws and protections than the recipients’ country. Through acceptance of anAward, each Holder authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic orother form, for the purposes of implementing, administering and managing the Holder’s participation in the Plan,including any requisite transfer of such Data as may be required to a broker or other third party with whom the Companyor any of its Subsidiaries or the Holder may elect to deposit any Shares. The Data related to a Holder will be held onlyas long as is necessary to implement, administer, and manage the Holder’s participation in the Plan. A Holder may, atany time, view the Data held by the Company with respect to such Holder, request additional information about thestorage and processing of the Data with respect to such Holder, recommend any necessary corrections to the Data withrespect to the Holder or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his orher local human resources representative. The Company may cancel Holder’s ability to participate in the Plan and, inthe Administrator’s discretion, the Holder may forfeit any outstanding Awards if the Holder refuses or withdraws his or herconsents as described herein. For more information on the consequences of refusal to consent or withdrawal of consent,Holders may contact their local human resources representative.ARTICLE 12.ADMINISTRATION12.1Administrator. The Committee shall administer the Plan (except as otherwise permittedherein). To the extent necessary to comply with Rule 16b-3 of the Exchange Act, and with respect to Awards that areintended to be Performance-Based Compensation, including Options and Stock Appreciation Rights, then theCommittee shall take all action with respect to such Awards, and the individuals taking such action shall consist solelyof two or more Non-Employee Directors, each of whom is intended to qualify as both a “non-employee director” asdefined by Rule 16b-3 of the Exchange Act or any successor rule and an “outside director” for purposes ofSection 162(m) of the Code. Additionally, to the extent required by Applicable Law, each of the individuals25  constituting the Committee shall be an “independent director” under the rules of any securities exchange or automatedquotation system on which the Shares are listed, quoted or traded. Notwithstanding the foregoing, any action taken bythe Committee shall be valid and effective, whether or not members of the Committee at the time of such action arelater determined not to have satisfied the requirements for membership set forth in this Section 12.1 or theOrganizational Documents. Except as may otherwise be provided in the Organizational Documents or as otherwiserequired by Applicable Law, (a) appointment of Committee members shall be effective upon acceptance ofappointment, (b) Committee members may resign at any time by delivering written or electronic notice to the Board and(c) vacancies in the Committee may only be filled by the Board. Notwithstanding the foregoing, (i) the full Board,acting by a majority of its members in office, shall conduct the general administration of the Plan with respect toAwards granted to Non-Employee Directors and, with respect to such Awards, the terms “Administrator” as used in thePlan shall be deemed to refer to the Board and (ii) the Board or Committee may delegate its authority hereunder to theextent permitted by Section 12.6.12.2Duties and Powers of Administrator. It shall be the duty of the Administrator to conduct thegeneral administration of the Plan in accordance with its provisions. The Administrator shall have the power to interpretthe Plan, all Programs and Award Agreements, and to adopt such rules for the administration, interpretation andapplication of the Plan and any Program as are not inconsistent with the Plan, to interpret, amend or revoke any suchrules and to amend the Plan or any Program or Award Agreement; provided that the rights or obligations of the Holder ofthe Award that is the subject of any such Program or Award Agreement are not materially and adversely affected by suchamendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 11.5or Section 13.10. In its sole discretion, the Board may at any time and from time to time exercise any and all rights andduties of the Committee in its capacity as the Administrator under the Plan except with respect to matters which underRule 16b‑3 under the Exchange Act or any successor rule, or Section 162(m) of the Code, or any regulations or rulesissued thereunder, or the rules of any securities exchange or automated quotation system on which the Shares arelisted, quoted or traded are required to be determined in the sole discretion of the Committee.12.3Action by the Administrator. Unless otherwise established by the Board, set forth in anyOrganizational Documents or as required by Applicable Law, a majority of the Administrator shall constitute a quorumand the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved inwriting by all members of the Administrator in lieu of a meeting, shall be deemed the acts of the Administrator. Eachmember of the Administrator is entitled to, in good faith, rely or act upon any report or other information furnished to thatmember by any officer or other employee of the Company or any Subsidiary, the Company’s independent certified publicaccountants, or any executive compensation consultant or other professional retained by the Company to assist in theadministration of the Plan.26  12.4Authority of Administrator. Subject to the Organizational Documents, any specificdesignation in the Plan and Applicable Law, the Administrator has the exclusive power, authority and sole discretion to:(a)Designate Eligible Individuals to receive Awards;(b)Determine the type or types of Awards to be granted to each Eligible Individual(including, without limitation, any Awards granted in tandem with another Award granted pursuant to the Plan);(c)Determine the number of Awards to be granted and the number of Shares towhich an Award will relate;(d)Determine the terms and conditions of any Award granted pursuant to the Plan,including, but not limited to, the exercise price, grant price, purchase price, any Performance Criteria or performancecriteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictionson the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competitionand claw-back and recapture of gain on an Award, based in each case on such considerations as the Administrator in itssole discretion determines;(e)Determine whether, to what extent, and under what circumstances an Awardmay be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or anAward may be canceled, forfeited, or surrendered;(f)Prescribe the form of each Award Agreement, which need not be identical foreach Holder;(g)Decide all other matters that must be determined in connection with an Award;(h)Establish, adopt, or revise any Programs, rules and regulations as it may deemnecessary or advisable to administer the Plan;(i)Interpret the terms of, and any matter arising pursuant to, the Plan, any Programor any Award Agreement;(j)Make all other decisions and determinations that may be required pursuant tothe Plan or as the Administrator deems necessary or advisable to administer the Plan; and(k)Accelerate wholly or partially the vesting or lapse of restrictions of any Award orportion thereof at any time after the grant of an Award, subject to whatever terms and conditions it selects and Section13.2.12.5Decisions Binding. The Administrator’s interpretation of the Plan, any Awards grantedpursuant to the Plan, any Program or any Award Agreement and all27  decisions and determinations by the Administrator with respect to the Plan are final, binding and conclusive on allPersons.12.6Delegation of Authority. The Board or Committee may from time to time delegate to acommittee of one or more members of the Board or one or more officers of the Company the authority to grant or amendAwards or to take other administrative actions pursuant to this Article 12; provided, however, that in no event shall anofficer of the Company be delegated the authority to grant Awards to, or amend Awards held by, the followingindividuals: (a) individuals who are subject to Section 16 of the Exchange Act, (b) Covered Employees with respect toAwards intended to constitute Performance Based Compensation, or (c) officers of the Company (or Directors) to whomauthority to grant or amend Awards has been delegated hereunder; provided, further, that any delegation ofadministrative authority shall only be permitted to the extent it is permissible under any Organizational Documents andApplicable Law (including, without limitation, Section 162(m) of the Code). Any delegation hereunder shall be subject tothe restrictions and limits that the Board or Committee specifies at the time of such delegation or that are otherwiseincluded in the applicable Organizational Documents, and the Board or Committee, as applicable, may at any timerescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section12.6 shall serve in such capacity at the pleasure of the Board or the Committee, as applicable, and the Board or theCommittee may abolish any committee at any time and re-vest in itself any previously delegated authority.ARTICLE 13.MISCELLANEOUS PROVISIONS13.1Amendment, Suspension or Termination of the Plan.(a)Except as otherwise provided in Section 13.1(b), the Plan may be wholly orpartially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board; providedthat, except as provided in Section 11.5 and Section 13.10, no amendment, suspension or termination of the Plan shall,without the consent of the Holder, materially and adversely affect any rights or obligations under any Award theretoforegranted or awarded, unless the Award itself otherwise expressly so provides.(b)Notwithstanding Section 13.1(a), the Board may not, except as provided inSection 13.2, take any of the following actions without approval of the Company’s stockholders given within twelve (12)months before or after such action: (i) increase the limit imposed in Section 3.1 on the maximum number of Shares whichmay be issued under the Plan or the Award Limit, (ii) reduce the price per share of any outstanding Option or StockAppreciation Right granted under the Plan or take any action prohibited under Section 11.6, or (iii) cancel any Option orStock Appreciation Right in exchange for cash or another Award in violation of Section 11.6.28  (c)No Awards may be granted or awarded during any period of suspension or aftertermination of the Plan, and notwithstanding anything herein to the contrary, in no event may any Award be grantedunder the Plan after the tenth (10th) anniversary of the earlier of (i) the date on which the Plan was adopted by the Boardor (ii) the date the Plan was approved by the Company’s stockholders (such anniversary, the “Expiration Date”). AnyAwards that are outstanding on the Expiration Date shall remain in force according to the terms of the Plan, theapplicable Program and the applicable Award Agreement.13.2Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of theCompany and Other Corporate Events.(a)In the event of any stock dividend, stock split, combination or exchange ofshares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets tostockholders, or any other change affecting the shares of the Company’s stock or the share price of the Company’s stockother than an Equity Restructuring, the Administrator may make equitable adjustments, if any, to reflect such change withrespect to: (i) the aggregate number and kind of Shares that may be issued under the Plan (including, but not limited to,adjustments of the limitations in Section 3.1 on the maximum number and kind of Shares which may be issued under thePlan, and adjustments of the Award Limit); (ii) the number and kind of Shares (or other securities or property) subject tooutstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, anyapplicable performance targets or criteria with respect thereto); and (iv) the grant or exercise price per share for anyoutstanding Awards under the Plan. Any adjustment affecting an Award intended as Performance-Based Compensationshall be made consistent with the requirements of Section 162(m) of the Code unless otherwise determined by theAdministrator.(b)In the event of any transaction or event described in Section 13.2(a) or anyunusual or nonrecurring transactions or events affecting the Company, any Subsidiary of the Company, or the financialstatements of the Company or any Subsidiary, or of changes in Applicable Law or Applicable Accounting Standards, theAdministrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of theAward or by action taken prior to the occurrence of such transaction or event, is hereby authorized to take any one ormore of the following actions whenever the Administrator determines that such action is appropriate in order to preventdilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respectto any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in Applicable Lawor Applicable Accounting Standards:(i)To provide for the termination of any such Award in exchangefor an amount of cash and/or other property with a value equal to the amount that would have been attained upon theexercise of such Award or realization of the Holder’s rights (and, for the avoidance of doubt, if as of the date of theoccurrence of the transaction or event described in this Section 13.2 the Administrator determines in good faith that noamount would have been attained upon the exercise of such Award or realization of the Holder’s rights, then such Awardmay be terminated by the Company without payment);29  (ii)To provide that such Award be assumed by the successor orsurvivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awardscovering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriateadjustments as to the number and kind of shares and applicable exercise or purchase price, in all cases, as determinedby the Administrator;(iii)To make adjustments in the number and type of Shares of theCompany’s stock (or other securities or property) subject to outstanding Awards, and/or in the terms and conditions of(including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may begranted in the future;(iv)To provide that such Award shall be exercisable or payable orfully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or theapplicable Program or Award Agreement;(v)To replace such Award with other rights or property selectedby the Administrator; and/or(vi)To provide that the Award cannot vest, be exercised orbecome payable after such event.(c)In connection with the occurrence of any Equity Restructuring, andnotwithstanding anything to the contrary in Sections 13.2(a) and 13.2(b):(i)The number and type of securities subject to each outstandingAward and the exercise price or grant price thereof, if applicable, shall be equitably adjusted (and the adjustmentsprovided under this Section 13.2(c)(i) shall be nondiscretionary and shall be final and binding on the affected Holder andthe Company); and/or(ii)The Administrator shall make such equitable adjustments, ifany, as the Administrator, in its sole discretion, may deem appropriate to reflect such Equity Restructuring with respect tothe aggregate number and kind of Shares that may be issued under the Plan (including, but not limited to, adjustments ofthe limitation in Section 3.1 on the maximum number and kind of Shares which may be issued under the Plan, andadjustments of the Award Limit).(d)Notwithstanding any other provision of the Plan, in the event of a Change inControl, unless the Administrator elects to (i) terminate an Award in exchange for cash, rights or property, or (ii) cause anAward to become fully exercisable and no longer subject to any forfeiture restrictions prior to the consummation of aChange in Control, pursuant to Section 13.2, (A) such Award (other than any portion subject to performance-basedvesting) shall continue in effect or be assumed or an equivalent Award substituted by the successor corporation or aparent or subsidiary of the successor corporation and (B) the portion of such Award subject to performance-basedvesting shall be subject to the terms and conditions of the applicable Award Agreement and, in the absence ofapplicable terms and conditions, the Administrator’s discretion. In the event30  an Award continues in effect or is assumed or an equivalent Award substituted, and the surviving or successor companyterminates Holder’s employment or service upon or within twelve (12) months following the Change in Control, thensuch Holder shall be fully vested in such continued, assumed or substituted Award.(e)In the event that the successor corporation in a Change in Control refuses toassume or substitute for an Award, the Administrator may cause (i) any or all of such Award to terminate in exchange forcash, rights or other property pursuant to Section 13.2(b)(i) or (ii) any or all of such Award to become fully exercisableimmediately prior to the consummation of such transaction and all forfeiture restrictions on any or all of such Award tolapse. If any such Award is exercisable in lieu of assumption or substitution in the event of a Change in Control, theAdministrator shall notify the Holder that such Award shall be fully exercisable for a period of fifteen (15) days from thedate of such notice, contingent upon the occurrence of the Change in Control, and such Award shall terminate upon theexpiration of such period.(f)For the purposes of this Section 13.2, an Award shall be considered assumed if,following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Awardimmediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property)received in the Change in Control by holders of Common Stock for each Share held on the effective date of thetransaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of amajority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control wasnot solely common stock of the successor corporation or its parent, the Administrator may, with the consent of thesuccessor corporation, provide for the consideration to be received upon the exercise of the Award, for each Sharesubject to an Award, to be solely common stock of the successor corporation or its parent equal in fair market value to theper-share consideration received by holders of Common Stock in the Change in Control.(g)The Administrator, in its sole discretion, may include such further provisionsand limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Companythat are not inconsistent with the provisions of the Plan.(h)Unless otherwise determined by the Administrator, no adjustment or actiondescribed in this Section 13.2 or in any other provision of the Plan shall be authorized to the extent it would (i) withrespect to Awards which are granted to Covered Employees and are intended to qualify as Performance-BasedCompensation, cause such Award to fail to so qualify as Performance-Based Compensation, (ii) cause the Plan toviolate Section 422(b)(1) of the Code, (iii) result in short-swing profits liability under Section 16 of the Exchange Act orviolate the exemptive conditions of Rule 16b-3 of the Exchange Act, or (iv) cause an Award to fail to be exempt from orcomply with Section 409A.(i)The existence of the Plan, any Program, any Award Agreement and/or theAwards granted hereunder shall not affect or restrict in any way the right or31  power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization,reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of theCompany, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or priorpreference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertibleinto or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all orany part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.(j)In the event of any pending stock dividend, stock split, combination or exchangeof shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets tostockholders, or any other change affecting the Shares or the share price of the Common Stock including any EquityRestructuring, for reasons of administrative convenience, the Company, in its sole discretion, may refuse to permit theexercise of any Award during a period of up to thirty (30) days prior to the consummation of any such transaction.13.3Approval of Plan by Stockholders. The Plan shall be submitted for the approval of theCompany’s stockholders within twelve (12) months after the date of the Board’s initial adoption of the Plan. Awards maybe granted or awarded prior to such stockholder approval; provided that such Awards shall not be exercisable, shall notvest and the restrictions thereon shall not lapse and no Shares shall be issued pursuant thereto prior to the time whenthe Plan is approved by the Company’s stockholders; and provided, further, that if such approval has not been obtainedat the end of said twelve (12) month period, all Awards previously granted or awarded under the Plan shall thereupon becanceled and become null and void.13.4No Stockholders Rights. Except as otherwise provided herein or in an applicable Program orAward Agreement, a Holder shall have none of the rights of a stockholder with respect to Shares covered by any Awarduntil the Holder becomes the record owner of such Shares.13.5Paperless Administration. In the event that the Company establishes, for itself or using theservices of a third party, an automated system for the documentation, granting or exercise of Awards, such as a systemusing an internet website or interactive voice response, then the paperless documentation, granting or exercise ofAwards by a Holder may be permitted through the use of such an automated system.13.6Effect of Plan upon Other Compensation Plans. The adoption of the Plan shall not affect anyother compensation or incentive plans in effect for the Company or any Subsidiary. Nothing in the Plan shall beconstrued to limit the right of the Company or any Subsidiary: (a) to establish any other forms of incentives orcompensation for Employees, Directors or Consultants of the Company or any Subsidiary, or (b) to grant or assumeoptions or other rights or awards otherwise than under the Plan in connection with any proper corporate purposeincluding without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease,merger, consolidation or32  otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.13.7Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and theissuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awardedhereunder are subject to compliance with all Applicable Law (including but not limited to state, federal and foreignsecurities law and margin requirements), and to such approvals by any listing, regulatory or governmental authority asmay, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securitiesdelivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requestedby the Company, provide such assurances and representations to the Company as the Company may deem necessaryor desirable to assure compliance with all Applicable Law. The Administrator, in its sole discretion, may take whateveractions it deems necessary or appropriate to effect compliance with Applicable Law, including, without limitation, placinglegends on share certificates and issuing stop-transfer notices to agents and registrars. Notwithstanding anything to thecontrary herein, the Administrator may not take any actions hereunder, and no Awards shall be granted, that wouldviolate Applicable Law. To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereundershall be deemed amended to the extent necessary to conform to Applicable Law.13.8Titles and Headings, References to Sections of the Code or Exchange Act. The titles andheadings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of thePlan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shallinclude any amendment or successor thereto.13.9Governing Law. The Plan and any Programs and Award Agreements hereunder shall beadministered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of lawsthereof or of any other jurisdiction.13.10Section 409A. To the extent that the Administrator determines that any Award grantedunder the Plan is subject to Section 409A, the Plan, the Program pursuant to which such Award is granted and theAward Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A. In thatregard, to the extent any Award under the Plan or any other compensatory plan or arrangement of the Company or any ofits Subsidiaries is subject to Section 409A, and such Award or other amount is payable on account of a Participant’sTermination of Service (or any similarly defined term), then (a) such Award or amount shall only be paid to the extentsuch Termination of Service qualifies as a “separation from service” as defined in Section 409A, and (b) if such Award oramount is payable to a “specified employee” as defined in Section 409A then to the extent required in order to avoid aprohibited distribution under Section 409A, such Award or other compensatory payment shall not be payable prior to theearlier of (i) the expiration of the six-month period measured from the date of the Participant’s Termination of Service, or(ii) the date of the Participant’s death. To the extent applicable, the Plan, the Program and any Award Agreements shallbe interpreted33  in accordance with Section 409A. Notwithstanding any provision of the Plan to the contrary, in the event that followingthe Effective Date the Administrator determines that any Award may be subject to Section 409A, the Administrator may(but is not obligated to), without a Holder’s consent, adopt such amendments to the Plan and the applicable Program andAward Agreement or adopt other policies and procedures (including amendments, policies and procedures withretroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (A) exemptthe Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to theAward, or (B) comply with the requirements of Section 409A and thereby avoid the application of any penalty taxes underSection 409A. The Company makes no representations or warranties as to the tax treatment of any Award under Section409A or otherwise. The Company shall have no obligation under this Section 13.10 or otherwise to take any action(whether or not described herein) to avoid the imposition of taxes, penalties or interest under Section 409A with respectto any Award and shall have no liability to any Holder or any other person if any Award, compensation or other benefitsunder the Plan are determined to constitute non-compliant, “nonqualified deferred compensation” subject to theimposition of taxes, penalties and/or interest under Section 409A.13.11Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for incentivecompensation. With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in thePlan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a generalcreditor of the Company or any Subsidiary.13.12Indemnification. To the extent permitted under Applicable Law and the OrganizationalDocuments, each member of the Administrator shall be indemnified and held harmless by the Company from any loss,cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with orresulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may beinvolved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid byhim or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives theCompany an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle anddefend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights ofindemnification to which such persons may be entitled pursuant to the Organizational Documents, as a matter of law, orotherwise, or any power that the Company may have to indemnify them or hold them harmless.13.13Relationship to other Benefits. No payment pursuant to the Plan shall be taken into accountin determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or otherbenefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such otherplan or an agreement thereunder.34  13.14Expenses. The expenses of administering the Plan shall be borne by the Company and itsSubsidiaries.* * * * *I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Funko, Inc. on October 23, 2017.* * * * *I hereby certify that the foregoing Plan was approved by the stockholders of Funko, Inc. on October 23, 2017.Executed on this 1st day of November, 2017. By: /s/TracyDawCorporate Secretary35  Exhibit 10.5FUNKO, INC.EXECUTIVE ANNUAL INCENTIVE PLAN1.PurposeThis Executive Annual Incentive Bonus Plan (the “Bonus Plan”) is intended to provide an incentive for superiorwork and to motivate eligible executives of Funko, Inc. (the “Company”) and its subsidiaries toward even higherachievement and business results, to tie their goals and interests to those of the Company and its stockholders and toenable the Company to attract and retain highly qualified executives. The Bonus Plan is for the benefit of CoveredEmployees (as defined below). 2.AdministrationThe Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shallhave the sole discretion and authority to administer and interpret the Bonus Plan.3.Eligibility and ParticipationThe Compensation Committee shall select the persons eligible to participate in the Bonus Plan, which mayinclude, without limitation, the executives of the Company and its subsidiaries who are or, as determined in the solediscretion of the Compensation Committee, may become “covered employees” (as defined in Section 162(m) of theInternal Revenue Code of 1986, as amended (the “Code”)) of the Company and its subsidiaries for the applicabletaxable year of the Company (such selected persons, the “Covered Employees”). 4.Bonus Determinations(a)A Covered Employee may receive a bonus payment under the Bonus Plan based upon the attainmentof performance objectives which are established by the Compensation Committee and relate to financial, operational orother metrics with respect to the Company or any of its subsidiaries (the “Performance Goals”), including but not limitedto: net sales; system-wide sales; comparable store sales; revenue; revenue growth or product revenue growth; operatingincome (before or after taxes); adjusted operating income; adjusted net income; adjusted earnings per share; channelrevenue; channel revenue growth; franchising commitments; manufacturing profit; manufacturing profit margin; storeclosures; pre- or after-tax income or loss (before or after allocation of corporate overhead and bonus); earnings or lossper share; net income or loss (before or after taxes); return on equity; total stockholder return; return on assets or netassets; appreciation in or maintenance of the price of the shares or any other publicly-traded securities of the Company;market share; gross profits; earnings or losses (including earnings or losses before taxes, before interest and taxes, orbefore interest, taxes, depreciation or amortization); adjusted earnings or losses (including adjusted earnings or lossesbefore taxes, before interest and taxes, or before interest, taxes, depreciation or amortization); economic value-addedmodels or equivalent metrics; comparisons with1 various stock market indices; reductions in costs; cash flow or cash flow per share (before or after dividends); return oncapital (including return on total capital or return on invested capital); cash flow return on investment; improvement in orattainment of expense levels or working capital levels, including cash, inventory and accounts receivable; operatingmargin; gross margin; year-end cash; cash margin; debt reduction; stockholders equity; operating efficiencies; marketshare; customer satisfaction; customer growth; employee satisfaction; supply chain achievements (including establishingrelationships with manufacturers or suppliers of component materials and manufacturers of the Company’s products);points of distribution; gross or net store openings; co-development, co-marketing, profit sharing, joint venture or othersimilar arrangements; financial ratios, including those measuring liquidity, activity, profitability or leverage; cost of capitalor assets under management; financing and other capital raising transactions (including sales of the Company’s equityor debt securities; factoring transactions; sales or licenses of the Company’s assets, including its intellectual property,whether in a particular jurisdiction or territory or globally; or through partnering transactions); implementation, completionor attainment of measurable objectives with respect to research, development, manufacturing, commercialization,products or projects, production volume levels, acquisitions and divestitures; factoring transactions; and recruiting andmaintaining personnel, any of which may be measured either in absolute terms or as compared to any incrementalincrease or decrease or as compared to results of a peer group or to market performance indicators or indices. (b)Except as otherwise set forth in this Section 4(b): (i) any bonuses paid to Covered Employees underthe Bonus Plan shall be based upon objectively determinable bonus formulas that tie such bonuses to one or moreperformance objectives relating to the Performance Goals; (ii) bonus formulas for Covered Employees shall be adoptedin each performance period by the Compensation Committee (generally, for performance periods of one year or more, nolater than 90 days after the commencement of the performance period to which the Performance Goals relate); and (iii)no bonuses shall be paid to Covered Employees unless and until the Compensation Committee makes a certificationwith respect to the attainment of the performance objectives. Notwithstanding the foregoing, the Company may paybonuses (including, without limitation, discretionary bonuses) to Covered Employees under the Bonus Plan based uponsuch other terms and conditions as the Compensation Committee may in its sole discretion determine.(c)The payment of a bonus to a Covered Employee with respect to a performance period shall beconditioned upon the Covered Employee’s employment by the Company on the last day of the performance period;provided, however, that the Compensation Committee may make exceptions to this requirement, in its sole discretion,including, without limitation, in the case of a Covered Employee’s termination of employment, retirement, death ordisability.2  5.Forfeiture and Claw-Back ProvisionsThe Compensation Committee may provide that any bonuses paid under the Bonus Plan shall be subject to theprovisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policyadopted to comply with the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and anyrules, regulations or interpretations thereunder, to the extent set forth in such claw-back policy.6.Other Provisions(a)Neither the establishment of the Bonus Plan nor the selection of any individual as a CoveredEmployee shall give any individual any right to be retained in the employ of the Company or any subsidiary thereof, orany right whatsoever under the Bonus Plan other than to receive bonus payments awarded by the CompensationCommittee.(b)No member of the Board of Directors of the Company or the Compensation Committee shall be liableto any individual in respect of the Bonus Plan for any act or omission of such member, any other member, or any officer,agent or employee of the Company or any of its subsidiaries.(c)The Company and its subsidiaries shall be entitled to withhold such amounts as may be required byfederal, state or local law from all bonus payments under the Bonus Plan.(d)To the extent not preempted by federal law, the Bonus Plan shall be governed and construed inaccordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof orany other jurisdiction.(e)The Bonus Plan is intended to meet the requirements of Section 409A of the Code and will beinterpreted and construed in accordance with Section 409A of the Code and Department of Treasury Regulations andother interpretive guidance issued thereunder, including without limitation any such regulations or other guidance thatmay be issued after the Effective Date (as defined below) (collectively, “Section 409A”). Each bonus payable pursuant tothe Bonus Plan shall be intended to comply with, or be exempt from, the requirements of Section 409A such that thebonus will not be subject to any penalty tax imposed under Section 409A. Notwithstanding any provision of the BonusPlan to the contrary, each bonus payable pursuant to the Bonus Plan shall be paid by no later than March 15 of thecalendar year following the calendar year in which the last day of the performance period occurs. Notwithstanding anyprovision of the Bonus Plan to the contrary, in the event that following the Effective Date the Company determines thatany provision of the Bonus Plan could otherwise cause any person to be subject to the penalty taxes imposed underSection 409A, the Company may adopt such amendments to the Bonus Plan or adopt other policies and procedures(including amendments, policies and procedures with retroactive effect), or take any other actions, that the Companydetermines are necessary or appropriate to comply with the requirements of Section 409A3  and thereby avoid the application of any penalty taxes under Section 409A. Notwithstanding anything herein to thecontrary, in no event shall any liability for failure to comply with the requirements of Section 409A be transferred from aCovered Employee or any other person to the Company or any of its affiliates, employees or agents pursuant to the termsof the Bonus Plan or otherwise. 7.Amendment and TerminationThe Board of Directors of the Company reserves the right to amend or terminate the Bonus Plan at any time inits sole discretion. Any amendments to the Bonus Plan shall require stockholder approval only to the extent required byany applicable law, rule or regulation.8.Stockholder ApprovalNo bonuses shall be paid under the Bonus Plan unless and until the Company’s stockholders shall haveapproved the Bonus Plan. The Bonus Plan will be submitted for the approval of the Company’s stockholders after theinitial adoption of the Bonus Plan by the Board of Directors of the Company.9.Term of Bonus PlanThe Bonus Plan shall become effective as of the day immediately prior to the first date upon which commonstock of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange or designated(or approved for designation) upon notice of issuance as a national market security on an interdealer quotation system(the “Effective Date”). The Bonus Plan shall expire on the earliest to occur of: (a) the first material modification of theBonus Plan (as defined in Treasury Regulation Section 1.162-27(h)(1)(iii)); (b) the first meeting of the Company’sstockholders at which members of the Board of Directors of the Company are to be elected that occurs after the close ofthe third calendar year following the calendar year in which occurred the first registration of an equity security of theCompany under Section 12 of the Securities Exchange Act of 1934, as amended; or (c) such other date, if any, on whichthe “reliance period” described under Treasury Regulation 1.162-27(f)(2) expires pursuant to the terms of Section 162(m)of the Code, and the rules, regulations and interpretations thereunder. The Bonus Plan is intended to be subject to therelief set forth in Treasury Regulation Section 1.162-27(f)(1) and shall be interpreted accordingly. * * * * * 4  I hereby certify that the Bonus Plan was duly authorized, approved and adopted by the Board of Directors ofFunko Inc. as of October 23, 2017, effective as of the Effective Date.I hereby certify that the Bonus Plan was approved by the stockholders of Funko Inc. as of October 23, 2017. By: /s/ Tracy Daw Name: Tracy DawTitle: Senior Vice President and General Counsel  Exhibit 10.8EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 20th day of October,2017, by and between Russell Nickel, a Washington resident (“Employee”), and Funko, Inc., a Delaware corporation(any of its Affiliates as may employ the Employee from time to time, and any successor(s) thereto, the “Company”).RECITALS WHEREAS, the Company is considering an initial public offering of the Company’s common stock (the“IPO”); and WHEREAS, in anticipation of the potential IPO, the Company desires to enter into this Agreement withEmployee, pursuant to which the Company will employ Employee on the terms set forth in this Agreement, andEmployee desires to be employed by the Company pursuant to the terms and conditions of this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties agree as follows:1.Employment. The Company agrees to employ Employee on the terms and conditions set forthin this Agreement, and Employee accepts such employment and agrees to perform the services and duties for theCompany as herein provided for the period and upon the other terms and conditions set forth in this Agreement.2.Term. Unless earlier terminated pursuant to the terms of Section 7 hereof, Employee shall beemployed by the Company for the period commencing as of the Effective Date and ending on the third (3rd) anniversaryof the Effective Date (the “Initial Term”), subject to automatic renewal periods for up to two additional one (1)-yearperiods, unless either party provides the other party with ninety (90) days’ advance written notice prior to the end of theInitial Term or any such renewal period, as applicable, of such party’s intent not to renew (the Initial Term and any suchrenewal period, the “Term”). The “Effective Date” shall be the date on which the IPO becomes effective, andnotwithstanding anything herein to the contrary, in the event the IPO does not occur for any reason, this Agreement shallbe deemed null and void.3.Position and Duties.3.01Title. During the Term, Employee agrees to serve as the Company’s ChiefFinancial Officer.3.02Duties. During the Term, Employee agrees to serve the Company, andEmployee will faithfully and to the best of his ability discharge the duties associated1  with his position and will devote his full time during business hours for the Company and to the business and affairs ofthe Company, its direct and indirect subsidiaries and its affiliates. Employee hereby confirms that during the Term, hewill not render or perform services for any other corporation, firm, entity or person. Employee recognizes that he will berequired to travel to perform certain of his duties. Employee shall report to, and be subject to the direction of, theCompany’s President, or if determined by the Board of Directors (the “Board”), the Board or the Chief Executive Officer.Notwithstanding the foregoing, Employee shall be permitted to participate in, and be involved with, such community,educational, charitable, professional, and religious organizations so long as such participation does not, in the judgmentof the Board interfere with the performance of or create a potential conflict with Employee’s duties hereunder.4.Compensation.4.01Base Salary. During the Term, the Company shall pay to Employee a baseannual salary of Three Hundred Seventy-Three Thousand and Three Hundred Dollars ($373,300.00) (“Base Salary”),which salary shall be paid in accordance with the Company’s normal payroll procedures and policies.4.02Annual Bonus. During the Term, Employee shall be eligible to receive abonus pursuant to an annual performance based incentive compensation program to be established by the Board, withEmployee’s annual target to be no less than 25% of Employee’s then Base Salary; provided, however, that the Companyreserves the right to establish a lesser target if done in good faith and as a result of Company’s legitimate businessneeds. Notwithstanding the preceding, Employee’s bonus, if any, may be below (including zero), at, or above, theannual target based upon the achievement of the performance objectives, as determined by the Company in its solediscretion, and payment of any bonus described in this Section 4.02 shall be according to the established plan andsubject to Employee’s continued employment by the Company through the date the bonus is paid pursuant to the annualperformance based incentive compensation program.4.03Benefits. During the Term, Employee may participate in all employee benefitplans or programs of the Company consistent with such plans and programs of the Company. The Company does notguarantee the adoption or continuance of any particular employee benefit plan or program during the Term, andEmployee’s participation in any such plan or program shall be subject to the provisions, rules and regulations applicablethereto.4.04Expenses; Contributions. During the Term, the Company agrees toreimburse all reasonable business expenses incurred by Employee consistent with the Company’s policies regardingreimbursement in the performance of Employee’s duties under this Agreement.4.05Vacation and Sick leave. During the Term, Employee shall be entitled tovacation, sick leave and holidays in accordance with the policy of the Company as to its employees.2  4.06Indemnification and Additional Insurance. The Company shall indemnifyEmployee with respect to matters relating to Employee’s services as an officer of the Company or any of its affiliates,occurring during the course and scope of Employee’s employment with the Company to the extent required by, andpursuant to the provisions in the, Delaware law. The Company may also cover Employee under a policy of officers’ anddirectors’ liability insurance providing coverage that is comparable to that provided now or hereafter to other seniorexecutives of the Company.5.Confidential Information and Proprietary Information.5.01Confidential Information. During the Term and at all times thereafter,Employee shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course ofthe business of the Company or any of its affiliates) any confidential or secret knowledge or information of the Companyor any of its affiliates which Employee has acquired or become acquainted with prior to the termination of the period ofhis employment by the Company (including employment by the Company or any affiliated companies prior to the date ofthis Agreement), whether developed by himself or by others, including, without limitation, any trade secrets, confidentialor secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly orindirectly useful in any aspect of the business of the Company or any of its affiliates, any customer or supplier lists of theCompany or any of its affiliates, any confidential or secret development or research work of the Company or any of itsaffiliates, or any other confidential information or secret aspect of the business of the Company or any of its affiliates(collectively, “Confidential Information”). Employee acknowledges that (a) the Company and its affiliates have expendedand shall continue to expend substantial amounts of time, money and effort to develop business strategies, employeeand customer relationships and goodwill and build an effective organization, (b) Employee is and shall become familiarwith the Company’s and its affiliates’ Confidential Information, including trade secrets, and that Employee’s services areof special, unique and extraordinary value to the Company and its affiliates, (c) the above-described knowledge orinformation constitutes a unique and valuable asset of the Company and its affiliates and the Company and its affiliateshave a legitimate business interest and right in protecting its Confidential Information, business strategies, employee andcustomer relationships and goodwill and (d) any disclosure or other use of such knowledge or information other than forthe sole benefit of the Company and any of its affiliates would be wrongful and would cause irreparable harm to theCompany and any of its affiliates. However, the foregoing shall not apply to any knowledge or information which is nowpublished or which subsequently becomes generally publicly known in the form in which it was obtained from theCompany or any of its affiliates, other than as a direct or indirect result of the breach of this Agreement by Employee.5.02Proprietary Information. (a) Employee agrees that the results and proceedsof Employee’s services for the Company or its affiliates (including, but not limited to, any trade secrets, products,services, processes, know-how, designs, developments, innovations, analyses, drawings, reports, techniques, formulas,methods, developmental or experimental work, improvements, discoveries, inventions, ideas, source and object codes,programs, matters of a literary, musical, dramatic or otherwise3  creative nature, writings and other works of authorship) resulting from services performed while an employee of theCompany and any works in progress, whether or not patentable or registrable under copyright or similar statutes, thatwere made, developed, conceived or reduced to practice or learned by Employee, either alone or jointly with others(collectively, “Inventions”), shall be works-made-for-hire and the Company (or, if applicable or as directed by theCompany or any of its affiliates) shall be deemed the sole owner throughout the universe of any and all trade secret,patent, copyright and other intellectual property rights (collectively, “Proprietary Rights”) of whatsoever nature therein,whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the samein perpetuity in any manner the Company determines in its sole discretion, without any further payment to Employeewhatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-made-for-hire and/or thereare any Proprietary Rights which do not accrue to the Company (or, as the case may be, any of its affiliates) under theimmediately preceding sentence, then Employee hereby irrevocably assigns and agrees to assign any and all ofEmployee’s right, title and interest thereto, including any and all Proprietary Rights of whatsoever nature therein, whetheror not now or hereafter known, existing, contemplated, recognized or developed, to the Company (or, if applicable or asdirected by the Company or any of its affiliates), and the Company or its affiliates shall have the right to use the same inperpetuity throughout the universe in any manner determined by the Company or such affiliates without any furtherpayment to Employee whatsoever. As to any Invention that Employee is required to assign, Employee shall promptlyand fully disclose to the Company all information known to Employee concerning such Invention.(b) Employee agrees that, from time to time, as may be requested by the Company and at theCompany’s sole cost and expense, Employee shall do any and all things that the Company may reasonably deem usefulor desirable to establish or document the Company’s exclusive ownership throughout the United States of America orany other country of any and all Proprietary Rights in any such Inventions, including the execution of appropriatecopyright and/or patent applications or assignments. To the extent Employee has any Proprietary Rights in theInventions that cannot be assigned in the manner described above, Employee unconditionally and irrevocably waivesthe enforcement of such Proprietary Rights. This Section 5.02 is subject to and shall not be deemed to limit, restrict orconstitute any waiver by the Company of any Proprietary Rights of ownership to which the Company may be entitled byoperation of law by virtue of the Company’s being Employee’s employer. Employee further agrees that, from time totime, as may be requested by the Company and at the Company’s sole cost and expense, Employee shall assist theCompany in every proper and lawful way to obtain and from time to time enforce Proprietary Rights relating to Inventionsin any and all countries. To this end, Employee shall execute, verify and deliver such documents and perform such otheracts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining,perfecting, evidencing, sustaining, and enforcing such Proprietary Rights and the assignment thereof. In addition,Employee shall execute, verify, and deliver assignments of such Proprietary Rights to the Company or itsdesignees. Employee’s obligation to assist the Company with respect to Proprietary Rights relating to such Inventions inany and all countries shall continue beyond the termination of Employee’s employment with the Company.4  (c) Employee hereby waives and quitclaims to the Company any and all claims, of any naturewhatsoever, that Employee now or may hereafter have for infringement of any Proprietary Rights assigned hereunder tothe Company.5.03Defend Trade Secrets Act. Employee acknowledges that, pursuant to 18U.S.C. § 1833(b), an individual may not be held liable under any criminal or civil federal or state trade secret law fordisclosure of a trade secret (a) made in confidence to a government official, either directly or indirectly, or to an attorney,solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other documentfiled in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer forretaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney anduse the trade secret information in the court proceeding, so long as any document containing the trade secret is filedunder seal and the individual does not disclose the trade secret except pursuant to court order.6.Non-competition and Non-solicitation Covenants and Adversarial Restrictions.6.01Non-competition. Employee agrees that, during the Term and for twelvemonths after the termination of Employee’s employment for any reason (the “Non-Compete Period”), Employee shall not,directly or indirectly, (a) engage in activities or businesses (including without limitation by owning any interest in,managing, controlling, participating in, consulting with, advising, rendering services for, or in any manner engaging in thebusiness of owning, operating or managing any business) in any geographic location in which the Company, itssubsidiaries or Affiliates engage in, whether through selling, distributing, manufacturing, marketing, purchasing, orotherwise, that compete directly or indirectly with the Company or any of its subsidiaries or Affiliates (“CompetitiveActivities”), it being understood that Competitive Activities as of the date hereof include, without limitation, themanufacture, marketing, license, distribution and sale of licensed pop culture products; or (b) assist any person in anyway to do, or attempt to do, anything prohibited by Section 6.01(a) above. Employee acknowledges (i) that the businessof the Company and its affiliates is global in scope and (ii) notwithstanding the jurisdiction of formation or principal officeof the Company and its affiliates, or the location of any of their respective executives or employees (including, withoutlimitation, Employee), it is expected that the Company and its affiliates will have business activities and have valuablebusiness relationships within their respective industries throughout the United States and abroad.6.02Indirect Competition. Employee further agrees that, during the Term and theNon-Compete Period, he will not, directly or indirectly, assist or encourage any other person in carrying out, direct orindirectly, any activity that would be prohibited by the above provisions of this Section 6 if such activity were carried outby Employee, either directly or indirectly; and in particular, Employee agrees that he will not, directly or indirectly, induceany employee of the Company to carry out, directly or indirectly, any such activity.5  6.03Non-solicitation. Employee further agrees that, during the Term and for aperiod of two years after the termination of his employment (the “Non-Solicitation Period”), he will not, directly orindirectly, assist or encourage any other person in seeking to employ or hire any employee, consultant, advisor or agentof the Company or any of its affiliates or encouraging any such employee, consultant, advisor or agent to discontinueemployment with the Company or any of its affiliates.6.04Non-Disparagement. Employee agrees not to disparage the Company, anyof its products or practices, or any of its directors, officers, agents, representatives, partners, members, equityholders oraffiliates, either orally or in writing, at any time, and the Company shall direct its directors and officers not to disparageEmployee, either orally or in writing, at any time; provided that Employee, the Company and the Company’s directorsand officers may confer in confidence with their respective legal representatives and make truthful statements asrequired by law, or by governmental, regulatory or self-regulatory investigations or as truthful testimony in connectionwith any litigation involving Employee and the Company or its affiliates.6.05Enforceability. If a final and non-appealable judicial determination is madethat any of the provisions of this Section 6 constitutes an unreasonable or otherwise unenforceable restriction againstEmployee, the provisions of this Section 6 will not be rendered void but will be deemed to be modified to the minimumextent necessary to remain in force and effect for the longest period and largest geographic area that would not constitutesuch an unreasonable or unenforceable restriction. Moreover, and without limiting the generality of Section 6,notwithstanding the fact that any provision of this Section 6 is determined to not be enforceable through specificperformance, the Company will nevertheless be entitled to recover monetary damages as a result of Employee’s breachof such provision.6.06Acknowledgement. Employee acknowledges that Employee has carefullyread this Agreement and has given careful consideration to the restraints imposed upon Employee by this Agreement,and is in full accord as to the necessity of such restraints for the reasonable and proper protection of the ConfidentialInformation, business strategies, employee and customer relationships and goodwill of the Company and its subsidiariesand affiliates now existing or to be developed in the future. Employee expressly acknowledges and agrees that eachand every restraint imposed by this Agreement is reasonable with respect to subject matter, time period andgeographical area. Employee further acknowledges that although Employee’s compliance with the covenants containedin Sections 5 and 6 may prevent Employee from earning a livelihood in a business similar to the business of theCompany, Employee’s experience and capabilities are such that Employee has other opportunities to earn a livelihoodand adequate means of support for Employee and Employee’s dependents.7.Termination.7.01Grounds for Termination. Employee’s employment with the Company shallterminate (a) by Employee for Good Reason, (b) by the Company for Cause, (c) by the Employee without Good Reason,(d) by the Company without Cause,6  (e) on account of Employee’s death or disability, or (f) by expiration or non-renewal of the Term. Notwithstanding anytermination of this Agreement and Employee’s employment by the Company, Employee, in consideration of hisemployment hereunder to the date of such termination, shall remain bound by the provisions of this Agreement whichspecifically relate to periods, activities or obligations upon or subsequent to the termination of Employee’s employmentincluding without limitation the provisions of Sections 5, 6 and 8 hereof.7.02Cause Defined. Termination of Employee’s employment by the Company forany of the following reasons shall be deemed termination for “Cause”: (a) gross neglect or willful misconduct byEmployee of Employee’s duties or Employee’s willful failure to carry out, or comply with, in any material respect anylawful and reasonable directive of the Board not inconsistent with the terms of this Agreement; (b) conviction ofEmployee of, or Employee’s plea of no contest, plea of nolo contendere or imposition of adjudicated probation withrespect to, any felony or crime involving moral turpitude or Employee’s indictment for any felony or crime involving moralturpitude; provided if Employee is terminated following such indictment but is found not guilty or the indictment isdismissed, the termination shall be deemed to be a termination without Cause; (c) Employee’s habitual unlawful use(including being under the influence) or possession of illegal drugs on the Company’s premises or while performingEmployee’s duties and responsibilities under this Agreement; (d) Employee’s commission at any time of any act of fraud,embezzlement, misappropriation, material misconduct, or breach of fiduciary duty against the Company (or anypredecessor thereto or successor thereof); or (e) Employee’s material breach of the restrictive covenants in Sections 5and 6 hereof or any other confidentiality, non-compete or non-solicitation covenant; provided that the Company shallprovide Employee with fifteen (15) days prior written notice before any such termination in (a) or (e) (other than to theextent that (a) relates to any fraud or intentional misconduct) with an opportunity to meet with the Board and discuss orcure any such alleged violation.7.03Good Reason Defined. Termination of Employee’s employment byEmployee for any of the following reasons shall be deemed for “Good Reason”: (a) a material adverse change inEmployee’s title or reporting line or material duties, authorities or responsibilities, as determined by the Board (provided,that Employee’s title, reporting line or material duties, authorities or responsibilities shall not be deemed to be materiallyadversely changed solely because the Company (or its successor) is no longer an independently operated public entityor becomes a subsidiary of another entity); (b) a material breach by the Company of any material provision of thisAgreement; (c) a material reduction of Employee’s Base Salary or benefits or target bonus opportunity (other than such areduction that is generally consistent with a general reduction affecting the Company’s other similarly situatedexecutives); (d) failure by the Company to pay any portion of Employee’s earned Base Salary or bonus; or (e) theCompany’s requiring Employee to be headquartered at any office or location more than 50 miles from Everett,Washington, provided that in the case of all the above events, Employee may not resign from his or her employment forGood Reason unless he provides the Company written notice within 90 days after the initial occurrence of the event andat least 60 days prior to7  the date of termination, and the Company has not corrected the event prior to the date of termination.7.04Surrender of Records and Property. Upon termination of his employmentwith the Company for any reason, Employee shall deliver promptly to the Company all records, manuals, books, blankforms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof, which arethe property of the Company or any of its Affiliates or which relate in any way to the business, products, practices ortechniques of the Company or any of its affiliates, and all other property, trade secrets and confidential information of theCompany or any of its affiliates, including, but not limited to, all documents which in whole or in part contain any tradesecrets or confidential information of the Company or any of its Affiliates, which in any of these cases are in hispossession or under his control.7.05Payments Upon Termination. (a) If this Agreement is terminated for anyreason set forth in Section 7, then Employee shall be entitled to receive (i) his earned but unpaid Base Salary throughthe date of the termination, (ii) any accrued and unused vacation or paid time off through the date of termination, (iii)reimbursement of any business expenses incurred in the ordinary course of business through the date of termination thathave not yet been reimbursed pursuant to Section 4.04, and (iv) any earned but unpaid bonus pursuant to Section 4.02for the calendar year prior to termination to the extent not yet paid when due (together, the “Accrued Compensation”).(b) If Employee’s employment is terminated pursuant to Section 7.01(a) or (d) and provided thatEmployee shall have executed and delivered to the Company the a release of claims substantially in the form attachedhereto as Exhibit A (the “Release”) and any period for rescission of such Release shall have expired without Employeehaving rescinding such Release, in addition to the Accrued Compensation, Employee shall be entitled to receive either(i) if Employee has been an employee of the Company or its affiliates for less than two years prior to the date oftermination, continuation of the Base Salary for up to six (6) months from the date of termination, payable in six equalmonthly installments in accordance with the Company’s regular payroll practices, and reimbursement, up to a maximumof six (6) months, of the Company-paid portion of premium payments, as if Employee had remained an active employee,for any COBRA coverage Employee elects, if any; or (ii) if Employee has been an employee of the Company or itsaffiliates for at least two years prior to the date of termination, an amount equal to continuation of the Base Salary for upto twelve (12) months from the date of termination, payable in twelve equal monthly installments in accordance with theCompany’s regular payroll practices, and reimbursement, up to a maximum of twelve (12) months, of the Company-paidportion of premium payments, as if Employee had remained an active employee, for any COBRA coverage Employeeelects, if any.7.06Termination in Connection with a Change in Control. (a) Notwithstanding theforegoing, if Employee’s employment is terminated pursuant to Section 7.01(a) or (d) on or within twelve (12) monthsfollowing a Change in Control, and provided that Employee shall have executed and delivered to the Company theRelease and any period for rescission of such Release shall have expired without Employee8  having rescinding such Release, in addition to the Accrued Compensation but in lieu of any payments or benefitspursuant to Section 7.05(b), Employee shall be entitled to receive an amount equal to continuation of the Base Salary fortwelve (12) months from the date of termination, payable in twelve equal monthly installments in accordance with theCompany’s regular payroll practices, and reimbursement, up to a maximum of twelve (12) months, of the Company-paidportion of premium payments, as if Employee had remained an active employee, for any COBRA coverage Employeeelects, if any. (b) For purposes of this Agreement, a “Change in Control” shall mean, following the Effective Date, (i)a change in ownership or control of Funko, Inc. effected through a transaction or series of transactions (other than anoffering of common stock or units to the general public through a registration statement filed with the Securities andExchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d)and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than Funko, Inc., any oftheir respective subsidiaries, ACON Equity Management, L.L.C., ACON Equity GenPar, L.L.C., any other entity owned orcontrolled by one or more of the managing members or managers of ACON Equity Management, L.L.C. or ACON EquityGenPar, L.L.C. (collectively, “ACON”), any employee benefit plan maintained by Funko, Inc. or any of their respectivesubsidiaries, or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is undercommon control with, Funko, Inc. or ACON), directly or indirectly acquires beneficial ownership (within the meaning ofRule 13d-3 under the Exchange Act) of securities of Funko, Inc. possessing more than fifty percent (50%) of the totalcombined voting power of Funko, Inc.’s securities outstanding immediately after such acquisition; (ii) the majority of themembers of the Board are replaced during any twelve (12) month period by directors whose appointment or election isnot endorsed by a majority of the Board, as applicable, prior to the date of such appointment or election; or (iii) a sale orother disposition of all or substantially all of the Company’s assets in any single transaction or series of relatedtransactions.7.07Mitigation. The amounts set forth in Section 7.05(b) and Section 7.06(a) shallbe reduced by any amount Employee receives as compensation from a subsequent employer during the severanceperiod. 7.08Termination of Offices Held. Upon termination of his employment with theCompany for any reason, Employee agrees that he shall immediately resign from any offices he holds with the Companyor any of its affiliates, including any boards of directors or boards of managers.8.Miscellaneous.8.01Governing Law: Venue. This Agreement is made under and shall begoverned by and construed in accordance with the laws of the State of Washington, regardless of the laws that mightotherwise govern under applicable principles of conflict of law.9  8.02Prior Agreements. This Agreement contains the entire agreement of theparties relating to the subject matter hereof and supersedes all prior agreements and understandings with respect tosuch subject matter, and the parties hereto have made no agreement, representations or warranties relating to thesubject matter of this Agreement which are not set forth herein.8.03Withholding Taxes. The Company may withhold from any payments orbenefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law orgovernmental regulation or ruling.8.04Amendments. No amendments or modifications of this Agreement shall bedeemed effective unless made in writing and signed by the parties hereto.8.05No Waiver. No term or condition of this Agreement shall be deemed to havebeen waived, nor shall there by an estoppel to enforce any provisions of this Agreement, except by a statement in writingsigned by the party against whom enforcement of the waiver or estoppel is sought. Any written waiver shall not bedeemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived andshall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived8.06Section 409A. (a) For purposes of this Agreement,“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the TreasuryRegulations promulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect fromtime to time. The parties intend that any amounts payable hereunder that could constitute “deferred compensation” withinthe meaning of Section 409A will be compliant with Section 409A or exempt from Section 409A. Notwithstanding theforegoing, Employee shall be solely responsible and liable for the satisfaction of all taxes and penalties that may beimposed on or for the account of Employee in connection with this Agreement (including any taxes and penalties underSection 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise holdEmployee (or any beneficiary) harmless from any or all of such taxes or penalties. No provision of this Agreement shallbe interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from theEmployee or any other individual to the Company or any of its affiliates, employees or agents. (b) Notwithstanding anything in this Agreement to the contrary, the following special rule shall apply, ifand to the extent required by Section 409A, in the event that (i) Employee is deemed to be a “specified employee” withinthe meaning of Section 409A(a)(2)(B)(i) of the Code, (ii) amounts or benefits under this Agreement or any other program,plan or arrangement of the Company or a controlled group affiliate thereof are due or payable on account of “separationfrom service” within the meaning of Treasury Regulations Section 1.409A-l(h) and (iii) Employee is employed by a publiccompany or a controlled group affiliate thereof: no payments hereunder that are “deferred compensation” subject toSection 409A shall be made to Employee prior to the date that is six (6) months after the date of Employee’s separationfrom service or, if earlier,10  Employee’s date of death; following any applicable six (6) month delay, all such delayed payments will be paid in asingle lump sum on the earliest permissible payment date, without interest.(c) Each payment made under this Agreement (including each separate installment payment in thecase of a series of installment payments) shall be deemed to be a separate payment for purposes of Section 409A.Amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409Ato the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9)(“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Section409A. For purposes of this Agreement, with respect to payments of any amounts that are considered to be “deferredcompensation” subject to Section 409A, references to “termination of employment,” “termination,” or words and phrasesof similar import, shall be deemed to refer to Employee’s “separation from service” as defined in Section 409A and shallbe interpreted and applied in a manner that is consistent with the requirements of Section 409A.(d) Notwithstanding anything to the contrary in this Agreement, any payment or benefit under thisAgreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-l(b)(9)(v)(A)or (C) (relating to certain reimbursements and in‑kind benefits) shall be paid or provided to Employee only to the extentthat the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar yearfollowing the calendar year in which Employee’s “separation from service” occurs; and provided further that suchexpenses are reimbursed no later than the last day of the third calendar year following the calendar year in whichEmployee’s “separation from service” occurs. To the extent any indemnification payment, expense reimbursement, or theprovision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the priorsentence or otherwise), the amount of any such indemnification payment or expenses eligible for reimbursement, or theprovision of any in-kind benefit, in one calendar year shall not affect the indemnification payment or provision of in-kindbenefits or expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregatelimitation applicable to medical expenses), and in no event shall any indemnification payment or expenses bereimbursed after the last day of the calendar year following the calendar year in which Employee incurred suchindemnification payment or expenses, and in no event shall any right to indemnification payment or reimbursement or theprovision of any in-kind benefit be subject to liquidation or exchange for another benefit.(e) Notwithstanding anything to the contrary in this Agreement, to the extent that any payments dueunder this Agreement as a result of the Employee’s termination of employment with the Company are subject to theEmployee’s execution and delivery and non-revocation of the Release, (i) no such payments shall be made on or prior tothe sixtieth (60th) day immediately following Employee’s date of termination (the “Release Period”), (ii) the Companyshall deliver the Release to Employee no later than seven (7) days immediately following Employee’s date oftermination, (iii) if, as of the Release Expiration Date, Employee has failed to execute the Release or has timely revokedhis11  acceptance of the Release thereafter, Employee shall not be entitled to any payments or benefits otherwise conditionedon the Release, and (iv) if, as of the Release Expiration Date, Employee has executed the Release and has not revokedhis acceptance of the Release thereafter, any such payments that are delayed pursuant to this Section 8.06(e) shall bepaid in a lump sum on the first regularly scheduled payroll date following the expiration of the Release Period, withoutinterest. For purposes of this Section 8.06(e), “Release Expiration Date” shall mean the date that is twenty-one (21) daysfollowing the date upon which the Company timely delivers the Release to Employee, or, in the event that Employee’stermination of employment is “in connection with an exit incentive or other employment termination program” (as suchphrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days followingsuch delivery date.8.07Compensation Recovery Policy. Employee acknowledges and agrees that,to the extent the Company adopts any clawback or similar policy pursuant to the Dodd-Frank Wall Street Reform andConsumer Protection Act or otherwise, and any rules and regulations promulgated thereunder, he shall take all actionnecessary or appropriate to comply with such policy (including, without limitation, entering into any further agreements,amendments or policies necessary or appropriate to implement and/or enforce such policy with respect to past, presentand future compensation, as appropriate).8.08Severability. To the extent any provision of this Agreement shall be invalid orunenforceable, it shall be considered deleted herefrom, and the remainder of such provision and of this Agreement shallbe unaffected and shall continue in full force and effect. In furtherance and not in limitation of the foregoing, should theduration or geographical extent of, or business activities covered by, any provision of this Agreement be in excess of thatwhich is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration,extent or activities which may validly and enforceably be covered. Employee acknowledges the uncertainty of the law inthis respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid andenforceable to the maximum extent (not exceeding its express terms) possible under applicable law.8.09Assignment. The Company may transfer and assign this Agreement and theCompany’s rights and obligations hereunder to another entity that is substantially comparable to the Company in itsfinancial strength and ability to perform the Company’s obligations under this Agreement. After any such assignment bythe Company, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter bedeemed to be the Company for the purposes of all provisions of this Agreement including this Section 8. Neither thisAgreement nor the rights or obligations hereunder of the parties hereto shall be transferable or assignable by Employee,except in accordance with the laws of descent and distribution.8.10Injunctive Relief. Employee agrees that it would be difficult to compensatethe Company fully for damages for any violation of the provisions of this Agreement, including without limitation theprovisions of Sections 5 and 6. Accordingly,12  Employee specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforcethe provisions of this Agreement and that such relief may be granted without the necessity of proving actualdamages. This provision with respect to injunctive relief shall not, however, diminish the right of the Company to claimand recover damages in addition to injunctive relief.8.11Notices. Any notice, payment, demand or communication required orpermitted to be given by the provisions of this Agreement shall be deemed to have been effectively given and receivedon the date personally delivered to the respective party to whom it is directed, or five (5) days after the date whendeposited by registered or certified mail, with postage and charges prepaid and addressed to such party at its addressbelow its signature. Any party may change its address by delivering a written change of address to all of the otherparties in the manner set forth in this Section 8.11.8.12Section 280G. Notwithstanding any other provision of this Agreement or anyother plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided bythe Company or its affiliates to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise(“Covered Payments”) constitute parachute payments within the meaning of Section 280G of the Code (such payments,the “Parachute Payments”) and would, but for this Section 8.12, be subject to the excise tax imposed under Section 4999of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest orpenalties with respect to such taxes (collectively, the “Excise Tax”), or not be deductible under Section 280G of theCode, then such Covered Payments shall be reduced to the minimum extent necessary to ensure that no portion of theCovered Payments is subject to the Excise Tax. The Covered Payments shall be reduced in a manner that maximizesEmployee’s economic position. In applying this principle, the reduction shall be made in a manner consistent with therequirements of Section 409A, to the extent applicable, and where two or more economically equivalent amounts aresubject to reduction but payable at different times, such amounts payable at the later time shall be reduced first but notbelow zero. [Signatures on following page] 13  IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth in the firstparagraph. FUNKO, INC. By:/s/Brian MariottiName: Title: /s/Russell NickelRussell Nickel [Signature Page to the Employment Agreement]  Exhibit AWAIVER AND RELEASE OF CLAIMS AGREEMENT In exchange for the severance payments and benefits provided to me pursuant to Section 7.05 and 7.06(collectively, the “Severance Benefits”) of that certain Employment Agreement, dated as of October 20, 2017, by andamong Funko, Inc. (“Company”) and Russell Nickel (the “Employee”) (the “Employment Agreement”), the Employeefreely and voluntarily agrees to enter into and be bound by this Waiver and Release of Claims Agreement (this“Release”). 1.General Release. The Employee, on his own behalf and on behalf of hisspouse, child or children (if any), heirs, personal representative, executors, administrators, successors, assigns andanyone else claiming through him (the “Releasors”), hereby releases and discharges forever Funko, Inc., and itsaffiliates, and each of their respective past, present or future parent, affiliated, related, and subsidiary entities and eachof their respective past, present or future directors, officers, employees, trustees, agents, attorneys, administrators,plans, plan administrators, insurers, equityholders, members, representatives, predecessors, successors and assigns,and all Persons acting by, through, under or in concert with them (hereinafter collectively referred to as the “ReleasedParties”), from and against all liabilities, claims, demands, liens, causes of action, charges, suits, complaints,grievances, contracts, agreements, promises, obligations, costs, losses, damages, injuries, attorneys’ fees and otherlegal responsibilities (collectively referred to as “Claims”), of any form whatsoever (whether or not relating toEmployee's employment with the Company), including, but not limited to, any claims in law, equity, contract or tort,claims under any policy, agreement, understanding or promise, written or oral, formal or informal, between theEmployee and the Company or any of the other Released Parties, and any claims under the Civil Rights Act of 1866,the Civil Rights Act of 1871, the Civil Rights Act of 1964, the Americans With Disabilities Act of 1990, the AgeDiscrimination in Employment Act of 1967 (“ADEA”), the Sarbanes-Oxley Act of 2002, the Securities Act of 1933, theSecurities Exchange Act of 1934 (the “Exchange Act”), the Employee Retirement Income Security Act of 1974, theRehabilitation Act of 1973, the Family and Medical Leave Act of 1993, the Genetic Information Nondiscrimination Act of2008, the Worker Adjustment and Retraining Notification Act of 1988, the Delaware Discrimination in Employment Act,the Delaware Persons with Disabilities Employment Protection Act, the Delaware Whistleblowers’ Protection Act, theDelaware Wage Payment and Collection Act, the Delaware Fair Employment Practices Act, Delaware's social medialaw, the Washington Industrial Welfare Act, the Washington Minimum Wage Act, the Washington Wage Payment Act,the Washington Wage Rebate Act, the Washington Law Against Discrimination and the Washington Leave Law, aseach may have been amended from time to time, or any other federal, state or local statute, regulation, law, rule,ordinance or constitution, or common law, whether known or unknown, unforeseen, unanticipated, unsuspected orlatent, that the Employee or any of the Releasors now possess or have a right to, or have at any time heretofore ownedor held, or may at any time own or hold by reason of any matter or thing arising from any cause whatsoever prior to thedate of execution of this Release, and without limiting the generality of the foregoing, from all claims, demands  and causes of action based upon, relating to, or arising out of: (a) the Employment Agreement; (b) the Employee’semployment or other relationship with any of the Released Parties or the termination thereof; and (c) the Employee’sstatus as a holder of securities of any of the Released Parties. This Release includes, but is not limited to, all wrongfultermination and “constructive discharge” claims, all discrimination claims, all claims relating to any contracts ofemployment, whether express or implied, any covenant of good faith and fair dealing, whether express or implied, andany tort of any nature. This Release is for any relief, no matter how denominated, including but not limited to wages,back pay, front pay, benefits, compensatory, liquidated or punitive damages and attorneys’ fees. The Employeeacknowledges and reaffirms Employee’s obligations under the Employment Agreement with the Company datedOctober 20, 2017, a signed copy of which is attached hereto as Exhibit A, including but not limited to Sections 5 and 6thereof.2.Covenant Not To Sue. The Employee represents and covenants that he hasnot filed, initiated or caused to be filed or initiated any Claim, charge, suit, complaint, grievance, action, cause of action orproceeding against the Company or any of other the Released Parties. Except to the extent that such waiver isprecluded by law, the Employee further promises and agrees that he will not file, initiate or cause to be filed or initiatedany Claim, charge, suit, complaint, grievance, action, cause of action or proceeding based upon, arising out of or relatingto any Claim released hereunder, nor shall the Employee participate, assist or cooperate in any Claim, charge, suit,complaint, grievance, action, cause of action or proceeding regarding any of the Released Parties relating to any Claimsreleased hereunder, whether before a court or administrative agency or otherwise, unless required to do so by law. 3.Exclusions. Notwithstanding the foregoing, the Employee does not release hisrights to receive the Severance Benefits or any right that may not be released by private agreement. In addition, thisRelease will not prevent the Employee from (i) filing a charge or complaint with the Equal Employment OpportunityCommission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities andExchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”)or (ii) reporting possible violations of federal law or regulation to, otherwise communicating with or participating in anyinvestigation or proceeding that may be conducted by, or providing documents and other information, without notice tothe Company, to, any Governmental Agency or entity, including in accordance with the provisions of and rulespromulgated under Section 21F of the Exchange Act or Section 806 of the Sarbanes-Oxley Act of 2002, as each mayhave been amended from time to time, or any other whistleblower protection provisions of state or federal law orregulation. This Agreement does not limit Employee’s right to receive an award for information provided to anyGovernment Agencies; provided, however, that the Employee acknowledges and agrees that any Claim by him, orbrought on his behalf, for damages in connection with such a charge or investigation filed with the Equal EmploymentOpportunity Commission would be and hereby is barred. 4.No Assignment. The Employee represents and warrants that he has made noassignment or other transfer, and covenants that he will make no assignment  or other transfer, of any interest in any Claim that he may have against any of the Released Parties. 5.Indemnification of Released Parties. The Employee agrees to indemnify andhold harmless the Released Parties, and each of them, against any loss, claim, demand, damage, expenses or any otherliability whatsoever, including reasonable attorneys’ fees and costs, resulting from: (i) any breach of this Release by himor his successors in interest; (ii) any assignment or transfer, or attempted assignment or transfer, of any Claims releasedhereunder; or (iii) any action or proceeding brought by him or his successors in interest, if such action or proceedingarises out of, is based upon, or is related to any Claims released hereunder. This indemnity does not require payment asa condition precedent to recovery by any of the Released Parties. 6.Acknowledgments. The Employee acknowledges that the Company deliveredthis Release to him on [_____]. The Employee agrees that the Company has advised him to consult with an attorneybefore executing this Release. The Employee agrees that he has had the opportunity to consult with counsel, if hechose to do so, and that the Employee has had a sufficient and reasonable amount of time to read and consider thisRelease before executing it. The Employee acknowledges that he is responsible for any costs and fees resulting fromhis attorney reviewing this Release. The Employee agrees that he has carefully read this Release and knows itscontents, and that he signs this Release voluntarily, with a full understanding of its significance, and intending to bebound by its terms. The Employee acknowledges that the provision of the Severance Benefits is in exchange for thepromises in the Release and is not normally available under Company policy to employees who resign or are terminatedby the Company, and that, but for his execution of this Release, he would not be entitled to receive the SeveranceBenefits. The Employee further acknowledges that the provision of the Severance Benefits does not constitute anadmission by the Released Parties of liability or of violation of any applicable law or regulation. The Company and itsaffiliates expressly deny any liability or alleged violation and state that the Severance Benefits are being provided solelyfor the purpose of compromising any and all claims of the Employee without the cost and burden of litigation. 7.ADEA Provisions. The Employee understands that this Release includes arelease of claims arising under ADEA. The Employee acknowledges and agrees that he has had at least 21 days afterthe date of his receipt of this Release (such period, the “Consideration Period”) to review this Release and consider itsterms before signing this Release and that the Consideration Period will not be affected or extended by any changes,whether material or immaterial, that might be made to this Release. The Employee further acknowledges and agreesthat he understands that he may use as much or all of such 21-day period as he wishes before signing, and warrants thathe has done so. The Employee may revoke and cancel this Release in writing at any time within seven days after hisexecution of this Release (such seven-day period, the “Revocation Period”) by providing notice of revocation to[_____]. This Release shall not become effective and enforceable until after the expiration of the Revocation Period;after such  time, if there has been no revocation, this Release shall immediately be fully effective and enforceable. 8.Consequences of Breach or Revocation. The Employee agrees that,notwithstanding anything to the contrary in this Release, in the event that he breaches any of the terms of the Release, orrevokes the Release pursuant to Section 7, he shall forfeit the Severance Benefits and reimburse the Company for anyportion of the Severance Benefits that have already been paid, and, in the event of such a breach, he shall reimburse theCompany for any expenses or damages incurred as a result of such breach. 9.Severability. If any provision of the Release is declared invalid orunenforceable, the remaining portions of the Release shall not be affected thereby and shall be enforced. 10.Governing Law: Venue. This Agreement is made under and shall begoverned by and construed in accordance with the laws of the State of Delaware.  IN WITNESS WHEREOF, the undersigned has signed and executed this Release on the date set forth below asan expression of his intent to be bound by the foregoing terms of this Release.________________________________Date: ___________________________  Exhibit 10.10EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 20th day of October,2017, by and between Tracy Daw, a Washington resident (“Employee”), and Funko, Inc., a Delaware corporation (any ofits Affiliates as may employ the Employee from time to time, and any successor(s) thereto, the “Company”).RECITALS WHEREAS, the Company is considering an initial public offering of the Company’s common stock (the“IPO”); and WHEREAS, in anticipation of the potential IPO, the Company desires to enter into this Agreement withEmployee, pursuant to which the Company will employ Employee on the terms set forth in this Agreement, andEmployee desires to be employed by the Company pursuant to the terms and conditions of this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties agree as follows:1.Employment. The Company agrees to employ Employee on the terms and conditions set forthin this Agreement, and Employee accepts such employment and agrees to perform the services and duties for theCompany as herein provided for the period and upon the other terms and conditions set forth in this Agreement.2.Term. Unless earlier terminated pursuant to the terms of Section 7 hereof, Employee shall beemployed by the Company for the period commencing as of the Effective Date and ending on the third (3rd) anniversaryof the Effective Date (the “Initial Term”), subject to automatic renewal periods for up to two additional one (1)-yearperiods, unless either party provides the other party with ninety (90) days’ advance written notice prior to the end of theInitial Term or any such renewal period, as applicable, of such party’s intent not to renew (the Initial Term and any suchrenewal period, the “Term”). The “Effective Date” shall be the date on which the IPO becomes effective, andnotwithstanding anything herein to the contrary, in the event the IPO does not occur for any reason, this Agreement shallbe deemed null and void.3.Position and Duties.3.01Title. During the Term, Employee agrees to serve as the Company’s SeniorVice President, General Counsel and Secretary.3.02Duties. During the Term, Employee agrees to serve the Company, andEmployee will faithfully and to the best of his ability discharge the duties associated with his position and will devote hisfull time during business hours for the Company and1  to the business and affairs of the Company, its direct and indirect subsidiaries and its affiliates. Employee herebyconfirms that during the Term, he will not render or perform services for any other corporation, firm, entity orperson. Employee recognizes that he will be required to travel to perform certain of his duties. Employee shall report to,and be subject to the direction of, the Company’s President, or if determined by the Board of Directors (the “Board”), theBoard or the Chief Executive Officer. Notwithstanding the foregoing, Employee shall be permitted to participate in, andbe involved with, such community, educational, charitable, professional, and religious organizations so long as suchparticipation does not, in the judgment of the Board interfere with the performance of or create a potential conflict withEmployee’s duties hereunder.4.Compensation.4.01Base Salary. During the Term, the Company shall pay to Employee a baseannual salary of Three Hundred Forty-Seven Thousand and Nine Hundred Dollars ($347,900.00) (“Base Salary”), whichsalary shall be paid in accordance with the Company’s normal payroll procedures and policies.4.02Annual Bonus. During the Term, Employee shall be eligible to receive abonus pursuant to an annual performance based incentive compensation program to be established by the Board, withEmployee’s annual target to be no less than 25% of Employee’s then Base Salary; provided, however, that the Companyreserves the right to establish a lesser target if done in good faith and as a result of Company’s legitimate businessneeds. Notwithstanding the preceding, Employee’s bonus, if any, may be below (including zero), at, or above, theannual target based upon the achievement of the performance objectives, as determined by the Company in its solediscretion, and payment of any bonus described in this Section 4.02 shall be according to the established plan andsubject to Employee’s continued employment by the Company through the date the bonus is paid pursuant to the annualperformance based incentive compensation program.4.03Benefits. During the Term, Employee may participate in all employee benefitplans or programs of the Company consistent with such plans and programs of the Company. The Company does notguarantee the adoption or continuance of any particular employee benefit plan or program during the Term, andEmployee’s participation in any such plan or program shall be subject to the provisions, rules and regulations applicablethereto.4.04Expenses; Contributions. During the Term, the Company agrees toreimburse all reasonable business expenses incurred by Employee consistent with the Company’s policies regardingreimbursement in the performance of Employee’s duties under this Agreement.4.05Vacation and Sick leave. During the Term, Employee shall be entitled tovacation, sick leave and holidays in accordance with the policy of the Company as to its employees.2  4.06Indemnification and Additional Insurance. The Company shall indemnifyEmployee with respect to matters relating to Employee’s services as an officer of the Company or any of its affiliates,occurring during the course and scope of Employee’s employment with the Company to the extent required by, andpursuant to the provisions in the, Delaware law. The Company may also cover Employee under a policy of officers’ anddirectors’ liability insurance providing coverage that is comparable to that provided now or hereafter to other seniorexecutives of the Company.5.Confidential Information and Proprietary Information.5.01Confidential Information. During the Term and at all times thereafter,Employee shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course ofthe business of the Company or any of its affiliates) any confidential or secret knowledge or information of the Companyor any of its affiliates which Employee has acquired or become acquainted with prior to the termination of the period ofhis employment by the Company (including employment by the Company or any affiliated companies prior to the date ofthis Agreement), whether developed by himself or by others, including, without limitation, any trade secrets, confidentialor secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly orindirectly useful in any aspect of the business of the Company or any of its affiliates, any customer or supplier lists of theCompany or any of its affiliates, any confidential or secret development or research work of the Company or any of itsaffiliates, or any other confidential information or secret aspect of the business of the Company or any of its affiliates(collectively, “Confidential Information”). Employee acknowledges that (a) the Company and its affiliates have expendedand shall continue to expend substantial amounts of time, money and effort to develop business strategies, employeeand customer relationships and goodwill and build an effective organization, (b) Employee is and shall become familiarwith the Company’s and its affiliates’ Confidential Information, including trade secrets, and that Employee’s services areof special, unique and extraordinary value to the Company and its affiliates, (c) the above-described knowledge orinformation constitutes a unique and valuable asset of the Company and its affiliates and the Company and its affiliateshave a legitimate business interest and right in protecting its Confidential Information, business strategies, employee andcustomer relationships and goodwill and (d) any disclosure or other use of such knowledge or information other than forthe sole benefit of the Company and any of its affiliates would be wrongful and would cause irreparable harm to theCompany and any of its affiliates. However, the foregoing shall not apply to any knowledge or information which is nowpublished or which subsequently becomes generally publicly known in the form in which it was obtained from theCompany or any of its affiliates, other than as a direct or indirect result of the breach of this Agreement by Employee.5.02Proprietary Information. (a) Employee agrees that the results and proceedsof Employee’s services for the Company or its affiliates (including, but not limited to, any trade secrets, products,services, processes, know-how, designs, developments, innovations, analyses, drawings, reports, techniques, formulas,methods, developmental or experimental work, improvements, discoveries, inventions, ideas, source and object codes,programs, matters of a literary, musical, dramatic or otherwise3  creative nature, writings and other works of authorship) resulting from services performed while an employee of theCompany and any works in progress, whether or not patentable or registrable under copyright or similar statutes, thatwere made, developed, conceived or reduced to practice or learned by Employee, either alone or jointly with others(collectively, “Inventions”), shall be works-made-for-hire and the Company (or, if applicable or as directed by theCompany or any of its affiliates) shall be deemed the sole owner throughout the universe of any and all trade secret,patent, copyright and other intellectual property rights (collectively, “Proprietary Rights”) of whatsoever nature therein,whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the samein perpetuity in any manner the Company determines in its sole discretion, without any further payment to Employeewhatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-made-for-hire and/or thereare any Proprietary Rights which do not accrue to the Company (or, as the case may be, any of its affiliates) under theimmediately preceding sentence, then Employee hereby irrevocably assigns and agrees to assign any and all ofEmployee’s right, title and interest thereto, including any and all Proprietary Rights of whatsoever nature therein, whetheror not now or hereafter known, existing, contemplated, recognized or developed, to the Company (or, if applicable or asdirected by the Company or any of its affiliates), and the Company or its affiliates shall have the right to use the same inperpetuity throughout the universe in any manner determined by the Company or such affiliates without any furtherpayment to Employee whatsoever. As to any Invention that Employee is required to assign, Employee shall promptlyand fully disclose to the Company all information known to Employee concerning such Invention.(b) Employee agrees that, from time to time, as may be requested by the Company and at theCompany’s sole cost and expense, Employee shall do any and all things that the Company may reasonably deem usefulor desirable to establish or document the Company’s exclusive ownership throughout the United States of America orany other country of any and all Proprietary Rights in any such Inventions, including the execution of appropriatecopyright and/or patent applications or assignments. To the extent Employee has any Proprietary Rights in theInventions that cannot be assigned in the manner described above, Employee unconditionally and irrevocably waivesthe enforcement of such Proprietary Rights. This Section 5.02 is subject to and shall not be deemed to limit, restrict orconstitute any waiver by the Company of any Proprietary Rights of ownership to which the Company may be entitled byoperation of law by virtue of the Company’s being Employee’s employer. Employee further agrees that, from time totime, as may be requested by the Company and at the Company’s sole cost and expense, Employee shall assist theCompany in every proper and lawful way to obtain and from time to time enforce Proprietary Rights relating to Inventionsin any and all countries. To this end, Employee shall execute, verify and deliver such documents and perform such otheracts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining,perfecting, evidencing, sustaining, and enforcing such Proprietary Rights and the assignment thereof. In addition,Employee shall execute, verify, and deliver assignments of such Proprietary Rights to the Company or itsdesignees. Employee’s obligation to assist the Company with respect to Proprietary Rights relating to such Inventions inany and all countries shall continue beyond the termination of Employee’s employment with the Company.4  (c) Employee hereby waives and quitclaims to the Company any and all claims, of any naturewhatsoever, that Employee now or may hereafter have for infringement of any Proprietary Rights assigned hereunder tothe Company.5.03Defend Trade Secrets Act. Employee acknowledges that, pursuant to 18U.S.C. § 1833(b), an individual may not be held liable under any criminal or civil federal or state trade secret law fordisclosure of a trade secret (a) made in confidence to a government official, either directly or indirectly, or to an attorney,solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other documentfiled in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer forretaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney anduse the trade secret information in the court proceeding, so long as any document containing the trade secret is filedunder seal and the individual does not disclose the trade secret except pursuant to court order.6.Non-competition and Non-solicitation Covenants and Adversarial Restrictions.6.01Non-competition. Employee agrees that, during the Term and for twelvemonths after the termination of Employee’s employment for any reason (the “Non-Compete Period”), Employee shall not,directly or indirectly, (a) engage in activities or businesses (including without limitation by owning any interest in,managing, controlling, participating in, consulting with, advising, rendering services for, or in any manner engaging in thebusiness of owning, operating or managing any business) in any geographic location in which the Company, itssubsidiaries or Affiliates engage in, whether through selling, distributing, manufacturing, marketing, purchasing, orotherwise, that compete directly or indirectly with the Company or any of its subsidiaries or Affiliates (“CompetitiveActivities”), it being understood that Competitive Activities as of the date hereof include, without limitation, themanufacture, marketing, license, distribution and sale of licensed pop culture products; or (b) assist any person in anyway to do, or attempt to do, anything prohibited by Section 6.01(a) above. Employee acknowledges (i) that the businessof the Company and its affiliates is global in scope and (ii) notwithstanding the jurisdiction of formation or principal officeof the Company and its affiliates, or the location of any of their respective executives or employees (including, withoutlimitation, Employee), it is expected that the Company and its affiliates will have business activities and have valuablebusiness relationships within their respective industries throughout the United States and abroad.6.02Indirect Competition. Employee further agrees that, during the Term and theNon-Compete Period, he will not, directly or indirectly, assist or encourage any other person in carrying out, direct orindirectly, any activity that would be prohibited by the above provisions of this Section 6 if such activity were carried outby Employee, either directly or indirectly; and in particular, Employee agrees that he will not, directly or indirectly, induceany employee of the Company to carry out, directly or indirectly, any such activity.5  6.03Non-solicitation. Employee further agrees that, during the Term and for aperiod of two years after the termination of his employment (the “Non-Solicitation Period”), he will not, directly orindirectly, assist or encourage any other person in seeking to employ or hire any employee, consultant, advisor or agentof the Company or any of its affiliates or encouraging any such employee, consultant, advisor or agent to discontinueemployment with the Company or any of its affiliates.6.04Non-Disparagement. Employee agrees not to disparage the Company, anyof its products or practices, or any of its directors, officers, agents, representatives, partners, members, equityholders oraffiliates, either orally or in writing, at any time, and the Company shall direct its directors and officers not to disparageEmployee, either orally or in writing, at any time; provided that Employee, the Company and the Company’s directorsand officers may confer in confidence with their respective legal representatives and make truthful statements asrequired by law, or by governmental, regulatory or self-regulatory investigations or as truthful testimony in connectionwith any litigation involving Employee and the Company or its affiliates.6.05Enforceability. If a final and non-appealable judicial determination is madethat any of the provisions of this Section 6 constitutes an unreasonable or otherwise unenforceable restriction againstEmployee, the provisions of this Section 6 will not be rendered void but will be deemed to be modified to the minimumextent necessary to remain in force and effect for the longest period and largest geographic area that would not constitutesuch an unreasonable or unenforceable restriction. Moreover, and without limiting the generality of Section 6,notwithstanding the fact that any provision of this Section 6 is determined to not be enforceable through specificperformance, the Company will nevertheless be entitled to recover monetary damages as a result of Employee’s breachof such provision.6.06Acknowledgement. Employee acknowledges that Employee has carefullyread this Agreement and has given careful consideration to the restraints imposed upon Employee by this Agreement,and is in full accord as to the necessity of such restraints for the reasonable and proper protection of the ConfidentialInformation, business strategies, employee and customer relationships and goodwill of the Company and its subsidiariesand affiliates now existing or to be developed in the future. Employee expressly acknowledges and agrees that eachand every restraint imposed by this Agreement is reasonable with respect to subject matter, time period andgeographical area. Employee further acknowledges that although Employee’s compliance with the covenants containedin Sections 5 and 6 may prevent Employee from earning a livelihood in a business similar to the business of theCompany, Employee’s experience and capabilities are such that Employee has other opportunities to earn a livelihoodand adequate means of support for Employee and Employee’s dependents.7.Termination.7.01Grounds for Termination. Employee’s employment with the Company shallterminate (a) by Employee for Good Reason, (b) by the Company for Cause, (c) by the Employee without Good Reason,(d) by the Company without Cause,6  (e) on account of Employee’s death or disability, or (f) by expiration or non-renewal of the Term. Notwithstanding anytermination of this Agreement and Employee’s employment by the Company, Employee, in consideration of hisemployment hereunder to the date of such termination, shall remain bound by the provisions of this Agreement whichspecifically relate to periods, activities or obligations upon or subsequent to the termination of Employee’s employmentincluding without limitation the provisions of Sections 5, 6 and 8 hereof.7.02Cause Defined. Termination of Employee’s employment by the Company forany of the following reasons shall be deemed termination for “Cause”: (a) gross neglect or willful misconduct byEmployee of Employee’s duties or Employee’s willful failure to carry out, or comply with, in any material respect anylawful and reasonable directive of the Board not inconsistent with the terms of this Agreement; (b) conviction ofEmployee of, or Employee’s plea of no contest, plea of nolo contendere or imposition of adjudicated probation withrespect to, any felony or crime involving moral turpitude or Employee’s indictment for any felony or crime involving moralturpitude; provided if Employee is terminated following such indictment but is found not guilty or the indictment isdismissed, the termination shall be deemed to be a termination without Cause; (c) Employee’s habitual unlawful use(including being under the influence) or possession of illegal drugs on the Company’s premises or while performingEmployee’s duties and responsibilities under this Agreement; (d) Employee’s commission at any time of any act of fraud,embezzlement, misappropriation, material misconduct, or breach of fiduciary duty against the Company (or anypredecessor thereto or successor thereof); or (e) Employee’s material breach of the restrictive covenants in Sections 5and 6 hereof or any other confidentiality, non-compete or non-solicitation covenant; provided that the Company shallprovide Employee with fifteen (15) days prior written notice before any such termination in (a) or (e) (other than to theextent that (a) relates to any fraud or intentional misconduct) with an opportunity to meet with the Board and discuss orcure any such alleged violation.7.03Good Reason Defined. Termination of Employee’s employment byEmployee for any of the following reasons shall be deemed for “Good Reason”: (a) a material adverse change inEmployee’s title or reporting line or material duties, authorities or responsibilities, as determined by the Board (provided,that Employee’s title, reporting line or material duties, authorities or responsibilities shall not be deemed to be materiallyadversely changed solely because the Company (or its successor) is no longer an independently operated public entityor becomes a subsidiary of another entity); (b) a material breach by the Company of any material provision of thisAgreement; (c) a material reduction of Employee’s Base Salary or benefits or target bonus opportunity (other than such areduction that is generally consistent with a general reduction affecting the Company’s other similarly situatedexecutives); (d) failure by the Company to pay any portion of Employee’s earned Base Salary or bonus; or (e) theCompany’s requiring Employee to be headquartered at any office or location more than 50 miles from Everett,Washington, provided that in the case of all the above events, Employee may not resign from his or her employment forGood Reason unless he provides the Company written notice within 90 days after the initial occurrence of the event andat least 60 days prior to7  the date of termination, and the Company has not corrected the event prior to the date of termination.7.04Surrender of Records and Property. Upon termination of his employmentwith the Company for any reason, Employee shall deliver promptly to the Company all records, manuals, books, blankforms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof, which arethe property of the Company or any of its Affiliates or which relate in any way to the business, products, practices ortechniques of the Company or any of its affiliates, and all other property, trade secrets and confidential information of theCompany or any of its affiliates, including, but not limited to, all documents which in whole or in part contain any tradesecrets or confidential information of the Company or any of its Affiliates, which in any of these cases are in hispossession or under his control.7.05Payments Upon Termination. (a) If this Agreement is terminated for anyreason set forth in Section 7, then Employee shall be entitled to receive (i) his earned but unpaid Base Salary throughthe date of the termination, (ii) any accrued and unused vacation or paid time off through the date of termination, (iii)reimbursement of any business expenses incurred in the ordinary course of business through the date of termination thathave not yet been reimbursed pursuant to Section 4.04, and (iv) any earned but unpaid bonus pursuant to Section 4.02for the calendar year prior to termination to the extent not yet paid when due (together, the “Accrued Compensation”).(b) If Employee’s employment is terminated pursuant to Section 7.01(a) or (d) and provided thatEmployee shall have executed and delivered to the Company the a release of claims substantially in the form attachedhereto as Exhibit A (the “Release”) and any period for rescission of such Release shall have expired without Employeehaving rescinding such Release, in addition to the Accrued Compensation, Employee shall be entitled to receive either(i) if Employee has been an employee of the Company or its affiliates for less than two years prior to the date oftermination, continuation of the Base Salary for up to six (6) months from the date of termination, payable in six equalmonthly installments in accordance with the Company’s regular payroll practices, and reimbursement, up to a maximumof six (6) months, of the Company-paid portion of premium payments, as if Employee had remained an active employee,for any COBRA coverage Employee elects, if any; or (ii) if Employee has been an employee of the Company or itsaffiliates for at least two years prior to the date of termination, an amount equal to continuation of the Base Salary for upto twelve (12) months from the date of termination, payable in twelve equal monthly installments in accordance with theCompany’s regular payroll practices, and reimbursement, up to a maximum of twelve (12) months, of the Company-paidportion of premium payments, as if Employee had remained an active employee, for any COBRA coverage Employeeelects, if any.7.06Termination in Connection with a Change in Control. (a) Notwithstanding theforegoing, if Employee’s employment is terminated pursuant to Section 7.01(a) or (d) on or within twelve (12) monthsfollowing a Change in Control, and provided that Employee shall have executed and delivered to the Company theRelease and any period for rescission of such Release shall have expired without Employee8  having rescinding such Release, in addition to the Accrued Compensation but in lieu of any payments or benefitspursuant to Section 7.05(b), Employee shall be entitled to receive an amount equal to continuation of the Base Salary fortwelve (12) months from the date of termination, payable in twelve equal monthly installments in accordance with theCompany’s regular payroll practices, and reimbursement, up to a maximum of twelve (12) months, of the Company-paidportion of premium payments, as if Employee had remained an active employee, for any COBRA coverage Employeeelects, if any. (b) For purposes of this Agreement, a “Change in Control” shall mean, following the Effective Date, (i)a change in ownership or control of Funko, Inc. effected through a transaction or series of transactions (other than anoffering of common stock or units to the general public through a registration statement filed with the Securities andExchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d)and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than Funko, Inc., any oftheir respective subsidiaries, ACON Equity Management, L.L.C., ACON Equity GenPar, L.L.C., any other entity owned orcontrolled by one or more of the managing members or managers of ACON Equity Management, L.L.C. or ACON EquityGenPar, L.L.C. (collectively, “ACON”), any employee benefit plan maintained by Funko, Inc. or any of their respectivesubsidiaries, or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is undercommon control with, Funko, Inc. or ACON), directly or indirectly acquires beneficial ownership (within the meaning ofRule 13d-3 under the Exchange Act) of securities of Funko, Inc. possessing more than fifty percent (50%) of the totalcombined voting power of Funko, Inc.’s securities outstanding immediately after such acquisition; (ii) the majority of themembers of the Board are replaced during any twelve (12) month period by directors whose appointment or election isnot endorsed by a majority of the Board, as applicable, prior to the date of such appointment or election; or (iii) a sale orother disposition of all or substantially all of the Company’s assets in any single transaction or series of relatedtransactions.7.07Mitigation. The amounts set forth in Section 7.05(b) and Section 7.06(a) shallbe reduced by any amount Employee receives as compensation from a subsequent employer during the severanceperiod. 7.08Termination of Offices Held. Upon termination of his employment with theCompany for any reason, Employee agrees that he shall immediately resign from any offices he holds with the Companyor any of its affiliates, including any boards of directors or boards of managers.8.Miscellaneous.8.01Governing Law: Venue. This Agreement is made under and shall begoverned by and construed in accordance with the laws of the State of Washington, regardless of the laws that mightotherwise govern under applicable principles of conflict of law.9  8.02Prior Agreements. This Agreement contains the entire agreement of theparties relating to the subject matter hereof and supersedes all prior agreements and understandings with respect tosuch subject matter, and the parties hereto have made no agreement, representations or warranties relating to thesubject matter of this Agreement which are not set forth herein.8.03Withholding Taxes. The Company may withhold from any payments orbenefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law orgovernmental regulation or ruling.8.04Amendments. No amendments or modifications of this Agreement shall bedeemed effective unless made in writing and signed by the parties hereto.8.05No Waiver. No term or condition of this Agreement shall be deemed to havebeen waived, nor shall there by an estoppel to enforce any provisions of this Agreement, except by a statement in writingsigned by the party against whom enforcement of the waiver or estoppel is sought. Any written waiver shall not bedeemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived andshall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived8.06Section 409A. (a) For purposes of this Agreement,“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the TreasuryRegulations promulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect fromtime to time. The parties intend that any amounts payable hereunder that could constitute “deferred compensation” withinthe meaning of Section 409A will be compliant with Section 409A or exempt from Section 409A. Notwithstanding theforegoing, Employee shall be solely responsible and liable for the satisfaction of all taxes and penalties that may beimposed on or for the account of Employee in connection with this Agreement (including any taxes and penalties underSection 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise holdEmployee (or any beneficiary) harmless from any or all of such taxes or penalties. No provision of this Agreement shallbe interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from theEmployee or any other individual to the Company or any of its affiliates, employees or agents. (b) Notwithstanding anything in this Agreement to the contrary, the following special rule shall apply, ifand to the extent required by Section 409A, in the event that (i) Employee is deemed to be a “specified employee” withinthe meaning of Section 409A(a)(2)(B)(i) of the Code, (ii) amounts or benefits under this Agreement or any other program,plan or arrangement of the Company or a controlled group affiliate thereof are due or payable on account of “separationfrom service” within the meaning of Treasury Regulations Section 1.409A-l(h) and (iii) Employee is employed by a publiccompany or a controlled group affiliate thereof: no payments hereunder that are “deferred compensation” subject toSection 409A shall be made to Employee prior to the date that is six (6) months after the date of Employee’s separationfrom service or, if earlier,10  Employee’s date of death; following any applicable six (6) month delay, all such delayed payments will be paid in asingle lump sum on the earliest permissible payment date, without interest.(c) Each payment made under this Agreement (including each separate installment payment in thecase of a series of installment payments) shall be deemed to be a separate payment for purposes of Section 409A.Amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409Ato the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9)(“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Section409A. For purposes of this Agreement, with respect to payments of any amounts that are considered to be “deferredcompensation” subject to Section 409A, references to “termination of employment,” “termination,” or words and phrasesof similar import, shall be deemed to refer to Employee’s “separation from service” as defined in Section 409A and shallbe interpreted and applied in a manner that is consistent with the requirements of Section 409A.(d) Notwithstanding anything to the contrary in this Agreement, any payment or benefit under thisAgreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-l(b)(9)(v)(A)or (C) (relating to certain reimbursements and in‑kind benefits) shall be paid or provided to Employee only to the extentthat the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar yearfollowing the calendar year in which Employee’s “separation from service” occurs; and provided further that suchexpenses are reimbursed no later than the last day of the third calendar year following the calendar year in whichEmployee’s “separation from service” occurs. To the extent any indemnification payment, expense reimbursement, or theprovision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the priorsentence or otherwise), the amount of any such indemnification payment or expenses eligible for reimbursement, or theprovision of any in-kind benefit, in one calendar year shall not affect the indemnification payment or provision of in-kindbenefits or expenses eligible for reimbursement in any other calendar year (except for any life-time or other aggregatelimitation applicable to medical expenses), and in no event shall any indemnification payment or expenses bereimbursed after the last day of the calendar year following the calendar year in which Employee incurred suchindemnification payment or expenses, and in no event shall any right to indemnification payment or reimbursement or theprovision of any in-kind benefit be subject to liquidation or exchange for another benefit.(e) Notwithstanding anything to the contrary in this Agreement, to the extent that any payments dueunder this Agreement as a result of the Employee’s termination of employment with the Company are subject to theEmployee’s execution and delivery and non-revocation of the Release, (i) no such payments shall be made on or prior tothe sixtieth (60th) day immediately following Employee’s date of termination (the “Release Period”), (ii) the Companyshall deliver the Release to Employee no later than seven (7) days immediately following Employee’s date oftermination, (iii) if, as of the Release Expiration Date, Employee has failed to execute the Release or has timely revokedhis11  acceptance of the Release thereafter, Employee shall not be entitled to any payments or benefits otherwise conditionedon the Release, and (iv) if, as of the Release Expiration Date, Employee has executed the Release and has not revokedhis acceptance of the Release thereafter, any such payments that are delayed pursuant to this Section 8.06(e) shall bepaid in a lump sum on the first regularly scheduled payroll date following the expiration of the Release Period, withoutinterest. For purposes of this Section 8.06(e), “Release Expiration Date” shall mean the date that is twenty-one (21) daysfollowing the date upon which the Company timely delivers the Release to Employee, or, in the event that Employee’stermination of employment is “in connection with an exit incentive or other employment termination program” (as suchphrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days followingsuch delivery date.8.07Compensation Recovery Policy. Employee acknowledges and agrees that,to the extent the Company adopts any clawback or similar policy pursuant to the Dodd-Frank Wall Street Reform andConsumer Protection Act or otherwise, and any rules and regulations promulgated thereunder, he shall take all actionnecessary or appropriate to comply with such policy (including, without limitation, entering into any further agreements,amendments or policies necessary or appropriate to implement and/or enforce such policy with respect to past, presentand future compensation, as appropriate).8.08Severability. To the extent any provision of this Agreement shall be invalid orunenforceable, it shall be considered deleted herefrom, and the remainder of such provision and of this Agreement shallbe unaffected and shall continue in full force and effect. In furtherance and not in limitation of the foregoing, should theduration or geographical extent of, or business activities covered by, any provision of this Agreement be in excess of thatwhich is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration,extent or activities which may validly and enforceably be covered. Employee acknowledges the uncertainty of the law inthis respect and expressly stipulates that this Agreement be given the construction which renders its provisions valid andenforceable to the maximum extent (not exceeding its express terms) possible under applicable law.8.09Assignment. The Company may transfer and assign this Agreement and theCompany’s rights and obligations hereunder to another entity that is substantially comparable to the Company in itsfinancial strength and ability to perform the Company’s obligations under this Agreement. After any such assignment bythe Company, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter bedeemed to be the Company for the purposes of all provisions of this Agreement including this Section 8. Neither thisAgreement nor the rights or obligations hereunder of the parties hereto shall be transferable or assignable by Employee,except in accordance with the laws of descent and distribution.8.10Injunctive Relief. Employee agrees that it would be difficult to compensatethe Company fully for damages for any violation of the provisions of this Agreement, including without limitation theprovisions of Sections 5 and 6. Accordingly,12  Employee specifically agrees that the Company shall be entitled to temporary and permanent injunctive relief to enforcethe provisions of this Agreement and that such relief may be granted without the necessity of proving actualdamages. This provision with respect to injunctive relief shall not, however, diminish the right of the Company to claimand recover damages in addition to injunctive relief.8.11Notices. Any notice, payment, demand or communication required orpermitted to be given by the provisions of this Agreement shall be deemed to have been effectively given and receivedon the date personally delivered to the respective party to whom it is directed, or five (5) days after the date whendeposited by registered or certified mail, with postage and charges prepaid and addressed to such party at its addressbelow its signature. Any party may change its address by delivering a written change of address to all of the otherparties in the manner set forth in this Section 8.11.8.12Section 280G. Notwithstanding any other provision of this Agreement or anyother plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided bythe Company or its affiliates to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise(“Covered Payments”) constitute parachute payments within the meaning of Section 280G of the Code (such payments,the “Parachute Payments”) and would, but for this Section 8.12, be subject to the excise tax imposed under Section 4999of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest orpenalties with respect to such taxes (collectively, the “Excise Tax”), or not be deductible under Section 280G of theCode, then such Covered Payments shall be reduced to the minimum extent necessary to ensure that no portion of theCovered Payments is subject to the Excise Tax. The Covered Payments shall be reduced in a manner that maximizesEmployee’s economic position. In applying this principle, the reduction shall be made in a manner consistent with therequirements of Section 409A, to the extent applicable, and where two or more economically equivalent amounts aresubject to reduction but payable at different times, such amounts payable at the later time shall be reduced first but notbelow zero. [Signatures on following page] 13  IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth in the firstparagraph. FUNKO, INC. By:/s/Brian MariottiName: Title: /s/Tracy DawTracy Daw [Signature Page to the Employment Agreement]  Exhibit AWAIVER AND RELEASE OF CLAIMS AGREEMENT In exchange for the severance payments and benefits provided to me pursuant to Section 7.05 and7.06 (collectively, the “Severance Benefits”) of that certain Employment Agreement, dated as of October 20, 2017, by andamong Funko, Inc. (“Company”) and Tracy Daw (the “Employee”) (the “Employment Agreement”), the Employee freelyand voluntarily agrees to enter into and be bound by this Waiver and Release of Claims Agreement (this “Release”). 1.General Release. The Employee, on his own behalf and on behalf of hisspouse, child or children (if any), heirs, personal representative, executors, administrators, successors, assigns andanyone else claiming through him (the “Releasors”), hereby releases and discharges forever Funko, Inc., and itsaffiliates, and each of their respective past, present or future parent, affiliated, related, and subsidiary entities and eachof their respective past, present or future directors, officers, employees, trustees, agents, attorneys, administrators,plans, plan administrators, insurers, equityholders, members, representatives, predecessors, successors and assigns,and all Persons acting by, through, under or in concert with them (hereinafter collectively referred to as the “ReleasedParties”), from and against all liabilities, claims, demands, liens, causes of action, charges, suits, complaints,grievances, contracts, agreements, promises, obligations, costs, losses, damages, injuries, attorneys’ fees and otherlegal responsibilities (collectively referred to as “Claims”), of any form whatsoever (whether or not relating toEmployee's employment with the Company), including, but not limited to, any claims in law, equity, contract or tort,claims under any policy, agreement, understanding or promise, written or oral, formal or informal, between theEmployee and the Company or any of the other Released Parties, and any claims under the Civil Rights Act of 1866,the Civil Rights Act of 1871, the Civil Rights Act of 1964, the Americans With Disabilities Act of 1990, the AgeDiscrimination in Employment Act of 1967 (“ADEA”), the Sarbanes-Oxley Act of 2002, the Securities Act of 1933, theSecurities Exchange Act of 1934 (the “Exchange Act”), the Employee Retirement Income Security Act of 1974, theRehabilitation Act of 1973, the Family and Medical Leave Act of 1993, the Genetic Information Nondiscrimination Act of2008, the Worker Adjustment and Retraining Notification Act of 1988, the Delaware Discrimination in Employment Act,the Delaware Persons with Disabilities Employment Protection Act, the Delaware Whistleblowers’ Protection Act, theDelaware Wage Payment and Collection Act, the Delaware Fair Employment Practices Act, Delaware's social medialaw, the Washington Industrial Welfare Act, the Washington Minimum Wage Act, the Washington Wage Payment Act,the Washington Wage Rebate Act, the Washington Law Against Discrimination and the Washington Leave Law, aseach may have been amended from time to time, or any other federal, state or local statute, regulation, law, rule,ordinance or constitution, or common law, whether known or unknown, unforeseen, unanticipated, unsuspected orlatent, that the Employee or any of the Releasors now possess or have a right to, or have at any time heretofore ownedor held, or may at any time own or hold by reason of any matter or thing arising from any cause whatsoever prior to thedate of execution of this Release, and without limiting the generality of the foregoing, from all claims, demands  and causes of action based upon, relating to, or arising out of: (a) the Employment Agreement; (b) the Employee’semployment or other relationship with any of the Released Parties or the termination thereof; and (c) the Employee’sstatus as a holder of securities of any of the Released Parties. This Release includes, but is not limited to, all wrongfultermination and “constructive discharge” claims, all discrimination claims, all claims relating to any contracts ofemployment, whether express or implied, any covenant of good faith and fair dealing, whether express or implied, andany tort of any nature. This Release is for any relief, no matter how denominated, including but not limited to wages,back pay, front pay, benefits, compensatory, liquidated or punitive damages and attorneys’ fees. The Employeeacknowledges and reaffirms Employee’s obligations under the Employment Agreement with the Company datedOctober 20, 2017, a signed copy of which is attached hereto as Exhibit A, including but not limited to Sections 5 and 6thereof.2.Covenant Not To Sue. The Employee represents and covenants that he hasnot filed, initiated or caused to be filed or initiated any Claim, charge, suit, complaint, grievance, action, cause of action orproceeding against the Company or any of other the Released Parties. Except to the extent that such waiver isprecluded by law, the Employee further promises and agrees that he will not file, initiate or cause to be filed or initiatedany Claim, charge, suit, complaint, grievance, action, cause of action or proceeding based upon, arising out of or relatingto any Claim released hereunder, nor shall the Employee participate, assist or cooperate in any Claim, charge, suit,complaint, grievance, action, cause of action or proceeding regarding any of the Released Parties relating to any Claimsreleased hereunder, whether before a court or administrative agency or otherwise, unless required to do so by law. 3.Exclusions. Notwithstanding the foregoing, the Employee does not release hisrights to receive the Severance Benefits or any right that may not be released by private agreement. In addition, thisRelease will not prevent the Employee from (i) filing a charge or complaint with the Equal Employment OpportunityCommission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities andExchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”)or (ii) reporting possible violations of federal law or regulation to, otherwise communicating with or participating in anyinvestigation or proceeding that may be conducted by, or providing documents and other information, without notice tothe Company, to, any Governmental Agency or entity, including in accordance with the provisions of and rulespromulgated under Section 21F of the Exchange Act or Section 806 of the Sarbanes-Oxley Act of 2002, as each mayhave been amended from time to time, or any other whistleblower protection provisions of state or federal law orregulation. This Agreement does not limit Employee’s right to receive an award for information provided to anyGovernment Agencies; provided, however, that the Employee acknowledges and agrees that any Claim by him, orbrought on his behalf, for damages in connection with such a charge or investigation filed with the Equal EmploymentOpportunity Commission would be and hereby is barred. 4.No Assignment. The Employee represents and warrants that he has made noassignment or other transfer, and covenants that he will make no assignment  or other transfer, of any interest in any Claim that he may have against any of the Released Parties. 5.Indemnification of Released Parties. The Employee agrees to indemnify andhold harmless the Released Parties, and each of them, against any loss, claim, demand, damage, expenses or any otherliability whatsoever, including reasonable attorneys’ fees and costs, resulting from: (i) any breach of this Release by himor his successors in interest; (ii) any assignment or transfer, or attempted assignment or transfer, of any Claims releasedhereunder; or (iii) any action or proceeding brought by him or his successors in interest, if such action or proceedingarises out of, is based upon, or is related to any Claims released hereunder. This indemnity does not require payment asa condition precedent to recovery by any of the Released Parties. 6.Acknowledgments. The Employee acknowledges that the Company deliveredthis Release to him on [_____]. The Employee agrees that the Company has advised him to consult with an attorneybefore executing this Release. The Employee agrees that he has had the opportunity to consult with counsel, if hechose to do so, and that the Employee has had a sufficient and reasonable amount of time to read and consider thisRelease before executing it. The Employee acknowledges that he is responsible for any costs and fees resulting fromhis attorney reviewing this Release. The Employee agrees that he has carefully read this Release and knows itscontents, and that he signs this Release voluntarily, with a full understanding of its significance, and intending to bebound by its terms. The Employee acknowledges that the provision of the Severance Benefits is in exchange for thepromises in the Release and is not normally available under Company policy to employees who resign or are terminatedby the Company, and that, but for his execution of this Release, he would not be entitled to receive the SeveranceBenefits. The Employee further acknowledges that the provision of the Severance Benefits does not constitute anadmission by the Released Parties of liability or of violation of any applicable law or regulation. The Company and itsaffiliates expressly deny any liability or alleged violation and state that the Severance Benefits are being provided solelyfor the purpose of compromising any and all claims of the Employee without the cost and burden of litigation. 7.ADEA Provisions. The Employee understands that this Release includes arelease of claims arising under ADEA. The Employee acknowledges and agrees that he has had at least 21 days afterthe date of his receipt of this Release (such period, the “Consideration Period”) to review this Release and consider itsterms before signing this Release and that the Consideration Period will not be affected or extended by any changes,whether material or immaterial, that might be made to this Release. The Employee further acknowledges and agreesthat he understands that he may use as much or all of such 21-day period as he wishes before signing, and warrants thathe has done so. The Employee may revoke and cancel this Release in writing at any time within seven days after hisexecution of this Release (such seven-day period, the “Revocation Period”) by providing notice of revocation to[_____]. This Release shall not become effective and enforceable until after the expiration of the Revocation Period;after such  time, if there has been no revocation, this Release shall immediately be fully effective and enforceable. 8.Consequences of Breach or Revocation. The Employee agrees that,notwithstanding anything to the contrary in this Release, in the event that he breaches any of the terms of the Release, orrevokes the Release pursuant to Section 7, he shall forfeit the Severance Benefits and reimburse the Company for anyportion of the Severance Benefits that have already been paid, and, in the event of such a breach, he shall reimburse theCompany for any expenses or damages incurred as a result of such breach. 9.Severability. If any provision of the Release is declared invalid orunenforceable, the remaining portions of the Release shall not be affected thereby and shall be enforced. 10.Governing Law: Venue. This Agreement is made under and shall begoverned by and construed in accordance with the laws of the State of Delaware.  IN WITNESS WHEREOF, the undersigned has signed and executed this Release on the date set forthbelow as an expression of his intent to be bound by the foregoing terms of this Release.________________________________Date: ____________________________  Exhibit 10.13EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 20th day of October,2017 (the “Effective Date”), by and between Andrew Perlmutter, a Washington resident (“Employee”), and Funko, Inc., aDelaware corporation (any of its Affiliates as may employ the Employee from time to time, and any successor(s) thereto,the “Company”).RECITALS WHEREAS, the Company desires to enter into this Agreement with Employee, pursuant to which the Companywill employ Employee on the terms set forth in this Agreement, and Employee desires to be employed by the Companypursuant to the terms and conditions of this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is herebyacknowledged, the parties agree as follows:1.Employment. The Company agrees to employ Employee on the terms and conditions set forthin this Agreement, and Employee accepts such employment and agrees to perform the services and duties for theCompany as herein provided for the period and upon the other terms and conditions set forth in this Agreement.2.Term. Unless earlier terminated pursuant to the terms of Section 7 hereof, Employee shall beemployed by the Company for the period commencing as of the Effective Date and ending on the third (3rd) anniversaryof the Effective Date (the “Initial Term”), subject to automatic renewal periods for up to two additional one (1)-yearperiods, unless either party provides the other party with ninety (90) days’ advance written notice prior to the end of theInitial Term or any such renewal period, as applicable, of such party’s intent not to renew (the Initial Term and any suchrenewal period, the “Term”). 3.Position and Duties.3.01Title. During the Term, Employee agrees to serve as the Company’sPresident.3.02Duties. During the Term, Employee agrees to serve the Company, andEmployee will faithfully and to the best of his ability discharge the duties associated with his position and will devote hisfull time during business hours for the Company and to the business and affairs of the Company, its direct and indirectsubsidiaries and its affiliates. Employee hereby confirms that during the Term, he will not render or perform services forany other corporation, firm, entity or person. Employee recognizes that he will be required to travel to perform certain ofhis duties. Employee shall report to, and be subject to the direction of, the Company’s President, or if determined by theBoard of1  Directors (the “Board”), the Board or the Chief Executive Officer. Notwithstanding the foregoing, Employee shall bepermitted to participate in, and be involved with, such community, educational, charitable, professional, and religiousorganizations so long as such participation does not, in the judgment of the Board interfere with the performance of orcreate a potential conflict with Employee’s duties hereunder.4.Compensation.4.01Base Salary. During the Term, the Company shall pay to Employee a baseannual salary of Five Hundred Thousand Dollars ($500,000.00) (“Base Salary”), which salary shall be paid inaccordance with the Company’s normal payroll procedures and policies.4.02Annual Bonus. During the Term, Employee shall be eligible to receive abonus pursuant to an annual performance based incentive compensation program to be established by the Board, withEmployee’s annual target to be no less than 100% of Employee’s then Base Salary; provided, however, that theCompany reserves the right to establish a lesser target if done in good faith and as a result of Company’s legitimatebusiness needs. The Employee’s annual bonus shall not exceed 150% his Base Salary. Notwithstanding the preceding,Employee’s bonus, if any, may be below (including zero), at, or above, the annual target based upon the achievement ofthe performance objectives, as determined by the Company in its sole discretion, and payment of any bonus described inthis Section 4.02 shall be according to the established plan and subject to Employee’s continued employment by theCompany through the date the bonus is paid pursuant to the annual performance based incentive compensationprogram.4.03Additional Cash Bonus. During the Term, Employee shall additionally beeligible to receive an annual additional cash bonus (the “Additional Cash Bonus”), subject to the Company’sperformance and key performance indicators, as determined by the Company in its sole discretion with Employee’sannual target for such Additional Cash Bonus to be $1 million. The Employee’s Additional Cash Bonus shall not exceed$1,250,000 per year.4.04Equity Awards. Following the Effective Date, the Employee shall be eligibleto be issued either (i) 123,000 options to purchase Class A Common Stock of the Company (the “Options”), subject to theCompany undergoing an initial public offering of the Company’s common stock (the “IPO”) on or prior to December 31,2017, or (ii) 600 Common Units (the “Profits Interests”) of Funko Acquisition Holdings, LLC (the “Parent”), in the event theIPO does not occur for any reason on or prior to December 31, 2017. The Options will be subject to an incentive awardplan, to be adopted by the Company and an award agreement. The Profits Interests will be subject to the Parent’slimited liability company agreement and an award agreement to be adopted thereunder. The Options or Profits Interests,as applicable, will be subject to vesting with 25% of such award vesting as of the date of grant and the remaining 75% ofsuch award vesting ratably on the first three anniversaries of the date of grant. 2  4.05Benefits. During the Term, Employee may participate in all employee benefitplans or programs of the Company consistent with such plans and programs of the Company. The Company does notguarantee the adoption or continuance of any particular employee benefit plan or program during the Term, andEmployee’s participation in any such plan or program shall be subject to the provisions, rules and regulations applicablethereto.4.06Expenses; Contributions. During the Term, the Company agrees toreimburse all reasonable business expenses incurred by Employee consistent with the Company’s policies regardingreimbursement in the performance of Employee’s duties under this Agreement.4.07Vacation and Sick leave. During the Term, Employee shall be entitled tovacation, sick leave and holidays in accordance with the policy of the Company as to its employees.4.08Indemnification and Additional Insurance. The Company shall indemnifyEmployee with respect to matters relating to Employee’s services as an officer of the Company or any of its affiliates,occurring during the course and scope of Employee’s employment with the Company to the extent required by, andpursuant to the provisions in the, Delaware law. The Company may also cover Employee under a policy of officers’ anddirectors’ liability insurance providing coverage that is comparable to that provided now or hereafter to other seniorexecutives of the Company.5.Confidential Information and Proprietary Information.5.01Confidential Information. During the Term and at all times thereafter,Employee shall not divulge, furnish or make accessible to anyone or use in any way (other than in the ordinary course ofthe business of the Company or any of its affiliates) any confidential or secret knowledge or information of the Companyor any of its affiliates which Employee has acquired or become acquainted with prior to the termination of the period ofhis employment by the Company (including employment by the Company or any affiliated companies prior to the date ofthis Agreement), whether developed by himself or by others, including, without limitation, any trade secrets, confidentialor secret designs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly orindirectly useful in any aspect of the business of the Company or any of its affiliates, any customer or supplier lists of theCompany or any of its affiliates, any confidential or secret development or research work of the Company or any of itsaffiliates, or any other confidential information or secret aspect of the business of the Company or any of its affiliates(collectively, “Confidential Information”). Employee acknowledges that (a) the Company and its affiliates have expendedand shall continue to expend substantial amounts of time, money and effort to develop business strategies, employeeand customer relationships and goodwill and build an effective organization, (b) Employee is and shall become familiarwith the Company’s and its affiliates’ Confidential Information, including trade secrets, and that Employee’s services areof special, unique and extraordinary value to the Company and its affiliates, (c) the above-described knowledge orinformation constitutes a unique and valuable asset of the Company and its affiliates3  and the Company and its affiliates have a legitimate business interest and right in protecting its Confidential Information,business strategies, employee and customer relationships and goodwill and (d) any disclosure or other use of suchknowledge or information other than for the sole benefit of the Company and any of its affiliates would be wrongful andwould cause irreparable harm to the Company and any of its affiliates. However, the foregoing shall not apply to anyknowledge or information which is now published or which subsequently becomes generally publicly known in the formin which it was obtained from the Company or any of its affiliates, other than as a direct or indirect result of the breach ofthis Agreement by Employee.5.02Proprietary Information. (a) Employee agrees that the results and proceedsof Employee’s services for the Company or its affiliates (including, but not limited to, any trade secrets, products,services, processes, know-how, designs, developments, innovations, analyses, drawings, reports, techniques, formulas,methods, developmental or experimental work, improvements, discoveries, inventions, ideas, source and object codes,programs, matters of a literary, musical, dramatic or otherwise creative nature, writings and other works of authorship)resulting from services performed while an employee of the Company and any works in progress, whether or notpatentable or registrable under copyright or similar statutes, that were made, developed, conceived or reduced topractice or learned by Employee, either alone or jointly with others (collectively, “Inventions”), shall be works-made-for-hire and the Company (or, if applicable or as directed by the Company or any of its affiliates) shall be deemed the soleowner throughout the universe of any and all trade secret, patent, copyright and other intellectual property rights(collectively, “Proprietary Rights”) of whatsoever nature therein, whether or not now or hereafter known, existing,contemplated, recognized or developed, with the right to use the same in perpetuity in any manner the Companydetermines in its sole discretion, without any further payment to Employee whatsoever. If, for any reason, any of suchresults and proceeds shall not legally be a work-made-for-hire and/or there are any Proprietary Rights which do notaccrue to the Company (or, as the case may be, any of its affiliates) under the immediately preceding sentence, thenEmployee hereby irrevocably assigns and agrees to assign any and all of Employee’s right, title and interest thereto,including any and all Proprietary Rights of whatsoever nature therein, whether or not now or hereafter known, existing,contemplated, recognized or developed, to the Company (or, if applicable or as directed by the Company or any of itsaffiliates), and the Company or its affiliates shall have the right to use the same in perpetuity throughout the universe inany manner determined by the Company or such affiliates without any further payment to Employee whatsoever. As toany Invention that Employee is required to assign, Employee shall promptly and fully disclose to the Company allinformation known to Employee concerning such Invention.(b) Employee agrees that, from time to time, as may be requested by the Company and at theCompany’s sole cost and expense, Employee shall do any and all things that the Company may reasonably deem usefulor desirable to establish or document the Company’s exclusive ownership throughout the United States of America orany other country of any and all Proprietary Rights in any such Inventions, including the execution of appropriatecopyright and/or patent applications or assignments. To the extent Employee has any Proprietary Rights in theInventions that cannot be assigned in4  the manner described above, Employee unconditionally and irrevocably waives the enforcement of such ProprietaryRights. This Section 5.02 is subject to and shall not be deemed to limit, restrict or constitute any waiver by the Companyof any Proprietary Rights of ownership to which the Company may be entitled by operation of law by virtue of theCompany’s being Employee’s employer. Employee further agrees that, from time to time, as may be requested by theCompany and at the Company’s sole cost and expense, Employee shall assist the Company in every proper and lawfulway to obtain and from time to time enforce Proprietary Rights relating to Inventions in any and all countries. To this end,Employee shall execute, verify and deliver such documents and perform such other acts (including appearances as awitness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining,and enforcing such Proprietary Rights and the assignment thereof. In addition, Employee shall execute, verify, anddeliver assignments of such Proprietary Rights to the Company or its designees. Employee’s obligation to assist theCompany with respect to Proprietary Rights relating to such Inventions in any and all countries shall continue beyond thetermination of Employee’s employment with the Company.(c) Employee hereby waives and quitclaims to the Company any and all claims, of any naturewhatsoever, that Employee now or may hereafter have for infringement of any Proprietary Rights assigned hereunder tothe Company.5.03Defend Trade Secrets Act. Employee acknowledges that, pursuant to 18U.S.C. § 1833(b), an individual may not be held liable under any criminal or civil federal or state trade secret law fordisclosure of a trade secret (a) made in confidence to a government official, either directly or indirectly, or to an attorney,solely for the purpose of reporting or investigating a suspected violation of law or (b) in a complaint or other documentfiled in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer forretaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney anduse the trade secret information in the court proceeding, so long as any document containing the trade secret is filedunder seal and the individual does not disclose the trade secret except pursuant to court order.6.Non-competition and Non-solicitation Covenants and Adversarial Restrictions.6.01Non-competition. Employee agrees that, during the Term and for twelvemonths after the termination of Employee’s employment for any reason (the “Non-Compete Period”), Employee shall not,directly or indirectly, (a) engage in activities or businesses (including without limitation by owning any interest in,managing, controlling, participating in, consulting with, advising, rendering services for, or in any manner engaging in thebusiness of owning, operating or managing any business) in any geographic location in which the Company, itssubsidiaries or Affiliates engage in, whether through selling, distributing, manufacturing, marketing, purchasing, orotherwise, that compete directly or indirectly with the Company or any of its subsidiaries or Affiliates (“CompetitiveActivities”), it being understood that Competitive Activities as of the date hereof include, without limitation, themanufacture, marketing, license, distribution and5  sale of licensed pop culture products; or (b) assist any person in any way to do, or attempt to do, anything prohibited bySection 6.01(a) above. Employee acknowledges (i) that the business of the Company and its affiliates is global in scopeand (ii) notwithstanding the jurisdiction of formation or principal office of the Company and its affiliates, or the location ofany of their respective executives or employees (including, without limitation, Employee), it is expected that theCompany and its affiliates will have business activities and have valuable business relationships within their respectiveindustries throughout the United States and abroad.6.02Indirect Competition. Employee further agrees that, during the Term and theNon-Compete Period, he will not, directly or indirectly, assist or encourage any other person in carrying out, direct orindirectly, any activity that would be prohibited by the above provisions of this Section 6 if such activity were carried outby Employee, either directly or indirectly; and in particular, Employee agrees that he will not, directly or indirectly, induceany employee of the Company to carry out, directly or indirectly, any such activity.6.03Non-solicitation. Employee further agrees that, during the Term and for aperiod of two years after the termination of his employment (the “Non-Solicitation Period”), he will not, directly orindirectly, assist or encourage any other person in seeking to employ or hire any employee, consultant, advisor or agentof the Company or any of its affiliates or encouraging any such employee, consultant, advisor or agent to discontinueemployment with the Company or any of its affiliates.6.04Non-Disparagement. Employee agrees not to disparage the Company, anyof its products or practices, or any of its directors, officers, agents, representatives, partners, members, equityholders oraffiliates, either orally or in writing, at any time, and the Company shall direct its directors and officers not to disparageEmployee, either orally or in writing, at any time; provided that Employee, the Company and the Company’s directorsand officers may confer in confidence with their respective legal representatives and make truthful statements asrequired by law, or by governmental, regulatory or self-regulatory investigations or as truthful testimony in connectionwith any litigation involving Employee and the Company or its affiliates.6.05Enforceability. If a final and non-appealable judicial determination is madethat any of the provisions of this Section 6 constitutes an unreasonable or otherwise unenforceable restriction againstEmployee, the provisions of this Section 6 will not be rendered void but will be deemed to be modified to the minimumextent necessary to remain in force and effect for the longest period and largest geographic area that would not constitutesuch an unreasonable or unenforceable restriction. Moreover, and without limiting the generality of Section 6,notwithstanding the fact that any provision of this Section 6 is determined to not be enforceable through specificperformance, the Company will nevertheless be entitled to recover monetary damages as a result of Employee’s breachof such provision.6.06Acknowledgement. Employee acknowledges that Employee has carefullyread this Agreement and has given careful consideration to the restraints6  imposed upon Employee by this Agreement, and is in full accord as to the necessity of such restraints for the reasonableand proper protection of the Confidential Information, business strategies, employee and customer relationships andgoodwill of the Company and its subsidiaries and affiliates now existing or to be developed in the future. Employeeexpressly acknowledges and agrees that each and every restraint imposed by this Agreement is reasonable with respectto subject matter, time period and geographical area. Employee further acknowledges that although Employee’scompliance with the covenants contained in Sections 5 and 6 may prevent Employee from earning a livelihood in abusiness similar to the business of the Company, Employee’s experience and capabilities are such that Employee hasother opportunities to earn a livelihood and adequate means of support for Employee and Employee’s dependents.7.Termination.7.01Grounds for Termination. Employee’s employment with the Company shallterminate (a) by Employee for Good Reason, (b) by the Company for Cause, (c) by the Employee without Good Reason,(d) by the Company without Cause, (e) on account of Employee’s death or disability, or (f) by expiration or non-renewalof the Term. Notwithstanding any termination of this Agreement and Employee’s employment by the Company,Employee, in consideration of his employment hereunder to the date of such termination, shall remain bound by theprovisions of this Agreement which specifically relate to periods, activities or obligations upon or subsequent to thetermination of Employee’s employment including without limitation the provisions of Sections 5, 6 and 8 hereof.7.02Cause Defined. Termination of Employee’s employment by the Company forany of the following reasons shall be deemed termination for “Cause”: (a) gross neglect or willful misconduct byEmployee of Employee’s duties or Employee’s willful failure to carry out, or comply with, in any material respect anylawful and reasonable directive of the Board not inconsistent with the terms of this Agreement; (b) conviction ofEmployee of, or Employee’s plea of no contest, plea of nolo contendere or imposition of adjudicated probation withrespect to, any felony or crime involving moral turpitude or Employee’s indictment for any felony or crime involving moralturpitude; provided if Employee is terminated following such indictment but is found not guilty or the indictment isdismissed, the termination shall be deemed to be a termination without Cause; (c) Employee’s habitual unlawful use(including being under the influence) or possession of illegal drugs on the Company’s premises or while performingEmployee’s duties and responsibilities under this Agreement; (d) Employee’s commission at any time of any act of fraud,embezzlement, misappropriation, material misconduct, or breach of fiduciary duty against the Company (or anypredecessor thereto or successor thereof); or (e) Employee’s material breach of the restrictive covenants in Sections 5and 6 hereof or any other confidentiality, non-compete or non-solicitation covenant; provided that the Company shallprovide Employee with fifteen (15) days prior written notice before any such termination in (a) or (e) (other than to theextent that (a) relates to any fraud or intentional misconduct) with an opportunity to meet with the Board and discuss orcure any such alleged violation.7  7.03Good Reason Defined. Termination of Employee’s employment byEmployee for any of the following reasons shall be deemed for “Good Reason”: (a) a material adverse change inEmployee’s title or reporting line or material duties, authorities or responsibilities, as determined by the Board (provided,that Employee’s title, reporting line or material duties, authorities or responsibilities shall not be deemed to be materiallyadversely changed solely because the Company (or its successor) is no longer an independently operated public entityor becomes a subsidiary of another entity); (b) a material breach by the Company of any material provision of thisAgreement; (c) a material reduction of Employee’s Base Salary or benefits or target bonus opportunity (other than such areduction that is generally consistent with a general reduction affecting the Company’s other similarly situatedexecutives); (d) failure by the Company to pay any portion of Employee’s earned Base Salary or bonus; or (e) theCompany’s requiring Employee to be headquartered at any office or location more than 50 miles from Everett,Washington, provided that in the case of all the above events, Employee may not resign from his or her employment forGood Reason unless he provides the Company written notice within 90 days after the initial occurrence of the event andat least 60 days prior to the date of termination, and the Company has not corrected the event prior to the date oftermination.7.04Surrender of Records and Property. Upon termination of his employmentwith the Company for any reason, Employee shall deliver promptly to the Company all records, manuals, books, blankforms, documents, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof, which arethe property of the Company or any of its Affiliates or which relate in any way to the business, products, practices ortechniques of the Company or any of its affiliates, and all other property, trade secrets and confidential information of theCompany or any of its affiliates, including, but not limited to, all documents which in whole or in part contain any tradesecrets or confidential information of the Company or any of its Affiliates, which in any of these cases are in hispossession or under his control.7.05Payments Upon Termination. (a) If this Agreement is terminated for anyreason set forth in Section 7, then Employee shall be entitled to receive (i) his earned but unpaid Base Salary throughthe date of the termination, (ii) any accrued and unused vacation or paid time off through the date of termination, (iii)reimbursement of any business expenses incurred in the ordinary course of business through the date of termination thathave not yet been reimbursed pursuant to Section 4.06, and (iv) any earned but unpaid bonus pursuant to Section 4.02and 4.03 for the calendar year prior to termination to the extent not yet paid when due (together, the “AccruedCompensation”).(b) If Employee’s employment is terminated pursuant to Section 7.01(a) or (d) and provided thatEmployee shall have executed and delivered to the Company the a release of claims substantially in the form attachedhereto as Exhibit A (the “Release”) and any period for rescission of such Release shall have expired without Employeehaving rescinding such Release, in addition to the Accrued Compensation, Employee shall be entitled to receive either(i) if Employee has been an employee of the Company or its affiliates for less than two years prior to the date oftermination, continuation of the Base Salary for up to six (6) months from the date of termination, payable in six equal8  monthly installments in accordance with the Company’s regular payroll practices, and reimbursement, up to a maximumof six (6) months, of the Company-paid portion of premium payments, as if Employee had remained an active employee,for any COBRA coverage Employee elects, if any; or (ii) if Employee has been an employee of the Company or itsaffiliates for at least two years prior to the date of termination, an amount equal to continuation of the Base Salary for upto twelve (12) months from the date of termination, payable in twelve equal monthly installments in accordance with theCompany’s regular payroll practices, and reimbursement, up to a maximum of twelve (12) months, of the Company-paidportion of premium payments, as if Employee had remained an active employee, for any COBRA coverage Employeeelects, if any.7.06Termination in Connection with a Change in Control. (a) Notwithstanding theforegoing, if Employee’s employment is terminated pursuant to Section 7.01(a) or (d) on or within twelve (12) monthsfollowing a Change in Control, and provided that Employee shall have executed and delivered to the Company theRelease and any period for rescission of such Release shall have expired without Employee having rescinding suchRelease, in addition to the Accrued Compensation but in lieu of any payments or benefits pursuant to Section 7.05(b),Employee shall be entitled to receive an amount equal to continuation of the Base Salary for twelve (12) months from thedate of termination, payable in twelve equal monthly installments in accordance with the Company’s regular payrollpractices, and reimbursement, up to a maximum of twelve (12) months, of the Company-paid portion of premiumpayments, as if Employee had remained an active employee, for any COBRA coverage Employee elects, if any. (b) For purposes of this Agreement, a “Change in Control” shall mean, following the Effective Date, (i)a change in ownership or control of Funko, Inc. effected through a transaction or series of transactions (other than anoffering of common stock or units to the general public through a registration statement filed with the Securities andExchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d)and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than Funko, Inc., any oftheir respective subsidiaries, ACON Equity Management, L.L.C., ACON Equity GenPar, L.L.C., any other entity owned orcontrolled by one or more of the managing members or managers of ACON Equity Management, L.L.C. or ACON EquityGenPar, L.L.C. (collectively, “ACON”), any employee benefit plan maintained by Funko, Inc. or any of their respectivesubsidiaries, or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is undercommon control with, Funko, Inc. or ACON), directly or indirectly acquires beneficial ownership (within the meaning ofRule 13d-3 under the Exchange Act) of securities of Funko, Inc. possessing more than fifty percent (50%) of the totalcombined voting power of Funko, Inc.’s securities outstanding immediately after such acquisition; (ii) the majority of themembers of the Board are replaced during any twelve (12) month period by directors whose appointment or election isnot endorsed by a majority of the Board, as applicable, prior to the date of such appointment or election; or (iii) a sale orother disposition of all or substantially all of the Company’s assets in any single transaction or series of relatedtransactions.9  7.07Mitigation. The amounts set forth in Section 7.05(b) and Section 7.06(a) shallbe reduced by any amount Employee receives as compensation from a subsequent employer during the severanceperiod. 7.08Termination of Offices Held. Upon termination of his employment with theCompany for any reason, Employee agrees that he shall immediately resign from any offices he holds with the Companyor any of its affiliates, including any boards of directors or boards of managers.8.Miscellaneous.8.01Governing Law: Venue. This Agreement is made under and shall begoverned by and construed in accordance with the laws of the State of Washington, regardless of the laws that mightotherwise govern under applicable principles of conflict of law.8.02Prior Agreements. This Agreement contains the entire agreement of theparties relating to the subject matter hereof and supersedes all prior agreements and understandings with respect tosuch subject matter, and the parties hereto have made no agreement, representations or warranties relating to thesubject matter of this Agreement which are not set forth herein.8.03Withholding Taxes. The Company may withhold from any payments orbenefits payable under this Agreement all federal, state, city or other taxes as shall be required pursuant to any law orgovernmental regulation or ruling.8.04Amendments. No amendments or modifications of this Agreement shall bedeemed effective unless made in writing and signed by the parties hereto.8.05No Waiver. No term or condition of this Agreement shall be deemed to havebeen waived, nor shall there by an estoppel to enforce any provisions of this Agreement, except by a statement in writingsigned by the party against whom enforcement of the waiver or estoppel is sought. Any written waiver shall not bedeemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived andshall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived8.06Section 409A. (a) For purposes of this Agreement, “Section 409A” meansSection 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulationspromulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect from time to time.The parties intend that any amounts payable hereunder that could constitute “deferred compensation” within themeaning of Section 409A will be compliant with Section 409A or exempt from Section 409A. Notwithstanding theforegoing, Employee shall be solely responsible and liable for the satisfaction of all taxes and penalties that may beimposed on or for the account of Employee in connection with this Agreement (including any taxes and penalties underSection 409A), and neither the Company nor any of its Affiliates shall have any obligation to indemnify or otherwise holdEmployee (or any beneficiary) harmless from any or all of10  such taxes or penalties. No provision of this Agreement shall be interpreted or construed to transfer any liability for failureto comply with the requirements of Section 409A from the Employee or any other individual to the Company or any of itsaffiliates, employees or agents. (b) Notwithstanding anything in this Agreement to the contrary, the following special rule shall apply, ifand to the extent required by Section 409A, in the event that (i) Employee is deemed to be a “specified employee” withinthe meaning of Section 409A(a)(2)(B)(i) of the Code, (ii) amounts or benefits under this Agreement or any other program,plan or arrangement of the Company or a controlled group affiliate thereof are due or payable on account of “separationfrom service” within the meaning of Treasury Regulations Section 1.409A-l(h) and (iii) Employee is employed by a publiccompany or a controlled group affiliate thereof: no payments hereunder that are “deferred compensation” subject toSection 409A shall be made to Employee prior to the date that is six (6) months after the date of Employee’s separationfrom service or, if earlier, Employee’s date of death; following any applicable six (6) month delay, all such delayedpayments will be paid in a single lump sum on the earliest permissible payment date, without interest.(c) Each payment made under this Agreement (including each separate installment payment in thecase of a series of installment payments) shall be deemed to be a separate payment for purposes of Section 409A.Amounts payable under this Agreement shall be deemed not to be a “deferral of compensation” subject to Section 409Ato the extent provided in the exceptions in Treasury Regulation Sections 1.409A-1(b)(4) (“short-term deferrals”) and (b)(9)(“separation pay plans,” including the exception under subparagraph (iii)) and other applicable provisions of Section409A. For purposes of this Agreement, with respect to payments of any amounts that are considered to be “deferredcompensation” subject to Section 409A, references to “termination of employment,” “termination,” or words and phrasesof similar import, shall be deemed to refer to Employee’s “separation from service” as defined in Section 409A and shallbe interpreted and applied in a manner that is consistent with the requirements of Section 409A.(d) Notwithstanding anything to the contrary in this Agreement, any payment or benefit under thisAgreement or otherwise that is exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-l(b)(9)(v)(A)or (C) (relating to certain reimbursements and in‑kind benefits) shall be paid or provided to Employee only to the extentthat the expenses are not incurred, or the benefits are not provided, beyond the last day of the second calendar yearfollowing the calendar year in which Employee’s “separation from service” occurs; and provided further that suchexpenses are reimbursed no later than the last day of the third calendar year following the calendar year in whichEmployee’s “separation from service” occurs. To the extent any indemnification payment, expense reimbursement, or theprovision of any in-kind benefit is determined to be subject to Section 409A (and not exempt pursuant to the priorsentence or otherwise), the amount of any such indemnification payment or expenses eligible for reimbursement, or theprovision of any in-kind benefit, in one calendar year shall not affect the indemnification payment or provision of in-kindbenefits or expenses eligible for reimbursement in any11  other calendar year (except for any life-time or other aggregate limitation applicable to medical expenses), and in noevent shall any indemnification payment or expenses be reimbursed after the last day of the calendar year following thecalendar year in which Employee incurred such indemnification payment or expenses, and in no event shall any right toindemnification payment or reimbursement or the provision of any in-kind benefit be subject to liquidation or exchangefor another benefit.(e) Notwithstanding anything to the contrary in this Agreement, to the extent that any payments dueunder this Agreement as a result of the Employee’s termination of employment with the Company are subject to theEmployee’s execution and delivery and non-revocation of the Release, (i) no such payments shall be made on or prior tothe sixtieth (60th) day immediately following Employee’s date of termination (the “Release Period”), (ii) the Companyshall deliver the Release to Employee no later than seven (7) days immediately following Employee’s date oftermination, (iii) if, as of the Release Expiration Date, Employee has failed to execute the Release or has timely revokedhis acceptance of the Release thereafter, Employee shall not be entitled to any payments or benefits otherwiseconditioned on the Release, and (iv) if, as of the Release Expiration Date, Employee has executed the Release and hasnot revoked his acceptance of the Release thereafter, any such payments that are delayed pursuant to this Section8.06(e) shall be paid in a lump sum on the first regularly scheduled payroll date following the expiration of the ReleasePeriod, without interest. For purposes of this Section 8.06(e), “Release Expiration Date” shall mean the date that istwenty-one (21) days following the date upon which the Company timely delivers the Release to Employee, or, in theevent that Employee’s termination of employment is “in connection with an exit incentive or other employmenttermination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that isforty-five (45) days following such delivery date.8.07Compensation Recovery Policy. Employee acknowledges and agrees that,to the extent the Company adopts any clawback or similar policy pursuant to the Dodd-Frank Wall Street Reform andConsumer Protection Act or otherwise, and any rules and regulations promulgated thereunder, he shall take all actionnecessary or appropriate to comply with such policy (including, without limitation, entering into any further agreements,amendments or policies necessary or appropriate to implement and/or enforce such policy with respect to past, presentand future compensation, as appropriate).8.08Severability. To the extent any provision of this Agreement shall be invalid orunenforceable, it shall be considered deleted herefrom, and the remainder of such provision and of this Agreement shallbe unaffected and shall continue in full force and effect. In furtherance and not in limitation of the foregoing, should theduration or geographical extent of, or business activities covered by, any provision of this Agreement be in excess of thatwhich is valid and enforceable under applicable law, then such provision shall be construed to cover only that duration,extent or activities which may validly and enforceably be covered. Employee acknowledges the uncertainty of the law inthis respect and expressly stipulates that this Agreement be given the construction12  which renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possibleunder applicable law.8.09Assignment. The Company may transfer and assign this Agreement and theCompany’s rights and obligations hereunder to another entity that is substantially comparable to the Company in itsfinancial strength and ability to perform the Company’s obligations under this Agreement. After any such assignment bythe Company, the Company shall be discharged from all further liability hereunder and such assignee shall thereafter bedeemed to be the Company for the purposes of all provisions of this Agreement including this Section 8. Neither thisAgreement nor the rights or obligations hereunder of the parties hereto shall be transferable or assignable by Employee,except in accordance with the laws of descent and distribution.8.10Injunctive Relief. Employee agrees that it would be difficult to compensatethe Company fully for damages for any violation of the provisions of this Agreement, including without limitation theprovisions of Sections 5 and 6. Accordingly, Employee specifically agrees that the Company shall be entitled totemporary and permanent injunctive relief to enforce the provisions of this Agreement and that such relief may be grantedwithout the necessity of proving actual damages. This provision with respect to injunctive relief shall not, however,diminish the right of the Company to claim and recover damages in addition to injunctive relief.8.11Notices. Any notice, payment, demand or communication required orpermitted to be given by the provisions of this Agreement shall be deemed to have been effectively given and receivedon the date personally delivered to the respective party to whom it is directed, or five (5) days after the date whendeposited by registered or certified mail, with postage and charges prepaid and addressed to such party at its addressbelow its signature. Any party may change its address by delivering a written change of address to all of the otherparties in the manner set forth in this Section 8.11.8.12Section 280G. Notwithstanding any other provision of this Agreement or anyother plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided bythe Company or its affiliates to Employee or for Employee’s benefit pursuant to the terms of this Agreement or otherwise(“Covered Payments”) constitute parachute payments within the meaning of Section 280G of the Code (such payments,the “Parachute Payments”) and would, but for this Section 8.12, be subject to the excise tax imposed under Section 4999of the Code (or any successor provision thereto) or any similar tax imposed by state or local law or any interest orpenalties with respect to such taxes (collectively, the “Excise Tax”), or not be deductible under Section 280G of theCode, then such Covered Payments shall be reduced to the minimum extent necessary to ensure that no portion of theCovered Payments is subject to the Excise Tax. The Covered Payments shall be reduced in a manner that maximizesEmployee’s economic position. In applying this principle, the reduction shall be made in a manner consistent with therequirements of Section 409A, to the extent applicable, and where two or more economically equivalent amounts aresubject to reduction but payable at different times, such amounts payable at the later time shall be reduced first but notbelow zero. 13  [Signatures on following page] 14  IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth in the firstparagraph. FUNKO, INC. By:/s/ Brian Mariotti Name: Title: /s/ Andrew PerlmutterAndrew Perlmutter [Signature Page to the Employment Agreement]  Exhibit AWAIVER AND RELEASE OF CLAIMS AGREEMENT In exchange for the severance payments and benefits provided to me pursuant to Section 7.05 and7.06 (collectively, the “Severance Benefits”) of that certain Employment Agreement, dated as of October 20, 2017, by andamong Funko, Inc. (“Company”) and Andrew Perlmutter (the “Employee”) (the “Employment Agreement”), the Employeefreely and voluntarily agrees to enter into and be bound by this Waiver and Release of Claims Agreement (this“Release”). 1.General Release. The Employee, on his own behalf and on behalf of hisspouse, child or children (if any), heirs, personal representative, executors, administrators, successors, assigns andanyone else claiming through him (the “Releasors”), hereby releases and discharges forever Funko, Inc., and itsaffiliates, and each of their respective past, present or future parent, affiliated, related, and subsidiary entities and eachof their respective past, present or future directors, officers, employees, trustees, agents, attorneys, administrators,plans, plan administrators, insurers, equityholders, members, representatives, predecessors, successors and assigns,and all Persons acting by, through, under or in concert with them (hereinafter collectively referred to as the “ReleasedParties”), from and against all liabilities, claims, demands, liens, causes of action, charges, suits, complaints,grievances, contracts, agreements, promises, obligations, costs, losses, damages, injuries, attorneys’ fees and otherlegal responsibilities (collectively referred to as “Claims”), of any form whatsoever (whether or not relating toEmployee's employment with the Company), including, but not limited to, any claims in law, equity, contract or tort,claims under any policy, agreement, understanding or promise, written or oral, formal or informal, between theEmployee and the Company or any of the other Released Parties, and any claims under the Civil Rights Act of 1866,the Civil Rights Act of 1871, the Civil Rights Act of 1964, the Americans With Disabilities Act of 1990, the AgeDiscrimination in Employment Act of 1967 (“ADEA”), the Sarbanes-Oxley Act of 2002, the Securities Act of 1933, theSecurities Exchange Act of 1934 (the “Exchange Act”), the Employee Retirement Income Security Act of 1974, theRehabilitation Act of 1973, the Family and Medical Leave Act of 1993, the Genetic Information Nondiscrimination Act of2008, the Worker Adjustment and Retraining Notification Act of 1988, the Delaware Discrimination in Employment Act,the Delaware Persons with Disabilities Employment Protection Act, the Delaware Whistleblowers’ Protection Act, theDelaware Wage Payment and Collection Act, the Delaware Fair Employment Practices Act, Delaware's social medialaw, the Washington Industrial Welfare Act, the Washington Minimum Wage Act, the Washington Wage Payment Act,the Washington Wage Rebate Act, the Washington Law Against Discrimination and the Washington Leave Law, aseach may have been amended from time to time, or any other federal, state or local statute, regulation, law, rule,ordinance or constitution, or common law, whether known or unknown, unforeseen, unanticipated, unsuspected orlatent, that the Employee or any of the Releasors now possess or have a right to, or have at any time heretofore ownedor held, or may at any time own or hold by reason of any matter or thing arising from any cause whatsoever prior to thedate of execution of this Release, and without limiting the generality of the foregoing, from all claims, demands  and causes of action based upon, relating to, or arising out of: (a) the Employment Agreement; (b) the Employee’semployment or other relationship with any of the Released Parties or the termination thereof; and (c) the Employee’sstatus as a holder of securities of any of the Released Parties. This Release includes, but is not limited to, all wrongfultermination and “constructive discharge” claims, all discrimination claims, all claims relating to any contracts ofemployment, whether express or implied, any covenant of good faith and fair dealing, whether express or implied, andany tort of any nature. This Release is for any relief, no matter how denominated, including but not limited to wages,back pay, front pay, benefits, compensatory, liquidated or punitive damages and attorneys’ fees. The Employeeacknowledges and reaffirms Employee’s obligations under the Employment Agreement with the Company datedOctober 20, 2017, a signed copy of which is attached hereto as Exhibit A, including but not limited to Sections 5 and 6thereof.2.Covenant Not To Sue. The Employee represents and covenants that he hasnot filed, initiated or caused to be filed or initiated any Claim, charge, suit, complaint, grievance, action, cause of action orproceeding against the Company or any of other the Released Parties. Except to the extent that such waiver isprecluded by law, the Employee further promises and agrees that he will not file, initiate or cause to be filed or initiatedany Claim, charge, suit, complaint, grievance, action, cause of action or proceeding based upon, arising out of or relatingto any Claim released hereunder, nor shall the Employee participate, assist or cooperate in any Claim, charge, suit,complaint, grievance, action, cause of action or proceeding regarding any of the Released Parties relating to any Claimsreleased hereunder, whether before a court or administrative agency or otherwise, unless required to do so by law. 3.Exclusions. Notwithstanding the foregoing, the Employee does not release hisrights to receive the Severance Benefits or any right that may not be released by private agreement. In addition, thisRelease will not prevent the Employee from (i) filing a charge or complaint with the Equal Employment OpportunityCommission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities andExchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”)or (ii) reporting possible violations of federal law or regulation to, otherwise communicating with or participating in anyinvestigation or proceeding that may be conducted by, or providing documents and other information, without notice tothe Company, to, any Governmental Agency or entity, including in accordance with the provisions of and rulespromulgated under Section 21F of the Exchange Act or Section 806 of the Sarbanes-Oxley Act of 2002, as each mayhave been amended from time to time, or any other whistleblower protection provisions of state or federal law orregulation. This Agreement does not limit Employee’s right to receive an award for information provided to anyGovernment Agencies; provided, however, that the Employee acknowledges and agrees that any Claim by him, orbrought on his behalf, for damages in connection with such a charge or investigation filed with the Equal EmploymentOpportunity Commission would be and hereby is barred. 4.No Assignment. The Employee represents and warrants that he has made noassignment or other transfer, and covenants that he will make no assignment  or other transfer, of any interest in any Claim that he may have against any of the Released Parties. 5.Indemnification of Released Parties. The Employee agrees to indemnify andhold harmless the Released Parties, and each of them, against any loss, claim, demand, damage, expenses or any otherliability whatsoever, including reasonable attorneys’ fees and costs, resulting from: (i) any breach of this Release by himor his successors in interest; (ii) any assignment or transfer, or attempted assignment or transfer, of any Claims releasedhereunder; or (iii) any action or proceeding brought by him or his successors in interest, if such action or proceedingarises out of, is based upon, or is related to any Claims released hereunder. This indemnity does not require payment asa condition precedent to recovery by any of the Released Parties. 6.Acknowledgments. The Employee acknowledges that the Company deliveredthis Release to him on [_____]. The Employee agrees that the Company has advised him to consult with an attorneybefore executing this Release. The Employee agrees that he has had the opportunity to consult with counsel, if hechose to do so, and that the Employee has had a sufficient and reasonable amount of time to read and consider thisRelease before executing it. The Employee acknowledges that he is responsible for any costs and fees resulting fromhis attorney reviewing this Release. The Employee agrees that he has carefully read this Release and knows itscontents, and that he signs this Release voluntarily, with a full understanding of its significance, and intending to bebound by its terms. The Employee acknowledges that the provision of the Severance Benefits is in exchange for thepromises in the Release and is not normally available under Company policy to employees who resign or are terminatedby the Company, and that, but for his execution of this Release, he would not be entitled to receive the SeveranceBenefits. The Employee further acknowledges that the provision of the Severance Benefits does not constitute anadmission by the Released Parties of liability or of violation of any applicable law or regulation. The Company and itsaffiliates expressly deny any liability or alleged violation and state that the Severance Benefits are being provided solelyfor the purpose of compromising any and all claims of the Employee without the cost and burden of litigation. 7.ADEA Provisions. The Employee understands that this Release includes arelease of claims arising under ADEA. The Employee acknowledges and agrees that he has had at least 21 days afterthe date of his receipt of this Release (such period, the “Consideration Period”) to review this Release and consider itsterms before signing this Release and that the Consideration Period will not be affected or extended by any changes,whether material or immaterial, that might be made to this Release. The Employee further acknowledges and agreesthat he understands that he may use as much or all of such 21-day period as he wishes before signing, and warrants thathe has done so. The Employee may revoke and cancel this Release in writing at any time within seven days after hisexecution of this Release (such seven-day period, the “Revocation Period”) by providing notice of revocation to[_____]. This Release shall not become effective and enforceable until after the expiration of the Revocation Period;after such  time, if there has been no revocation, this Release shall immediately be fully effective and enforceable. 8.Consequences of Breach or Revocation. The Employee agrees that,notwithstanding anything to the contrary in this Release, in the event that he breaches any of the terms of the Release, orrevokes the Release pursuant to Section 7, he shall forfeit the Severance Benefits and reimburse the Company for anyportion of the Severance Benefits that have already been paid, and, in the event of such a breach, he shall reimburse theCompany for any expenses or damages incurred as a result of such breach. 9.Severability. If any provision of the Release is declared invalid orunenforceable, the remaining portions of the Release shall not be affected thereby and shall be enforced. 10.Governing Law: Venue. This Agreement is made under and shall begoverned by and construed in accordance with the laws of the State of Delaware.  IN WITNESS WHEREOF, the undersigned has signed and executed this Release on the date set forthbelow as an expression of his intent to be bound by the foregoing terms of this Release.________________________________Date: ___________________________  Exhibit 10.25 TAX RECEIVABLE AGREEMENTby and amongFUNKO, INC.FUNKO ACQUISITION HOLDINGS, LLCthe several MEMBERS (as defined herein)MANAGEMENT REPRESENTATIVE (as defined herein) andOTHER MEMBERS OF FUNKO ACQUISITION HOLDINGS, LLCFROM TIME TO TIME PARTY HERETO Dated as of November 1, 2017  CONTENTS PageArticle I. DEFINITIONS2Section 1.1Definitions2Section 1.2Rules of Construction11Article II. DETERMINATION OF REALIZED TAX BENEFIT12Section 2.1Basis Adjustments; the LLC 754 Election12Section 2.2Basis Schedules13Section 2.3Tax Benefit Schedules13Section 2.4Procedures; Amendments14Article III. TAX BENEFIT PAYMENTS15Section 3.1Timing and Amount of Tax Benefit Payments15Section 3.2No Duplicative Payments19Section 3.3Pro-Ration of Payments as Between the Members19Section 3.4Optional Estimated Payment Procedure20Section 3.5Changes; Reserves; Suspension of Payments21Article IV. TERMINATION23Section 4.1Early Termination of Agreement; Breach of Agreement23Section 4.2Early Termination Notice25Section 4.3Payment Upon Early Termination26Article V. SUBORDINATION AND LATE PAYMENTS27Section 5.1Subordination27Section 5.2Late Payments by the Corporation27Article VI. TAX MATTERS; CONSISTENCY; COOPERATION27Section 6.1Participation in the Corporation’s and the LLC’ Tax Matters27Section 6.2Consistency28Section 6.3Cooperation28Article VII. MISCELLANEOUS29Section 7.1Notices29Section 7.2Counterparts30i  Section 7.3Entire Agreement; No Third Party Beneficiaries30Section 7.4Governing Law31Section 7.5Severability31Section 7.6Assignments; Amendments; Successors; No Waiver31Section 7.7Titles and Subtitles32Section 7.8Resolution of Disputes32Section 7.9Reconciliation33Section 7.10Withholding34Section 7.11Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets34Section 7.12Confidentiality35Section 7.13Change in Law35Section 7.14Interest Rate Limitation36Section 7.15Independent Nature of Rights and Obligations36Section 7.16LLC Agreement37Section 7.17Management Representative37 Exhibits Exhibit A - Form of Joinder Agreement ii  TAX RECEIVABLE AGREEMENTThis TAX RECEIVABLE AGREEMENT (as the same may be amended, restated, amended and restated,supplemented or otherwise modified from time to time, this “Agreement”), dated as of November 1, 2017, is herebyentered into by and among Funko, Inc., a Delaware corporation (the “Corporation”), Funko Acquisition Holdings, LLC, aDelaware limited liability company (the “LLC”), each of the Members from time to time party hereto, and the ManagementRepresentative. Capitalized terms used but not otherwise defined herein have the respective meanings set forth inSection 1.01.RECITALSWHEREAS, the LLC is treated as a partnership for U.S. federal income tax purposes;WHEREAS, each of the members of the LLC other than the Corporation (such members who are parties hereto,and each other Person who becomes party hereto by satisfying the Joinder Requirement, the “Members”) owns (or, in thecase of such other Persons, will own) limited liability company interests in the LLC (the “Units”);WHEREAS, on the date hereof, the Corporation will become the managing member of the LLC;WHEREAS, exclusive of the Over-Allotment Option (as defined below), the Corporation will issue 10,416,666shares of its Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) to certain purchasers inan initial public offering of its Class A Common Stock (the “IPO”);WHEREAS, the Corporation will use a portion of the net proceeds from the IPO to purchase newly-issued Unitsdirectly from the LLC, which proceeds will be used to repay or prepay certain indebtedness of the LLC and for generalcompany purposes;WHEREAS, the Corporation may issue additional Class A Common Stock in connection with the IPO as aresult of the exercise by the underwriters of their over-allotment option (the “Over-Allotment Option”) and, if the Over-Allotment Option is in fact exercised in whole or in part, any additional net proceeds received by the Corporation will beused by the Corporation to acquire additional newly-issued Units directly from the LLC, which proceeds that are receivedby the LLC will be used to repay certain indebtedness of the LLC and for general company purposes;WHEREAS, on and after the date hereof, pursuant to the LLC Agreement, each Member has the right from timeto time to require the LLC to redeem (a “Redemption”) all or a portion of such Member’s Units for cash or, at theCorporation’s election, Class A Common Stock; provided that, at the election of the Corporation in its sole discretion, theCorporation may effect a direct exchange (a “Direct Exchange”) of such cash or shares of Class A Common Stock forsuch Units;1  WHEREAS, the LLC and any direct subsidiary or indirect subsidiary (owned through a chain of pass-throughentities) of the LLC that is treated as a partnership for U.S. federal income tax purposes (together with the LLC and anydirect or indirect subsidiary (owned through a chain of pass-through entities) of the LLC that is treated as a disregardedentity for U.S. federal income tax purposes, the “the LLC Group”) will have in effect an election under Section 754 of theCode (as defined herein) for the Taxable Year (as defined herein) in which any Exchange (as defined below) occurs,which election should result in an adjustment to the Corporation’s share of the tax basis of the assets owned by the LLCGroup as of the date of the Exchange, with a consequent result on the taxable income subsequently derived therefrom;andWHEREAS, the parties to this Agreement desire to provide for certain payments and make certainarrangements with respect to any tax benefits to be derived by the Corporation as the result of Exchanges and the receiptof payments under this Agreement.NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forthherein, and intending to be legally bound hereby, the parties hereto agree as follows:ARTICLE I.DEFINITIONSSection 1.1Definitions. As used in this Agreement, the terms set forth in this Article I shall have thefollowing meanings (such meanings to be equally applicable to both (i) the singular and plural and (ii) the active andpassive forms of the terms defined).“ACON” means ACON Funko Investors, L.L.C., a Delaware limited liability company, and its PermittedTransferees..“Actual Interest Amount” is defined in Section 3.1(b)(vii) of this Agreement.“Advisory Firm” means Ernst & Young LLP or any other accounting firm that is nationally recognized as beingan expert in Covered Tax matters and is not an Affiliate of the Corporation.“Advisory Firm Letter” means a letter, that has been prepared by the Advisory Firm used by the Corporation inconnection with the performance of its obligations under this Agreement, which states that the relevant Schedules,notices or other information to be provided by the Corporation to the Members, along with all supporting schedules andwork papers, were prepared in a manner that is consistent with the terms of this Agreement and, to the extent notexpressly provided in this Agreement, on a reasonable basis in light of the facts and law in existence on the date suchSchedules, notices or other information were delivered by the Corporation to the Members.2  “Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one or moreintermediaries, Controls, is Controlled by, or is under common Control with, such first Person.“Agreed Rate” means LIBOR plus 100 basis points.“Agreement” is defined in the preamble.“Amended Schedule” is defined in Section 2.4(b) of this Agreement.“Assumed State and Local Tax Rate” means the tax rate equal to the sum of the products of (x) theCorporation’s income tax apportionment rate(s) for each state and local jurisdiction in which the Corporation files incomeor franchise tax returns for the relevant Taxable Year and (y) the highest corporate income and franchise tax rate(s) foreach such state and local jurisdiction in which the Corporation files income tax returns for each relevant Taxable Year“Attributable” is defined in Section 3.1(b)(i) of this Agreement.“Audit Committee” means the audit committee of the Board.“Basis Adjustment” means the increase or decrease to the tax basis of, or the Corporation’s share of, the taxbasis of the Reference Assets (i) under Section 734(b), 743(b) and 754 of the Code and, in each case, the comparablesections of U.S. state and local tax law (in situations where, following an Exchange, the LLC remains in existence as anentity for tax purposes) and (ii) under Sections 732 and 1012 of the Code and, in each case, the comparable sections ofU.S. state and local tax law (in situations where, as a result of one or more Exchanges, the LLC becomes an entity that isdisregarded as separate from its owner for tax purposes), in each case, as a result of any Exchange and any paymentsmade under this Agreement. Notwithstanding any other provision of this Agreement, the amount of any BasisAdjustment resulting from an Exchange of one or more Units shall be determined without regard to any Pre-ExchangeTransfer of such Units and as if any such Pre-Exchange Transfer had not occurred.“Basis Schedule” is defined in Section 2.2 of this Agreement.“Beneficial Owner” means, with respect to any security, a Person who directly or indirectly, through anycontract, arrangement, understanding, relationship or otherwise, has or shares: (i) voting power, which includes thepower to vote, or to direct the voting of, with respect to such security and/or (ii) investment power, which includes thepower to dispose of, or to direct the disposition of, such security.“Board” means the Board of Directors of the Corporation.3  “Business Day” means any day excluding Saturday, Sunday and any day that is a legal holiday under the lawsof the State of New York or is a day on which banking institutions located in New York are closed.“Change Notice” is defined in Section 3.5(a) of this Agreement.“Change of Control” means the occurrence of any of the following events:(1) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Securities ExchangeAct of 1934, as amended, or any successor provisions thereto (the “Exchange Act”), but excluding anyemployee benefit plan of such person and its subsidiaries, and any person or entity acting in its capacity astrustee, agent or other fiduciary or administrator of any such plan, and excluding the Permitted Transferees)becomes the “beneficial owner” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act),directly or indirectly, of shares of Class A Common Stock, Class B Common Stock, Preferred Stock and/or anyother class or classes of capital stock of the Corporation (if any) representing in the aggregate more than fiftypercent (50%) of the voting power of all of the outstanding shares of capital stock of the Corporation entitled tovote;(2) the shareholders of the Corporation approve a plan of complete liquidation or dissolution of theCorporation or there is consummated an agreement or series of related agreements for the sale or otherdisposition, directly or indirectly, by the Corporation of all or substantially all of the Corporation’s assets(including a sale of all or substantially all of the assets of the LLC);(3) there is consummated a merger or consolidation of the Corporation with any other corporation orentity, and, immediately after the consummation of such merger or consolidation, the voting securities of theCorporation immediately prior to such merger or consolidation do not continue to represent, or are notconverted into, more than 50% of the combined voting power of the then outstanding voting securities of thePerson resulting from such merger or consolidation or, if the surviving company is a Subsidiary, the ultimateparent thereof; or(4) the Corporation ceases to be the sole managing member of the LLC.Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue of theconsummation of any transaction or series of integrated transactions immediately following which the record holders ofthe Class A Common Stock and Class B Common Stock immediately prior to such transaction or series of transactionscontinue to have substantially the same proportionate ownership in and voting control over, and own substantially all ofthe shares of, an entity which owns all or4  substantially all of the assets of the Corporation immediately following such transaction or series of transactions.“Class B Common Stock” means shares of Class B common stock, par value $0.0001 per share, of theCorporation.“Code” means the U.S. Internal Revenue Code of 1986, as amended. “Control” means the possession, direct or indirect, of the power to direct or cause the direction of themanagement and policies of a Person, whether through ownership of voting securities, by contract or other agreement.“Corporation” is defined in the preamble to this Agreement.“Covered Person” is defined in Section 7.17 of this Agreement.“Covered Tax Benefit” is defined in Section 3.3(a) of this Agreement.“Covered Taxes” means any and all U.S. federal, state, local and foreign taxes, assessments or similar chargesthat are based on or measured with respect to net income or profits and any interest related thereto.“Cumulative Net Realized Tax Benefit” is defined in Section 3.1(b)(iii) of this Agreement.“Default Rate” means the sum of (i) the highest rate applicable at the time under the Senior Secured CreditFacilities plus (ii) 200 basis points, it being understood that if there are no Senior Secured Credit Facilities then theDefault Rate shall be LIBOR plus 500 basis points.“Default Rate Interest” is defined in Section 3.1(b)(ix) of this Agreement.“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similarprovision of U.S. state tax law, as applicable, or any other event (including the execution of IRS Form 870-AD) that finallyand conclusively establishes the amount of any liability for tax.“Direct Exchange” is defined in the recitals to this agreement.“Dispute” is defined in Section 7.8(a) of this Agreement.“Early Termination Agreed Rate” means LIBOR plus 200 basis points.“Early Termination Effective Date” means the date of an Early Termination Notice for purposes of determiningthe Early Termination Payment.“Early Termination Notice” is defined in Section 4.2 of this Agreement.5  “Early Termination Payment” is defined in Section 4.3(b) of this Agreement.“Early Termination Rate” means the lesser of (i) 6.50 % per annum, compounded annually, and (ii) the EarlyTermination Agreed Rate.“Early Termination Reference Date” is defined in Section 4.2 of this Agreement.“Early Termination Schedule” is defined in Section 4.2 of this Agreement.“Estimated Tax Benefit Payment” is defined in Section 3.4 of this Agreement.“Exchange” means any Direct Exchange or Redemption.“Exchange Date” means the date of any Exchange.“Expert” is defined in Section 7.9 of this Agreement.“Extension Rate Interest” is defined in Section 3.1(b)(viii) of this Agreement.“Final Payment Date” means any date on which a payment is required to be made pursuant to thisAgreement. For the avoidance of doubt, the Final Payment Date in respect of a Tax Benefit Payment is determinedpursuant to Section 3.1(a) of this Agreement.“Fundamental” is defined in Section 2.2 of this Agreement.“GAAP” means generally accepted accounting principles in the United States, as in effect from time to time;provided, however, that if the Corporation notifies the Members that the Corporation requests an amendment to anyprovision hereof to eliminate the effect of any change in GAAP or in the application thereof occurring after the date of thisAgreement (including through the adoption of International Financial Reporting Standards and applicable accountingrequirements set by the International Accounting Standards Board or any successor thereto (the “IFRS”)), on theoperation of such provision (or if the Members notify the Corporation that they request an amendment to any provisionhereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in theapplication thereof (including through the adoption of IFRS), then such provision shall be interpreted on the basis ofGAAP as in effect and applied immediately before such change shall have become effective until such notice shall havebeen withdrawn or such provision amended in accordance herewith.“Hypothetical Tax Liability” means, with respect to any Taxable Year, the hypothetical liability of theCorporation that would arise in respect of Covered Taxes, using the same methods, elections, conventions and similarpractices used on the actual relevant Tax Returns of the Corporation but (i) calculating depreciation, amortization, orother similar deductions, or otherwise calculating any items of income, gain, or loss, using the Corporation’s share of theNon-Adjusted Tax Basis as reflected6  on the Basis Schedule, including amendments thereto for the Taxable Year and (ii) excluding any deduction attributableto Imputed Interest, Actual Interest Amounts or Default Rate Interest for the Taxable Year; provided, that for purposesdetermining the Hypothetical Tax Liability, the combined tax rate for U.S. state and local Covered Taxes (but not, for theavoidance of doubt, federal Covered Taxes) shall be the Assumed State and Local Tax Rate. For the avoidance ofdoubt, (i) the Hypothetical Tax Liability shall be determined without taking into account the carryover or carryback of anytax item attributable to Imputed Interest, Actual Interest, Default Rate Interest or a Basis Adjustment (or portions thereof);and (ii) the calculation of the Hypothetical Tax Liability shall take into account the federal benefit received by theCorporation with respect to state and local jurisdiction income taxes (with such benefit taking into account theCorporation’s marginal U.S. federal income tax rate for the relevant Taxable Year, the Assumed State and Local TaxRate, and the deductibility, if any, of state and local jurisdiction income taxes).“Imputed Interest” is defined in Section 3.1(b)(vi) of this Agreement.“Independent Directors” means the members of the Board who are “independent” under the standards set forthin Rule 10A-3 promulgated under the Exchange Act and the corresponding rules of the applicable exchange on whichthe Class A Common Stock is traded or quoted.“IPO” is defined in the recitals to this Agreement.“IRS” means the U.S. Internal Revenue Service.“Joinder” means a joinder to this Agreement, in form and substance substantially similar to Exhibit A to thisAgreement.“Joinder Requirement” is defined in Section 7.6(b) of this Agreement.“LIBOR” means during any period, the rate which appears on the Bloomberg Page BBAM1 (or on such othersubstitute Bloomberg page that displays rates at which U.S. dollar deposits are offered by leading banks in the Londoninterbank deposit market), or the rate which is quoted by another source selected by the Corporation as an authorizedinformation vendor for the purpose of displaying rates at which U.S. dollar deposits are offered by leading banks in theLondon interbank deposit market (a "Alternate Source"), at approximately 11:00 a.m., London time, two (2) BusinessDays prior to the first day of such period as the London interbank offered rate for U.S. dollars having a borrowing dateand a maturity comparable to such period (or if there shall at any time, for any reason, no longer exist a Bloomberg PageBBAM1 (or any substitute page) or any LIBOR Alternate Source, a comparable replacement rate determined by theCorporation at such time, which determination shall be conclusive absent manifest error; provided, that at no time shallLIBOR be less than 0%.“LLC” is defined in the recitals to this Agreement.7  “LLC Agreement” means that certain Second Amended and Restated Limited Liability Company Agreement ofthe LLC, dated as of the date hereof, as such agreement may be further amended, restated, supplemented and/orotherwise modified from time to time.“Management Representative” is defined in Section 7.17 of this Agreement.“Market Value” means the Common Unit Redemption Price, as defined in the LLC Agreement, determined as ofan Early Termination Date.“Members” is defined in the recitals to this Agreement.“Net Tax Benefit” is defined in Section 3.1(b)(ii) of this Agreement.“Non-Adjusted Tax Basis” means, with respect to any Reference Asset at any time, the tax basis that such assetwould have had at such time if no Basis Adjustments had been made.“Objection Notice” is defined in Section 2.4(a)(i) of this Agreement.“Over-Allotment Option” is defined in the recitals to this Agreement.“Parties” means the parties named on the signature pages to this agreement and each additional party thatsatisfies the Joinder Requirement, in each case with their respective successors and assigns.“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate,trust, business association, organization, governmental entity or other entity.“Permitted Transfer” means the transfer of Units by a holder of Units to any transferee as permitted by the LLCAgreement.“Permitted Transferee” means a holder of Units pursuant to a Permitted Transfer.“Pre-Exchange Transfer” means any transfer of one or more Units (including upon the death of a Member) (i)that occurs after the IPO but prior to an Exchange of such Units and (ii) to which Section 743(b) of the Code applies.“Realized Tax Benefit” is defined in Section 3.1(b)(iv) of this Agreement.“Realized Tax Detriment” is defined in Section 3.1(b)(v) of this Agreement.“Reconciliation Dispute” is defined in Section 7.9 of this Agreement.“Reconciliation Procedures” is defined in Section 2.4(a) of this Agreement.“Redemption” has the meaning in the recitals to this Agreement.8  “Reference Asset” means any tangible or intangible asset of the LLC or any of its successors or assigns, andwhether held directly by the LLC or indirectly by the LLC through any entity in which the LLC now holds or maysubsequently hold an ownership interest (but only if such entity is treated as a partnership or disregarded entity forpurposes of the applicable tax), at the time of an Exchange. A Reference Asset also includes any asset the tax basis ofwhich is determined, in whole or in part, by reference to the tax basis of an asset that is described in the precedingsentence, including “substituted basis property” within the meaning of Section 7701(a)(42) of the Code.“Schedule” means any of the following: (i) a Basis Schedule, (ii) a Tax Benefit Schedule, or (iii) the EarlyTermination Schedule, and, in each case, any amendments thereto.“Senior Obligations” is defined in Section 5.1 of this Agreement.“Senior Secured Credit Facilities” means the indebtedness described in that certain agreement entered into onOctober 30, 2015 by and among FAH LLC, Funko Holdings LLC, and Funko, LLC, as borrowers, PNC Bank, NationalAssociation, as administrative agent, Cerebus Business Finance, LLC, as collateral agent, and the other persons partythereto, as amended from time to time, or any replacement or refinancing thereof.“Subsidiary” means, with respect to any Person and as of the date of any determination, any other Person as towhich such Person, owns, directly or indirectly, or otherwise controls, more than 50% of the voting power or other similarinterests, or the sole general partner interest, or managing member or similar interest, of such Person.“Subsidiary Stock” means any stock or other equity interest in any Subsidiary of the Corporation that is treatedas a corporation for U.S. federal income tax purposes.“Tax Benefit Payment” is defined in Section 3.1(b) of this Agreement.“Tax Benefit Schedule” is defined in Section 2.3(a) of this Agreement.“Tax Return” means any return, declaration, report or similar statement required to be filed with respect to taxes(including any attached schedules), including, without limitation, any information return, claim for refund, amended returnand declaration of estimated tax.“Taxable Year” means a taxable year of the Corporation as defined in Section 441(b) of the Code orcomparable section of U.S. state or local tax law, as applicable (and, therefore, for the avoidance of doubt, may include aperiod of less than 12 months for which a Tax Return is made), ending on or after the closing date of the IPO.“Taxing Authority” means any national, federal, state, county, municipal, or local government, or anysubdivision, agency, commission or authority thereof, or any quasi-9  governmental body, or any other authority of any kind, exercising regulatory or other authority in relation to tax matters.“Termination Objection Notice” is defined in Section 4.2 of this Agreement.“Treasury Regulations” means the final, temporary, and (to the extent they can be relied upon) proposedregulations under the Code, as promulgated from time to time (including corresponding provisions and succeedingprovisions) as in effect for the relevant taxable period.“True-Up” is defined in Section 3.4 of this Agreement.“U.S.” means the United States of America.“Units” is defined in the recitals to this Agreement.“Valuation Assumptions” means, as of an Early Termination Effective Date, the assumptions that:(1)in each Taxable Year ending on or after such Early Termination Effective Date, theCorporation will have taxable income sufficient to fully use the deductions arising from the Basis Adjustmentsand the Imputed Interest during such Taxable Year or future Taxable Years (including, for the avoidance ofdoubt, Basis Adjustments and Imputed Interest that would result from future Tax Benefit Payments that wouldbe paid in accordance with the Valuation Assumptions) in which such deductions would become available;(2)the U.S. federal income tax rates that will be in effect for each such Taxable Year will bethose specified for each such Taxable Year by the Code and other law as in effect on the Early TerminationEffective Date, except to the extent any change to such tax rates for such Taxable Year have already beenenacted into law and the combined U.S. state and local income tax rates (but not, for the avoidance ofdoubt, federal income tax rates) for each such Taxable Year shall be the Assumed State and Local Tax Ratefor the Taxable Year that includes the Early Termination Effective Date;(3)all taxable income of the Corporation will be subject to the maximum applicable tax rates foreach Covered Tax throughout the relevant period; provided, that the combined tax rate for U.S. state and localincome taxes (but not, for the avoidance of doubt, federal income tax) shall be the Assumed State and LocalTax Rate, and, for the avoidance of doubt, the applicable calculations shall take into account the federal benefitreceived by the Corporation with respect to state and local jurisdiction income taxes (with such benefit takinginto account the Corporation’s applicable marginal U.S. federal income tax rate, the Assumed State and LocalTax Rate, and the deductibility, if any, of state and local jurisdiction income taxes);10  (4)any loss carryovers or carrybacks generated by any Basis Adjustment or Imputed Interest(including such Basis Adjustment and Imputed Interest generated as a result of payments under thisAgreement) and available as of the Early Termination Effective Date will be used by the Corporation on a prorata basis from the date of the Early Termination Effective Date through the scheduled expiration date of suchloss carryovers or carrybacks;(5)any non-amortizable assets (other than Subsidiary Stock) will be disposed of on the earlierof the fifteenth anniversary of (i) the applicable Basis Adjustment and (ii) the Early Termination Effective Date;(6)any Subsidiary Stock will be deemed never to be disposed of except if Subsidiary Stock isdirectly disposed of in the Change of Control;(7)if, on the Early Termination Effective Date, any Member has Units that have not beenExchanged, then such Units shall be deemed to be Exchanged for the Market Value that would be received bysuch Member if such Units had been Exchanged on the Early Termination Effective Date, and such Membershall be deemed to receive the amount of cash such Member would have been entitled to pursuant to Section4.3(a) had such Units actually been Exchanged on the Early Termination Effective Date;(8)any proposed adjustment to a tax item of a Party that has given rise to a Change Notice, andany reserve or contingent liability associated with a tax position that has given rise to a Reserve Notice, shallbe deemed to have been favorably resolved such that the proposed adjustment or reserve or contingent liabilityassociated with such tax position shall not be taken into account in determining the amount of any Tax BenefitPayment due to a Member; and(9)any payment obligations pursuant to this Agreement will be satisfied on the date that anyTax Return to which such payment obligation relates is required to be filed excluding any extensions.Section 1.2Rules of Construction. Unless otherwise specified herein:(a)The meanings of defined terms are equally applicable to the singular and plural forms of the definedterms.(b)For purposes of interpretation of this Agreement:(i)The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when usedin this Agreement shall refer to this Agreement as a whole and not to any particular provision thereof.(ii)References in this Agreement to a Schedule, Article, Section, clause or sub-clause refer tothe appropriate Schedule to, or Article, Section, clause or subclause in, this Agreement.11  (iii)References in this Agreement to dollars or “$” refer to the lawful currency of the UnitedStates of America.(iv)The term “including” is by way of example and not limitation.(v)The term “documents” includes any and all instruments, documents, agreements, certificates,notices, reports, financial statements and other writings, however evidenced, whether in physical or electronicform.(c)In the computation of periods of time from a specified date to a later specified date, the word “from”means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “toand including.”(d)Section headings herein are included for convenience of reference only and shall not affect theinterpretation of this Agreement.(e)Unless otherwise expressly provided herein, (a) references to organization documents (including theLLC Agreement), agreements (including this Agreement) and other contractual instruments shall be deemed to includeall subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to theextent that such amendments, restatements, extensions, supplements and other modifications are permitted hereby; and(b) references to any law (including the Code and the Treasury Regulations) shall include all statutory and regulatoryprovisions consolidating, amending, replacing, supplementing or interpreting such law.ARTICLE II.DETERMINATION OF REALIZED TAX BENEFITSection 2.1Basis Adjustments; the LLC 754 Election.(a)Basis Adjustments. The Parties acknowledge and agree that (A) each Direct Exchange shall giverise to Basis Adjustments and (B) each Redemption using cash or Class A Common Stock contributed to the LLC by theCorporation shall be treated as a direct purchase of Units by the Corporation from the applicable Member pursuant toSection 707(a)(2)(B) of the Code that shall give rise to Basis Adjustments. In connection with a Direct Exchange orRedemption, the Parties acknowledge and agree that pursuant to applicable law the Corporation’s share of the basis inthe Reference Assets shall be increased by the excess, if any, of (A) the sum of (x) the fair market value of Class ACommon Stock or the cash transferred to a Member pursuant to an Exchange as payment for the Units, (y) the amount ofpayments made pursuant to this Agreement with respect to such Exchange and (z) the amount of liabilities allocated tothe Units acquired pursuant to the Exchange, over (B) the Corporation’s share of the basis of the Reference Assetsimmediately after the Exchange attributable to the Units exchanged, determined as if each member of the LLC Groupremains in existence as an entity for tax purposes and no member of the LLC Group made the election provided bySection 754 of the Code. 12  For the avoidance of doubt, payments made under this Agreement shall not be treated as resulting in a Basis Adjustmentto the extent that such payments are treated as Imputed Interest or are Actual Interest Amounts or Default Rate Interest.(b)Section 754 Election. In its capacity as the sole managing member of the LLC, the Corporation willensure that, on and after the date hereof and continuing throughout the term of this Agreement, the LLC and each of itsdirect and indirect Subsidiaries that is treated as a partnership for U.S. federal income tax purposes will have in effect anelection under Section 754 of the Code (and under any similar provisions of applicable U.S. state or local law).Section 2.2Basis Schedules. Within ninety (90) calendar days after the filing of the U.S. federal incomeTax Return of the Corporation for each relevant Taxable Year, the Corporation shall deliver to ACON, the ManagementRepresentative and Fundamental Capital, LLC (“Fundamental”), as applicable, a schedule (the “Basis Schedule”) thatshows, in reasonable detail as necessary in order to understand the calculations performed under this Agreement: (a)the Basis Adjustments with respect to the Reference Assets as a result of the relevant Exchanges effected in suchTaxable Year and (b) the period (or periods) over which each Basis Adjustment is amortizable and/or depreciable. TheBasis Schedule will become final and binding on the Parties pursuant to the procedures set forth in Section 2.4(a) andmay be amended by the Parties pursuant to the procedures set forth in Section 2.4(b).Section 2.3Tax Benefit Schedules.(a)Tax Benefit Schedule. Within ninety (90) calendar days after the filing of the U.S. federal income TaxReturn of the Corporation for any Taxable Year in which there is a Realized Tax Benefit or Realized Tax Detriment, theCorporation shall provide to ACON, the Management Representative and Fundamental, as applicable, a scheduleshowing, in reasonable detail, the calculation of the Realized Tax Benefit or Realized Tax Detriment for such TaxableYear (a “Tax Benefit Schedule”). The Tax Benefit Schedule will become final and binding on the Parties pursuant to theprocedures set forth in Section 2.4(a), and may be amended by the Parties pursuant to the procedures set forth inSection 2.4(b).(b)Applicable Principles. Subject to the provisions of this Agreement, the Realized Tax Benefit orRealized Tax Detriment for each Taxable Year is intended to measure the decrease or increase in the actual liability ofthe Corporation for Covered Taxes for such Taxable Year attributable to the Basis Adjustments, Imputed Interest, ActualInterest Amounts, and Default Rate Interest as determined using a “with and without” methodology described in Section2.4(a). Carryovers or carrybacks of any Tax item attributable to any Basis Adjustment, Imputed Interest, Actual InterestAmounts, and Default Rate Interest shall be considered to be subject to the rules of the Code and the TreasuryRegulations or the appropriate provisions of U.S. state or local tax law, as applicable, governing the use, limitation andexpiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any Tax item includes a portionthat is13  attributable to a Basis Adjustment, Imputed Interest, Actual Interest Amounts, and Default Rate Interest (a “TRA Portion”)and another portion that is not (a “Non-TRA Portion”), such portions shall be considered to be used in accordance withthe “with and without” methodology so that: (i) the amount of any Non-TRA Portion is deemed utilized first, followed bythe amount of any TRA Portion (with the TRA Portion being applied on a proportionate basis consistent with theprovisions of Section 3.3(a)); and (ii) in the case of a carryback of a Non-TRA Portion, such carryback shall not affect theoriginal “with and without” calculation made in the prior Taxable Year. The Parties agree that (i) all Tax BenefitPayments (other than Imputed Interest, Actual Interest Amounts and Default Rate Interest) attributable to an Exchangewill to the extent permitted by applicable law (A) be treated as subsequent upward purchase price adjustments that giverise to further Basis Adjustments for the Corporation and (B) have the effect of creating additional Basis Adjustments forthe Corporation in the year of payment, and (ii) as a result, such additional Basis Adjustments will be incorporated intothe current Taxable Year continuing until any incremental current Taxable Year benefits equal an immaterial amount. Section 2.4Procedures; Amendments.(a)Procedures. Each time the Corporation delivers an applicable Schedule to ACON, the ManagementRepresentative and Fundamental, as applicable under this Agreement, including any Amended Schedule deliveredpursuant to Section 2.4(b), but excluding any Early Termination Schedule or amended Early Termination Scheduledelivered pursuant to the procedures set forth in Section 4.2, the Corporation shall also: (x) deliver supporting schedulesand work papers, as determined by the Corporation or as reasonably requested by ACON and the ManagementRepresentative, as applicable, that provide a reasonable level of detail regarding the data and calculations that wererelevant for purposes of preparing the Schedule; (y) deliver an Advisory Firm Letter supporting such Schedule; and (z)allow ACON and the Management Representative, as applicable, and their advisors to have reasonable access to theappropriate representatives, as determined by the Corporation or as reasonably requested by ACON and theManagement Representative, as applicable, at the Corporation and the Advisory Firm in connection with a review ofsuch Schedule. Without limiting the generality of the preceding sentence, the Corporation shall ensure that any TaxBenefit Schedule that is delivered to ACON, the Management Representative and Fundamental, as applicable, alongwith any supporting schedules and work papers, provides a reasonably detailed presentation of the calculation of theactual liability of the Corporation for Covered Taxes (the “with” calculation) and the Hypothetical Tax Liability of theCorporation (the “without” calculation), and identifies any material assumptions or operating procedures or principles thatwere used for purposes of such calculations. An applicable Schedule or amendment thereto shall become final andbinding on the Parties thirty (30) calendar days from the date on which ACON, the Management Representative andFundamental, as applicable, first received the applicable Schedule or amendment thereto unless:14  (i)ACON or the Management Representative, as applicable, within thirty (30) calendar daysafter receiving the applicable Schedule or amendment thereto, provides the Corporation with written notice of amaterial objection to such Schedule that is made in good faith and that sets forth in reasonable detail ACON’sor the Management Representative’s, as applicable, material objection (an “Objection Notice”) or(ii)each of ACON and the Management Representative, as applicable, provides a writtenwaiver of its right to deliver an Objection Notice within the time period described in clause (i) above, in whichcase such Schedule or amendment thereto becomes binding on the date the waiver from each of ACON andthe Management Representative, as applicable, is received by the Corporation.In the event that ACON or the Management Representative, as applicable, timely delivers an Objection Notice pursuantto clause (i) above, and if the Parties, for any reason, are unable to successfully resolve the issues raised in theObjection Notice within thirty (30) calendar days after receipt by the Corporation of the Objection Notice, the Corporationand ACON or the Management Representative, as applicable, shall employ the reconciliation procedures as describedin Section 7.9 of this Agreement (the “Reconciliation Procedures”).(b)Amended Schedule. The applicable Schedule for any Taxable Year may be amended from time totime by the Corporation: (i) in connection with a Determination affecting such Schedule; (ii) to correct inaccuracies in theSchedule identified as a result of the receipt of additional factual information relating to a Taxable Year after the date theSchedule was originally provided to ACON and the Management Representative, as applicable; (iii) to comply with anExpert’s determination under the Reconciliation Procedures applicable to this Agreement; (iv) to reflect a change in theRealized Tax Benefit or Realized Tax Detriment for such Taxable Year attributable to a carryback or carryforward of aloss or other Tax item to such Taxable Year; (v) to reflect a change in the Realized Tax Benefit or Realized TaxDetriment for such Taxable Year attributable to an amended Tax Return filed for such Taxable Year; or (vi) to adjust aBasis Schedule to take into account any Tax Benefit Payments made pursuant to this Agreement (any such Schedule,an “Amended Schedule”). ARTICLE III.TAX BENEFIT PAYMENTSSection 3.1Timing and Amount of Tax Benefit Payments.(a)Timing of Payments. Except as provided in Sections 3.4 and 3.5, and subject to Sections 3.2 and 3.3,within three (3) Business Days following the date on which each Tax Benefit Schedule that is required to be delivered bythe Corporation to ACON and the Management Representative, as applicable, pursuant to Section 2.3(a) of thisAgreement becomes final in accordance with Section 2.4(a) of this Agreement,15  the Corporation shall pay to each relevant Member the Tax Benefit Payment as determined pursuant to Section3.1(b). Each such Tax Benefit Payment shall be made by wire transfer of immediately available funds to the bankaccount previously designated by such Members or as otherwise agreed by the Corporation and such Members. For theavoidance of doubt, the Members shall not be required under any circumstances to return any portion of any Tax BenefitPayment previously paid by the Corporation to the Members (including any portion of any Estimated Tax BenefitPayment or any Early Termination Payment).(b)Amount of Payments. For purposes of this Agreement, a “Tax Benefit Payment” with respect to anyMember means an amount, not less than zero, equal to the sum of: (i) the portion of the Net Tax Benefit that isAttributable to such Member (including Imputed Interest calculated in respect of such amount); and (ii) the Actual InterestAmount with respect to the Net Tax Benefit described in (i).(i)Attributable. A Net Tax Benefit is “Attributable” to a Member to the extent that it is derivedfrom any Basis Adjustment, Imputed Interest, or Actual Interest Amount that is attributable to an Exchangeundertaken by or with respect to such Member.(ii)Net Tax Benefit. The “Net Tax Benefit” for a Taxable Year equals the amount of the excess,if any, of (x) 85% of the Cumulative Net Realized Tax Benefit as of the end of such Taxable Year over (y) theaggregate amount of all Tax Benefit Payments previously made under this Section 3.1. For the avoidance ofdoubt, if the Cumulative Net Realized Tax Benefit as of the end of any Taxable Year is less than the aggregateamount of all Tax Benefit Payments previously made, no Member shall be required to return any portion of anyTax Benefit Payment previously made by the Corporation to such Member.(iii)Cumulative Net Realized Tax Benefit. The “Cumulative Net Realized Tax Benefit” for aTaxable Year equals the cumulative amount of Realized Tax Benefits for all Taxable Years of the Corporation,up to and including such Taxable Year, net of the cumulative amount of Realized Tax Detriments for the sameperiod. The Realized Tax Benefit and Realized Tax Detriment for each Taxable Year shall be determinedbased on the most recent Tax Benefit Schedule or Amended Schedule, if any, in existence at the time of suchdetermination.(iv)Realized Tax Benefit. The “Realized Tax Benefit” for a Taxable Year equals the excess, ifany, of the Hypothetical Tax Liability over the actual liability of the Corporation for Covered Taxes; provided,that for purposes of determining the Hypothetical Tax Liability and actual liability of the Corporation for CoveredTaxes, the Corporation shall use the Assumed State and Local Tax Rate for purposes of determining suchliabilities for all state and local Covered Taxes. For the avoidance of doubt, the calculation of the HypotheticalTax Liability and the actual liability of the Corporation for Covered Taxes shall take16  into account the federal benefit received by the Corporation with respect to state and local jurisdiction incometaxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate for therelevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state and localjurisdiction income taxes). If all or a portion of the actual liability for such Covered Taxes for the Taxable Yeararises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be included indetermining the Realized Tax Benefit unless and until there has been a Determination.(v)Realized Tax Detriment. The “Realized Tax Detriment” for a Taxable Year equals theexcess, if any, of the actual liability of the Corporation for Covered Taxes over the Hypothetical Tax Liability forsuch Taxable Year; provided, that for purposes of determining the Hypothetical Tax Liability and actual liabilityof the Corporation for Covered Taxes, the Corporation shall use the Assumed State and Local Tax Rate forpurposes of determining such liabilities for all state and local Covered Taxes. For the avoidance of doubt, thecalculation of the Hypothetical Tax Liability and the actual liability of the Corporation for Covered Taxes shalltake into account the federal benefit received by the Corporation with respect to state and local jurisdictionincome taxes (with such benefit taking into account the Corporation’s marginal U.S. federal income tax rate forthe relevant Taxable Year, the Assumed State and Local Tax Rate, and the deductibility, if any, of state andlocal jurisdiction income taxes). If all or a portion of the actual liability for such Covered Taxes for the TaxableYear arises as a result of an audit by a Taxing Authority of any Taxable Year, such liability shall not be includedin determining the Realized Tax Detriment unless and until there has been a Determination.(vi)Imputed Interest. The parties acknowledge that the principles of Sections 1272, 1274, or483 of the Code, as applicable, and the principles of any similar provision of U.S. state and local law, will, asapplicable, apply to cause a portion of any Net Tax Benefit payable by the Corporation to a Member under thisAgreement to be treated as imputed interest (“Imputed Interest”). For the avoidance of doubt, the deduction forthe amount of Imputed Interest as determined with respect to any Net Tax Benefit payable by the Corporation toa Member shall be excluded in determining the Hypothetical Tax Liability of the Corporation for purposes ofcalculating Realized Tax Benefits and Realized Tax Detriments pursuant to this Agreement.(vii)Actual Interest Amount. The “Actual Interest Amount” calculated in respect of the Net TaxBenefit for a Taxable Year will equal the amount of any Extension Rate Interest. For the avoidance of doubt,any deduction for any Actual Interest Amount as determined with respect to any Net Tax Benefit payable by theCorporation to a Member shall be excluded in determining the Hypothetical Tax Liability of the Corporation forpurposes of calculating Realized Tax Benefits and Realized Tax Detriments pursuant to this Agreement.17  (viii)Extension Rate Interest. Subject to Section 3.4, the amount of “Extension Rate Interest”calculated in respect of the Net Tax Benefit (including previously accrued Imputed Interest) for a Taxable Yearwill equal interest calculated at the Agreed Rate from the due date (without extensions) for filing the U.S. federalincome Tax Return of the Corporation for such Taxable Year until the date on which the Corporation makes atimely Tax Benefit Payment to the Member on or before the Final Payment Date as determined pursuant toSection 3.1(a).(ix)Default Rate Interest. In the event that the Corporation does not make timely payment of allor any portion of a Tax Benefit Payment to a Member on or before the Final Payment Date as determinedpursuant to Section 3.1(a), the amount of “Default Rate Interest” calculated in respect of the Net Tax Benefit(including previously accrued Imputed Interest and Extension Rate Interest) for a Taxable Year will equalinterest calculated at the Default Rate from the Final Payment Date for a Tax Benefit Payment as determinedpursuant to Section 3.1(a) until the date on which the Corporation makes such Tax Benefit Payment to suchMember. For the avoidance of doubt, any deduction for any Default Rate Interest with respect to any Net TaxBenefit payable by the Corporation to a Member shall be excluded in determining the Hypothetical Tax Liabilityof the Corporation for purposes of calculating Realized Tax Benefits and Realized Tax Detriments pursuant tothis Agreement.(x)The Corporation and the Members hereby acknowledge and agree that, as of the date of thisAgreement and as of the date of any future Exchange that may be subject to this Agreement, the aggregatevalue of the Tax Benefit Payments cannot be reasonably ascertained for U.S. federal income or otherapplicable tax purposes. Notwithstanding anything to the contrary in this Agreement, unless a Member notifiesthe Corporation otherwise, the stated maximum selling price (within the meaning of Treasury Regulation15A.453-1(c)(2)) with respect to any Exchange by such Member shall not exceed 175% of the amount of theinitial consideration received in connection with such Exchange (which, for the avoidance of doubt, shallinclude the amount of any cash and the fair market value of any Class A Common Stock received in suchExchange and shall exclude the fair market value of any Tax Benefit Payments) and the amount of the initialconsideration received in connection with such Exchange and the aggregate Tax Benefit Payments to suchMember in respect of such Exchange (other than amounts accounted for as interest under the Code) shall notexceed such stated maximum selling price.(c)Interest. The provisions of Section 3.1(b) are intended to operate so that interest will effectively accruein respect of the Net Tax Benefit for any Taxable Year as follows:(i)first, at the applicable rate used to determine the amount of Imputed Interest under the Code(from the relevant Exchange Date until the due18  date (without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Yearand, if required under applicable law, through the Final Payment Date for a Tax Benefit Payment as determinedpursuant to Section 3.1(a));(ii)second, at the Agreed Rate in respect of any Extension Rate Interest (from the due date(without extensions) for filing the U.S. federal income Tax Return of the Corporation for such Taxable Year untilthe Final Payment Date for a Tax Benefit Payment as determined pursuant to Section 3.1(a)); and(iii)third, at the Default Rate in respect of any Default Rate Interest (from the Final PaymentDate for a Tax Benefit Payment as determined pursuant to Section 3.1(a) until the date on which theCorporation makes the relevant Tax Benefit Payment to a Member).Section 3.2No Duplicative Payments. It is intended that the provisions of this Agreement will not result inthe duplicative payment of any amount (including interest) that may be required under this Agreement, and the provisionsof this Agreement shall be consistently interpreted and applied in accordance with that intent. For purposes of thisAgreement, and also for the avoidance of doubt, no Tax Benefit Payment shall be required to be calculated or made inrespect of any estimated tax payments, including, without limitation, any estimated U.S. federal income tax payments.Section 3.3Pro-Ration of Payments as Between the Members.(a)Insufficient Taxable Income. Notwithstanding anything in Section 3.1(b) to the contrary, if theaggregate potential depreciation, amortization or other similar deductions in respect of the Basis Adjustments, ImputedInterest, Actual Interest Amounts, and Default Rate Interest for purposes of determining the Corporation’s liability forCovered Taxes (the “Covered Tax Benefit”) is limited in a particular Taxable Year because the Corporation does nothave sufficient actual taxable income, then the available Covered Tax Benefit for the Corporation shall be allocatedamong the Members in proportion to the respective Tax Benefit Payment that would have been payable if theCorporation had in fact had sufficient taxable income so that there had been no such limitation. As an illustration of theintended operation of this Section 3.3(a), if the Corporation had $200 of aggregate potential Covered Tax Benefits in aparticular Taxable Year (with $50 of such Covered Tax Benefits being attributable to Member 1 and $150 of suchCovered Tax Benefits being attributable to Member 2), such that Member 1 would have potentially been entitled to a TaxBenefit Payment of $42.50 and Member 2 would have been entitled to a Tax Benefit Payment of $127.50 if theCorporation had $200 of actual taxable income, and if at the same time the Corporation only had $100 of actual taxableincome in such Taxable Year, then $25 of the aggregate $100 actual Covered Tax Benefit for the Corporation for suchTaxable Year would be allocated to Member 1 and $75 of the aggregate $100 actual Covered Tax benefit for theCorporation would be allocated to Member 2, such that Member 119  would receive a Tax Benefit Payment of $21.25 and Member 2 would receive a Tax Benefit Payment of $63.75. (b)Late Payments. If for any reason the Corporation is not able to timely and fully satisfy its paymentobligations under this Agreement in respect of a particular Taxable Year, then Default Rate Interest will begin to accruepursuant to Section 5.2 and the Corporation and other Parties agree that (i) the Corporation shall pay the Tax BenefitPayments due in respect of such Taxable Year to each Member pro rata in proportion to the amount of such Tax BenefitPayments, without favoring one obligation over the other, and (ii) no Tax Benefit Payment shall be made in respect ofany Taxable Year until all Tax Benefit Payments to all Members in respect of all prior Taxable Years have been made infull.Section 3.4Optional Estimated Tax Benefit Payment Procedure. As long as the Corporation is current inrespect of its payment obligations owed to each Member pursuant to this Agreement and there are no delinquent TaxBenefit Payments (including interest thereon) outstanding in respect of prior Taxable Years for any Member, theCorporation may, at any time on or after the due date (without extensions) for filing the U.S. federal income Tax Return ofthe Corporation for a Taxable Year and at the Corporation’s option, in its sole discretion, make one or more estimatedpayments to the Members in respect of any anticipated amounts to be owed with respect to a Taxable Year to theMembers pursuant to Section 3.1 of this Agreement (any such estimated payments referred to as an “Estimated TaxBenefit Payment”); provided that any Estimated Tax Benefit Payment made to a Member pursuant to this Section 3.4 ismatched by a proportionately equal Estimated Tax Benefit Payment to all other Members then entitled to a Tax BenefitPayment. Any Estimated Tax Benefit Payment made under this Section 3.4 shall be paid by the Corporation to theMembers and applied against the final amount of any Tax Benefit Payment to be made pursuant to Section 3.1. Thepayment of an Estimated Tax Benefit Payment by the Corporation to the Members pursuant to this Section 3.4 shall alsoterminate the obligation of the Corporation to make payment of any Extension Rate Interest that might have otherwiseaccrued with respect to the proportionate amount of the Tax Benefit Payment that is being paid in advance of theapplicable Tax Benefit Schedule being finalized pursuant to Section 2.4. Upon the making of any Estimated Tax BenefitPayment pursuant to this Section 3.4, the amount of such Estimated Tax Benefit Payment shall first be applied to anyestimated Extension Rate Interest, then to Imputed Interest, and then applied to the remaining residual amount of the TaxBenefit Payment to be made pursuant to Section 3.1. In determining the final amount of any Tax Benefit Payment to bemade pursuant to Section 3.1, and for purposes of finalizing the Tax Benefit Schedule pursuant to Section 2.4, theamount of any Estimated Tax Benefit Payments that may have been made with respect to the Taxable Year shall beincreased, if the finally determined Tax Benefit Payment for a Taxable Year exceeds the Estimated Tax BenefitPayments made for such Taxable Year, with such increase being paid by the Corporation to the Members along with anappropriate amount of Extension Rate Interest in respect of the amount of such increase (a “True-Up”). If the EstimatedTax Benefit Payment for a Taxable Year exceeds the finally determined Tax Benefit Payment for such Taxable20  Year, such excess, along with an appropriate amount of Extension Rate Interest in respect of such excess (beingcharged by the Corporation to the Member), shall be applied to reduce the amount of any subsequent future Tax BenefitPayments (including Estimated Tax Benefit Payments, if any) to be paid by the Corporation to such Member. As of thedate on which any Estimated Tax Benefit Payments are made, and as of the date on which any True-Up is made, allsuch payments shall be made in the same manner and subject to the same terms and conditions as otherwisecontemplated by Section 3.1 and all other applicable terms of this Agreement. For the avoidance of doubt, as is the casewith Tax Benefit Payments made by the Corporation to the Members pursuant to Section 3.1, the amount of anyEstimated Tax Benefit Payments made pursuant to this Section 3.4 that are attributable to an Exchange shall also betreated, in part, as subsequent upward purchase price adjustments that give rise to Basis Adjustments in the TaxableYear of payment to the extent permitted by applicable law and as of the date on which such payments are made (to theextent of the estimated Net Tax Benefit associated with such Estimated Tax Benefit Payment, less any Imputed Interest,and exclusive of any Extension Rate Interest).Section 3.5 Changes; Reserves; Suspension of Payments.(a)Receipt of Change Notice. If any Party, or any Affiliate or Subsidiary of any Party, receives a 30-dayletter, a final audit report, a statutory notice of deficiency, or similar written notice from any Taxing Authority that proposesan adjustment to a tax item of a Party that would reduce the Tax Benefit Payments that may be payable by theCorporation to the Members (a “Change Notice”), prompt written notification and a copy of the relevant Change Noticeshall be delivered by the Party, or its Affiliate or Subsidiary, that received such Change Notice to each of the Corporation,ACON, the Management Representative and Fundamental.(b)Receipt of Reserve Notice. Prior to the delivery of any Tax Benefit Schedule or other Schedule by theCorporation to ACON, the Management Representative and Fundamental, management of the Corporation shall consultwith the auditors for the Corporation and, if necessary, the Advisory Firm or other legal or accounting advisors to theCorporation regarding the substantive tax issues and related conclusions that underlie the calculations related to thedetermination of the Tax Benefit Payments required under this Agreement. If, following such consultation, themanagement for the Corporation shall reasonably determine that a tax reserve or contingent liability must be establishedby the Corporation for financial accounting purposes (as determined in accordance with GAAP) in relation to any past orfuture tax position that affects the amount of any past or future Tax Benefit Payments that have been made or that may bemade under this Agreement, then ACON and Fundamental shall be notified of such determination (a “Reserve Notice”).(c)Suspension of Payments. From and after the date on which a Change Notice is received, to theextent provided in the following sentence, Tax Benefit Payments required to be made under this Agreement shall be paidby the Corporation to a national bank mutually agreeable to the Parties to act as escrow agent to hold such21  funds in escrow pursuant to an escrow agreement until a Determination in respect of the applicable Change Notice isreceived. For purposes of the preceding sentence and for purposes of the determination of the amount to be placed inescrow pending a Determination, the Corporation shall suspend all future Tax Benefit Payments required under thisAgreement until the amount of such suspended future Tax Benefit Payments equals the aggregate amount of Tax BenefitPayments that the Corporation reasonably determines would not be payable if such Change Notice results in an adverseDetermination. From and after the date on which a Reserve Notice is issued, to the extent that the tax position that givesrise to a tax reserve or contingent liability would have the effect of reducing the Tax Benefit Payments required to bemade under this Agreement, the Tax Benefit Payments required to be made under this Agreement shall, to the extentdetermined reasonably necessary by the Audit Committee, be paid by the Corporation to a national bank mutuallyagreeable to the Parties to act as escrow agent to hold such funds in escrow pursuant to an escrow agreement until therelevant reserve is released or the relevant contingent liability is eliminated or it is otherwise determined that the taxposition is not reasonably expected to have the effect of reducing the Tax Benefit Payments. For purposes of thepreceding sentence and for purposes of the Audit Committee’s determination of the amount to be placed in escrowpending the release of the reserve or the elimination of the contingent liability, the Corporation shall be entitled tosuspend all future Tax Benefit Payments required under this Agreement until the amount of such suspended future TaxBenefit Payments equals the aggregate amount of Tax Benefit Payments that the Corporation reasonably determineswould not be payable if the tax position giving rise to the reserve is sustained. The amount to be placed in escrow shallbe held in an interest-bearing escrow account. The date on which the Corporation pays any such Tax Benefit Paymentsto the escrow agent shall not be considered the date on which such Tax Benefit Payments are paid to the Members;provided, however, the Actual Interest Amount and Default Rate Interest shall not accrue on the amount of the TaxBenefit Payments after the date on which such amount is placed in the escrow, and the amount of Tax Benefit Paymentspayable to Members with respect to the Tax Benefit Payments at issue shall be net of expenses and taxes as set forth inSection 3.5(d).(d)Release of Escrowed Funds. As of the date on which a reserve is released or contingent liability iseliminated (in the case of a Reserve Notice), and provided that no Change Notice has previously been issued and is stilloutstanding in relation to the same tax position that was the subject of the Reserve Notice, the relevant escrowed funds(along with any interest earned on such funds, and less (1) the out-of-pocket expenses incurred by the Corporation orthe LLC in administering the escrow, and (2) any taxes imposed on the Corporation or the LLC with respect to anyincome earned on the investment of such funds) shall be distributed to the relevant Members. The portion of the relevantescrowed funds held back pursuant to clauses (1) and (2) of the immediately preceding sentences shall be distributed tothe Corporation or the LLC, as applicable. If a Determination is received (in the case of a Change Notice), and if suchDetermination results in no adjustment in any Tax Benefit Payments under this Agreement, and provided that noReserve Notice has previously been issued and is still outstanding in relation to the same tax position that was thesubject of the Change22  Notice, then the relevant escrowed funds (along with any interest earned on such funds, and less (1) the out-of-pocketexpenses incurred by the Corporation or the LLC in administering the escrow, and (2) any taxes imposed on theCorporation or the LLC with respect to any income earned on the investment of such funds) shall be distributed to therelevant Members. If a Determination is received (in the case of a Change Notice), and if such Determination results inan adjustment in any Tax Benefit Payments under this Agreement, and provided that no Reserve Notice has previouslybeen issued and is still outstanding in relation to the same tax position that was the subject of the Change Notice, thenthe relevant escrowed funds (along with any interest earned on such funds) shall be distributed as follows: (i) first, to theCorporation or the LLC in an amount equal to (1) the out-of-pocket expenses incurred by the Corporation or the LLC inadministering the escrow and in contesting the Determination and (2) any taxes imposed on the Corporation or the LLCwith respect to any income earned on the investment of such funds; and (ii) second, to the relevant Parties (which, for theavoidance of doubt and depending on the nature of the adjustments, may include the Corporation or the relevantMembers, or some combination thereof) in accordance with the relevant Amended Schedule prepared pursuant toSection 2.4 of this Agreement.(e)Early Termination. Notwithstanding any other provision of this Agreement, in the event of an EarlyTermination Notice prior to release of the escrow pursuant to Section 3.5(d), the escrowed funds shall be released to theCorporation, and any Early Termination Payment payable by the Corporation to the Members pursuant to Section 4.3shall be computed without regard to any proposed adjustment to a tax item of a Party that has given rise to a ChangeNotice or any tax position that has given rise to a Reserve Notice.ARTICLE IV.TERMINATIONSection 4.1Early Termination of Agreement; Breach of Agreement.(a)Corporation’s Early Termination Right. With the written approval of a majority of the IndependentDirectors, the Corporation may completely terminate this Agreement, as and to the extent provided herein, with respect toall amounts payable to the Members pursuant to this Agreement by paying to the Members the Early TerminationPayment; provided that Early Termination Payments may be made pursuant to this Section 4.1(a) only if made to allMembers that are entitled to such a payment simultaneously, and provided further, that the Corporation may withdrawany notice to execute its termination rights under this Section 4.1(a) prior to the time at which any Early TerminationPayment has been paid. Upon the Corporation’s payment of the Early Termination Payment, the Corporation shall nothave any further payment obligations under this Agreement, other than with respect to any: (i) prior Tax Benefit Paymentsthat are due and payable under this Agreement but that still remain unpaid as of the date of the Early Termination Notice;and (ii) current Tax Benefit Payment due for the Taxable Year ending on or including the date of the Early TerminationNotice (except to the extent that the amount described in clause (ii) is included in the23  calculation of the Early Termination Payment). If an Exchange subsequently occurs with respect to Units for which theCorporation has exercised its termination rights under this Section 4.1(a), the Corporation shall have no obligationsunder this Agreement with respect to such Exchange.(b)Acceleration Upon Change of Control. In the event of a Change of Control, all obligations hereundershall be accelerated and such obligations shall be calculated pursuant to this Article IV as if an Early Termination Noticehad been delivered on the closing date of the Change of Control and utilizing the Valuation Assumptions by substitutingthe phrase “the closing date of a Change of Control” in each place where the phrase “Early Termination Effective Date”appears. Such obligations shall include, but not be limited to, (1) the Early Termination Payment calculated as if anEarly Termination Notice had been delivered on the closing date of the Change of Control, (2) any Tax Benefit Paymentsagreed to by the Corporation and the Members as due and payable but unpaid as of the Early Termination Notice and (3)any Tax Benefit Payments due for any Taxable Year ending prior to, with or including the closing date of a Change ofControl (except to the extent that any amounts described in clauses (2) or (3) are included in the Early TerminationPayment). For the avoidance of doubt, Sections 4.2 and 4.3 shall apply to a Change of Control, mutadis mutandi.(c)Acceleration Upon Breach of Agreement. In the event that the Corporation materially breaches any ofits material obligations under this Agreement, whether as a result of failure to make any payment when due, failure tohonor any other material obligation required hereunder, or by operation of law as a result of the rejection of thisAgreement in a case commenced under the Bankruptcy Code or otherwise, then all obligations hereunder shall beaccelerated and become immediately due and payable upon notice of acceleration from a Member (provided that in thecase of any proceeding under the Bankruptcy Code or other insolvency statute, such acceleration shall be automaticwithout any such notice), and such obligations shall be calculated as if an Early Termination Notice had been deliveredon the date of such notice of acceleration (or, in the case of any proceeding under the Bankruptcy Code or otherinsolvency statute, on the date of such breach) and shall include, but not be limited to: (i) the Early Termination Paymentcalculated as if an Early Termination Notice had been delivered on the date of such acceleration; (ii) any prior TaxBenefit Payments that are due and payable under this Agreement but that still remain unpaid as of the date of suchacceleration; and (iii) any current Tax Benefit Payment due for the Taxable Year ending with or including the date ofsuch acceleration (except to the extent included in the Early Termination Payment). Notwithstanding the foregoing, inthe event that the Corporation breaches this Agreement and such breach is not a material breach of a material obligation,a Member shall still be entitled to enforce all of its rights otherwise available under this Agreement, excluding, for theavoidance of doubt, seeking an acceleration of amounts payable under this Agreement. For purposes of this Section4.1(c), and subject to the following sentence, the Parties agree that the failure to make any payment due pursuant to thisAgreement within sixty (60) days of the relevant Final Payment Date shall be deemed to be a material breach of amaterial obligation under24  this Agreement for all purposes of this Agreement, and that it will not be considered to be a material breach of a materialobligation under this Agreement to make a payment due pursuant to this Agreement within sixty (60) days of the relevantFinal Payment Date. For the avoidance of doubt, a suspension of payments pursuant to Section 3.5 will not beconsidered to be a failure to make a payment due pursuant to this Agreement, provided that the Corporation complieswith the provisions of Section 3.5(c) that require the Corporation to pay the Tax Benefit Payments to anescrow. Notwithstanding anything in this Agreement to the contrary, it shall not be a material breach of a materialobligation of this Agreement if the Corporation fails to make any Tax Benefit Payment within sixty (60) days of therelevant Final Payment Date to the extent that the Corporation has insufficient funds or cannot make such payment as aresult of obligations imposed in connection with the Senior Obligations or under applicable law, and cannot obtainsufficient funds to make such payments by taking commercially reasonable actions; provided that the interest provisionsof Section 5.2 shall apply to such late payment (unless the Corporation does not have sufficient funds to make suchpayment as a result of limitations imposed by any Senior Obligations, in which case Section 5.2 shall apply, but theDefault Rate shall be replaced by the Agreed Rate); and further provided that such payment obligation shall nonethelessaccrue for the benefit of the Members and the Corporation shall make such payment at the first opportunity that it hassufficient funds and is otherwise able to make such payment.Section 4.2Early Termination Notice. If the Corporation chooses to exercise its right of early terminationunder Section 4.1 above, the Corporation shall deliver to ACON, the Management Representative and Fundamental anotice of the Corporation’s decision to exercise such right (an “Early Termination Notice”) and a schedule (the “EarlyTermination Schedule”) showing in reasonable detail the calculation of the Early Termination Payment. The Corporationshall also (x) deliver to ACON, the Management Representative and Fundamental supporting schedules and workpapers, as determined by the Corporation or as reasonably requested by ACON or the Management Representative,that provide a reasonable level of detail regarding the data and calculations that were relevant for purposes of preparingthe Early Termination Schedule; (y) deliver to ACON, the Management Representative and Fundamental an AdvisoryFirm Letter supporting such Early Termination Schedule; and (z) allow ACON and the Management Representative andtheir advisors to have reasonable access to the appropriate representatives, as determined by the Corporation or asreasonably requested by ACON or the Management Representative, at the Corporation and the Advisory Firm inconnection with a review of such Early Termination Schedule. The Early Termination Schedule shall become final andbinding on each Party thirty (30) calendar days from the first date on which ACON, the Management Representative andFundamental received such Early Termination Schedule unless:(i)ACON or the Management Representative within thirty (30) calendar days after receiving theEarly Termination Schedule, provides the Corporation with (A) notice of a material objection to such EarlyTermination Schedule made in good faith and setting forth in reasonable detail ACON or the25  Management Representative’s, as applicable, material objection (a “Termination Objection Notice”) and (B) aletter from an Advisory Firm (that is different from the Advisory Firm that was used by the Corporation to preparethe Early Termination Schedule) in support of such Termination Objection Notice; or(ii)each of ACON and the Management Representative provides a written waiver of such rightof a Termination Objection Notice within the period described in clause (i) above, in which case such EarlyTermination Schedule becomes binding on the date the waiver from ACON and the ManagementRepresentative is received by the Corporation.In the event that ACON or the Management Representative timely delivers a Termination Objection Notice pursuant toclause (i) above, and if the Parties, for any reason, are unable to successfully resolve the issues raised in theTermination Objection Notice within thirty (30) calendar days after receipt by the Corporation of the TerminationObjection Notice, the Corporation and ACON or the Management Representative, as applicable, shall employ theReconciliation Procedures. For the avoidance of doubt, and notwithstanding anything to the contrary herein, theexpense of preparing and obtaining the letter from an Advisory Firm referenced in clause (i) above shall be borne solelyby ACON or the Management Representative, as applicable, and the Corporation shall have no liability with respect tosuch letter or any of the expenses associated with its preparation and delivery. The date on which the Early TerminationSchedule becomes final in accordance with this Section 4.2 shall be the “Early Termination Reference Date.”Section 4.3Payment Upon Early Termination.(a)Timing of Payment. Within three (3) Business Days after the Early Termination Reference Date, theCorporation shall pay to each Member an amount equal to the Early Termination Payment for such Member. Such EarlyTermination Payment shall be made by the Corporation by wire transfer of immediately available funds to a bankaccount or accounts designated by the Members or as otherwise agreed by the Corporation and the Members.(b)Amount of Payment. The “Early Termination Payment” payable to a Member pursuant to Section4.3(a) shall equal the present value, discounted at the Early Termination Rate as determined as of the Early TerminationReference Date, of all Tax Benefit Payments that would be required to be paid by the Corporation to such Member,whether payable with respect to Units that were Exchanged prior to the Early Termination Effective Date or on or after theEarly Termination Effective Date, beginning from the Early Termination Effective Date and using the ValuationAssumptions. For the avoidance of doubt, notwithstanding any other provision in this Agreement, neither (i) anyproposed adjustment to a tax item of a Party that has given rise to a Change Notice, nor (ii) any reserve or contingentliability associated with a tax position that has given rise to a Reserve Notice, shall be taken into account in determiningthe amount of26  any Early Termination Payment, which shall be computed as if the adjustment or tax item has been favorably resolved.ARTICLE V.SUBORDINATION AND LATE PAYMENTSSection 5.1Subordination. Notwithstanding any other provision of this Agreement to the contrary, anyTax Benefit Payment or Early Termination Payment required to be made by the Corporation to the Members under thisAgreement shall rank subordinate and junior in right of payment to any principal, interest, or other amounts due andpayable in respect of any obligations owed in respect of secured or unsecured indebtedness for borrowed money of theCorporation and its Subsidiaries (“Senior Obligations”) and shall rank pari passu in right of payment with all current orfuture unsecured obligations of the Corporation that are not Senior Obligations. To the extent that any payment underthis Agreement is not permitted to be made at the time payment is due as a result of this Section 5.1 and the terms of theagreements governing Senior Obligations, such payment obligation nevertheless shall accrue for the benefit of theMembers and the Corporation shall make such payments at the first opportunity that such payments are permitted to bemade in accordance with the terms of the Senior Obligations.Section 5.2Late Payments by the Corporation. Except as otherwise provided in this Agreement, theamount of all or any portion of any Tax Benefit Payment or Early Termination Payment not made to the Members whendue under the terms of this Agreement, whether as a result of Section 5.1 and the terms of the Senior Obligations orotherwise, shall be payable together with any interest thereon, computed at the Default Rate and commencing from theFinal Payment Date on which such Tax Benefit Payment or Early Termination Payment was first due and payable to thedate of actual payment.ARTICLE VI.TAX MATTERS; CONSISTENCY; COOPERATIONSection 6.1Participation in the Corporation’s and the LLC’s Tax Matters. Except as otherwise providedherein, the Corporation shall have full responsibility for, and sole discretion over, all tax matters concerning theCorporation and the LLC, including without limitation the preparation, filing or amending of any Tax Return anddefending, contesting or settling any issue pertaining to taxes; provided, however, that if ACON owns (or would ownupon an Exchange of all outstanding Units) at least five (5) percent of the Class A Common Stock, the Corporation shallnot settle or fail to contest any issue pertaining to Covered Taxes that is reasonably expected to materially adverselyaffect the Members’ rights and obligations under this Agreement without the consent of ACON, such consent not to beunreasonably withheld or delayed. If ACON fails to respond to any notice with respect to the settlement or otherdisposition of any such issue within fifteen (15) days of its receipt of the applicable notice, ACON shall be deemed tohave consented to the proposed settlement or other disposition.27  Notwithstanding the foregoing, the Corporation shall notify ACON, the Management Representative and Fundamental of,and keep them reasonably informed with respect to, the portion of any tax audit of the Corporation or the LLC, or any ofthe LLC’s Subsidiaries, the outcome of which is reasonably expected to materially affect the Tax Benefit Paymentspayable to such Members under this Agreement, and ACON and the Management Representative, as applicable, shallhave the right to participate in and to monitor at their own expense (but, for the avoidance of doubt, not to control) anysuch portion of any such Tax audit. To the extent there is a conflict between this Agreement and the LLC Agreement asit relates to tax matters concerning Covered Taxes and the Corporation and the LLC, including preparation, filing oramending of any Tax Return and defending, contesting or settling any issue pertaining to taxes, this Agreement shallcontrol; provided, however, that to the extent there is a conflict between this Agreement and Sections 5.05 and 9.02 ofthe LLC Agreement, Sections 5.05 and 9.02 of the LLC Agreement shall control.Section 6.2Consistency. Except as otherwise required by law, all calculations and determinations madehereunder, including, without limitation, any Basis Adjustments, the Schedules and the determination of any RealizedTax Benefits or Realized Tax Detriments, shall be made in accordance with the elections, methodologies or positionstaken by the Corporation and the LLC on their respective Tax Returns. Each Member shall prepare its Tax Returns in amanner that is consistent with the terms of this Agreement, and any related calculations or determinations that are madehereunder, including, without limitation, the terms of Section 2.1 of this Agreement and the Schedules provided to theMembers under this Agreement. In the event that an Advisory Firm is replaced with another Advisory Firm, suchreplacement Advisory Firm shall perform its services under this Agreement using procedures and methodologiesconsistent with the previous Advisory Firm, unless otherwise required by law or unless the Corporation and all of theMembers agree to the use of other procedures and methodologies.Section 6.3Cooperation.(a)Each Member shall (i) furnish to the Corporation in a timely manner such information, documents andother materials as the Corporation may reasonably request for purposes of making any determination or computationnecessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit,examination or controversy with any Taxing Authority, (ii) make itself available to the Corporation and its representativesto provide explanations of documents and materials and such other information as the Corporation or its representativesmay reasonably request in connection with any of the matters described in clause (i) above, and (iii) reasonablycooperate in connection with any such matter.(b)The Corporation shall reimburse the Members for any reasonable and documented out-of-pocketcosts and expenses incurred pursuant to Section 6.3(a).28  ARTICLE VII.MISCELLANEOUSSection 7.1Notices. All notices, requests, consents and other communications hereunder shall be inwriting and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courierservice, by fax, by electronic mail (delivery receipt requested) or by certified or registered mail (postage prepaid, returnreceipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be asspecified in a notice given in accordance with this Section 7.1). All notices hereunder shall be delivered as set forthbelow, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:If to the Corporation, to:Funko, Inc.2802 Wetmore AvenueEverett, Washington 98201Attn: Russell Nickelwith a copy (which shall not constitute notice to the Corporation) to:Latham & Watkins LLP885 Third AvenueNew York, New York 10022Attn: Marc JaffeIf to ACON:ACON Funko Investors, L.L.C.1133 Connecticut Ave. N.W., Suite 700Washington, D.C. 20036 Attn: Kenneth R. Brotman with a copy (which shall not constitute notice to ACON) to:Hogan Lovells US LLP7930 Jones Branch Drive, Ninth FloorMcLean, VA 22102 Attn: Robert Welp Adam Brown 29  If to Fundamental:Fundamental Capital, LLC4 Embarcadero CenterSuite 1400San Francisco, CA 94111Attn: Kevin Keenleywith a copy (which shall not constitute notice to Fundamental) to:Reed Smith LLP1510 Page Mill Road Suite 110Palo Alto, CA 94304-1127Attn: Donald C. Reinke If to the Management Representative (on behalf of applicable Members):Russell NickelFunko, Inc.2802 Wetmore AvenueEverett, Washington 98201 Any Party may change its address, fax number or e-mail address by giving each of the other Parties written notice thereofin the manner set forth above.Section 7.2Counterparts. This Agreement may be executed in one or more counterparts, all of whichshall be considered one and the same agreement and shall become effective when one or more counterparts have beensigned by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign thesame counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission shall be aseffective as delivery of a manually signed counterpart of this Agreement.Section 7.3Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entireagreement and supersedes all prior agreements and understandings, both written and oral, among the Parties withrespect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each Partyhereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, isintended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or byreason of this Agreement.30  Section 7.4Governing Law. This Agreement shall be governed by, and construed in accordance with,the law of the State of Delaware, without regard to the conflicts of laws principles thereof that would mandate theapplication of the laws of another jurisdiction.Section 7.5Severability. If any term or other provision of this Agreement is invalid, illegal or incapable ofbeing enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain infull force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected inany manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegalor incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effectthe original intent of the Parties as closely as possible in an acceptable manner in order that the transactionscontemplated hereby are consummated as originally contemplated to the greatest extent possible.Section 7.6Assignments; Amendments; Successors; No Waiver.(a)Assignment. No Member may assign, sell, pledge, or otherwise alienate or transfer any interest in thisAgreement, including the right to receive any Tax Benefit Payments under this Agreement, to any Person (other than aPermitted Transferee) without (i) the prior written consent of the Corporation (such consent not to be unreasonablywithheld, conditioned or delayed) and (ii) such Person executing and delivering a Joinder agreeing to succeed to theapplicable portion of such Member’s interest in this Agreement and to become a Party for all purposes of this Agreement(the “Joinder Requirement”). For the avoidance of doubt, if a Member transfers Units in accordance with the terms of theLLC Agreement but does not assign to the transferee of such Units its rights under this Agreement with respect to suchtransferred Units, such Member shall continue to be entitled to receive the Tax Benefit Payments arising in respect of asubsequent Exchange of such Units (and any such transferred Units shall be separately identified, so as to facilitate thedetermination of Tax Benefit Payments hereunder). The Corporation may not assign any of its rights or obligations underthis Agreement to any Person (other than any direct or indirect successor (whether by purchase, merger, consolidation orotherwise) to all or substantially all of the business or assets of the Corporation) without the prior written consent of eachof the Members (and any purported assignment without such consent shall be null and void). (b)Amendments. No provision of this Agreement may be amended unless such amendment is approvedin writing by each of a majority of the Independent Directors, ACON, the Management Representative and Fundamental,in which case such amendment shall be permitted. No provision of this Agreement may be waived unless such waiver isin writing and signed by the Party against whom the waiver is to be effective.31  (c)Successors. Except as provided in Section 7.6(a), all of the terms and provisions of this Agreementshall be binding upon, and shall inure to the benefit of and be enforceable by, the Parties hereto and their respectivesuccessors, assigns, heirs, executors, administrators and legal representatives. The Corporation shall require andcause any direct or indirect successor (whether by purchase, merger, consolidation or otherwise) to all or substantially allof the business or assets of the Corporation, by written agreement, expressly to assume and agree to perform thisAgreement in the same manner and to the same extent that the Corporation would be required to perform if no suchsuccession had taken place.(d)Waiver. No failure by any Party to insist upon the strict performance of any covenant, duty,agreement, or condition of this Agreement, or to exercise any right or remedy consequent upon a breach thereof, shallconstitute a waiver of any such breach or any other covenant, duty, agreement, or condition.Section 7.7Titles and Subtitles. The titles of the sections and subsections of this Agreement are forconvenience of reference only and are not to be considered in construing this Agreement.Section 7.8Resolution of Disputes.(a)Except for Reconciliation Disputes subject to Section 7.9, any and all disputes which cannot besettled amicably, including any ancillary claims of any Party, arising out of, relating to or in connection with the validity,negotiation, execution, interpretation, performance or non-performance of this Agreement (including the validity, scopeand enforceability of this arbitration provision) (each a “Dispute”) shall be finally resolved by arbitration in accordancewith the International Institute for Conflict Prevention and Resolution Rules for Administered Arbitration (the “Rules”) bythree arbitrators, of which the Corporation shall appoint one arbitrator and the Members party to such Dispute shallappoint one arbitrator in accordance with the “screened” appointment procedure provided in Rule 5.4. The arbitrationshall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by thearbitrators may be entered by any court having jurisdiction thereof. The place of the arbitration shall be Seattle,Washington.(b)Notwithstanding the provisions of paragraph (a), any Party may bring an action or special proceedingin any court of competent jurisdiction for the purpose of compelling another Party to arbitrate, seeking temporary orpreliminary relief in aid of an arbitration hereunder, and/or enforcing an arbitration award and, for the purposes of thisparagraph (b), each Party (i) expressly consents to the application of paragraph (c) of this Section 7.8 to any such actionor proceeding, and (ii) agrees that proof shall not be required that monetary damages for breach of the provisions of thisAgreement would be difficult to calculate and that remedies at law would be inadequate. For the avoidance of doubt, thisSection 7.8 shall not apply to Reconciliation Disputes to be settled in accordance with the procedures set forth in Section7.9.32  (c)Each Party irrevocably consents to service of process by means of notice in the manner provided forin Section 7.1. Nothing in this Agreement shall affect the right of any Party to serve process in any other mannerpermitted by law.(d)WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLYWAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIALBY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THISAGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORTOR ANY OTHER THEORY).(e)In the event the parties are unable to agree whether a dispute between them is a ReconciliationDispute subject to the dispute resolution procedure set forth in Section 7.9 or a Dispute subject to the dispute resolutionprocedure set forth in this Section 7.8, such disagreement shall be decided and resolved in accordance with theprocedure set forth in this Section 7.8.Section 7.9Reconciliation. In the event that the Corporation and any Member are unable to resolve adisagreement with respect to a Schedule (other than an Early Termination Schedule) prepared in accordance with theprocedures set forth in Section 2.4, or with respect to an Early Termination Schedule prepared in accordance with theprocedures set forth in Section 4.2, within the relevant time period designated in this Agreement (a “ReconciliationDispute”), the Reconciliation Dispute shall be submitted for determination to a nationally recognized expert (the “Expert”)in the particular area of disagreement mutually acceptable to both Parties. The Expert shall be a partner or principal in anationally recognized accounting firm, and unless the Corporation and such Member agree otherwise, the Expert shallnot, and the firm that employs the Expert shall not, have any material relationship with the Corporation or such Memberor other actual or potential conflict of interest. If the Parties are unable to agree on an Expert within fifteen (15) calendardays of receipt by the respondent(s) of written notice of a Reconciliation Dispute, the selection of an Expert shall betreated as a Dispute subject to Section 7.8 and an arbitration panel shall pick an Expert from a nationally recognizedaccounting firm that does not have any material relationship with the Corporation or such Member or other actual orpotential conflict of interest. The Expert shall resolve any matter relating to the Basis Schedule or an amendment theretoor the Early Termination Schedule or an amendment thereto within thirty (30) calendar days and shall resolve any matterrelating to a Tax Benefit Schedule or an amendment thereto within fifteen (15) calendar days or as soon thereafter as isreasonably practicable, in each case after the matter has been submitted to the Expert for resolution. Notwithstandingthe preceding sentence, if the matter is not resolved before any payment that is the subject of a disagreement would bedue (in the absence of such disagreement) or any Tax Return reflecting the subject of a disagreement is due, theundisputed amount shall be paid on the date prescribed by this Agreement and such Tax Return may be filed asprepared by the Corporation, subject to adjustment or amendment upon resolution. The costs and expenses relating tothe engagement of such Expert or amending any Tax Return shall be borne by the Corporation except as33  provided in the next sentence. The Corporation and the Members shall bear their own costs and expenses of suchproceeding, unless (i) the Expert adopts the Member’s position, in which case the Corporation shall reimburse theMember for any reasonable and documented out-of-pocket costs and expenses in such proceeding (including for theavoidance of doubt any costs and expenses incurred by the Member relating to the engagement of the Expert oramending any applicable Tax Return), or (ii) the Expert adopts the Corporation’s position, in which case the Membershall reimburse the Corporation for any reasonable and documented out-of-pocket costs and expenses in suchproceeding (including for the avoidance of doubt costs and expenses incurred by the Corporation relating to theengagement of the Expert or amending any applicable Tax Return). The Expert shall finally determine anyReconciliation Dispute and the determinations of the Expert pursuant to this Section 7.9 shall be binding on theCorporation and the Members and may be entered and enforced in any court having competent jurisdiction.Section 7.10Withholding. The Corporation and its affiliates and representatives shall be entitled todeduct and withhold from any payment that is payable to any Member pursuant to this Agreement such amounts as theCorporation is required to deduct and withhold with respect to the making of such payment under the Code or anyprovision of U.S. state, local or foreign tax law. To the extent that amounts are so withheld and paid over to theappropriate Taxing Authority, such withheld amounts shall be treated for all purposes of this Agreement as having beenpaid by the Corporation to the relevant Member. Each Member shall promptly provide the Corporation with anyapplicable tax forms and certifications reasonably requested by the Corporation in connection with determining whetherany such deductions and withholdings are required under the Code or any provision of U.S. state, local or foreign taxlaw.Section 7.11Admission of the Corporation into a Consolidated Group; Transfers of Corporate Assets.(a)If the Corporation is or becomes a member of an affiliated or consolidated group of corporations thatfiles a consolidated income Tax Return pursuant to Section 1501 or other applicable Sections of the Code governingaffiliated or consolidated groups, or any corresponding provisions of U.S. state or local law, then: (i) the provisions of thisAgreement shall be applied with respect to the group as a whole; and (ii) Tax Benefit Payments, Early TerminationPayments, and other applicable items hereunder shall be computed with reference to the consolidated taxable income ofthe group as a whole. (b)If the Corporation, its successor in interest or any member of a group described in Section 7.11(a)transfers one or more assets to a corporation (or a Person classified as a corporation for U.S. income tax purposes) withwhich such entity does not file a consolidated Tax Return pursuant to Section 1501 of the Code, such entity, for purposesof calculating the amount of any Tax Benefit Payment or Early Termination Payment due hereunder, shall be treated ashaving disposed of such asset in a fully taxable transaction on the date of such transfer. The consideration deemed tobe34  received by such entity shall be equal to the fair market value of the contributed asset as determined by the AdvisoryFirm or a valuation expert selected by the Corporation. For purposes of this Section 7.11, a transfer of a partnershipinterest shall be treated as a transfer of the transferring partner’s share of each of the assets and liabilities of thatpartnership. Notwithstanding anything to the contrary set forth herein, if the Corporation, its successor in interest or anymember of a group described in Section 7.11(a), transfers its assets pursuant to a transaction that qualifies as a“reorganization” (within the meaning of Section 368(a) of the Code) in which such entity does not survive or pursuant toany other transaction to which Section 381(a) of the Code applies (other than any such reorganization or any such othertransaction, in each case, pursuant to which such entity transfers assets to a corporation with which the Corporation, itssuccessor in interest or any member of the group described in Section 7.11(a) (other than any such member beingtransferred in such reorganization or other transaction) does not file a consolidated Tax Return pursuant to Section 1501of the Code), the transfer will not cause such entity to be treated as having transferred any assets to a corporation (or aPerson classified as a corporation for U.S. income tax purposes) pursuant to this Section 7.11(b). Section 7.12Confidentiality. Each Member and its assignees acknowledges and agrees that theinformation of the Corporation is confidential and, except in the course of performing any duties as necessary for theCorporation and its Affiliates, as required by law or legal process or to enforce the terms of this Agreement, such Personshall keep and retain in the strictest confidence and not disclose to any Person any confidential matters, acquiredpursuant to this Agreement, of the Corporation and its Affiliates and successors, learned by any Member heretofore orhereafter. This Section 7.12 shall not apply to (i) any information that has been made publicly available by theCorporation or any of its Affiliates, becomes public knowledge (except as a result of an act of any Member in violation ofthis Agreement) or is generally known to the business community, (ii) the disclosure of information to the extentnecessary for a Member to prosecute or defend claims arising under or relating to this Agreement, and (iii) the disclosureof information to the extent necessary for a Member to prepare and file its Tax Returns, to respond to any inquiriesregarding the same from any Taxing Authority or to prosecute or defend any action, proceeding or audit by any TaxingAuthority with respect to such Tax Returns. If a Member or an assignee commits a breach, or threatens to commit abreach, of any of the provisions of this Section 7.12, the Corporation shall have the right and remedy to have theprovisions of this Section 7.12 specifically enforced by injunctive relief or otherwise by any court of competent jurisdictionwithout the need to post any bond or other security, it being acknowledged and agreed that any such breach orthreatened breach shall cause irreparable injury to the Corporation or any of its Subsidiaries and that money damagesalone shall not provide an adequate remedy to such Persons. Such rights and remedies shall be in addition to, and notin lieu of, any other rights and remedies available at law or in equity.Section 7.13Change in Law. Notwithstanding anything herein to the contrary, if, as a result of or, inconnection with an actual or proposed change in law, a Member reasonably believes that the existence of thisAgreement could cause income (other35  than income arising from receipt of a payment under this Agreement) recognized by such Member (or direct or indirectequity holders in such Member) in connection with any Exchange to be treated as ordinary income rather than capitalgain (or otherwise taxed at ordinary income rates) for U.S. federal income tax purposes or would have other materialadverse tax consequences to such Member or any direct or indirect owner of such Member, then at the written election ofsuch Member in its sole discretion (in an instrument signed by such Member and delivered to the Corporation) and to theextent specified therein by such Member, this Agreement shall cease to have further effect and shall not apply to anExchange with respect to such Member occurring after a date specified by such Member, or may be amended by in amanner reasonably determined by such Member, provided that such amendment shall not result in an increase in anypayments owed by the Corporation under this Agreement at any time as compared to the amounts and times ofpayments that would have been due in the absence of such amendment.Section 7.14Interest Rate Limitation. Notwithstanding anything to the contrary contained herein, theinterest paid or agreed to be paid hereunder with respect to amounts due to any Member hereunder shall not exceed themaximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”). If any Member shall receiveinterest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the Tax Benefit Payment,Estimated Tax Benefit Payment or Early Termination Payment, as applicable (but in each case exclusive of anycomponent thereof comprising interest) or, if it exceeds such unpaid non-interest amount, refunded to the Corporation. Indetermining whether the interest contracted for, charged, or received by any Member exceeds the Maximum Rate, suchMember may, to the extent permitted by applicable law, (a) characterize any payment that is not principal as an expense,fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate,allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of thepayment obligations owed by the Corporation to such Member hereunder. Notwithstanding the foregoing, it is theintention of the Parties to conform strictly to any applicable usury laws.Section 7.15Independent Nature of Rights and Obligations. The rights and obligations of the eachMember hereunder are several and not joint with the rights and obligations of any other Person. A Member shall not beresponsible in any way for the performance of the obligations of any other Person hereunder, nor shall a Member havethe right to enforce the rights or obligations of any other Person hereunder (other than the Corporation). The obligationsof a Member hereunder are solely for the benefit of, and shall be enforceable solely by, the Corporation. Nothingcontained herein or in any other agreement or document delivered at any closing, and no action taken by any Memberpursuant hereto or thereto, shall be deemed to constitute the Members acting as a partnership, an association, a jointventure or any other kind of entity, or create a presumption that the Members are in any way acting in concert or as agroup with respect to such rights or obligations or the transactions contemplated hereby, and the Corporationacknowledges that the Members are not acting in concert or as a group and36  will not assert any such claim with respect to such rights or obligations or the transactions contemplated hereby.Section 7.16LLC Agreement. This Agreement shall be treated as part of the LLC Agreement asdescribed in Section 761(c) of the Code and Sections 1.704-1(b)(2)(ii)(h) and 1.761-1(c) of the Treasury Regulations.Section 7.17Management Representative. By executing this Agreement, each of the Members (otherthan ACON and any of its Affiliates) shall be deemed to have irrevocably constituted and appointed Russell Nickel (inthe capacity described in this Section 7.17 and each successor as provided below, the “Management Representative”)as his, her or its agent and attorney in fact with full power of substitution to act from and after the date hereof and to doany and all things and execute any and all documents on behalf of such Members which may be necessary, convenientor appropriate to facilitate any matters under this Agreement, including but not limited to: (i) execution of the documentsand certificates required pursuant to this Agreement; (ii) except to the extent specifically provided in this Agreement thatnotice shall be sent to Fundamental, receipt and forwarding of notices and communications pursuant to this Agreement;(iv) administration of the provisions of this Agreement; (v) except with respect to Fundamental in respect of matters forwhich Fundamental has negotiated separate protections as described herein, giving or agreeing to, on behalf of suchMembers, any and all consents, waivers, amendments or modifications deemed by the Management Representative, inits sole and absolute discretion, to be necessary or appropriate under this Agreement and the execution or delivery ofany documents that may be necessary or appropriate in connection therewith; (vi) except with respect to Fundamental,amending this Agreement or any of the instruments to be delivered to the Corporation pursuant to this Agreement;(vii) taking actions Management Representative is expressly authorized to take pursuant to the other provisions of thisAgreement; (viii) except with respect to Fundamental, negotiating and compromising, on behalf of such Members, anydispute that may arise under, and exercising or refraining from exercising any remedies available under, this Agreementor any other agreement contemplated hereby and executing, on behalf of such Members, any settlement agreement,release or other document with respect to such dispute or remedy; and (ix) engaging attorneys, accountants, agents orconsultants on behalf of such Members in connection with this Agreement or any other agreement contemplated herebyand paying any fees related thereto. If the Management Representative is unable or unwilling to so serve, then theMembers (other than ACON and its Affiliates), as applicable, holding a majority of the common units owned by suchMembers outstanding on the date hereof, shall elect a new Management Representative. To the fullest extent permittedby law, none of the Management Representative, any of its Affiliates, or any of the Management Representative’s orAffiliate’s directors, officers, employees or other agents (each a “Covered Person”) shall be liable, responsible oraccountable in damages or otherwise to any Member, the LLC or the Corporation for damages arising from any actiontaken or omitted to be taken by the Management Representative or any other Person with respect to the LLC or theCorporation, except in the case of any action or omission which constitutes, with respect to such Person,37  willful misconduct or fraud. Each of the Covered Persons may consult with legal counsel, accountants, and other expertsselected by it, and any act or omission suffered or taken by it on behalf of the LLC or the Corporation or in furtherance ofthe interests of the LLC or the Corporation in good faith in reliance upon and in accordance with the advice of suchcounsel, accountants, or other experts shall create a rebuttable presumption of the good faith and due care of suchCovered Person with respect to such act or omission; provided that such counsel, accountants, or other experts wereselected with reasonable care. Each of the Covered Persons may rely in good faith upon, and shall have no liability tothe LLC, the Corporation or the Members for acting or refraining from acting upon, any resolution, certificate, statement,instrument, opinion, report, notice, request, consent, order, bond, debenture, or other paper or document reasonablybelieved by it to be genuine and to have been signed or presented by the proper party or parties.[Signature Page Follows This Page] 38  IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf thisAgreement as of the date first written above.CORPORATION:FUNKO, INC. By:/s/ Tracy DawName: Title: [Signature Page to Tax Receivable Agreement]  THE LLC:FUNKO ACQUISITION HOLDINGS, L.L.C. By:/s/ Tracy DawName: Title: [Signature Page to Tax Receivable Agreement]  MEMBERACON FUNKO INVESTORS, L.L.C.By ACON Funko Manager, L.L.C., itsManagerBy:/s/ Kenneth Brotman Name:Kenneth Brotman Title:Managing Director [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Russell Nickel Name:Russell Nickel Title: MANAGEMENT REPRESENTATIVE:By:/s/ Russell Nickel Name:Russell Nickel Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Sean Wilkinson Name:Sean Wilkinson Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Jacob Matson Name:Jacob Matson Title:Dir. Innovation [Signature Page to Tax Receivable Agreement]  MEMBER:VICTORIA ANNE MARIOTTI, AS TRUSTEE OF BRIAN R.MARIOTTI GRANTOR RETAINED ANNUITY TRUSTBy:/s/ Victoria Anne Mariotti Name:Victoria Anne Mariotti Title:Trustee [Signature Page to Tax Receivable Agreement]  MEMBER:VICTORIA ANNE MARIOTTI, AS TRUSTEE OF MARIOTTIFAMILY IRREVOCABLE TRUSTBy:/s/ Victoria Anne Mariotti Name:Victoria Anne Mariotti Title:Trustee[Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Kurt Dicus Name:Kurt Dicus Title:10-18-2017 [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Laurie Anderson Name:Laurie Anderson Title:Controller [Signature Page to Tax Receivable Agreement]  MEMBER:CERBERUS ASRS HOLDINGS, LLCBy:/s/ Daniel E. Wolf Name:Daniel E. Wolf Title:Vice President [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Mark Robben Name:Mark Robben Title:Director of Marketing [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Timothy Spiller Name:Timothy Spiller Title:Director of Operations [Signature Page to Tax Receivable Agreement]  MEMBER:TREVOR SCHULTZ, AS TRUSTEE OF THE TREVORSCHULTZ FAMILY TRUST,DATED DECEMBER 8, 2011By:/s/ Trevor Schultz Name:Trevor Schultz Title:Trustee [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Johanna Gepford Name:Johanna Gepford Title:SVP Sales [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Sanjay Srivastava Name:Sanjay Srivastava Title:Director, Analytics [Signature Page to Tax Receivable Agreement]  MEMBER:DALE SCHULTZ, AS TRUSTEE OF THE DALE SCHULTZFAMILY TRUST, DATEDDECEMBER 8, 2011By:/s/ Dale Schultz Name:Dale Schultz Title:Trustee [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Andrew Perlmutter Name:Andrew Perlmutter Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Andrew Oddie Name:Andrew Oddie Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Robert Mitchell Name:Robert Mitchell Title:Sr. Director, Operations [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Adam Kriger Name:Adam Kriger Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Brian Mariotti Name:Brian Mariotti Title: [Signature Page to Tax Receivable Agreement]  MEMBER:GLADSTONE CAPITAL CORPORATIONBy:/s/ Bob Marcotte Name:Bob Marcotte Title:President [Signature Page to Tax Receivable Agreement]  MEMBER: By:/s/ Doug Kikendall Name:Doug Kikendall Title:Member [Signature Page to Tax Receivable Agreement]  MEMBER:JON P. AND TRISHAWN P. KIPP CHILDREN’S TRUST U/A/D5/31/14By:/s/ Shauna M. Kipp trustee Name: Title:Trustee [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Gustavio Rubio Escudero Name:Gustavo Rubio Escudero Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Sarathy Annamraju Name:Sarathy Annamraju Title:CIO [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Robert Schwartz Name:Robert Schwartz Title:Designer [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Melissa Alton Name:Melissa Alton Title:Director of Procurement [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Anne Aquino Name:Anne Aquino Title:Retail Fulfillment Manager [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Allison Dinan Name:Allison Dinan Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Charles Denson Name:Charles Denson Title:Director [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Tracy Daw Name:Tracy Daw Title:SVP & General Counsel [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Benjamin Butcher Name:Benjamin Butcher Title: [Signature Page to Tax Receivable Agreement]  MEMBER:By:/s/ Michael Becker Name:Michael Becker Title:V.P. Apparel [Signature Page to Tax Receivable Agreement]  MEMBER:GLADSTONE INVESTMENT CORPORATIONBy:/s/ David Gladstone Name:David Gladstone Title:CEO [Signature Page to Tax Receivable Agreement]  MEMBER:FUNDAMENTAL CAPITAL, LLC, a Delaware limited liabilitycompany,By: FUNDAMENTAL CAPITAL PARTNERS, LLC,a Delaware limited liability companyManagerBy:/s/ Richard McNally Name:Richard McNally Title:Member [Signature Page to Tax Receivable Agreement]  MEMBER:FUNKO INTERNATIONAL, LLC, a Delaware Limited LiabilityCompany,By: FUNDAMENTAL CAPITAL, LLC, a Delaware limitedliability companyBy: FUNDAMENTAL CAPITAL PARTNERS, LLC, aDelaware limited liability companyManagerBy:/s/ Richard McNally Name:Richard McNally Title:Manager [Signature Page to Tax Receivable Agreement]  MEMBER:DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LPBy: Drawbridge Special Opportunities GP LLC, its generalpartnerBy:/s/ Constantine M. Dakolias Name:Constantine M. Dakolias Title:President [Signature Page to Tax Receivable Agreement]  Exhibit AFORM OF JOINDER AGREEMENTThis JOINDER AGREEMENT, dated as of _________________, 20___ (this “Joinder”), is delivered pursuantto that certain Tax Receivable Agreement, dated as of November 1, 2017 (as amended, restated, amended and restated,supplemented or otherwise modified from time to time, the “Tax Receivable Agreement”) by and among Funko, Inc., aDelaware corporation (the “Corporation”), Funko Acquisition Holdings, LLC, a Delaware limited liability company (“theLLC”), and each of the Members from time to time party thereto. Capitalized terms used but not otherwise defined hereinhave the respective meanings set forth in the Tax Receivable Agreement. 1.Joinder to the Tax Receivable Agreement. Upon the execution of this Joinder by the undersigned and deliveryhereof to the Corporation, the undersigned hereby is and hereafter will be a Member under the Tax ReceivableAgreement and a Party thereto, with all the rights, privileges and responsibilities of a Member thereunder. Theundersigned hereby agrees that it shall comply with and be fully bound by the terms of the Tax ReceivableAgreement as if it had been a signatory thereto as of the date thereof. 2.Incorporation by Reference. All terms and conditions of the Tax Receivable Agreement are herebyincorporated by reference in this Joinder as if set forth herein in full. 3.Address. All notices under the Tax Receivable Agreement to the undersigned shall be direct to:[Name] [Address] [City, State, Zip Code] Attn: Facsimile: E-mail:IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and yearfirst above written.[NAME OF NEW PARTY]By: Name: Title:  Acknowledged and agreedas of the date first set forth above: FUNKO, INC.By: Name: Title:  Exhibit 10.26STOCKHOLDERS AGREEMENT OFFUNKO, INC.THIS STOCKHOLDERS AGREEMENT, dated as of November 1, 2017 (as it may be amended, amended andrestated or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), is entered into byand among Funko, Inc., a Delaware corporation (the “Corporation”), ACON Funko Investors, L.L.C., a Delawarelimited liability company (“ACON”), ACON Funko Investors Holdings 1, L.L.C., a Delaware limited liability company(“ACON Funko Investors Holdco 1”), ACON Funko Investors Holdings 2, L.L.C., a Delaware limited liability company(“ACON Funko Investors Holdco 2”), ACON Funko Investors Holdings 3, L.L.C., a Delaware limited liability company(“ACON Funko Investors Holdco 3”, and together with ACON Funko Investors Holdco 1 and ACON Funko InvestorsHoldco 2, the “ACON Holdcos”), Fundamental Capital, LLC, a Delaware limited liability company (“FundamentalCapital”), Funko International, LLC, a Delaware limited liability company (“Funko International”) and Brian Mariotti, anindividual (“Mr. Mariotti”, and together with ACON, Fundamental Capital and Funko International, the “OriginalMembers”). Certain terms used in this Agreement are defined in Section 7.RECITALSWHEREAS, each Original Member owns, directly or indirectly, outstanding membership interests in FunkoAcquisition Holdings, L.L.C., a Delaware limited liability company (“FAH LLC”), which membership interests constituteand are defined as “Common Units” pursuant to the Second Amended and Restated Limited Liability CompanyAgreement of FAH LLC, dated as of November 1, 2017, as such agreement may be further amended, restated, amendedand restated, supplemented or otherwise modified from time to time (the “LLC Agreement” and such membershipinterests, the “Common Units”);WHEREAS, the Corporation is contemplating an offering and sale of the shares of Class A common stock, parvalue $0.0001 per share, of the Corporation (the “Class A Common Stock”) in an underwritten initial public offering (the“IPO”) and using a portion of the net proceeds received from the IPO to purchase Common Units;WHEREAS, pursuant to that certain Common Unit Subscription Agreement by and between the Corporationand FAH LLC, dated as of November 1, 2017 (the “Common Unit Subscription Agreement”) and that certain CommonUnit Purchase Agreement by and among the Corporation and certain member(s) of FAH LLC parties thereto, dated as ofNovember 1, 2017 (the “Common Unit Purchase Agreement”), the Corporation will hold Common Units; WHEREAS, upon consummation of the transactions contemplated by the Common Unit SubscriptionAgreement and the Common Unit Purchase Agreement, it is contemplated that the Corporation will be admitted as amember, and appointed as the sole managing member of FAH LLC;17 WHEREAS, in connection with, and prior to, the consummation of the IPO, it is anticipated that ACON, theACON Holdcos, the Corporation and certain of their respective affiliates will enter into a series of related transactionspursuant to which the ACON Holdcos will become holders of Class A Common Stock;WHEREAS, immediately following the consummation of the IPO, ACON (together with the ACON Holdcos andany other Permitted Transferees of ACON (and any affiliate of an ACON Holdco to which any such ACON Holdcotransfers Class A Common Stock), in such capacity, the “ACON Related Parties”) will be the record holder of shares ofClass A Common Stock and Class B common stock, par value $0.0001 per share, of the Corporation (“Class B CommonStock”);WHEREAS, immediately following the consummation of the IPO, Fundamental Capital and Funko International(collectively, “Fundamental”, and together with each of their Permitted Transferees, in such capacity, the “FundamentalRelated Parties”) will be the record holders of shares of Class B Common Stock;WHEREAS, immediately following the consummation of the IPO, Mr. Mariotti will be the record holder of ClassB Common Stock; andWHEREAS, in order to induce the Original Members (x) to approve the sale and issuance of Common Units byFAH LLC to the Corporation and the appointment of the Corporation as the sole managing member of FAH LLC inconnection with the IPO and (y) to take such other actions as shall be necessary to effectuate the transactionscontemplated by the IPO, the parties hereto desire to set forth their agreement with respect to the matters set forth hereinin connection with their respective investments in the Corporation.NOW, THEREFORE, in consideration of the covenants and agreements contained herein and other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, the Corporation and the OriginalMembers agree as follows:AgreementSection 1.Election of the Board of Directors.(a)Subject to this Section 1(a), the ACON Related Parties shall be entitled to designate for nomination bythe Board up to three (3) Directors from time to time (any Director designated by the ACON Related Parties, an “ACONDirector”). The ACON Directors shall be apportioned among the three (3) classes of Directors as nearly equal in numberas possible. The right of the ACON Related Parties to designate the ACON Directors as set forth in this Section 1(a)shall be subject to the following: (i) if at any time the ACON Related Parties beneficially own, directly or indirectly, in theaggregate less than thirty-five percent (35%) but at least twenty-five percent (25%) or more of all issued and outstandingshares of Class A Common Stock (including for this purpose the Underlying Class A Shares), the ACON Related Partiesshall only be entitled to designate two (2) ACON Directors, and (ii) if at any time the ACON Related Parties beneficiallyown, directly or indirectly, in the aggregate less than twenty-five percent (25%) but at least2 fifteen percent (15%) or more of all issued and outstanding shares of Class A Common Stock (including for this purposethe Underlying Class A Shares), the ACON Related Parties shall only be entitled to designate one (1) ACONDirector. The ACON Related Parties shall not be entitled to designate any ACON Directors in accordance with thisSection 1(a) if at any time the ACON Related Parties beneficially own, directly or indirectly, in the aggregate less thanfifteen percent (15%) of all issued and outstanding shares of Class A Common Stock (including for this purposeUnderlying Class A Shares). Commencing on the one year anniversary of the date on which the Class A CommonStock is listed on a national securities exchange and ending on the earlier of (x) the date on which the FundamentalRelated Parties no longer have any Director designation rights under Section 1(b) and (y) the date on which the ACONRelated Parties are no longer entitled to designate three (3) ACON Directors in accordance with this Section 1(a), one ofthe ACON Directors shall be “independent” in accordance with the Nasdaq Stock Market and U.S. Securities andExchange Commission rules regarding audit committee independence.(b)Subject to this Section 1(b), the Fundamental Related Parties shall be entitled to designate fornomination by the Board one (1) Director from time to time (such Director designated by Fundamental, the “FundamentalDirector”). The Fundamental Related Parties shall not be entitled to designate the Fundamental Director in accordancewith this Section 1(b) from and after October 1, 2018 or if at any time prior thereto the Fundamental Related Partiesbeneficially own, directly or indirectly, in the aggregate less than ten percent (10%) of all issued and outstanding sharesof Class A Common Stock (including for this purpose the Underlying Class A Shares).(c)Subject to this Section 1(c), Mr. Mariotti shall be entitled to be designated for nomination by the Boardas a Director. The right of Mr. Mariotti to be designated as a Director as set forth in this Section 1(c) shall be subject toMr. Mariotti serving as the Chief Executive Officer of the Corporation. Mr. Mariotti shall not be entitled to be designatedas a Director in accordance with this Section 1(c) once Mr. Mariotti ceases to be the Chief Executive Officer of theCorporation. (d)Subject to Section 1(a), Section 1(b) and Section 1(c), each of ACON, the ACON Holdcos,Fundamental and Mr. Mariotti hereby agrees to vote, or cause to be voted, all outstanding shares of Class A CommonStock and/or Class B Common Stock, as applicable, held by the ACON Related Parties, the Fundamental RelatedParties or Mr. Mariotti (or any of the Permitted Transferees) at any annual or special meeting of stockholders of theCorporation at which Directors of the Corporation are to be elected or removed, or to take all Necessary Action to causethe election or removal of the ACON Directors, the Fundamental Director and Mr. Mariotti as a Director, as providedherein.Section 2.Vacancies and Replacements. (a)If the number of Directors that the ACON Related Parties or the Fundamental Related Parties havethe right to designate to the Board is decreased pursuant to Section 1(a) or Section 1(b), or if Mr. Mariotti is no longerentitled to serve on3 the Board pursuant to Section 1(c) (each such occurrence, a “Decrease in Designation Rights”), then:(i)unless a majority of Directors agree in writing that a Director or Directors shall not resign as aresult of a Decrease in Designation Rights, each of the ACON Related Parties, the Fundamental RelatedParties or Mr. Mariotti, as applicable, shall use its reasonable best efforts to cause each of (x) the appropriatenumber of ACON Directors that the ACON Related Parties cease to have the right to designate to serve as anACON Director, (y) the Fundamental Director that the Fundamental Related Parties cease to have the right todesignate to serve as the Fundamental Director or (z) Mr. Mariotti, if Mr. Mariotti ceases to the have the right tobe designated as a Director, respectively, to offer to tender his, her or their resignation(s), and each of suchACON Directors, Fundamental Director or Mr. Mariotti so tendering a resignation, as applicable, shall resignwithin thirty (30) days from the date that the ACON Related Parties, the Fundamental Related Parties and/or Mr.Mariotti, as applicable, incurs a Decrease in Designation Rights; provided, however, that with respect to theFundamental Related Parties, if the Decrease in Designation Rights occurs as a result of reaching theOctober 1, 2018 expiration date for such designation right as set forth in Section 1(b), then the FundamentalDirector shall not be required to resign prior to the first business day after the date on which the Corporationfiles its Quarterly Report on Form 10-Q for the period ended September 30, 2018. In the event any such ACONDirector, Fundamental Director or Mr. Mariotti, as applicable, does not resign as a Director by such time as isrequired by the foregoing, the ACON Related Parties, the Fundamental Related Parties and Mr. Mariotti, asholders of Class A Common Stock and Class B Common Stock, the Corporation and the Board, to the fullestextent permitted by law and, with respect to the Board, subject to its fiduciary duties to the Corporation’sstockholders, shall thereafter take all Necessary Action, including voting in accordance with Section 1(d), tocause the removal of such individual as a Director; and(ii)the vacancy or vacancies created by such resignation(s) and/or removal(s) shall be filledwith one or more Directors, as applicable, designated by the Board upon the recommendation of theNominating and Corporate Governance Committee, so long as it is established. (b)Each of the ACON Related Parties and the Fundamental Related Parties shall have the sole right torequest that one or more of their respective designated Directors, as applicable, tender their resignations as Directors ofthe Board (each, a “Removal Right”), in each case, with or without cause at any time, by sending a written notice to suchDirector and the Corporation’s Secretary stating the name of the Director or Directors whose resignation from the Boardis requested (the “Removal Notice”). If the Director subject to such Removal Notice does not resign within thirty (30)days from receipt thereof by such Director, the ACON Related Parties, the Fundamental Related Parties and Mr. Mariotti,as holders of Class A Common Stock and Class B Common Stock, the Corporation and the Board, to the fullest extentpermitted by law and, with respect to the Board, subject to its fiduciary duties to the Corporation’s stockholders, shall4 thereafter take all Necessary Action, including voting in accordance with Section 1(d) to cause the removal of suchDirector from the Board (and such Director shall only be removed by the parties to this Agreement in such manner asprovided herein). (c)Each of the ACON Related Parties and the Fundamental Related Parties, as applicable, shall havethe exclusive right to designate a replacement Director for nomination or election by the Board to fill vacancies createdas a result of not designating their respective Director(s) initially or by death, disability, retirement, resignation, removal(with or without cause) of their respective Director(s), or otherwise by designating a successor for nomination or electionby the Board to fill the vacancy of their respective Director(s) created thereby on the terms and subject to the conditionsof Section 1.Section 3.Initial Directors. The initial ACON Directors pursuant to Section 1(a) shall be Kenneth R.Brotman (as a Class III Director), Gino Dellomo (as a Class II Director) and Adam Kriger (as a Class I Director). Theinitial Fundamental Director pursuant to Section 1(b) shall be Richard McNally (as a Class II Director). Pursuant toSection 1(c), Mr. Mariotti shall be a Class I Director. Kenneth R. Brotman shall serve as the initial Chairperson of theBoard (as defined in the Bylaws) for the initial term, in accordance with this Agreement and the Bylaws, after which theChairperson of the Board shall be determined in accordance with this Agreement and the Bylaws.Section 4.Rights of the ACON Related Parties. In addition to any voting requirements contained in theorganizational documents of the Corporation or any of its Subsidiaries, the Corporation shall not take, and shall causeFAH LLC and its Subsidiaries not to take, any of the following actions (whether by merger, consolidation or otherwise)without the prior written approval of ACON and each of the ACON Holdcos for as long as the ACON Related Partiesbeneficially own, directly or indirectly, in the aggregate thirty percent (30%) or more of all issued and outstanding sharesof Class A Common Stock (including for these purposes the Underlying Class A Shares):(a)any transaction or series of related transactions, in each case, to the extent within the reasonablecontrol of the Corporation, (i) in which any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of theExchange Act (excluding the ACON Related Parties and any “group” that includes the ACON Related Parties, theFundamental Related Parties and Mr. Mariotti)) acquires, directly or indirectly, in excess of fifty percent (50%) of the thenoutstanding shares of any class of capital stock (or equivalent) of the Corporation, FAH LLC or any of their respectiveSubsidiaries (whether by merger, consolidation, sale or transfer of capital stock or partnership, membership or otherequity interests, tender offer, exchange offer, reorganization, recapitalization or otherwise) or (ii) following which any“person” or “group” referred to in clause (i) hereof has the direct or indirect power to elect a majority of the members of theBoard or to replace the Corporation as the sole manager of FAH LLC (or to add another Person as a co-manager of FAHLLC);(b)the reorganization, recapitalization, voluntary bankruptcy, liquidation, dissolution or winding-up of theCorporation, FAH LLC or any of their respective Subsidiaries;5 (c)the sale, lease or exchange of all or substantially all of the property and assets of the Corporation andits Subsidiaries, taken as a whole;(d)the (i) resignation, replacement or removal of the Corporation as the sole manager of FAH LLC or (ii)appointment of any additional Person as a manager of FAH LLC;(e)any acquisition or disposition of assets of the Corporation or any of its Subsidiaries where theaggregate consideration for such assets is greater than ten million dollars ($10,000,000) in any single transaction orseries of related transactions, other than transactions solely between or among the Corporation and/or one or more of theCorporation’s direct or indirect wholly owned subsidiaries;(f)the creation of a new class or series of capital stock or equity securities of the Corporation, FAH LLC orany of their respective Subsidiaries;(g)any issuance of additional shares of Class A Common Stock, Class B Common Stock, PreferredStock or other equity securities of the Corporation, FAH LLC or any of their respective Subsidiaries after the date hereof,other than any issuance of additional shares of Class A Common Stock or other equity securities of the Corporation or itsSubsidiaries (i) under any stock option or other equity compensation plan of the Corporation or any of its Subsidiariesapproved by the Board or the compensation committee of the Board, (ii) pursuant to the exercise or conversion of anyoptions, warrants or other securities existing as of the date of this Agreement, or (iii) in connection with any redemption ofCommon Units as set forth in the LLC Agreement;(h)any amendment or modification of the organizational documents of the Corporation, FAH LLC or anyof their respective Subsidiaries, other than the LLC Agreement, which shall be subject to amendment or modificationsolely in accordance with the terms set forth therein; or(i)any increase or decrease of the size of the Board.Section 5.Covenants of the Corporation. (a)The Corporation agrees to take all Necessary Action to cause (i) the Board to be comprised atleast of seven (7) Directors or such other number of Directors as the Board may determine, subject to the terms of thisAgreement, the Charter or the Bylaws of the Corporation; (ii) the individuals designated in accordance with Section 1 tobe included in the slate of nominees to be elected to the Board at the next annual or special meeting of stockholders ofthe Corporation at which Directors are to be elected, in accordance with the Bylaws, Charter and General CorporationLaw of the State of Delaware and at each annual meeting of stockholders of the Corporation thereafter at which suchDirector’s term expires; (iii) the individuals designated in accordance with Section 2(c) to fill the applicable vacancies onthe Board, in accordance with the Bylaws, Charter, Securities Laws, General Corporation Law of the State of Delawareand the Nasdaq Stock Market rules; (iv) an ACON Director to be the Chairperson of the Board and (v) to adhere to,implement and enforce the provisions set forth in Section 4.6 (b)The ACON Related Parties, the Fundamental Related Parties and Mr. Mariotti shall complywith the requirements of the Charter and Bylaws when designating and nominating individuals as Directors, in eachcase, to the extent such requirements are applicable to Directors generally. Notwithstanding anything to the contrary setforth herein, in the event that the Board determines, within sixty (60) days after compliance with the first sentence of thisSection 5(b), in good faith, after consultation with outside legal counsel, that its nomination, appointment or election of aparticular Director designated in accordance with Section 1 or Section 2, as applicable, would constitute a breach of itsfiduciary duties to the Corporation’s stockholders or does not otherwise comply with any requirements of the Charter orBylaws, then the Board shall inform the ACON Related Parties, the Fundamental Related Parties and/or Mr. Mariotti, asapplicable, of such determination in writing and explain in reasonable detail the basis for such determination and shall,to the fullest extent permitted by law, nominate, appoint or elect another individual designated for nomination, election orappointment to the Board by the ACON Related Parties and/or the Fundamental Related Parties, as applicable (subjectin each case to this Section 5(b)); provided, however, that if the Board informs Mr. Mariotti that Mr. Mariotti cannot beappointed or elected as set forth in this Section 5(b), Mr. Mariotti shall not be entitled to nominate a substitute to theBoard. The Board and the Corporation shall, to the fullest extent permitted by law, take all Necessary Action required bythis Section 5 with respect to the election of such substitute designees to the Board.Section 6.Termination. This Agreement shall terminate upon the earliest to occur of any one of thefollowing events:(a)each of (i) the ACON Related Parties, (ii) the Fundamental Related Parties and (iii) Mr. Mariotticeasing to own any shares of Class A Common Stock or Class B Common Stock;(b)each of (i) the ACON Related Parties, (ii) the Fundamental Related Parties and (iii) Mr. Mariotticeasing to have any Director designation rights under Section 1 and(c)the unanimous written consent of the parties hereto. For the avoidance of doubt, the rights and obligations (x) of the ACON Related Parties under this Agreementshall terminate upon the ACON Related Parties ceasing to own any shares of Class A Common Stock or Class BCommon Stock, (y) of the Fundamental Related Parties under this Agreement shall terminate upon the FundamentalRelated Parties ceasing to own any shares of Class A Common Stock or Class B Common Stock and (z) Mr. Mariottiunder this Agreement shall terminate upon Mr. Mariotti ceasing to own any shares of Class A Common Stock or Class BCommon Stock. Notwithstanding the foregoing, nothing in this Agreement shall modify, limit or otherwise affect, in anyway, any and all rights to indemnification, exculpation and/or contribution owed by any of the parties hereto, to the extentarising out of or relating to events occurring prior to the date of termination of this Agreement or the date the rights andobligations of such party under this Agreement terminates in accordance with this Section 6.7 Section 7.Definitions. As used in this Agreement, any term that it is not defined herein, shall have thefollowing meanings:“Board” means the board of directors of the Corporation.“Bylaws” means the amended and restated bylaws of the Corporation, dated as of the date hereof, as the samemay be further amended, restated, amended and restated or otherwise modified from time to time.“Charter” means the amended and restated certificate of incorporation of the Corporation, effective as of thedate hereof, as the same may be further amended, restated, amended and restated or otherwise modified from time totime.“Director” means a member of the Board.“Necessary Action” means, with respect to a specified result, all commercially reasonable actions required tocause such result that are within the power of a specified Person, including (i) voting or providing a written consent or proxy with respect to the equity securities owned by the Person obligated to undertake the necessary action, (ii) voting infavor of the adoption of stockholders’ resolutions and amendments to the organizational documents of the Corporation,(iii) executing agreements and instruments, and (iv) making, or causing to be made, with governmental, administrative orregulatory authorities, all filings, registrations or similar actions that are required to achieve such result.“Nominating and Corporate Governance Committee” means the nominating and corporate governancecommittee of the Board or any committee of the Board authorized to perform the function of recommending to the Boardthe nominees for election as Directors or nominating the nominees for election as Directors.“Permitted Transferees” has the meaning set forth in the Charter.“Person” means any individual, corporation, limited liability company, partnership, trust, joint stock company,business trust, unincorporated association, joint venture, governmental authority or other entity or organization, includinga government or any subdivision or agency thereof.“Preferred Stock” means the shares of preferred stock, par value $0.0001 per share, of the Corporation.“Securities Laws” means the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, asamended, and the rules promulgated thereunder.“Subsidiary” means with respect to any Person, any corporation, limited liability company, partnership,association, trust or other form of legal entity, of which (a) such first Person directly or indirectly owns or controls at leasta majority of the securities or other interests having by their terms voting power to elect a majority of the board of directorsor others performing similar functions, or (b) such first Person is a general8 partner or managing member (excluding partnerships in which such Person or any Subsidiary thereof does not have amajority of the voting interests in such partnership).“Underlying Class A Shares” means all shares of Class A Common Stock issuable upon redemption ofCommon Units, assuming all such Common Units are redeemed for Class A Common Stock on a one-for-one basis.Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii)words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,”“herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer tothe specified Article or Section of this Agreement; (v) the word “including” shall mean “including, without limitation”; (vi)each defined term has its defined meaning throughout this Agreement, whether the definition of such term appearsbefore or after such term is used; and (vii) the word “or” shall be disjunctive but not exclusive. References to agreementsand other documents shall be deemed to include all subsequent amendments and other modifications thereto.References to statutes shall include all regulations promulgated thereunder and references to statutes or regulationsshall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute orregulation.Section 8.Choice of Law and Venue; Waiver of Right to Jury Trial.(a)THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED INACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE. EACH OF THE PARTIES HERETOACKNOWLEDGES AND AGREES THAT IN THE EVENT OF ANY BREACH OF THIS AGREEMENT, THE NON-BREACHING PARTY WOULD BE IRREPARABLY HARMED AND COULD NOT BE MADE WHOLE BY MONETARYDAMAGES, AND THAT, IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE ENTITLED AT LAW ORIN EQUITY, THE PARTIES SHALL BE ENTITLED TO SUCH EQUITABLE OR INJUNCTIVE RELIEF AS MAY BEAPPROPRIATE. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TOPRECLUDE THE ENFORCEMENT OF ANY JUDGMENT OF A DELAWARE FEDERAL OR STATE COURT, OR THETAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SUCH A JUDGMENT, IN ANY OTHERAPPROPRIATE JURISDICTION.(b)IN THE EVENT ANY PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION,PROCEEDING OR OTHER LEGAL ACTION IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANYRELATED AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, THEPARTIES TO THIS AGREEMENT HEREBY (1) AGREE UNDER ALL CIRCUMSTANCES ABSOLUTELY ANDIRREVOCABLY TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURT OF CHANCERY OF THESTATE OF DELAWARE, OR IF (AND ONLY IF) SUCH COURT FINDS IT LACKS SUBJECT MATTERJURISDICTION, THE SUPERIOR COURT OF THE STATE OF DELAWARE (COMPLEX COMMERCIAL DIVISION),OR IF UNDER APPLICABLE LAW, SUBJECT MATTER JURISDICTION OVER THE MATTER9 THAT IS THE SUBJECT OF THE ACTION OR PROCEEDING IS VESTED EXCLUSIVELY IN THE FEDERALCOURTS OF THE UNITED STATES OF AMERICA, THE UNITED STATES DISTRICT COURT FOR THE DISTRICTOF DELAWARE, AND APPELATE COURTS FROM ANY THEREOF, WITH RESPECT TO ALL ACTIONS ANDPROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONSCONTEMPLATED HEREBY; (2) AGREE THAT IN THE EVENT OF ANY SUCH LITIGATION, PROCEEDING ORACTION, SUCH PARTIES WILL CONSENT AND SUBMIT TO THE PERSONAL JURISDICTION OF ANY SUCHCOURT DESCRIBED IN CLAUSE (1) OF THIS SECTION 8(B) AND TO SERVICE OF PROCESS UPON THEM INACCORDANCE WITH THE RULES AND STATUTES GOVERNING SERVICE OF PROCESS; (3) AGREE TO WAIVETO THE FULL EXTENT PERMITTED BY LAW ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVETO THE VENUE OF ANY SUCH LITIGATION, PROCEEDING OR ACTION IN ANY SUCH COURT OR THAT ANYSUCH LITIGATION, PROCEEDING OR ACTION WAS BROUGHT IN ANY INCONVENIENT FORUM; (4) AGREE TOWAIVE ANY RIGHTS TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THISAGREEMENT; (5) AGREE TO SERVICE OF PROCESS IN ANY LEGAL PROCEEDING BY MAILING OF COPIESTHEREOF TO SUCH PARTY AT ITS ADDRESS SET FORTH HEREIN FOR COMMUNICATIONS TO SUCH PARTY;(6) AGREE THAT ANY SERVICE MADE AS PROVIDED HEREIN SHALL BE EFFECTIVE AND BINDING SERVICEIN EVERY RESPECT; AND (7) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTYTO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.Section 9.Notices. Any notice, request, claim, demand, document and other communication hereunder toany party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent byfacsimile, or by electronic mail, or first class mail, or by Federal Express or other similar courier or other similar means ofcommunication, as follows: (a)If to ACON, addressed as follows:ACON Funko Investors, L.L.C.1133 Connecticut Ave. N.W., Suite 700Washington, D.C. 22102Attn: Kenneth R. BrotmanFacsimile: (202) 454-1101E-mail: kbrotman@aconinvestments.com with a copy (which copy shall not constitute notice) to:Hogan Lovells US LLP7930 Jones Branch Drive, Ninth FloorMcLean, VA 22102Attn: Robert Welp Adam Brown10 Facsimile: (703) 610-6200E-mail: robert.welp@hoganlovells.com adam.brown@hoganlovells.com (b)If to Fundamental, addressed as follows:Fundamental Capital, LLC4 Embarcadero CenterSuite 1400San Francisco, CA 94111Attn: Kevin KeenleyFacsimile: (415) 543-1491E-mail: keenley@fundamentalcapital.comwith a copy (which shall not constitute notice) to:Reed Smith LLP1510 Page Mill Road Suite 110Palo Alto, CA 94304-1127Attn:. Donald C. ReinkeFacsimile: (650) 352 0699E-mail: dreinke@reedsmith.com (c)If to Mr. Mariotti, addressed as follows: Brian Mariotti2802 Wetmore AvenueEverett, Washington 98201E-mail: brian@funko.com (d)If to the Corporation, addressed as follows:Funko, Inc.2802 Wetmore AvenueEverett, Washington 98201Telephone: (425) 261-0457Attn: Russell Nickel, Chief Financial Officer Tracy Daw, Senior Vice President, General Counsel and SecretaryE-mail: russell@funko.com tracy@funko.com with a copy (which copy shall not constitute notice) to: 11 Latham & Watkins LLP885 Third AvenueNew York, New York 10022Attn: Marc JaffeIan SchumanFacsimile: (212) 751-4864E-mail: marc.jaffe@lw.comian.schuman@lw.comor, in each case, to such other address or email address as such party may designate in writing to each party by writtennotice given in the manner specified herein. All such communications shall be deemed to have been given, delivered ormade when so delivered by hand or sent by facsimile (with confirmed transmission), on the next business day if sent byovernight courier service (with confirmed delivery) or when received if sent by first class mail, or in the case of notice byelectronic mail, when the relevant email enters the recipient’s server.Section 10.Assignment. Except as otherwise provided herein, all of the terms and provisions of thisAgreement shall be binding upon, shall inure to the benefit of and shall be enforceable by the respective successors andpermitted assigns of the parties hereto. This Agreement may not be assigned (by operation of law or otherwise) withoutthe express prior written consent of the other parties hereto, and any attempted assignment, without such consents, willbe null and void; provided, however, that each of ACON, Fundamental and Mr. Mariotti is permitted to assign thisAgreement to their respective Permitted Transferees of the Class B Common Stock and each ACON Holdco andFundamental is permitted to assign this Agreement to its respective affiliates in connection with a transfer of the Class ACommon Stock to such affiliate. Each of ACON, the ACON Holdcos, Fundamental and Mr. Mariotti shall cause any oftheir respective Permitted Transferees of the Class B Common Stock (or, in the case of an assignment of this Agreementby an ACON Holdco to one or more of its affiliates in connection with a transfer of Class A Common Stock, such ACONHoldco’s affiliate), to become a party to this Agreement. Section 11.Amendment and Modification; Waiver of Compliance. This Agreement may not be amended,modified, altered or supplemented except by means of a written instrument executed on behalf of each of theCorporation, ACON, Fundamental and Mr. Mariotti. Except as otherwise provided in this Agreement, any failure of any ofthe parties to comply with any obligation, covenant, agreement or condition herein may be waived by the party or partiesentitled to the benefits thereof only by a written instrument signed by the party or parties granting such waiver, but suchwaiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operateas a waiver of, or estoppel with respect to, any subsequent or other failure.Section 12.Waiver. No failure on the part of either party hereto to exercise any power, right, privilege orremedy under this Agreement, and no delay on the part of either party hereto in exercising any power, right, privilege orremedy under this Agreement, shall operate as a waiver thereof; and no single or partial exercise of any such power,12 right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege orremedy.Section 13.Severability. If any provision of this Agreement, or the application of such provision to anyPerson or circumstance or in any jurisdiction, shall be held to be invalid or unenforceable to any extent, (i) the remainderof this Agreement shall not be affected thereby, and each other provision hereof shall be valid and enforceable to thefullest extent permitted by law, (ii) as to such Person or circumstance or in such jurisdiction such provision shall bereformed to be valid and enforceable to the fullest extent permitted by law and (iii) the application of such provision toother Persons or circumstances or in other jurisdictions shall not be affected thereby.Section 14.Counterparts. This Agreement may be executed in any number of counterparts and signaturesmay be delivered by facsimile, each of which may be executed by less than all parties, each of which shall beenforceable against the parties actually executing such counterparts, and all of which together shall constitute oneinstrument.Section 15.Further Assurances. At any time or from time to time after the date hereof, the parties heretoagree to cooperate with each other, and at the request of any other party, to execute and deliver any further instrumentsor documents and to take all such further action as any other party may reasonably request in order to evidence oreffectuate the provisions of this Agreement and to otherwise carry out the intent of the parties hereunder.Section 16.Titles and Subtitles. The descriptive headings of this Agreement are inserted for convenienceonly and do not constitute a part of this Agreement.Section 17.Representations and Warranties.(a)Each of ACON, Fundamental, Brian Mariotti, and each Person who becomes a party to this Agreement afterthe date hereof, severally and not jointly and solely with respect to itself, represents and warrants to the Corporation as ofthe time such party becomes a party to this Agreement that (a) if applicable, it is duly authorized to execute, deliver andperform this Agreement; (b) this Agreement has been duly executed by such party and is a valid and binding agreementof such party, enforceable against such party in accordance with its terms; and (c) the execution, delivery andperformance by such party of this Agreement does not violate or conflict with or result in a breach of or constitute (or withnotice or lapse of time or both constitute) a default under any agreement to which such party is a party or, if applicable,the organizational documents of such party.(b)The Corporation represents and warrants to each other party hereto that (a) the Corporation is dulyauthorized to execute, deliver and perform this Agreement; (b) this Agreement has been duly authorized, executed anddelivered by the Corporation and is a valid and binding agreement of the Corporation, enforceable against theCorporation in accordance with its terms; and (c) the execution, delivery and performance13 by the Corporation of this Agreement does not violate or conflict with or result in a breach by the Corporation of orconstitute (or with notice or lapse of time or both constitute) a default by the Corporation under the Charter or Bylaws, anyexisting applicable law, rule, regulation, judgment, order, or decree of any governmental authority exercising anystatutory or regulatory authority of any of the foregoing, domestic or foreign, having jurisdiction over the Corporation orany of its Subsidiaries or any of their respective properties or assets, or any agreement or instrument to which theCorporation or any of its Subsidiaries is a party or by which the Corporation or any of its Subsidiaries or any of theirrespective properties or assets may be bound.Section 18.No Strict Construction. This Agreement shall be deemed to be collectively prepared by theparties hereto, and no ambiguity herein shall be construed for or against any party based upon the identity of the authorof this Agreement or any provision hereof.[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day and yearfirst above written.FUNKO, INC.By:/s/Tracy DawName:Title:[Signature Page to Stockholders Agreement] ACON FUNKO INVESTORS, L.L.C.By ACON Funko Manager, L.L.C., itsManager By:/s/Kenneth BrotmanName: Kenneth BrotmanTitle: Managing Director[Signature Page to Stockholders Agreement] ACON FUNKO INVESTORS HOLDINGS 1, L.L.C.By ACON Funko Manager, L.L.C., itsManaging Member By:/s/Kenneth BrotmanName: Kenneth BrotmanTitle: Managing Director[Signature Page to Stockholders Agreement] ACON FUNKO INVESTORS HOLDINGS 2, L.L.C.Bby ACON Equity GenPar, L.L.C., itsManaging Member By:/s/Kenneth BrotmanName: Kenneth BrotmanTitle: Managing Member[Signature Page to Stockholders Agreement] ACON FUNKO INVESTORS HOLDINGS 3, L.L.C.By ACON Equity GenPar, L.L.C., itsManaging Member By:/s/Kenneth BrotmanName: Kenneth BrotmanTitle: Managing Member[Signature Page to Stockholders Agreement] By:/s/Brian MariottiName: Brian MariottiTitle: [Signature Page to Stockholders Agreement] FUNDAMENTAL CAPITAL, LLC, a Delaware limited liabilitycompany, By: FUNDAMENTAL CAPITAL PARTNERS, LLC,a Delaware limited liability companyManager By:/s/ Richard McNallyName: Richard McNallyTitle: Manager[Signature Page to Stockholders Agreement] FUNKO INTERNATIONAL, LLC, a Delaware Limited LiabilityCompany, By: FUNDAMENTAL CAPITAL, LLC,a Delaware limited liability company By: FUNDAMENTAL CAPITAL PARTNERS, LLC, aDelaware limited liability companyManager By:/s/Richard McNallyName: Richard McNallyTitle: [Signature Page to Stockholders Agreement]Exhibit 10.27 FUNKO ACQUISITION HOLDINGS, L.L.C. SECOND AMENDED AND RESTATEDLIMITED LIABILITY COMPANY AGREEMENT Dated as of November 1, 2017 THE COMPANY INTERESTS REPRESENTED BY THIS SECOND AMENDED AND RESTATED LIMITED LIABILITYCOMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH COMPANY INTERESTSMAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVEREGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THEOTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN. TABLE OF CONTENTSPageArticle I. DEFINITIONS3 Article II. ORGANIZATIONAL MATTERS15 Section 2.01Formation of Company15 Section 2.02Second Amended and Restated Limited Liability Company Agreement15 Section 2.03Name15 Section 2.04Purpose15 Section 2.05Principal Office; Registered Office15 Section 2.06Term15 Section 2.07No State-Law Partnership15 Article III. MEMBERS; UNITS; CAPITALIZATION16 Section 3.01Members16 Section 3.02Units16 Section 3.03Recapitalization; the Corporation’s Capital Contribution; the Corporation’sPurchase of Common Units; Member Distribution17 Section 3.04Authorization and Issuance of Additional Units18 Section 3.05Repurchase or Redemption of shares of Class A Common Stock19 Section 3.06Certificates Representing Units; Lost, Stolen or Destroyed Certificates;Registration and Transfer of Units19 Section 3.07Negative Capital Accounts20 Section 3.08No Withdrawal20 Section 3.09Loans From Members20 Section 3.10Corporate Stock Option Plans and Equity Plans20 Section 3.11Dividend Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan orOther Plan22 Article IV. DISTRIBUTIONS23 Section 4.01Distributions23 Article V. CAPITAL ACCOUNTS; ALLOCATIONS; TAX MATTERS25 Section 5.01Capital Accounts25 Section 5.02Allocations26 Section 5.03Regulatory Allocations26 Section 5.04Final Allocations27 Section 5.05Tax Allocations28 Section 5.06Indemnification and Reimbursement for Payments on Behalf of a Member29 Article VI. MANAGEMENT30 Section 6.01Authority of Manager30 Section 6.02Actions of the Manager30 Section 6.03Resignation; No Removal31 Section 6.04Vacancies31 Section 6.05Transactions Between Company and Manager31 Section 6.06Reimbursement for Expenses31 Section 6.07Delegation of Authority32 Section 6.08Limitation of Liability of Manager32 Section 6.09Investment Company Act33 Section 6.10Outside Activities of the Manager33 Article VII. RIGHTS AND OBLIGATIONS OF MEMBERS AND MANAGER34 Section 7.01Limitation of Liability and Duties of Members34 Section 7.02Lack of Authority35 Section 7.03No Right of Partition35 Section 7.04Indemnification35 Section 7.05Members Right to Act37 Section 7.06Inspection Rights38 Article VIII. BOOKS, RECORDS, ACCOUNTING AND REPORTS, AFFIRMATIVE COVENANTS38 Section 8.01Records and Accounting38 Section 8.02Fiscal Year38 Article IX. TAX MATTERS38 Section 9.01Preparation of Tax Returns38 Section 9.02Tax Elections39 Section 9.03Tax Controversies39 Article X. RESTRICTIONS ON TRANSFER OF UNITS; PREEMPTIVE RIGHTS40 Section 10.01Transfers by Members40 Section 10.02Permitted Transfers40 Section 10.03Restricted Units Legend41 Section 10.04Transfer42 Section 10.05Assignee’s Rights42 Section 10.06Assignor’s Rights and Obligations42 Section 10.07Overriding Provisions43 Section 10.08Spousal Consent44 Section 10.09Tender Offers and Other Events with respect to the Corporation44 Article XI. REDEMPTION AND EXCHANGE RIGHTS45 Section 11.01Redemption Right of a Member45 Section 11.02Election and Contribution of the Corporation48 Section 11.03Exchange Right of the Corporation49 Section 11.04Reservation of shares of Class A Common Stock; Listing; Certificate of theCorporation50 Section 11.05Effect of Exercise of Redemption or Exchange Right51 Section 11.06Tax Treatment51 Article XII. ADMISSION OF MEMBERS51 Section 12.01Substituted Members51 Section 12.02Additional Members51 Article XIII. WITHDRAWAL AND RESIGNATION; TERMINATION OF RIGHTS51 Section 13.01Withdrawal and Resignation of Members51 Article XIV. DISSOLUTION AND LIQUIDATION52 Section 14.01Dissolution52 Section 14.02Winding up and Termination52 Section 14.03Deferment; Distribution in Kind53 Section 14.04Cancellation of Certificate53 Section 14.05Reasonable Time for Winding Up54 Section 14.06Return of Capital54 Article XV. VALUATION54 Section 15.01Determination54 Section 15.02Dispute Resolution54 Article XVI. GENERAL PROVISIONS55 Section 16.01Power of Attorney55 Section 16.02Confidentiality55 Section 16.03Amendments56 Section 16.04Title to Company Assets57 Section 16.05Addresses and Notices57 Section 16.06Binding Effect; Intended Beneficiaries58 Section 16.07Creditors58 Section 16.08Waiver58 Section 16.09Counterparts59 Section 16.10Applicable Law59 Section 16.11Severability59 Section 16.12Further Action59 Section 16.13Delivery by Electronic Transmission59 Section 16.14Right of Offset60 Section 16.15Entire Agreement60 Section 16.16Remedies60 Section 16.17Descriptive Headings; Interpretation60 Schedules Schedule 1–Schedule of Pre-IPO MembersSchedule 2–Schedule of Members Exhibits Exhibit A–Form of Joinder AgreementExhibit B-1–Form of Agreement and Consent of SpouseExhibit B-2–Form of Spouse’s Confirmation of Separate PropertyExhibit C–Methodology for Allocation of Excess Nonrecourse Liabilities  FUNKO ACQUISITION HOLDINGS, L.L.C.SECOND AMENDED AND RESTATEDLIMITED LIABILITY COMPANY AGREEMENTThis SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as the samemay be amended, restated, amended and restated, supplemented or otherwise modified from time to time, this“Agreement”), dated as of November 1, 2017 (the “Effective Time”), is entered into by and among Funko AcquisitionHoldings, L.L.C., a Delaware limited liability company (the “Company”), and its Members (as defined herein).RECITALSWHEREAS, unless the context otherwise requires, capitalized terms have the respective meanings ascribed tothem in Section 1.1;WHEREAS, the Company was formed as a limited liability company with the name “Funko AcquisitionHoldings, L.L.C.”, pursuant to and in accordance with the Delaware Act by the filing of the Certificate with the Secretaryof State of the State of Delaware pursuant to Section 18-201 of the Delaware Act on September 24, 2015;WHEREAS, the Company entered into a Limited Liability Company Agreement of the Company, dated as ofSeptember 24, 2015, which was amended and restated in its entirety by the Amended and Restated Limited LiabilityCompany Agreement of the Company, dated as of October 30, 2015 as amended by (i) Amendment No. 1 to theAmended and Restated Limited Liability Company Agreement of the Company, dated as of January 10, 2017 and (ii)Amendment No. 2 to the Amended and Restated Limited Liability Company Agreement of the Company, dated as ofNovember 1, 2017 (as amended, restated, amended and restated, supplemented or otherwise modified from time totime, together with all schedules, exhibits and annexes thereto, the “Initial LLC Agreement”), which the parties listed onSchedule 1 hereto have executed in their capacity as members (including pursuant to consent and joinders thereto)(collectively, the “Pre-IPO Members”);WHEREAS, the Pre-IPO Members, prior to the Effective Time, hold (i) Class A Units, Common Units and HRUnits (each as defined in Section 2.1(a) of the Initial LLC Agreement, respectively, the “Original Class A Units”, the“Original Common Units” and the “Original HR Units”, and collectively, the “Original Units”) of the Company, and/or (ii)options for Original Class A Units granted by the Company to certain Pre-IPO Members (the “Original Options”);WHEREAS, prior to the date of this Agreement, in connection with the Term Loan B Facility, the Companyissued the following warrants to the following Persons: (a) Cerberus ASRS Holdings LLC (i) Warrant No. 1, exercisablefor 1,233.4891 OriginalClass A Units, (ii) Warrant No. 3, exercisable for 69.2160 Original Common Units, and (iii) Warrant No. 5, exercisable for66.7021 Original Class A Units (the warrants described in paragraphs (a)(i) to (a)(iii), the “Cerberus Warrants”) and (b)Drawbridge Special Opportunities Fund LP (i) Warrant No. 2, exercisable for 449.8431 Original Class A Units, (ii)Warrant No. 4, exercisable for 25.2425 Original Common Units, and (iii) Warrant No. 6, exercisable for 24.3257 OriginalClass A Units (the warrants described in paragraphs (b)(i) to (b)(iii), the “Drawbridge Warrants”, and together with theCerberus Warrants, the “Original Warrants”);WHEREAS, (a) immediately prior to the Effective Time (i) ACON distributed a portion of its Original Class AUnits to ACON Funko Co-Invest, (ii) ACON Funko Co-Invest in turn distributed such Original Class A Units to ACONFunko Co-Invest Blocker, Quadren Blocker and ACON Funko AIV, (iii) ACON Funko AIV in turn distributed such OriginalClass A Units received from ACON Funko Co-Invest to ACON Funko AIV Blocker, Quadren Blocker and GenPar, and(iv) GenPar in turn contributed such Original Class A Units received from ACON Funko AIV to ACON Funko AIV Blockerand ACON Funko Investors Holdco 3, and (b) at or immediately after the Effective Time (i) each of Funko Merger Sub 1,Funko Merger Sub 2 and Funko Merger Sub 3 will merge with and into ACON Funko Co-Invest Blocker, ACON FunkoAIV Blocker and Quadren Blocker, respectively, with each of ACON Funko Co-Invest Blocker, ACON Funko AIV Blockerand Quadren Blocker surviving such mergers, (ii) ACON Funko Investors Holdco 3 will contribute the Common Unitsheld by it to the Corporation and (iii) as consideration for the mergers and contributions described above, each of ACONFunko Investors Holdco 1, ACON Funko Investors Holdco 2 and ACON Funko Investors Holdco 3 will receive newlyissued Class A Common Stock (the transactions describe above, collectively, the “Blocker Roll Up”).WHEREAS, the Company and the Pre-IPO Members desire to have Funko, Inc., a Delaware corporation (the“Corporation”), effect an initial public offering (the “IPO”) of shares of its Class A common stock, par value $0.0001 (the“Class A Common Stock”), and in connection therewith, to amend and restate the Initial LLC Agreement as of theEffective Time to reflect (a) a recapitalization of the Company and the associated split in the number of Units thenoutstanding (the “Recapitalization”), (b) the addition of the Corporation as a Member in the Company and its designationas sole Manager of the Company, and (c) the rights and obligations of the Members of the Company that are enumeratedand agreed upon in the terms of this Agreement effective as of the Effective Time, at which time the Initial LLCAgreement shall be superseded entirely by this Agreement;WHEREAS, in connection with the Recapitalization and as of the Effective Time, (i) the Original Units will beconverted into Common Units as set forth herein, (ii) the Original Warrants will be exercised, converted and/orexchanged for Common Units as set forth herein and (iii) the Original Options will be converted into options to purchaseCommon Units;2WHEREAS, the parties listed on the Schedule of Members attached hereto as Schedule 2 are the Members asof the Effective Time and after giving effect to the Recapitalization and completion of the Blocker Roll Up;WHEREAS, except for the Over-Allotment Option, the Corporation will sell shares of its Class A Common Stockto public investors in the IPO and will use the net proceeds received from the IPO (the “IPO Net Proceeds”) to purchasenewly issued Common Units from the Company pursuant to the IPO Common Unit Subscription Agreement; andWHEREAS, the Corporation may issue additional shares of Class A Common Stock in connection with the IPOas a result of the exercise by the underwriters of their over-allotment option (the “Over-Allotment Option”) and, if theOver-Allotment Option is exercised in whole or in part, any additional net proceeds (the “Over-Allotment Option NetProceeds”) shall be used by the Corporation to purchase additional newly issued Common Units from the Companypursuant to the IPO Common Unit Subscription Agreement.NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Members, intendingto be legally bound, hereby agree as follows:ARTICLE I.DEFINITIONSThe following definitions shall be applied to the terms used in this Agreement for all purposes, unless otherwiseclearly indicated to the contrary.“ACON” means ACON Funko Investors, L.L.C., a Delaware limited liability company, and its PermittedTransferees.“ACON Funko AIV” means AEP III Funko AIV, L.P., a Delaware limited partnership.“ACON Funko AIV Blocker” means AEP III Funko Investors, L.L.C., a Delaware limited liability company.“ACON Funko Co-Invest” means ACON Funko Investors I, L.L.C., a Delaware limited liability company.“ACON Funko Co-Invest Blocker” means ACON Funko Investor Holdings, L.L.C., a Delaware limited liabilitycompany.“ACON Funko Investors Holdco 1” means ACON Funko Investors Holdings 1, L.L.C., a Delaware limitedliability company.“ACON Funko Investors Holdco 2” means ACON Funko Investors Holdings 2, L.L.C., a Delaware limitedliability company.3“ACON Funko Investors Holdco 3” means ACON Funko Investors Holdings 3, L.L.C., a Delaware limitedliability company.“Additional Member” has the meaning set forth in Section 12.02.“ACON Related Parties” means, collectively, (i) ACON, (ii) ACON Funko Investors Holdco 1, (iii) ACON FunkoInvestors Holdco 2, (iv) ACON Funko Investors Holdco 3, and (v) each of their respective Permitted Transferees.“Adjusted Capital Account Deficit” means with respect to the Capital Account of any Member as of the end ofany Taxable Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, suchMember’s Capital Account balance shall be: (a)reduced for any items described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5), and (6); and (b)increased for any amount such Member is obligated to contribute or is treated as being obligated tocontribute to the Company pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (relating topartner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).“Admission Date” has the meaning set forth in Section 10.06.“Affiliate” (and, with a correlative meaning, “Affiliated”) means, with respect to a specified Person, each otherPerson that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under commoncontrol with, the Person specified. As used in this definition, “control” (including with correlative meanings, “controlledby” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction ofmanagement or policies (whether through ownership of voting securities or by contract or other agreement).“Agreement” has the meaning set forth in the preamble to this Agreement.“Assignee” means a Person to whom a Company Interest has been transferred but who has not become aMember pursuant to Article XII.“Assumed Tax Liability” means, with respect to any Member, an amount equal to the excess of (i) the productof (A) the Distribution Tax Rate multiplied by (B) the estimated or actual cumulative taxable income or gain of theCompany, as determined for federal income tax purposes, allocated to such Member for full or partial Fiscal Yearscommencing on or after January 1, 2017, less prior losses of the Company allocated to such Member for full or partialFiscal Years commencing on or after January 1, 2017, in each case, as determined by the Manager over (ii) the sum of(A) the cumulative Tax Distributions made to such Member after the closing date of the IPO pursuant to Sections 4.01(b)(i), 4.01(b)(ii) and 4.01(b)(iii) and (B) tax distributions made to such Member (or such Member’s predecessor) pursuant tothe Initial LLC Agreement with respect to taxable income or gain of the Company allocated for the Fiscal Yearcommencing on4January 1, 2017, including such tax distributions made pursuant to Section 4.01(b)(v); provided that, in the case of theCorporation, such Assumed Tax Liability (x) shall be computed without regard to any increases to the tax basis of theCompany’s property pursuant to Section 743(b) of the Code and (y) shall in no event be less than an amount that willenable the Corporation to meet both its tax obligations and its obligations pursuant to the Tax Receivable Agreement forthe relevant Taxable Year; provided further that, in the case of each Member, such Assumed Tax Liability shall take intoaccount any Code Section 704(c) allocations (including “reverse” 704(c) allocations) to the Member.“Base Rate” means, on any date, a variable rate per annum equal to the rate of interest most recently publishedby The Wall Street Journal as the “prime rate” at large U.S. money center banks.“Black-Out Period” means any “black-out” or similar period under the Corporation’s policies covering trading inthe Corporation’s securities to which the applicable Redeeming Member is subject (or will be subject at such time as itowns Class A Common Stock), which period restricts the ability of such Redeeming Member to immediately resellshares of Class A Common Stock to be delivered to such Redeeming Member in connection with a Share Settlement.“Blockers” means, collectively, ACON Funko AIV Blocker, ACON Funko Co-Invest Blocker and QuadrenBlocker.“Blocker Roll Up” has the meaning set forth in the recitals to this Agreement.“Book Value” means, with respect to any Company property, the Company’s adjusted basis for U.S. federalincome tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury RegulationSection 1.704-1(b)(2)(iv)(d)-(g).“Business Day” means any day other than a Saturday or a Sunday or a day on which banks located in NewYork City, New York generally are authorized or required by Law to close.“Capital Account” means the capital account maintained for a Member in accordance with Section 5.01.“Capital Contribution” means, with respect to any Member, the amount of any cash, cash equivalents,promissory obligations or the Fair Market Value of other property that such Member (or such Member’s predecessor)contributes (or is deemed to contribute) to the Company pursuant to Article III hereof.“Cash Settlement” means immediately available funds in U.S. dollars in an amount equal to the RedeemedUnits Equivalent.“Cerberus Warrants” has the meaning set forth in the recitals to this Agreement.5“Certificate” means the Company’s Certificate of Formation as filed with the Secretary of State of the State ofDelaware, as amended or amended and restated from time to time.“Class A Common Stock” has the meaning set forth in the recitals to this Agreement.“Class B Common Stock” means the shares of Class B Common Stock, par value $0.0001 per share, of theCorporation.“Code” means the United States Internal Revenue Code of 1986, as amended.“Common Unit” means a Unit representing a fractional part of the Company Interests of the Members andhaving the rights and obligations specified with respect to the Common Units in this Agreement.“Common Unit Redemption Price” means the arithmetic average of the volume weighted average prices for ashare of Class A Common Stock (or any class of stock into which it has been converted) on the principal U.S. securitiesexchange or automated or electronic quotation system on which the Class A Common Stock trades, as reported byBloomberg, L.P., or its successor, for each of the five (5) consecutive full Trading Days ending on and including the lastfull Trading Day immediately prior to the Redemption Date, subject to appropriate and equitable adjustment for any stocksplits, reverse splits, stock dividends or similar events affecting the Class A Common Stock. If the Class A CommonStock no longer trades on a securities exchange or automated or electronic quotation system, then the Manager (throughits board of directors, including a majority of the independent directors (within the meaning of the rules of the StockExchange)) shall determine the Common Unit Redemption Price in good faith.“Common Unitholder” means a Member who is the registered holder of Common Units.“Company” has the meaning set forth in the preamble to this Agreement.“Company Interest” means the interest of a Member in Profits, Losses and Distributions.“Contribution Notice” has the meaning set forth in Section 11.01(b).“Corporate Board” means the Board of Directors of the Corporation.“Corporate Incentive Award Plan” means the 2017 Incentive Award Plan of the Corporation, as the same maybe amended, restated, amended and restated, supplemented or otherwise modified from time to time.“Corporation” has the meaning set forth in the recitals to this Agreement, together with its successors andassigns.6“Credit Agreements” means any promissory note, mortgage, loan agreement, indenture or similar instrumentor agreement to which the Company or any of its Subsidiaries is or becomes a borrower, as such instruments oragreements may be amended, restated, supplemented or otherwise modified from time to time and including any one ormore refinancing or replacements thereof, in whole or in part, with any other debt facility or debt obligation, for as long asthe payee or creditor to whom the Company or any of its Subsidiaries owes such obligation is not an Affiliate of theCompany, including the Term Loan B Facility.“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del.C. § 18-101, et seq., as it may beamended from time to time, and any successor thereto.“Direct Exchange” has the meaning set forth in Section 11.03(a).“Distributable Cash” means, as of any relevant date on which a determination is being made by the Managerregarding a potential distribution pursuant to Section 4.01(a), the amount of cash that could be distributed by theCompany for such purposes in accordance with the Credit Agreements (and without otherwise violating any applicableprovisions of any of the Credit Agreements).“Distribution” (and, with a correlative meaning, “Distribute”) means each distribution made by the Company toa Member with respect to such Member’s Units, whether in cash, property or securities of the Company and whether byliquidating distribution or otherwise; provided, however, that none of the following shall be a Distribution: (a) anyrecapitalization that does not result in the distribution of cash or property to Members or any exchange of securities of theCompany, and any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of anyoutstanding Units or (b) any other payment made by the Company to a Member that is not properly treated as a“distribution” for purposes of Sections 731, 732, or 733 or other applicable provisions of the Code.“Distribution Tax Rate” means a rate equal to the highest effective marginal combined federal, state and localincome tax rate for a Fiscal Year applicable to corporate or individual taxpayers that may potentially apply to anyMember for such Fiscal Year, taking into account the character of the relevant tax items (e.g., ordinary or capital) and thedeductibility of state and local income taxes for federal income tax purposes (but only to the extent such taxes aredeductible under the Code), as reasonably determined by the Manager.“Drawbridge Warrants” has the meaning set forth in the recitals to this Agreement.“Effective Time” has the meaning set forth in the preamble to this Agreement.“Equity Plan” means any stock or equity purchase plan, restricted stock or equity plan or other similar equitycompensation plan now or hereafter adopted by the Company or the Corporation.7“Equity Securities” means (a) Units or other equity interests in the Company or any Subsidiary of the Company(including other classes or groups thereof having such relative rights, powers and duties as may from time to time beestablished by the Manager pursuant to the provisions of this Agreement, including rights, powers and/or duties senior toexisting classes and groups of Units and other equity interests in the Company or any Subsidiary of the Company), (b)obligations, evidences of indebtedness or other securities or interests convertible or exchangeable into Units or otherequity interests in the Company or any Subsidiary of the Company, and (c) warrants, options or other rights to purchaseor otherwise acquire Units or other equity interests in the Company or any Subsidiary of the Company.“Event of Withdrawal” means the expulsion, bankruptcy or dissolution of a Member or the occurrence of anyother event that terminates the continued membership of a Member in the Company. “Event of Withdrawal” shall notinclude an event that (a) terminates the existence of a Member for income tax purposes (including, without limitation, (i) achange in entity classification of a Member under Treasury Regulations Section 301.7701-3, (ii) termination of apartnership pursuant to Code Section 708(b)(1)(B), (iii) a sale of assets by, or liquidation of, a Member pursuant to anelection under Code Sections 336 or 338, or (iv) merger, severance, or allocation within a trust or among sub-trusts of atrust that is a Member) but that (b) does not terminate the existence of such Member under applicable state law (or, in thecase of a trust that is a Member, does not terminate the trusteeship of the fiduciaries under such trust with respect to allthe Company Interests of such trust that is a Member).“Exchange Election Notice” has the meaning set forth in Section 11.03(b).“Fair Market Value” means, with respect to any asset, its fair market value determined according to Article XV.“Fiscal Period” means any interim accounting period within a Taxable Year established by the Manager andwhich is permitted or required by Section 706 of the Code.“Fiscal Year” means the Company’s annual accounting period established pursuant to Section 8.02.“Funko International” means Funko International, LLC, a Delaware limited liability company, and its PermittedTransferees.“Funko Merger Sub 1” means Funko Merger Sub 1, L.L.C.“Funko Merger Sub 2” means Funko Merger Sub 2, L.L.C.“Funko Merger Sub 3” means Funko Merger Sub 3, L.L.C.“Fundamental” means Funko International and Fundamental Capital together.8“Fundamental Capital” means Fundamental Capital, LLC, a Delaware limited liability company, and itsPermitted Transferees.“GenPar” means ACON Equity GenPar, L.L.C., a Delaware limited liability company.“Governmental Entity” means (a) the United States of America, (b) any other sovereign nation, (c) any state,province, district, territory or other political subdivision of (a) or (b) of this definition, including any county, municipal orother local subdivision of the foregoing, or (d) any entity exercising executive, legislative, judicial, regulatory oradministrative functions of government on behalf of (a), (b) or (c) of this definition.“Indemnified Person” has the meaning set forth in Section 7.04(a).“Initial LLC Agreement” has the meaning set forth in the recitals to this Agreement.“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended from time to time.“IPO” has the meaning set forth in the recitals to this Agreement.“IPO Common Unit Subscription” has the meaning set forth in Section 3.03(b).“IPO Common Unit Subscription Agreement” means that certain Common Unit Subscription Agreement,dated as of the date of this Agreement, by and between the Corporation and the Company.“IPO Net Proceeds” has the meaning set forth in the recitals to this Agreement.“Joinder” means a joinder to this Agreement, in form and substance substantially similar to Exhibit A to thisAgreement.“Law” means all laws, statutes, ordinances, rules and regulations of the United States, any foreign country andeach state, commonwealth, city, county, municipality, regulatory body, agency or other political subdivision thereof.“liquidator” has the meaning set forth in Section 14.02.“LLC Employee” means an employee of, or other service provider (including, without limitation, anymanagement member whether or not treated as an employee for the purposes of U.S. federal income tax) to, theCompany or any of its Subsidiaries, in each case acting in such capacity.“Losses” means items of Company loss or deduction determined according to Section 5.01(b).“Manager” has the meaning set forth in Section 6.01.9“Market Price” means, with respect to a share of Class A Common Stock as of a specified date, the last saleprice per share of Class A Common Stock, regular way, or if no such sale took place on such day, the average of theclosing bid and asked prices per share of Class A Common Stock, regular way, in either case as reported in the principalconsolidated transaction reporting system with respect to securities listed or admitted to trading on the Stock Exchangeor, if the Class A Common Stock is not listed or admitted to trading on the Stock Exchange, as reported on the principalconsolidated transaction reporting system with respect to securities listed on the principal national securities exchangeon which the Class A Common Stock is listed or admitted to trading or, if the Class A Common Stock is not listed oradmitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the highbid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers,Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation systemthat may then be in use or, if the Class A Common Stock is not quoted by any such system, the average of the closingbid and asked prices as furnished by a professional market maker making a market in shares of Class A Common Stockselected by the Corporate Board or, in the event that no trading price is available for the shares of Class A CommonStock, the fair market value of a share of Class A Common Stock, as determined in good faith by the Corporate Board.“Member” means, as of any date of determination, (a) each of the members named on the Schedule ofMembers and (b) any Person admitted to the Company as a Substituted Member or Additional Member in accordancewith Article XII, but in each case only so long as such Person is shown on the Company’s books and records as theowner of one or more Units, each in its capacity as a member of the Company. The Members shall constitute a singleclass or group of members for purposes of the Delaware Act.“Minimum Gain” means “partnership minimum gain” determined pursuant to Treasury Regulation Section1.704-2(d).“Net Loss” means, with respect to a Fiscal Year, the excess if any, of Losses for such Fiscal Year over Profitsfor such Fiscal Year (excluding Profits and Losses specially allocated pursuant to Section 5.03 and Section 5.04).“Net Profit” means, with respect to a Fiscal Year, the excess if any, of Profits for such Fiscal Year over Lossesfor such Fiscal Year (excluding Profits and Losses specially allocated pursuant to Section 5.03 and Section 5.04).“Officer” has the meaning set forth in Section 6.01(b).“Optionee” means a Person to whom a stock option is granted under any Stock Option Plan.“Original Class A Units” has the meaning set forth in the recitals to this Agreement.“Original Common Units” has the meaning set forth in the recitals to this Agreement.10“Original HR Units” has the meaning set forth in the recitals to this Agreement.“Original Options” has the meaning set forth in the recitals to this Agreement.“Original SP Units” means SP Units, as defined in Section 2.1(a) of the Initial LLC Agreement.“Original Units” has the meaning set forth in the recitals to this Agreement.“Original Warrants” has the meaning set forth in the recitals to this Agreement.“Other Agreements” has the meaning set forth in Section 10.04.“Over-Allotment Contribution” has the meaning set forth in Section 3.03(b).“Over-Allotment Option” has the meaning set forth in the recitals to this Agreement.“Over-Allotment Option Net Proceeds” has the meaning set forth in the recitals to this Agreement.“Partnership Representative” has the meaning set forth in Section 9.03(b).“Percentage Interest” means, as among an individual class of Units and with respect to a Member at aparticular time, such Member’s percentage interest in the Company determined by dividing such Member’s Units of suchclass by the total Units of all Members of such class at such time. The Percentage Interest of each Member shall becalculated to the 4th decimal place.“Permitted Transfer” has the meaning set forth in Section 10.02.“Permitted Transferee” has the meaning set forth in Section 10.02.“Person” means an individual or any corporation, partnership, limited liability company, trust, unincorporatedorganization, association, joint venture or any other organization or entity, whether or not a legal entity.“Pre-IPO Members” has the meaning set forth in the recitals to this Agreement.“Pro rata,” “pro rata portion,” “according to their interests,” “ratably,” “proportionately,” “proportional,” “inproportion to,” “based on the number of Units held,” “based upon the percentage of Units held,” “based upon thenumber of Units outstanding,” and other terms with similar meanings, when used in the context of a number of Units ofthe Company relative to other Units, means as amongst an individual class of Units, pro rata based upon the number ofsuch Units within such class of Units.“Profits” means items of Company income and gain determined according to Section 5.01(b).11“Pubco Offer has the meaning set forth in Section 10.09(a).“Quadren Blocker” means Quadren Investment Inc.“Quarterly Tax Distribution” has the meaning set forth in Section 4.01(b)(i).“Recapitalization” has the meaning set forth in the recitals to this Agreement.“Redeemed Units” has the meaning set forth in Section 11.01(a).“Redeemed Units Equivalent” means the product of (a) the applicable number of Redeemed Units, times (b)the Common Unit Redemption Price.“Redeeming Member” has the meaning set forth in Section 11.01(a).“Redemption” has the meaning set forth in Section 11.01(a).“Redemption Date” has the meaning set forth in Section 11.01(a).“Redemption Notice” has the meaning set forth in Section 11.01(a).“Redemption Right” has the meaning set forth in Section 11.01(a).“Registration Rights Agreement” means that certain Registration Rights Agreement, dated as of the date ofthis Agreement, by and among the Corporation, certain of the Members as of the Effective Time and certain otherpersons whose signatures are affixed thereto (together with any joinder thereto from time to time by any successor orassign to any party to such agreement).“Retraction Notice” has the meaning set forth in Section 11.01(c).“Revised Partnership Audit Provisions” means Section 1101 of Title XI (Revenue Provisions Related to TaxCompliance) of the Bipartisan Budget Act of 2015, H.R. 1314, Public Law Number 114-74.“Schedule of Members” has the meaning set forth in Section 3.01(b).“SEC” means the U.S. Securities and Exchange Commission, including any governmental body or agencysucceeding to the functions thereof.“Securities Act” means the U.S. Securities Act of 1933, as amended, and applicable rules and regulationsthereunder, and any successor to such statute, rules or regulations. Any reference herein to a specific section, rule orregulation of the Securities Act shall be deemed to include any corresponding provisions of future Law.“Share Settlement” means a number of shares of Class A Common Stock equal to the number of RedeemedUnits.“Sponsor Person” has the meaning set forth in Section 7.04(d).12“Stock Exchange” means the NASDAQ.“Stockholders Agreement” means that certain stockholders agreement, dated as of November 1, 2017, by andamong the Corporation and the other Persons party thereto (as it may be amended from time to time in accordance withits terms).“Stock Option Plan” means any stock option plan now or hereafter adopted by the Company or by theCorporation, including the Corporate Incentive Award Plan.“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership,association or business entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled(without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof isat the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of thatPerson or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity(other than a corporation), a majority of the voting interests thereof are at the time owned or controlled, directly orindirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof,references to a “Subsidiary” of the Company shall be given effect only at such times that the Company has one or moreSubsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.“Substituted Member” means a Person that is admitted as a Member to the Company pursuant to Section12.01.“Tax Distributions” has the meaning set forth in Section 4.01(b)(i).“Tax Matters Partner” has the meaning set forth in Section 9.03(a).“Tax Receivable Agreement” means that certain Tax Receivable Agreement, dated as the date of thisAgreement, by and among the Corporation, on the one hand, and the Members as of the Effective Time, on the otherhand (together with any joinder thereto from time to time by any successor or assign to any party to such agreement).“Taxable Year” means the Company’s accounting period for U.S. federal income tax purposes determinedpursuant to Section 9.02.“Term Loan B Facility” means that certain Financing Agreement, dated as of October 30, 2015, by and amongthe Company, as a borrower, Funko Holdings LLC, as a borrower, and Funko, LLC, as a borrower, the guarantors thatmay become party thereto, the lenders from time to time party thereto, Cerberus Business Finance, LLC, as CollateralAgent, and PNC Bank, National Association, as Administrative Agent, as amended from time to time.“Trading Day” means a day on which the Stock Exchange or such other principal United States securitiesexchange on which the Class A Common Stock is listed or13admitted to trading is open for the transaction of business (unless such trading shall have been suspended for the entireday).“Transfer” (and, with a correlative meaning, “Transferring”) means any sale, transfer, assignment, redemption,pledge, encumbrance or other disposition of (whether directly or indirectly, whether with or without consideration andwhether voluntarily or involuntarily or by operation of Law) (a) any interest (legal or beneficial) in any Equity Securities or(b) any equity or other interest (legal or beneficial) in any Member if substantially all of the assets of such Member consistsolely of Units.“Treasury Regulations” means the tax regulations promulgated under the Code and any correspondingprovisions of succeeding regulations.“Underwriting Agreement” means the Underwriting Agreement, dated as of November 1, 2017, by and amongthe Corporation, the Company and Goldman, Sachs & Co., J.P. Morgan Securities LLC and Merrill Lynch, Pierce,Fenner & Smith Incorporated, as representative of the several underwriters named therein.“Unit” means a Company Interest of a Member or a permitted Assignee in the Company representing afractional part of the Company Interests of all Members and Assignees as may be established by the Manager from timeto time in accordance with Section 3.02; provided, however, that any class or group of Units issued shall have therelative rights, powers and duties set forth in this Agreement, and the Company Interest represented by such class orgroup of Units shall be determined in accordance with such relative rights, powers and duties.“Unitholder” means a Common Unitholder and any Member who is the registered holder of any other class ofUnits, if any.“Unvested Corporate Shares” means shares of Class A Common Stock issuable pursuant to awards grantedunder the Corporate Incentive Award Plan that are not Vested Corporate Shares.“Value” means (a) for any Stock Option Plan, the Market Price for the Trading Day immediately preceding thedate of exercise of a stock option under such Stock Option Plan and (b) for any Equity Plan other than a Stock OptionPlan, the Market Price for the Trading Day immediately preceding the Vesting Date.“Vested Corporate Shares” means the shares of Class A Common Stock issued pursuant to awards grantedunder the Corporate Incentive Award Plan that are vested pursuant to the terms thereof or any award or similaragreement relating thereto.“Vesting Date” has the meaning set forth in Section 3.10(c)(ii).14ARTICLE II.ORGANIZATIONAL MATTERSSection 2.01Formation of Company. The Company was formed on September 24, 2015 pursuant to theprovisions of the Delaware Act.Section 2.02Second Amended and Restated Limited Liability Company Agreement. The Membershereby execute this Agreement for the purpose of establishing the affairs of the Company and the conduct of its businessin accordance with the provisions of the Delaware Act. The Members hereby agree that during the term of the Companyset forth in Section 2.06 the rights and obligations of the Members with respect to the Company will be determined inaccordance with the terms and conditions of this Agreement and the Delaware Act. No provision of this Agreement shallbe in violation of the Delaware Act and to the extent any provision of this Agreement is in violation of the Delaware Act,such provision shall be void and of no effect to the extent of such violation without affecting the validity of the otherprovisions of this Agreement. Neither any Member nor the Manager nor any other Person shall have appraisal rights withrespect to any Company Interests (including any Units).Section 2.03Name. The name of the Company shall be “Funko Acquisition Holdings, L.L.C.” TheManager in its sole discretion may change the name of the Company at any time and from time to time. Notification ofany such change shall be given to all of the Members and, to the extent practicable, to all of the holders of any EquitySecurities then outstanding. The Company’s business may be conducted under its name and/or any other name ornames deemed advisable by the Manager.Section 2.04Purpose. The primary business and purpose of the Company shall be to engage in suchactivities as are permitted under the Delaware Act and determined from time to time by the Manager in accordance withthe terms and conditions of this Agreement.Section 2.05Principal Office; Registered Office. The principal office of the Company shall be at 2802Wetmore Avenue, Everett, Washington, 98201 or such other place as the Manager may from time to time designate. Theaddress of the registered office of the Company in the State of Delaware shall be c/o Corporation Service Company, 251Little Falls Drive, Suite 400, in the City of Wilmington, State of Delaware, 19808, and the registered agent for service ofprocess on the Company in the State of Delaware at such registered office shall be Corporation Service Company. TheManager may from time to time change the Company’s registered agent and registered office in the State of Delaware.Section 2.06Term. The term of the Company commenced upon the filing of the Certificate in accordancewith the Delaware Act and shall continue in existence until dissolution of the Company in accordance with the provisionsof Article XIV.Section 2.07No State-Law Partnership. The Members intend that the Company not be a partnership(including, without limitation, a limited partnership) or joint venture,15and that no Member be a partner or joint venturer of any other Member by virtue of this Agreement, for any purposesother than as set forth in the last sentence of this Section 2.07, and neither this Agreement nor any other documententered into by the Company or any Member relating to the subject matter hereof shall be construed to suggestotherwise. The Members intend that the Company shall be treated as a partnership for U.S. federal and, if applicable,state or local income tax purposes, and that each Member and the Company shall file all tax returns and shall otherwisetake all tax and financial reporting positions in a manner consistent with such treatment.ARTICLE III.MEMBERS; UNITS; CAPITALIZATIONSection 3.01Members.(a)At the Effective Time and concurrently with the IPO Common Unit Subscription and completion of theBlocker Roll Up (save for item (b)(ii) as described therein, which shall occur immediately after the Effective Time), theCorporation shall be automatically admitted to the Company as a Member. (b)The Company shall maintain a schedule setting forth: (i) the name and address of each Member; (ii)the aggregate number of outstanding Units and the number and class of Units held by each Member; (iii) the aggregateamount of cash Capital Contributions that has been made by the Members with respect to their Units; and (iv) the FairMarket Value of any property other than cash contributed by the Members with respect to their Units (including, ifapplicable, a description and the amount of any liability assumed by the Company or to which contributed property issubject) (such schedule, the “Schedule of Members”). The applicable Schedule of Members in effect as of the EffectiveTime and after giving effect to the Recapitalization and completion of the Blocker Roll Up is set forth as Schedule 2attached to this Agreement. The Schedule of Members shall be the definitive record of ownership of each Unit of theCompany and all relevant information with respect to each Member. The Company shall be entitled to recognize theexclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound torecognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall haveexpress or other notice thereof, except as otherwise provided by the Delaware Act.(c)No Member shall be required or, except as approved by the Manager pursuant to Section 6.01 and inaccordance with the other provisions of this Agreement, permitted to (i) loan any money or property to the Company, (ii)borrow any money or property from the Company or (iii) make any additional Capital Contributions.Section 3.02Units.(a)Interests in the Company shall be represented by Units, or such other securities of the Company, ineach case as the Manager may establish in its discretion (subject to any limitations prescribed by the StockholdersAgreement) in accordance with16the terms and subject to the restrictions hereof. At the Effective Time, the Units will be comprised of a single class ofCommon Units. (b)Subject to Section 3.04(a) and any limitations prescribed in the Stockholders Agreement, the Managermay (i) issue additional Common Units at any time in its sole discretion and (ii) create one or more classes or series ofUnits or preferred Units solely to the extent such new class or series of Units or preferred Units are substantiallyequivalent to a class of common stock of the Corporation or class or series of preferred stock of theCorporation; provided, that as long as there are any Members (other than the Corporation and the Blockers) (i) no suchnew class or series of Units may deprive such Members of, or dilute or reduce, the allocations and distributions theywould have received, and the other rights and benefits to which they would have been entitled, in respect of theirCompany Interest if such new class or series of Units had not been created and (ii) no such new class or series of Unitsmay be issued, in each case, except to the extent (and solely to the extent) the Company actually receives cash in anaggregate amount, or other property with a Fair Market Value in an aggregate amount, equal to the aggregatedistributions that would be made in respect of such new class or series of Units if the Company were liquidatedimmediately after the issuance of such new class or series of Units. (c)To the extent required pursuant to Section 3.04(a) or Section 3.10, as applicable, the Manager mayamend this Agreement, without the consent of any Member or any other Person, in connection with the creation andissuance of such classes or series of Units, subject to Sections 16.03(b) and Section 16.03(d) hereof and any limitationsprescribed by the Stockholders Agreement.Section 3.03Recapitalization; the Corporation’s Capital Contribution; the Corporation’s Purchase ofCommon Units; Member Distribution.(a)Recapitalization. In connection with the Recapitalization, the number of Original Class A Units,Original SP Units, Original Common Units and Original HR Units that were issued and outstanding and held by the Pre-IPO Members prior to the Effective Time as set forth opposite to the respective Pre-IPO Member in Schedule 1 arehereby converted, as of the Effective Time, and after giving effect to the Recapitalization and completion of the BlockerRoll Up, into the number of Common Units set forth opposite the name of the respective Member on the Schedule ofMembers attached hereto as Schedule 2, and such Common Units are hereby issued and outstanding as of the EffectiveTime and the holders of such Common Units hereby continue as Members. (b)The Corporation’s Common Unit Agreement. Following the Recapitalization, the Corporation willacquire 10,416,666 newly issued Common Units in exchange for a portion of the IPO Net Proceeds payable to theCompany upon consummation of the IPO pursuant to the IPO Common Unit Subscription Agreement with the Company(the “IPO Common Unit Subscription”). The IPO Common Unit Subscription shall be reflected on the Schedule ofMembers. In addition, to the extent the underwriters in the IPO exercise the Over-Allotment Option in whole or in part,upon the exercise of the Over-Allotment Option, the Corporation will contribute a portion of the17Over-Allotment Option Net Proceeds to the Company in exchange for newly issued Common Units pursuant to the IPOCommon Unit Subscription Agreement, and such issuance of additional Common Units shall be reflected on theSchedule of Members (the “Over-Allotment Contribution”). The number of Common Units issued in the Over-AllotmentContribution, in the aggregate, shall be equal to the number of shares of Class A Common Stock issued by theCorporation in such exercise of the Over-Allotment Option. For the avoidance of doubt, the Corporation shall beadmitted as a Member with respect to all Common Units it holds from time to time.Section 3.04Authorization and Issuance of Additional Units.(a)The Company shall undertake all actions, including, without limitation, an issuance, reclassification,distribution, division or recapitalization, with respect to the Common Units, to maintain at all times a one-to-one ratiobetween the number of Common Units owned by the Corporation, directly or indirectly, and the number of outstandingshares of Class A Common Stock, disregarding, for purposes of maintaining the one-to-one ratio, (i) Unvested CorporateShares, (ii) treasury stock or (iii) preferred stock or other debt or equity securities (including without limitation warrants,options or rights) issued by the Corporation that are convertible into or exercisable or exchangeable for Class ACommon Stock (except to the extent the net proceeds from such other securities, including any exercise or purchaseprice payable upon conversion, exercise or exchange thereof, has been contributed by the Corporation to the equitycapital of the Company). In the event the Corporation issues, transfers or delivers from treasury stock or repurchasesClass A Common Stock in a transaction not contemplated in this Agreement, the Manager shall take all actions suchthat, after giving effect to all such issuances, transfers, deliveries or repurchases, the number of outstanding CommonUnits owned by the Corporation will equal on a one-for-one basis the number of outstanding shares of Class A CommonStock. In the event the Corporation issues, transfers or delivers from treasury stock or repurchases or redeems theCorporation’s preferred stock in a transaction not contemplated in this Agreement, the Manager shall have the authorityto take all actions such that, after giving effect to all such issuances, transfers, deliveries, repurchases or redemptions,the Corporation holds (in the case of any issuance, transfer or delivery) or ceases to hold (in the case of any repurchaseor redemption) equity interests in the Company which (in the good faith determination by the Manager) are in theaggregate substantially equivalent to the outstanding preferred stock of the Corporation so issued, transferred, delivered,repurchased or redeemed. The Company shall not undertake any subdivision (by any Common Unit split, Common Unitdistribution, reclassification, recapitalization or similar event) or combination (by reverse Common Unit split,reclassification, recapitalization or similar event) of the Common Units that is not accompanied by an identicalsubdivision or combination of Class A Common Stock to maintain at all times a one-to-one ratio between the number ofCommon Units owned by the Corporation and the number of outstanding shares of Class A Common Stock, unless suchaction is necessary to maintain at all times a one-to-one ratio between the number18of Common Units owned by the Corporation and the number of outstanding shares of Class A Common Stock ascontemplated by the first sentence of this Section 3.04(a).(b)The Company shall only be permitted to issue additional Common Units, and/or establish otherclasses of Units or other Equity Securities in the Company to the Persons and on the terms and conditions provided forin Section 3.02, this Section 3.04, Section 3.10 and Section 3.11. Subject to the foregoing, the Manager may cause theCompany to issue additional Common Units authorized under this Agreement and/or establish other classes of Units orother Equity Securities in the Company at such times and upon such terms as the Manager shall determine and theManager shall amend this Agreement as necessary in connection with the issuance of additional Common Units andadmission of additional Members under this Section 3.04 without the requirement of any consent or acknowledgement ofany other Member. Section 3.05Repurchase or Redemption of shares of Class A Common Stock. If, at any time, any sharesof Class A Common Stock are repurchased or redeemed (whether by exercise of a put or call, automatically or by meansof another arrangement) by the Corporation for cash, then the Manager shall cause the Company, immediately prior tosuch repurchase or redemption of Class A Common Stock, to redeem a corresponding number of Common Units held(directly or indirectly) by the Corporation, at an aggregate redemption price equal to the aggregate purchase orredemption price of the shares of Class A Common Stock being repurchased or redeemed by the Corporation (plus anyexpenses related thereto) and upon such other terms as are the same for the shares of Class A Common Stock beingrepurchased or redeemed by the Corporation. Notwithstanding any provision to the contrary contained in this Agreement,the Company shall not make any repurchase or redemption if such repurchase or redemption would violate anyapplicable Law.Section 3.06Certificates Representing Units; Lost, Stolen or Destroyed Certificates; Registration andTransfer of Units.(a)Units shall not be certificated unless otherwise determined by the Manager. If the Managerdetermines that one or more Units shall be certificated, each such certificate shall be signed by or in the name of theCompany, by the Chief Executive Officer, Chief Financial Officer, General Counsel or any other officer designated by theManager, representing the number of Units held by such holder. Such certificate shall be in such form (and shall containsuch legends) as the Manager may determine. Any or all of such signatures on any certificate representing one or moreUnits may be a facsimile, engraved or printed, to the extent permitted by applicable Law. The Manager agrees that itshall not elect to treat any Unit as a “security” within the meaning of Article 8 of the Uniform Commercial Code unlessthereafter all Units then outstanding are represented by one or more certificates.(b)If Units are certificated, the Manager may direct that a new certificate representing one or more Unitsbe issued in place of any certificate theretofore issued by the Company alleged to have been lost, stolen or destroyed,upon delivery to the Manager of an affidavit of the owner or owners of such certificate, setting forth such allegation. The19Manager may require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to givethe Company a bond sufficient to indemnify it against any claim that may be made against it on account of the allegedloss, theft or destruction of any such certificate or the issuance of any such new certificate.(c)Upon surrender to the Company or the transfer agent of the Company, if any, of a certificate for one ormore Units, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, incompliance with the provisions hereof, the Company shall issue a new certificate representing one or more Units to thePerson entitled thereto, cancel the old certificate and record the transaction upon its books. Subject to the provisions ofthis Agreement, the Manager may prescribe such additional rules and regulations as it may deem appropriate relating tothe issue, Transfer and registration of Units.Section 3.07Negative Capital Accounts. No Member shall be required to pay to any other Member or theCompany any deficit or negative balance which may exist from time to time in such Member’s Capital Account (includingupon and after dissolution of the Company).Section 3.08No Withdrawal. No Person shall be entitled to withdraw any part of such Person’s CapitalContribution or Capital Account or to receive any Distribution from the Company, except as expressly provided in thisAgreement.Section 3.09Loans From Members. Loans by Members to the Company shall not be considered CapitalContributions. Subject to the provisions of Section 3.01(c), the amount of any such advances shall be a debt of theCompany to such Member and shall be payable or collectible in accordance with the terms and conditions upon whichsuch advances are made.Section 3.10Corporate Stock Option Plans and Equity Plans.(a)Options Granted to Persons other than LLC Employees. If at any time or from time to time, inconnection with any Stock Option Plan, a stock option granted over shares of Class A Common Stock to a Person otherthan an LLC Employee is duly exercised:(i)The Corporation shall, as soon as practicable after such exercise, make a CapitalContribution to the Company in an amount equal to the exercise price paid to the Corporation by suchexercising Person in connection with the exercise of such stock option.(ii)Notwithstanding the amount of the Capital Contribution actually made pursuant to Section3.10(a)(i), the Corporation shall be deemed to have contributed to the Company as a Capital Contribution, inlieu of the Capital Contribution actually made and in consideration of additional Common Units, an amountequal to the Value of a share of Class A Common Stock as of the date of such exercise multiplied by thenumber of shares of Class A Common Stock then20being issued by the Corporation in connection with the exercise of such stock option.(iii)The Corporation shall receive in exchange for such Capital Contributions (as deemed madeunder Section 3.10(a)(ii)), a number of Common Units equal to the number of shares of Class A Common Stockfor which such option was exercised.(b)Options Granted to LLC Employees. If at any time or from time to time, in connection with any StockOption Plan, a stock option granted over shares of Class A Common Stock to an LLC Employee is duly exercised:(i)The Corporation shall sell to the Optionee, and the Optionee shall purchase from theCorporation, for a cash price per share equal to the Value of a share of Class A Common Stock at the time ofthe exercise, the number of shares of Class A Common Stock equal to the quotient of (x) the exercise pricepayable by the Optionee in connection with the exercise of such stock option divided by (y) the Value of a shareof Class A Common Stock at the time of such exercise.(ii)The Corporation shall sell to the Company (or if the Optionee is an employee of, or otherservice provider to, a Subsidiary, the Corporation shall sell to such Subsidiary), and the Company (or suchSubsidiary, as applicable) shall purchase from the Corporation, a number of shares of Class A Common Stockequal to the excess of (x) the number of shares of Class A Common Stock as to which such stock option isbeing exercised over (y) the number of shares of Class A Common Stock sold pursuant to Section 3.10(b)(i)hereof. The purchase price per share of Class A Common Stock for such sale of shares of Class A CommonStock to the Company (or such Subsidiary) shall be the Value of a share of Class A Common Stock as of thedate of exercise of such stock option.(iii)The Company shall transfer to the Optionee (or if the Optionee is an employee of, or otherservice provider to, a Subsidiary, the Subsidiary shall transfer to the Optionee) at no additional cost to such LLCEmployee and as additional compensation (and not a distribution) to such LLC Employee, the number ofshares of Class A Common Stock described in Section 3.10(b)(ii).(iv)The Corporation shall, as soon as practicable after such exercise, make a CapitalContribution to the Company in an amount equal to all proceeds received (from whatever source, but excludingany payment in respect of payroll taxes or other withholdings) by the Corporation in connection with theexercise of such stock option. The Corporation shall receive for such Capital Contribution, a number ofCommon Units equal to the number of shares of Class A Common Stock for which such option was exercised.(c)Restricted Stock Granted to LLC Employees. If at any time or from time to time, in connection with anyEquity Plan (other than a Stock Option Plan), any shares of Class A Common Stock are issued to an LLC Employee(including any shares of Class21A Common Stock that are subject to forfeiture in the event such LLC Employee terminates his or her employment withthe Company or any Subsidiary) in consideration for services performed for the Company or any Subsidiary:(i)The Corporation shall issue such number of shares of Class A Common Stock as are to beissued to such LLC Employee in accordance with the Equity Plan;(ii)On the date (such date, the “Vesting Date”) that the Value of such shares is includible intaxable income of such LLC Employee, the following events will be deemed to have occurred: (1) theCorporation shall be deemed to have sold such shares of Class A Common Stock to the Company (or if suchLLC Employee is an employee of, or other service provider to, a Subsidiary, to such Subsidiary) for a purchaseprice equal to the Value of such shares of Class A Common Stock, (2) the Company (or such Subsidiary) shallbe deemed to have delivered such shares of Class A Common Stock to such LLC Employee, (3) theCorporation shall be deemed to have contributed the purchase price for such shares of Class A Common Stockto the Company as a Capital Contribution, and (4) in the case where such LLC Employee is an employee of aSubsidiary, the Company shall be deemed to have contributed such amount to the capital of the Subsidiary;and(iii)The Company shall issue to the Corporation on the Vesting Date a number of Units equal tothe number of shares of Class A Common Stock issued under Section 3.10(c)(i) in consideration for a CapitalContribution that the Corporation is deemed to make to the Company pursuant to clause (3) of Section 3.10(c)(ii) above.(d)Future Stock Incentive Plans. Nothing in this Agreement shall be construed or applied to preclude orrestrain the Corporation from adopting, modifying or terminating stock incentive plans for the benefit of employees,directors or other business associates of the Corporation, the Company or any of their respective Affiliates. TheMembers acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by theCorporation, amendments to this Section 3.10 may become necessary or advisable and that any approval or consent toany such amendments requested by the Corporation shall be deemed granted by the Manager and the Members, asapplicable, without the requirement of any further consent or acknowledgement of any other Member.(e)Anti-dilution adjustments. For all purposes of this Section 3.10, the number of shares of Class ACommon Stock and the corresponding number of Common Units shall be determined after giving effect to all anti-dilutionor similar adjustments that are applicable, as of the date of exercise or vesting, to the option, warrant, restricted stock orother equity interest that is being exercised or becomes vested under the applicable Stock Option Plan or other EquityPlan and applicable award or grant documentation.Section 3.11Dividend Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan or OtherPlan. Except as may otherwise be provided in this Article III, all amounts received or deemed received by theCorporation in respect of any dividend22reinvestment plan, cash option purchase plan, stock incentive or other stock or subscription plan or agreement, either (a)shall be utilized by the Corporation to effect open market purchases of shares of Class A Common Stock, or (b) if theCorporation elects instead to issue new shares of Class A Common Stock with respect to such amounts, shall becontributed by the Corporation to the Company in exchange for additional Units. Upon such contribution, the Companywill issue to the Corporation a number of Units equal to the number of new shares of Class A Common Stock so issued.ARTICLE IV.DISTRIBUTIONSSection 4.01Distributions.(a)Distributable Cash; Other Distributions. To the extent permitted by applicable Law and hereunder,Distributions to Members may be declared by the Manager out of Distributable Cash or other funds or property legallyavailable therefor in such amounts, at such time and on such terms (including the payment dates of such Distributions)as the Manager shall determine using such record date as the Manager may designate. All Distributions made under thisSection 4.01 shall be made to the Members as of the close of business on such record date on a pro rata basis inaccordance with each Member’s Percentage Interest (other than, for the avoidance of doubt, any distributions madepursuant to Section 4.01(b)(v)) as of the close of business on such record date; provided, however, that the Managershall have the obligation to make Distributions as set forth in Sections 4.01(b) and 14.02; provided, further, thatnotwithstanding any other provision herein to the contrary, no Distributions shall be made to any Member to the extentsuch Distribution would render the Company insolvent or violate the Delaware Act. For purposes of the foregoingsentence, insolvency means the inability of the Company to meet its payment obligations when due. Promptly followingthe designation of a record date and the declaration of a Distribution pursuant to this Section 4.01(a), the Manager shallgive notice to each Member of the record date, the amount and the terms of the Distribution and the payment datethereof. In furtherance of the foregoing, it is intended that the Manager shall, to the extent permitted by applicable Lawand hereunder, have the right in its sole discretion to make Distributions to the Members pursuant to this Section 4.01(a)in such amounts as shall enable the Corporation to meet its obligations, including its obligations pursuant to the TaxReceivable Agreement (to the extent such obligations are not otherwise able to be satisfied as a result of TaxDistributions required to be made pursuant to Section 4.01(b)).(b)Tax Distributions.(i)With respect to each Fiscal Year, the Company shall, to the extent permitted by applicableLaw, make cash distributions (“Tax Distributions”) to each Member in accordance with, and to the extent of,such Member's Assumed Tax Liability. Tax Distributions pursuant to this Section 4.01(b)(i) shall be estimatedby the Company on a quarterly basis and, to the extent feasible, shall be distributed to the Members (togetherwith a statement showing the calculation of such Tax Distribution and an estimate of the Company's net taxableincome23allocable to each Member for such period) on a quarterly basis on April 15th, June 15th, September 15th andJanuary 15th (of the succeeding year) (or such other dates for which individuals are required to make quarterlyestimated tax payments for U.S. federal income tax purposes) (each, a “Quarterly Tax Distribution”); provided,that the foregoing shall not restrict the Company from making a Tax Distribution on any other date. QuarterlyTax Distributions shall take into account the estimated taxable income or loss of the Company for the FiscalYear through the end of the relevant quarterly period. A final accounting for Tax Distributions shall be made foreach Fiscal Year after the allocation of the Company's actual net taxable income or loss has been determinedand any shortfall in the amount of Tax Distributions a Member received for such Fiscal Year based on such finalaccounting shall promptly be distributed to such Member. For the avoidance of doubt, any excess TaxDistributions a Member receives with respect to any Fiscal Year shall reduce future Tax Distributions otherwiserequired to be made to such Member with respect to any subsequent Fiscal Year.(ii)To the extent a Member otherwise would be entitled to receive less than its PercentageInterest of the aggregate Tax Distributions to be paid pursuant to this Section 4.01(b) (other than anydistributions made pursuant to Section 4.01(b)(v)) on any given date, the Tax Distributions to such Membershall be increased to ensure that all Distributions made pursuant to this Section 4.01(b) are made pro rata inaccordance with the Members’ respective Percentage Interests. If, on a Tax Distribution Date, there areinsufficient funds on hand to distribute to the Members the full amount of the Tax Distributions to which suchMembers are otherwise entitled, Distributions pursuant to this Section 4.01(b) shall be made to the Members tothe extent of available funds in accordance with their Percentage Interests and the Company shall make futureTax Distributions as soon as funds become available sufficient to pay the remaining portion of the TaxDistributions to which such Members are otherwise entitled.(iii)In the event of any audit by, or similar event with, a taxing authority that affects thecalculation of any Member’s Assumed Tax Liability for any taxable year (other than an audit conductedpursuant to the Revised Partnership Audit Provisions for which no election is made pursuant to Section 6226thereof), or in the event the Company files an amended tax return, each Member’s Assumed Tax Liability withrespect to such year shall be recalculated by giving effect to such event (for the avoidance of doubt, taking intoaccount interest or penalties). Any shortfall in the amount of Tax Distributions the Members and formerMembers received for the relevant taxable years based on such recalculated Assumed Tax Liability promptlyshall be distributed to such Members and the successors of such former Members, except, for the avoidance ofdoubt, to the extent Distributions were made to such Members and former Members pursuant to Section 4.01(a)and this Section 4.01(b) in the relevant taxable years sufficient to cover such shortfall.(iv)Notwithstanding the foregoing, Tax Distributions pursuant to this Section 4.01(b) (other than,for the avoidance of doubt, any distributions made24pursuant to Section 4.01(b)(v)), if any, shall be made to a Member only to the extent all previous TaxDistributions to such Member pursuant to Section 4.01(b) with respect to the Fiscal Year are less than the TaxDistributions such Member otherwise would have been entitled to receive with respect to such Fiscal Yearpursuant to this Section 4.01(b).(v)Notwithstanding the foregoing and anything to the contrary in this Agreement, a finalaccounting for tax distributions under the Initial LLC Agreement in respect of the taxable income of theCompany for the portion of the Fiscal Year of the Company that ends on closing date of the IPO shall be madeby the Company following the closing date of the IPO and, based on such final accounting, the Company shallmake a tax distribution to the Pre-IPO Members (or in the case of any Pre-IPO Member that no longer exists, thesuccessor of such Pre-IPO Member) in accordance with the applicable terms of the Initial LLC Agreement to theextent of any shortfall in the amount of tax distributions the Pre-IPO Members received prior to the closing dateof the IPO with respect to taxable income of the Company for such portion of such Fiscal Year that will beallocated to the Pre-IPO Members pursuant to Section 706 of the Code. For the avoidance of doubt, the amountof the Tax Distribution to be made pursuant to this Section 4.01(b)(v) shall be calculated pursuant to Section3.1(a) of the Initial LLC Agreement.ARTICLE V.CAPITAL ACCOUNTS; ALLOCATIONS; TAX MATTERSSection 5.01Capital Accounts.(a)The Company shall maintain a separate Capital Account for each Member according to the rules ofTreasury Regulation Section 1.704-1(b)(2)(iv). For this purpose, the Company may (in the discretion of the Manager),upon the occurrence of the events specified in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), increase or decrease theCapital Accounts in accordance with the rules of such Treasury Regulation and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property.(b)For purposes of computing the amount of any item of Company income, gain, loss or deduction to beallocated pursuant to this Article V and to be reflected in the Capital Accounts of the Members, the determination,recognition and classification of any such item shall be the same as its determination, recognition and classification forU.S. federal income tax purposes (including any method of depreciation, cost recovery or amortization used for thispurpose); provided, however, that:(i)The computation of all items of income, gain, loss and deduction shall include those itemsdescribed in Code Section 705(a)(l)(B) or Code Section 705(a)(2)(B) and Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not includable in gross income or are not deductiblefor U.S. federal income tax purposes.25(ii)If the Book Value of any Company property is adjusted pursuant to Treasury RegulationSection 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or lossfrom the disposition of such property.(iii)Items of income, gain, loss or deduction attributable to the disposition of Company propertyhaving a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to theBook Value of such property.(iv)Items of depreciation, amortization and other cost recovery deductions with respect toCompany property having a Book Value that differs from its adjusted basis for tax purposes shall be computedby reference to the property’s Book Value in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).(v)To the extent an adjustment to the adjusted tax basis of any Company asset pursuant toCode Sections 732(d), 734(b) or 743(b) is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the CapitalAccounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if theadjustment decreases such basis).Section 5.02Allocations. Except as otherwise provided in Section 5.03 and Section 5.04, Net Profits andNet Losses for any Fiscal Year or Fiscal Period shall be allocated among the Capital Accounts of the Members pro ratain accordance with their respective Percentage Interests.Section 5.03Regulatory Allocations.(a)Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). If there is a net decreaseduring a Taxable Year in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) shall be allocated to the Membersin the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(i)(4).(b)Nonrecourse deductions (as determined according to Treasury Regulation Section 1.704-2(b)(1)) forany Taxable Year shall be allocated pro rata among the Members in accordance with their Percentage Interests. Exceptas otherwise provided in Section 5.03(a), if there is a net decrease in the Minimum Gain during any Taxable Year, eachMember shall be allocated Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) in theamounts and of such character as determined according to Treasury Regulation Section 1.704-2(f). This Section 5.03(b)is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury RegulationSection 1.704-2(f), and shall be interpreted in a manner consistent therewith.(c)If any Member that unexpectedly receives an adjustment, allocation or Distribution described inTreasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6)26has an Adjusted Capital Account Deficit as of the end of any Taxable Year, computed after the application of Sections5.03(a) and 5.03(b) but before the application of any other provision of this Article V, then Profits for such Taxable Yearshall be allocated to such Member in proportion to, and to the extent of, such Adjusted Capital Account Deficit. ThisSection 5.03(c) is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.(d)If the allocation of Net Losses to a Member as provided in Section 5.02 would create or increase anAdjusted Capital Account Deficit, there shall be allocated to such Member only that amount of Losses as will not createor increase an Adjusted Capital Account Deficit. The Net Losses that would, absent the application of the precedingsentence, otherwise be allocated to such Member shall be allocated to the other Members in accordance with theirrelative Percentage Interests, subject to this Section 5.03(d).(e)Profits and Losses described in Section 5.01(b)(v) shall be allocated in a manner consistent with themanner that the adjustments to the Capital Accounts are required to be made pursuant to Treasury Regulation Section1.704-1(b)(2)(iv)(j), (k) and (m).(f)The allocations set forth in Section 5.03(a) through and including Section 5.03(e) (the “RegulatoryAllocations”) are intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2 of the TreasuryRegulations. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocateProfit and Loss of the Company or make Distributions. Accordingly, notwithstanding the other provisions of this Article V,but subject to the Regulatory Allocations, income, gain, deduction and loss shall be reallocated among the Members soas to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of theMembers to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such otheritems of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations. Ingeneral, the Members anticipate that this will be accomplished by specially allocating other Profit and Loss (and suchother items of income, gain, deduction and loss) among the Members so that the net amount of the RegulatoryAllocations and such special allocations to each such Member is zero. In addition, if in any Fiscal Year or Fiscal Periodthere is a decrease in partnership minimum gain, or in partner nonrecourse debt minimum gain, and application of theminimum gain chargeback requirements set forth in Section 5.03(a) or Section 5.03(b) would cause a distortion in theeconomic arrangement among the Members, the Members may, if they do not expect that the Company will havesufficient other income to correct such distortion, request the Internal Revenue Service to waive either or both of suchminimum gain chargeback requirements. If such request is granted, this Agreement shall be applied in such instance asif it did not contain such minimum gain chargeback requirement.Section 5.04Final Allocations. Notwithstanding any contrary provision in this Agreement except Section5.03, the Manager shall make appropriate adjustments to27allocations of Profits and Losses to (or, if necessary, allocate items of gross income, gain, loss or deduction of theCompany among) the Members upon the liquidation of the Company (within the meaning of Section 1.704 1(b)(2)(ii)(g) ofthe Treasury Regulations), the transfer of substantially all the Units (whether by sale or exchange or merger) or sale of allor substantially all the assets of the Company, such that, to the maximum extent possible, the Capital Accounts of theMembers are proportionate to their Percentage Interests. In each case, such adjustments or allocations shall occur, tothe maximum extent possible, in the Fiscal Year of the event requiring such adjustments or allocations.Section 5.05Tax Allocations.(a)The income, gains, losses, deductions and credits of the Company will be allocated, for federal, stateand local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses,deductions and credits among the Members for computing their Capital Accounts; provided that if any such allocation isnot permitted by the Code or other applicable Law, the Company’s subsequent income, gains, losses, deductions andcredits will be allocated among the Members so as to reflect as nearly as possible the allocation set forth herein incomputing their Capital Accounts.(b)Items of Company taxable income, gain, loss and deduction with respect to any property contributedto the capital of the Company shall be allocated among the Members in accordance with Code Section 704(c) so as totake account of any variation between the adjusted basis of such property to the Company for federal income taxpurposes and its Book Value using the traditional method set forth in Treasury Regulations Section 1.704-3(b).(c)If the Book Value of any Company asset is adjusted pursuant to Section 5.01(b), includingadjustments to the Book Value of any Company asset in connection with the execution of this Agreement, subsequentallocations of items of taxable income, gain, loss and deduction with respect to such asset shall take account of anyvariation between the adjusted basis of such asset for federal income tax purposes and its Book Value using thetraditional method set forth in Treasury Regulations Section 1.704-3(b).(d)Allocations of tax credits, tax credit recapture, and any items related thereto shall be allocated to theMembers as determined by the Manager taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).(e)For purposes of determining a Member’s share of the Company’s “excess nonrecourse liabilities”within the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member’s interest in income and gain shall bedetermined pursuant to any proper method, as reasonably determined by the Manager; provided, that each year theManager shall use its reasonable best efforts (using in all instances any proper method, including without limitation the“additional method” described in Treasury Regulation Section 1.752-3(a)(3))) to allocate a sufficient amount of theexcess nonrecourse liabilities to those Members who would have at the end of the applicable Taxable Year, but for suchallocation, taxable income due to the deemed distribution of money to such Member28pursuant to Section 752(b) of the Code that is in excess of such Member’s adjusted tax basis in its Units; and provided,further, that, in making such allocations of the Company’s “excess nonrecourse liabilities” in the year of the IPO, theManager shall, to the extent permissible under law, use the methodology used in the illustration attached hereto asExhibit C (for the avoidance of doubt, in making allocations of the Company’s “excess nonrecourse liabilities” inaccordance with this Section 5.05(e), the Manager shall be permitted to use the methodology set forth in Exhibit C insubsequent taxable periods as well). (f)Allocations pursuant to this Section 5.05 are solely for purposes of federal, state and local taxes andshall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits,Losses, Distributions or other Company items pursuant to any provision of this Agreement.Section 5.06Indemnification and Reimbursement for Payments on Behalf of a Member. If the Companyis obligated to pay any amount to a Governmental Entity (or otherwise makes a payment to a Governmental Entity) that isspecifically attributable to a Member or a Member’s status as such (including federal income taxes as a result ofCompany obligations pursuant to the Revised Partnership Audit Provisions, federal withholding taxes, state personalproperty taxes and state unincorporated business taxes, but excluding payments such as payroll taxes, withholdingtaxes, benefits or professional association fees and the like required to be made or made voluntarily by the Company onbehalf of any Member based upon such Member’s status as an employee of the Company), then such Person shallindemnify the Company in full for the entire amount paid (including interest, penalties and related expenses). TheManager may offset Distributions to which a Person is otherwise entitled under this Agreement against such Person’sobligation to indemnify the Company under this Section 5.06. In addition, notwithstanding anything to the contrary, eachMember agrees that any Cash Settlement such Member is entitled to receive pursuant to Article XI may be offset by anamount equal to such Member’s obligation to indemnify the Company under this Section 5.06 and that such Membershall be treated as receiving the full amount of such Cash Settlement and paying to the Company an amount equal tosuch obligation. A Member’s obligation to make payments to the Company under this Section 5.06 shall survive thetermination, dissolution, liquidation and winding up of the Company. In the event that the Company has been terminatedprior to the date such payment is due, such Member shall make such payment to the Manager (or its designee), whichshall distribute such funds in accordance with this Agreement. The Company may pursue and enforce all rights andremedies it may have against each Member under this Section 5.06, including instituting a lawsuit to collect suchcontribution with interest calculated at a rate per annum equal to the sum of the Base Rate plus 300 basis points (but notin excess of the highest rate per annum permitted by Law). Each Member hereby agrees to furnish to the Company suchinformation and forms as required or reasonably requested in order to comply with any Laws and regulations governingwithholding of tax or in order to claim any reduced rate of, or exemption from, withholding to which the Member is legallyentitled.29ARTICLE VI.MANAGEMENTSection 6.01Authority of Manager.(a)Except for situations in which the approval of any Member(s) is specifically required by thisAgreement, (i) all management powers over the business and affairs of the Company shall be exclusively vested in theCorporation, as the sole managing member of the Company (the Corporation, in such capacity, the “Manager”) and (ii)the Manager shall conduct, direct and exercise full control over all activities of the Company. The Manager shall be the“manager” of the Company for the purposes of the Delaware Act. Except as otherwise expressly provided for herein andsubject to the other provisions of this Agreement, the Members hereby consent to the exercise by the Manager of all suchpowers and rights conferred on the Members by the Delaware Act with respect to the management and control of theCompany. Any vacancies in the position of Manager shall be filled in accordance with Section 6.04.(b)The day-to-day business and operations of the Company shall be overseen and implemented byofficers of the Company (each, an “Officer” and collectively, the “Officers”), subject to the limitations imposed by theManager. An Officer may, but need not, be a Member. Each Officer shall be appointed by the Manager and shall holdoffice until his or her successor shall be duly designated and shall qualify or until his or her death or until he shall resignor shall have been removed in the manner hereinafter provided. Any one Person may hold more than oneoffice. Subject to the other provisions in this Agreement (including in Section 6.07 below), the salaries or othercompensation, if any, of the Officers of the Company shall be fixed from time to time by the Manager. The authority andresponsibility of the Officers shall include, but not be limited to, such duties as the Manager may, from time to time,delegate to them and the carrying out of the Company’s business and affairs on a day-to-day basis. The existing Officersof the Company as of the Effective Time shall remain in their respective positions and shall be deemed to have beenappointed by the Manager. All Officers shall be, and shall be deemed to be, officers and employees of the Company. AnOfficer may also perform one or more roles as an officer of the Manager. Any Officer may be removed at any time, with orwithout cause, by the Manager.(c)The Manager shall have the power and authority to effectuate the sale, lease, transfer, exchange orother disposition of any, all or substantially all of the assets of the Company (including the exercise or grant of anyconversion, option, privilege or subscription right or any other right available in connection with any assets at any timeheld by the Company) or the merger, consolidation, reorganization or other combination of the Company with or intoanother entity, for the avoidance of doubt, without the prior consent of any Member or any other Person being required,subject to the limitations prescribed by the Stockholders Agreement.Section 6.02Actions of the Manager. The Manager may act through any Officer or through any otherPerson or Persons to whom authority and duties have been delegated pursuant to Section 6.07.30Section 6.03Resignation; No Removal. The Manager may resign at any time by giving written notice tothe Members. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by theMembers, and the acceptance of the resignation shall not be necessary to make it effective. For the avoidance of doubt,the Members have no right under this Agreement to remove or replace the Manager.Section 6.04Vacancies. Subject to the limitations prescribed in the Stockholders Agreement, vacanciesin the position of Manager occurring for any reason shall be filled by the Corporation (or, if the Corporation has ceased toexist without any successor or assign, then by the holders of a majority in interest of the voting capital stock of theCorporation immediately prior to such cessation). For the avoidance of doubt, the Members have no right under thisAgreement to fill any vacancy in the position of Manager.Section 6.05Transactions Between Company and Manager. The Manager may cause the Company tocontract and deal with the Manager, or any Affiliate of the Manager, provided, that such contracts and dealings (otherthan contracts and dealings between the Company and its Subsidiaries) are on terms comparable to and competitivewith those available to the Company from others dealing at arm’s length or are approved by the Members and otherwiseare permitted by the Credit Agreements. The Members hereby approve each of the contracts or agreements between oramong the Manager, the Company and their respective Affiliates entered into on or prior to the date of this Agreement inaccordance with the Initial LLC Agreement or that the board of managers has approved in connection with the IPO as ofthe date of this Agreement, including the IPO Common Unit Subscription Agreement.Section 6.06Reimbursement for Expenses. The Manager shall not be compensated for its services asManager of the Company except as expressly provided in this Agreement. The Members acknowledge and agree that,upon consummation of the IPO, the Manager’s Class A Common Stock will be publicly traded and therefore the Managerwill have access to the public capital markets and that such status and the services performed by the Manager will inureto the benefit of the Company and all Members; therefore, the Manager shall be reimbursed by the Company for anyreasonable out-of-pocket expenses incurred on behalf of the Company, including without limitation all fees, expensesand costs associated with the IPO and all fees, expenses and costs of being a public company (including withoutlimitation public reporting obligations, proxy statements, stockholder meetings, stock exchange fees, transfer agent fees,legal fees, SEC and FINRA filing fees and offering expenses) and maintaining its corporate existence. For theavoidance of doubt, the Manager shall not be reimbursed for any federal, state or local taxes imposed on the Manager orany subsidiary of the Manager (other than taxes paid by the Manager on behalf of the Company and any subsidiary ofthe Company but only if the taxes paid were the legal liability of the Company and/or any subsidiary of the Company). Inthe event that shares of Class A Common Stock are sold to underwriters in the IPO (or in any subsequent public offering)at a price per share that is lower than the price per share for which such shares of Class A Common Stock are sold to thepublic in the IPO (or in such subsequent public offering, as applicable) after taking into account underwriters’ discountsor commissions and brokers’31fees or commissions (such difference, the “Discount”) (i) the Manager shall be deemed to have contributed to theCompany in exchange for newly issued Common Units the full amount for which such shares of Class A Common Stockwere sold to the public and (ii) the Company shall be deemed to have paid the Discount as an expense. To the extentpracticable, expenses incurred by the Manager on behalf of or for the benefit of the Company shall be billed directly toand paid by the Company and, if and to the extent any reimbursements to the Manager or any of its Affiliates by theCompany pursuant to this Section 6.06 constitute gross income to such Person (as opposed to the repayment ofadvances made by such Person on behalf of the Company), such amounts shall be treated as “guaranteed payments”within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing theMembers’ Capital Accounts.Section 6.07Delegation of Authority. The Manager (a) may, from time to time, delegate to one or morePersons such authority and duties as the Manager may deem advisable, and (b) may assign titles (including, withoutlimitation, chief executive officer, president, chief financial officer, chief operating officer, general counsel, senior vicepresident, vice president, secretary, assistant secretary, treasurer or assistant treasurer) and delegate certain authorityand duties to such Persons as the same may be amended, restated or otherwise modified from time to time. Any numberof titles may be held by the same individual. The salaries or other compensation, if any, of such agents of the Companyshall be fixed from time to time by the Manager, subject to the other provisions in this Agreement.Section 6.08Limitation of Liability of Manager.(a)Except as otherwise provided herein or in an agreement entered into by such Person and theCompany, neither the Manager nor any of the Manager’s Affiliates or Manager’s officers, employees or other agents shallbe liable to the Company, to any Member that is not the Manager or to any other Person bound by this Agreement for anyact or omission performed or omitted by the Manager in its capacity as the sole managing member of the Companypursuant to authority granted to the Manager by this Agreement; provided, however, that, except as otherwise providedherein, such limitation of liability shall not apply to the extent the act or omission was attributable to the Manager’s grossnegligence, willful misconduct or knowing violation of Law or for any present or future breaches of any representations,warranties or covenants by the Manager or its Affiliates contained herein or in the other agreements with theCompany. The Manager may exercise any of the powers granted to it by this Agreement and perform any of the dutiesimposed upon it hereunder either directly or by or through its agents, and shall not be responsible for any misconduct ornegligence on the part of any such agent (so long as such agent was selected in good faith and with reasonablecare). The Manager shall be entitled to rely upon the advice of legal counsel, independent public accountants and otherexperts, including financial advisors, and any act of or failure to act by the Manager in good faith reliance on such adviceshall in no event subject the Manager to liability to the Company or any Member that is not the Manager.(b)Whenever this Agreement or any other agreement contemplated herein provides that the Managershall act in a manner which is, or provide terms which are, “fair32and reasonable” to the Company or any Member that is not the Manager, the Manager shall determine such appropriateaction or provide such terms considering, in each case, the relative interests of each party to such agreement, transactionor situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, andany applicable United States generally accepted accounting practices or principles, notwithstanding any other provisionof this Agreement or any duty otherwise existing at Law or in equity.(c)Whenever in this Agreement or any other agreement contemplated herein, the Manager is permitted orrequired to take any action or to make a decision in its “sole discretion” or “discretion,” with “complete discretion” or undera grant of similar authority or latitude, the Manager shall be entitled to consider such interests and factors as it desires,including its own interests, and shall, to the fullest extent permitted by applicable Law and notwithstanding any dutyotherwise existing at Law or in equity, have no duty or obligation to give any consideration to any interest of or factorsaffecting the Company, other Members or any other Person.(d)Whenever in this Agreement the Manager is permitted or required to take any action or to make adecision in its “good faith” or under another express standard, the Manager shall act under such express standard and, tothe extent permitted by applicable Law, shall not be subject to any other or different standards imposed by thisAgreement or any other agreement contemplated herein, notwithstanding any provision of this Agreement or dutyotherwise, existing at Law or in equity, and, notwithstanding anything contained herein to the contrary, so long as theManager acts in good faith, the resolution, action or terms so made, taken or provided by the Manager shall not constitutea breach of this Agreement or impose liability upon the Manager or any of the Manager’s Affiliates and shall be deemedapproved by all Members.Section 6.09Investment Company Act. The Manager shall use its best efforts to ensure that theCompany shall not be subject to registration as an investment company pursuant to the Investment Company Act.Section 6.10Outside Activities of the Manager. The Manager shall not, directly or indirectly, enter into orconduct any business or operations, other than in connection with (a) the ownership, acquisition and disposition ofCommon Units, (b) the management of the business and affairs of the Company and its Subsidiaries, (c) the operation ofthe Manager as a reporting company with a class (or classes) of securities registered under Section 12 of the ExchangeAct and listed on a securities exchange, (d) the offering, sale, syndication, private placement or public offering of stock,bonds, securities or other interests of the Corporation or the Company or any of its Subsidiaries, (e) financing orrefinancing of any type related to the Corporation or the Company, its Subsidiaries or their assets or activities, (f) treasuryand treasury management, (g) stock repurchases, (h) the declaration and payment of dividends with respect to any classof securities and (i) such activities as are incidental to the foregoing, subject, with respect to each of the foregoing, to anylimitations prescribed by the Stockholders Agreement; provided, however, that, except as otherwise provided herein, thenet proceeds of any financing raised by the Manager pursuant to the preceding clauses (d) and (e) shall be madeavailable to the33Company, whether as Capital Contributions, loans or otherwise, as appropriate; provided, further, that the Manager may,in its sole and absolute discretion, from time to time hold or acquire assets in its own name or otherwise other thanthrough the Company and its Subsidiaries so long as the Manager takes commercially reasonable measures to ensurethat the economic benefits and burdens of such assets are otherwise vested in the Company or its Subsidiaries, throughassignment, mortgage loan or otherwise or, if it is not commercially reasonable to vest such economic interests in theCompany or any of its Subsidiaries, the Members shall negotiate in good faith to amend this Agreement to reflect suchactivities and the direct ownership of assets by the Manager. Nothing contained herein shall be deemed to prohibit theManager from executing any guarantee of indebtedness of the Company or its Subsidiaries.ARTICLE VII.RIGHTS AND OBLIGATIONS OF MEMBERS AND MANAGERSection 7.01Limitation of Liability and Duties of Members.(a)Except as provided in this Agreement or in the Delaware Act, the debts, obligations and liabilities ofthe Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of theCompany and no Member (including without limitation, the Manager) shall be obligated personally for any such debts,obligations, contracts or liabilities of the Company solely by reason of being a Member or the Manager (except to theextent and under the circumstances set forth in any non-waivable provision of the Act). Notwithstanding anythingcontained herein to the contrary, to the fullest extent permitted by applicable Law, the failure of the Company to observeany formalities or requirements relating to the exercise of its powers or management of its business and affairs under thisAgreement or the Delaware Act shall not be grounds for imposing personal liability on the Members for liabilities of theCompany.(b)In accordance with the Delaware Act and the laws of the State of Delaware, a Member may, undercertain circumstances, be required to return amounts previously distributed to such Member. It is the intent of theMembers that no Distribution to any Member pursuant to Articles IV or XIV shall be deemed a return of money or otherproperty paid or distributed in violation of the Delaware Act. The payment of any such money or Distribution of any suchproperty to a Member shall be deemed to be a compromise within the meaning of Section 18-502(b) of the Delaware Act,and, to the fullest extent permitted by Law, any Member receiving any such money or property shall not be required toreturn any such money or property to the Company or any other Person, unless such distribution was made by theCompany to its Members in clerical error. However, if any court of competent jurisdiction holds that, notwithstanding theprovisions of this Agreement, any Member is obligated to make any such payment, such obligation shall be theobligation of such Member and not of any other Member.(c)Notwithstanding any other provision of this Agreement (but subject, and without limitation, to Section6.08 with respect to the Manager), to the extent that, at Law or in equity, any Member (other than the Manager in itscapacity as such) (or any34Member’s Affiliate or any manager, managing member, general partner, director, officer, employee, agent, fiduciary ortrustee of any Member or of any Affiliate of a Member) has duties (including fiduciary duties) to the Company, to theManager, to another Member, to any Person who acquires an interest in a Company Interest or to any other Personbound by this Agreement, all such duties (including fiduciary duties) are hereby eliminated, to the fullest extent permittedby law, and replaced with the duties or standards expressly set forth herein, if any. The elimination of duties (includingfiduciary duties) to the Company, the Manager, each of the Members, each other Person who acquires an interest in aCompany Interest and each other Person bound by this Agreement and replacement thereof with the duties or standardsexpressly set forth herein, if any, are approved by the Company, the Manager, each of the Members, each other Personwho acquires an interest in a Company Interest and each other Person bound by this Agreement.Section 7.02Lack of Authority. No Member, other than the Manager or a duly appointed Officer, in eachcase in its capacity as such, has the authority or power to act for or on behalf of the Company, to do any act that would bebinding on the Company or to make any expenditure on behalf of the Company. The Members hereby consent to theexercise by the Manager of the powers conferred on them by Law and this Agreement.Section 7.03No Right of Partition. No Member, other than the Manager, shall have the right to seek orobtain partition by court decree or operation of Law of any Company property, or the right to own or use particular orindividual assets of the Company.Section 7.04Indemnification.(a)Subject to Section 5.06, the Company hereby agrees to indemnify and hold harmless any Person(each an “Indemnified Person”) to the fullest extent permitted under applicable Law, as the same now exists or mayhereafter be amended, substituted or replaced (but, in the case of any such amendment, substitution or replacement onlyto the extent that such amendment, substitution or replacement permits the Company to provide broader indemnificationrights than the Company is providing immediately prior to such amendment), against all expenses, liabilities and losses(including attorneys’ fees, judgments, fines, excise taxes or penalties) reasonably incurred or suffered by such Person (orone or more of such Person’s Affiliates) by reason of the fact that such Person is or was a Member or an Affiliate thereof(other than as a result of an ownership interest in the Corporation) or is or was serving as the Manager or a director,officer, employee or other agent of the Manager, or a director, manager, Officer, employee or other agent of the Companyor is or was serving at the request of the Company as a manager, officer, director, principal, member, employee or agentof another corporation, partnership, joint venture, limited liability company, trust or other enterprise; provided, however,that no Indemnified Person shall be indemnified for any expenses, liabilities and losses suffered that are attributable tosuch Indemnified Person’s or its Affiliates’ gross negligence, willful misconduct or knowing violation of Law or for anypresent or future breaches of any representations, warranties or covenants by such Indemnified Person or its Affiliatescontained herein or in the other agreements with the Company. Reasonable expenses,35including attorneys’ fees, incurred by any such Indemnified Person in defending a proceeding shall be paid by theCompany in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of anundertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined thatsuch Indemnified Person is not entitled to be indemnified by the Company. (b)The right to indemnification and the advancement of expenses conferred in this Section 7.04 shall notbe exclusive of any other right which any Person may have or hereafter acquire under any statute, agreement, bylaw,action by the Manager or otherwise.(c)The Company shall maintain directors’ and officers’ liability insurance, or substantially equivalentinsurance, at its expense, to protect any Indemnified Person (and the investment funds, if any, they represent) againstany expense, liability or loss described in Section 7.04(a) whether or not the Company would have the power toindemnify such Indemnified Person against such expense, liability or loss under the provisions of this Section 7.04. TheCompany shall use its commercially reasonable efforts to purchase and maintain property, casualty and liabilityinsurance in types and at levels customary for companies of similar size engaged in similar lines of business, asdetermined in good faith by the Manager, and the Company shall use its commercially reasonable efforts to purchasedirectors’ and officers’ liability insurance (including employment practices coverage) with a carrier and in an amountdetermined necessary or desirable as determined in good faith by the Manager.(d)Notwithstanding anything contained herein to the contrary (including in this Section 7.04), theCompany agrees that any indemnification and advancement of expenses available to any current or former IndemnifiedPerson from (i) ACON; (ii) Fundamental or (iii) any investment fund that is an Affiliate of ACON or Fundamental, asapplicable, or of the Company, in each case, who was appointed to serve as a director of the Company or served as aMember of the Company by virtue of such Person’s service as a member, director, partner or employee of any such fundprior to or following the Effective Time (any such Person, a “Sponsor Person”) shall be secondary to the indemnificationand advancement of expenses to be provided by the Company pursuant to this Section 7.04. Such indemnification andadvancement of expenses shall be provided out of and to the extent of Company assets only. No Member (unless suchMember otherwise agrees in writing or is found in a non-appealable decision by a court of competent jurisdiction to havepersonal liability on account thereof) shall have personal liability on account thereof or shall be required to makeadditional Capital Contributions to help satisfy such indemnity of the Company. The Company (i) shall be the primaryindemnitor of first resort for such Sponsor Person pursuant to this Section 7.04 and (ii) shall be fully responsible for theadvancement of all expenses and the payment of all damages or liabilities with respect to such Sponsor Person whichare addressed by this Section 7.04.(e)If this Section 7.04 or any portion hereof shall be invalidated on any ground by any court of competentjurisdiction, then the Company shall nevertheless indemnify36and hold harmless each Indemnified Person pursuant to this Section 7.04 to the fullest extent permitted by anyapplicable portion of this Section 7.04 that shall not have been invalidated and to the fullest extent permitted byapplicable Law.(f)From the Effective Time through December 31, 2021, neither the Company nor the Manager shall, andshall not permit their respective Subsidiaries to, amend, repeal or otherwise modify any provision in any suchSubsidiary’s certificate or articles of incorporation or formation or bylaws or operating agreement relating to theexculpation or indemnification (including fee advancement) of any officers and/or directors (unless required byLaw). The Company and the Manager shall cause each Subsidiary to honor and perform under all indemnificationobligations owed to any of the individuals who were officers and/or directors of such Subsidiary prior to the EffectiveTime.Section 7.05Members Right to Act. For matters that require the approval of the Members, the Membersshall act through meetings and written consents as described in paragraphs (a) and (b) below:(a)Except as otherwise expressly provided by this Agreement, acts by the Members holding a majority ofthe Units, voting together as a single class, shall be the acts of the Members. Any Member entitled to vote at a meetingof Members or to express consent or dissent to Company action in writing without a meeting may authorize anotherperson or persons to act for it by proxy. An electronic mail, telegram, telex, cablegram or similar transmission by theMember, or a photographic, photostatic, facsimile or similar reproduction of a writing executed by the Member shall (ifstated thereon) be treated as a proxy executed in writing for purposes of this Section 7.05(a). No proxy shall be voted oracted upon after eleven (11) months from the date thereof, unless the proxy provides for a longer period. A proxy shallbe revocable unless the proxy form conspicuously states that the proxy is irrevocable and that the proxy is coupled withan interest. Should a proxy designate two or more Persons to act as proxies, unless that instrument shall provide to thecontrary, a majority of such Persons present at any meeting at which their powers thereunder are to be exercised shallhave and may exercise all the powers of voting or giving consents thereby conferred, or, if only one be present, thensuch powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particularissue, the Company shall not be required to recognize such proxy with respect to such issue if such proxy does notspecify how the votes that are the subject of such proxy are to be voted with respect to such issue.(b)The actions by the Members permitted hereunder may be taken at a meeting called by the Manager orby the Members holding a majority of the Units entitled to vote on such matter on at least five (5) Business Days priorwritten notice to the other Members entitled to vote, which notice shall state the purpose or purposes for which suchmeeting is being called. The actions taken by the Members entitled to vote or consent at any meeting (as opposed to bywritten consent), however called and noticed, shall be as valid as though taken at a meeting duly held after regular calland notice if (but not until), either before, at or after the meeting, the Members entitled to vote or consent as to whom itwas improperly held signs a written waiver of notice or a consent to the holding of such meeting or an approval of theminutes thereof. The actions by the Members entitled to37vote or consent may be taken by vote of the Members entitled to vote or consent at a meeting or by written consent(without the requirement of prior notice), so long as such consent (x) is signed by Members having not less than theminimum number of Units that would be necessary to authorize or take such action at a meeting at which all Membersentitled to vote thereon were present and voted and (y) such request for consent in writing was distributed to all Membersentitled to vote thereon simultaneously. Prompt notice of the action so taken, which shall state the purpose or purposesfor which such consent is required and may be delivered via email, without a meeting shall be given to those Membersentitled to vote or consent who have not consented in writing; provided, however, that the failure to give any such noticeshall not affect the validity of the action taken by such written consent. Any action taken pursuant to such written consentof the Members shall have the same force and effect as if taken by the Members at a meeting thereof.Section 7.06Inspection Rights. The Company shall permit each Member and each of its designatedrepresentatives to examine the books and records of the Company or any of its Subsidiaries at the principal office of theCompany or such other location as the Manager shall reasonably approve during reasonable business hours for anypurpose reasonably related to such Member’s Company Interest; provided, that Manager has a right to keep confidentialfrom the Members certain information in accordance with Section 18-305 of the Delaware Act.ARTICLE VIII.BOOKS, RECORDS, ACCOUNTING AND REPORTS, AFFIRMATIVE COVENANTSSection 8.01Records and Accounting. The Company shall keep, or cause to be kept, appropriate booksand records with respect to the Company’s business, including all books and records necessary to provide anyinformation, lists and copies of documents required pursuant to applicable Laws. All matters concerning (a) thedetermination of the relative amount of allocations and Distributions among the Members pursuant to Articles IV and Vand (b) accounting procedures and determinations, and other determinations not specifically and expressly provided forby the terms of this Agreement, shall be determined by the Manager, whose determination shall be final and conclusiveas to all of the Members absent manifest clerical error.Section 8.02Fiscal Year. The Fiscal Year of the Company shall end on December 31 of each year orsuch other date as may be established by the Manager.ARTICLE IX.TAX MATTERSSection 9.01Preparation of Tax Returns. The Manager shall arrange for the preparation and timely filingof all tax returns required to be filed by the Company. On or before April 15, June 15, September 15, and December 15of each Fiscal Year, the Company shall send to each Person who was a Member at any time during the prior quarter, anestimate of such Member’s state tax apportionment information and allocations to the Members of taxable income, gains,losses, deductions and credits for38the prior quarter, which estimate shall have been reviewed by the Company’s outside tax accountants. In addition, nolater than (i) March 30 following the end of the prior Fiscal Year, the Company shall provide to each Person that was aMember at any time during such Fiscal Year a statement showing an estimate of such Member’s state tax apportionmentinformation and such Member’s estimated allocations of taxable income, gains, losses, deductions and credits for suchFiscal Year and (ii) July 31 following the end of the prior Fiscal Year, the Company shall send to each Person who was aMember at any time during such Fiscal Year, a statement showing such Member’s final state tax apportionmentinformation and allocations to the Members of taxable income, gains, losses, deductions and credits for such Fiscal Yearand a completed IRS Schedule K-1. The Company shall notify the Members upon receipt of any notice of any materialincome tax examination of the Company by federal, state or local authorities. Subject to the terms and conditions of thisAgreement and except as otherwise provided in this Agreement, in its capacity as Tax Matters Partner, the Corporationshall have the authority to prepare the tax returns of the Company using such permissible methods and elections as itdetermines in its reasonable discretion, including without limitation the use of any permissible method under Section 706of the Code for purposes of determining the varying Company Interests of its Members.Section 9.02Tax Elections. The Taxable Year shall be the Fiscal Year set forth in Section 8.02. TheCompany and any eligible Subsidiary shall have in effect an election pursuant to Section 754 of the Code, shall notthereafter revoke such election and shall make a new election pursuant to Section 754 to the extent necessary followingany “termination” of the Company or the Subsidiary under Section 708 of the Code. Each Member will upon requestsupply any information reasonably necessary to give proper effect to any such elections.Section 9.03Tax Controversies.(a)With respect to the Tax Year that includes the date of the IPO (and any Tax Year beginning on orbefore December 31, 2017), the Corporation is hereby designated the Tax Matters Partner of the Company within themeaning given to such term in Section 6231 of the Code (the Corporation, in such capacity, the “Tax Matters Partner”)and is authorized and required to represent the Company (at the Company’s expense) in connection with allexaminations of the Company’s affairs by tax authorities, including resulting administrative and judicial proceedings, andto expend Company funds for professional services reasonably incurred in connection therewith. Each Member agreesto cooperate with the Company and to do or refrain from doing any or all things reasonably requested by the Companywith respect to the conduct of such proceedings. The Tax Matters Partner shall keep Members reasonably informed ofthe progress of any material income tax examinations, audits or other proceedings and all Members shall have the rightto observe and participate at their sole expense in any such tax proceedings to the extent permitted by applicablelaw. Nothing set forth in this Agreement shall diminish,39limit or restrict the rights of any Member under Subchapter C, Chapter 63, Subtitle F of the Code (Code Sections 6221 etseq.).(b)With respect to Tax Years beginning after December 31, 2017, pursuant to the Revised PartnershipAudit Provisions, the Corporation shall be designated and may, on behalf of the Company, at any time, and withoutfurther notice to or consent from any Member, act as the “partnership representative” of the Company (within the meaninggiven to such term in Section 6223 of the Code) (the “Partnership Representative”) for purposes of the Code. ThePartnership Representative shall have the right and obligation to take all actions authorized and required, respectively,by the Code for the Partnership Representative and is authorized and required to represent the Company (at theCompany’s expense) in connection with all examinations of the Company’s affairs by tax authorities, including resultingadministrative and judicial proceedings, and to expend Company funds for professional services reasonably incurred inconnection therewith. Each Member agrees to cooperate with the Company and to do or refrain from doing any or allthings reasonably requested by the Company with respect to the conduct of such proceedings. The PartnershipRepresentative shall keep Members reasonably informed regarding any material income tax proceedings, and theMembers shall have the right to observe and participate through representatives of their own choosing (at their soleexpense) in any such tax proceedings to the extent permitted by applicable law. Nothing herein shall diminish, limit orrestrict the rights of any Member under the Revised Partnership Audit Provisions.ARTICLE X.RESTRICTIONS ON TRANSFER OF UNITS; PREEMPTIVE RIGHTSSection 10.01Transfers by Members. No holder of Units shall Transfer any interest in any Units, exceptTransfers (a) pursuant to and in accordance with Sections 10.02 and 10.09 or (b) approved in writing by the Manager, inthe case of Transfers by any Member other than the Manager, or (c) in the case of Transfers by the Manager, to anyPerson who succeeds to the Manager in accordance with Section 6.04. Notwithstanding the foregoing, “Transfer” shallnot include an event that terminates the existence of a Member for income tax purposes (including, without limitation, achange in entity classification of a Member under Treasury Regulations Section 301.7701-3, termination of a partnershippursuant to Code Section 708(b)(1)(B), a sale of assets by, or liquidation of, a Member pursuant to an election underCode Sections 336 or 338, or merger, severance, or allocation within a trust or among sub-trusts of a trust that is aMember), but that does not terminate the existence of such Member under applicable state Law (or, in the case of a trustthat is a Member, does not terminate the trusteeship of the fiduciaries under such trust with respect to all the CompanyInterests of such trust that is a Member).Section 10.02Permitted Transfers. The restrictions contained in Section 10.01 shall not apply to any ofthe following (each, a “Permitted Transfer” and each transferee, a “Permitted Transferee”): (i)(A) a Transfer pursuant toa Redemption or Exchange in accordance with Article XI hereof or (B) a Transfer by a Member to the Corporation or anyof its Subsidiaries, (ii) a Transfer by any Member to such Member’s40spouse, any lineal ascendants or descendants or trusts or other entities in which such Member or Member’s spouse,lineal ascendants or descendants hold (and continue to hold while such trusts or other entities hold Units) 50% or moreof such entity’s beneficial interests, (iii) a Transfer pursuant to the Laws of descent and distribution, (iv) a Transfer to apartner, shareholder, member or Affiliated investment fund of such Member (which may include special purposeinvestment vehicles wholly owned by one or more Affiliated investment funds but shall not include portfolio companies)and (v) any Transfer as shall be necessary to effectuate the Blocker Roll Up; provided, however, that (x) the restrictionscontained in this Agreement will continue to apply to Units after any Permitted Transfer of such Units, and (y) in the caseof the foregoing clauses (ii), (iii), (iv) and (v), the Permitted Transferees of the Units so Transferred shall agree in writingto be bound by the provisions of this Agreement and, except with respect to the Transfers contemplated by the foregoingclause (v), the transferor will deliver a written notice to the Company and the Members, which notice will disclose inreasonable detail the identity of the proposed Permitted Transferee. In the case of a Permitted Transfer of any CommonUnits by any Member that is authorized to hold Class B Common Stock in accordance with the Corporation’s certificateof incorporation to a Permitted Transferee in accordance with this Section 10.02, such Member (or any subsequentPermitted Transferee of such Member) shall be required to also transfer an equal number of shares of Class B CommonStock corresponding to the proportion of such Member’s (or subsequent Permitted Transferee’s) Common Units thatwere transferred in the transaction to such Permitted Transferee. All Permitted Transfers are subject to the additionallimitations set forth in Section 10.07(b).Section 10.03Restricted Units Legend. The Units have not been registered under the Securities Actand, therefore, in addition to the other restrictions on Transfer contained in this Agreement, cannot be sold unlesssubsequently registered under the Securities Act or an exemption from such registration is then available. To the extentsuch Units have been certificated, each certificate evidencing Units and each certificate issued in exchange for or uponthe Transfer of any Units (if such securities remain Units as defined herein after such Transfer) shall be stamped orotherwise imprinted with a legend in substantially the following form:“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED ON NOVEMBER 1, 2017, AND HAVENOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOTBE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THEACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THISCERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THESECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF FUNKO ACQUISITIONHOLDINGS, L.L.C., AS MAY BE AMENDED AND MODIFIED FROM TIME TO TIME, AND FUNKO ACQUISITIONHOLDINGS, L.L.C. RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCHCONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF SUCH CONDITIONSSHALL BE FURNISHED BY FUNKO ACQUISITION41HOLDINGS, L.L.C. TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”The Company shall imprint such legend on certificates (if any) evidencing Units. The legend set forth above shall beremoved from the certificates (if any) evidencing any units which cease to be Units in accordance with the definitionthereof.Section 10.04Transfer. Prior to Transferring any Units, the Transferring holder of Units shall cause theprospective Permitted Transferee to be bound by this Agreement and any other agreements executed by the holders ofUnits and relating to such Units in the aggregate to which the transferor was a party, including without limitation theStockholders Agreement (collectively, the “Other Agreements”) by executing and delivering to the Companycounterparts of this Agreement and any applicable Other Agreements.Section 10.05Assignee’s Rights.(a)The Transfer of a Company Interest in accordance with this Agreement shall be effective as of thedate of its assignment (assuming compliance with all of the conditions to such Transfer set forth herein), and suchTransfer shall be shown on the books and records of the Company. Profits, Losses and other Company items shall beallocated between the Transferor and the Assignee according to Code Section 706, using any permissible method asdetermined in the reasonable discretion of the Manager. Distributions made before the effective date of such Transfershall be paid to the Transferor, and Distributions made on or after such date shall be paid to the Assignee.(b)Unless and until an Assignee becomes a Member pursuant to Article XII, the Assignee shall not beentitled to any of the rights granted to a Member hereunder or under applicable Law, other than the rights grantedspecifically to Assignees pursuant to this Agreement; provided, however, that, without relieving the Transferring Memberfrom any such limitations or obligations as more fully described in Section 10.06, such Assignee shall be bound by anylimitations and obligations of a Member contained herein that a Member would be bound on account of the Assignee’sCompany Interest (including the obligation to make Capital Contributions on account of such Company Interest).Section 10.06Assignor’s Rights and Obligations. Any Member who shall Transfer any Company Interestin a manner in accordance with this Agreement shall cease to be a Member with respect to such Units or other interestand shall no longer have any rights or privileges, or, except as set forth in this Section 10.06, duties, liabilities orobligations, of a Member with respect to such Units or other interest (it being understood, however, that the applicableprovisions of Sections 6.08 and 7.04 shall continue to inure to such Person’s benefit), except that unless and until theAssignee (if not already a Member) is admitted as a Substituted Member in accordance with the provisions of Article XII(the “Admission Date”), (i) such assigning Member shall retain all of the duties, liabilities and obligations of a Memberwith respect to such Units or other interest, and (ii) the Manager may, in its sole discretion, reinstate all or any portion ofthe rights and privileges of such Member with respect to such Units or other interest for any42period of time prior to the Admission Date. Nothing contained herein shall relieve any Member who Transfers any Unitsor other interest in the Company from any liability of such Member to the Company with respect to such CompanyInterest that may exist on the Admission Date or that is otherwise specified in the Delaware Act or for any liability to theCompany or any other Person for any materially false statement made by such Member (in its capacity as such) or forany present or future breaches of any representations, warranties or covenants by such Member (in its capacity as such)contained herein or in the other agreements with the Company.Section 10.07Overriding Provisions.(a)Any Transfer or attempted Transfer of any Units in violation of this Agreement (including anyprohibited indirect Transfers) shall be null and void ab initio, and the provisions of Sections 10.05 and 10.06 shall notapply to any such Transfers. For the avoidance of doubt, any Person to whom a Transfer is made or attempted inviolation of this Agreement shall not become a Member, shall not be entitled to vote on any matters coming before theMembers and shall not have any other rights in or with respect to any rights of a Member of the Company. The approvalof any Transfer in any one or more instances shall not limit or waive the requirement for such approval in any other orfuture instance. The Manager shall promptly amend the Schedule of Members to reflect any Permitted Transfer pursuantto this Article X.(b)Notwithstanding anything contained herein to the contrary (including, for the avoidance of doubt, theprovisions of Section 10.01 and Article XI and Article XII), in no event shall any Member Transfer any Units to the extentsuch Transfer would:(i)result in the violation of the Securities Act, or any other applicable federal, state or foreignLaws;(ii)cause an assignment under the Investment Company Act;(iii)in the reasonable determination of the Manager, be a violation of or a default (or an eventthat, with notice or the lapse of time or both, would constitute a default) under, or result in an acceleration of anyCredit Agreement which the Company or the Manager is a party; provided that (x) the payee or creditor to whomthe Company or the Manager owes such obligation is not an Affiliate of the Company or the Manager and (y)such Credit Agreement, individually or in the aggregate, has an aggregate principal amount of loans orrevolving commitments then outstanding that is equal to or greater than $20,000,000.00;(iv)be a Transfer to a Person who is not legally competent or who has not achieved his or hermajority of age under applicable Law (excluding trusts for the benefit of minors);43(v)cause the Company to be treated as a “publicly traded partnership” or to be taxed as acorporation pursuant to Section 7704 of the Code or successor provision of the Code; or(vi)result in the Company having more than one hundred (100) partners, within the meaning ofTreasury Regulations Section 1.7704-1(h)(1) (determined pursuant to the rules of Treasury Regulations Section1.7704-1(h)(3)).Section 10.08Spousal Consent. In connection with the execution and delivery of this Agreement, anyMember who is a natural person will deliver to the Company an executed consent from such Member’s spouse (if any) inthe form of Exhibit B-1 attached hereto or a Member’s spouse confirmation of separate property in the form of Exhibit B-2attached hereto. If, at any time subsequent to the date of this Agreement such Member becomes legally married(whether in the first instance or to a different spouse), such Member shall cause his or her spouse to execute and deliverto the Company a consent in the form of Exhibit B attached hereto. Such Member’s non-delivery to the Company of anexecuted consent in the form of Exhibit B at any time shall constitute such Member’s continuing representation andwarranty that such Member is not legally married as of such date.Section 10.09Tender Offers and Other Events with respect to the Corporation. (a)In the event that a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization orsimilar transaction with respect to Class A Common Stock (a “Pubco Offer”) is proposed by the Corporation or isproposed to the Corporation or its stockholders and approved by the Corporate Board or is otherwise effected or to beeffected with the consent or approval of the Corporate Board, the Common Unitholders shall be permitted to participatein such Pubco Offer by delivery of a Redemption Notice (which Redemption Notice shall be effective immediately prior tothe consummation of such Pubco Offer (and, for the avoidance of doubt, shall be contingent upon such Pubco Offer andnot be effective if such Pubco Offer is not consummated)). In the case of a Pubco Offer proposed by the Corporation, theCorporation will use its reasonable best efforts expeditiously and in good faith to take all such actions and do all suchthings as are necessary or desirable to enable and permit the Common Unitholders to participate in such Pubco Offer tothe same extent or on an economically equivalent basis as the holders of shares of Class A Common Stock withoutdiscrimination; provided, that without limiting the generality of this sentence (and without limiting the ability of anyMember holding Common Units to consummate a Redemption at any time pursuant to the terms of this Agreement), theManager will use its reasonable best efforts expeditiously and in good faith to ensure that such Common Unitholdersmay participate in such Pubco Offer without being required to have their Common Units and shares of Class B CommonStock redeemed (or, if so required, to ensure that any such redemption shall be effective only upon, and shall beconditional upon, the closing of the transactions contemplated by the Pubco Offer). For the avoidance of doubt, in noevent shall Common Unitholders be entitled to receive in such Pubco Offer aggregate consideration for each CommonUnit that is greater than the consideration payable in respect of each share of Class A44Common Stock in connection with a Pubco Offer (it being understood that payments under or in respect of the TaxReceivable Agreement shall not be considered part of any such consideration). (b)The Corporation shall send written notice to the Company and the Common Unitholders at least thirty(30) days prior to the closing of the transactions contemplated by the Pubco Offer notifying them of their rights pursuant tothis Section 10.09, and setting forth (i) a copy of the written proposal or agreement pursuant to which the Pubco Offer willbe effected, (ii) the consideration payable in connection therewith, (iii) the terms and conditions of transfer and paymentand (iv) the date and location of and procedures for selling Common Units. In the event that the information set forth innotice changes from that set forth in the initial notice, a subsequent notice shall be delivered by the Corporation no lessthan seven (7) days prior to the closing of the Pubco Offer.ARTICLE XI.REDEMPTION AND EXCHANGE RIGHTSSection 11.01Redemption Right of a Member.(a)Each Member (other than the Corporation and the Blockers) shall be entitled to cause the Company toredeem (a “Redemption”) its Common Units (excluding, for the avoidance of doubt, any Common Units that are subjectto vesting conditions or subject to Transfer limitations pursuant to this Agreement) in whole or in part (the “RedemptionRight”) at any time and from time to time following the waiver or expiration of any contractual lock-up period relating tothe shares of the Corporation that may be applicable to such Member. A Member desiring to exercise its RedemptionRight (each, a “Redeeming Member”) shall exercise such right by giving written notice (the “Redemption Notice”) to theCompany with a copy to the Corporation. The Redemption Notice shall specify the number of Common Units (the“Redeemed Units”) that the Redeeming Member intends to have the Company redeem and a date, not less than three(3) Business Days nor more than ten (10) Business Days after delivery of such Redemption Notice (unless and to theextent that the Manager in its sole discretion agrees in writing to waive such time periods), on which exercise of theRedemption Right shall be completed (the “Redemption Date”); provided, that the Company, the Corporation and theRedeeming Member may change the number of Redeemed Units and/or the Redemption Date specified in suchRedemption Notice to another number and/or date by mutual agreement signed in writing by each of them; provided,further, that a Redemption may be conditioned (including as to timing) by the Redeeming Member on (i) the Corporationand/or the Redeeming Member having entered into a valid and binding agreement with a third party for the sale of sharesof Class A Common Stock that may be issued in connection with such proposed Redemption (whether in a tender orexchange offer, private sale or otherwise) and such agreement is subject to customary closing conditions for agreementsof this kind and the delivery of the Class A Common Stock by the Corporation or the Redeeming Member, as applicable,to such third party, (ii) the closing of an announced merger, consolidation or other transaction or event in which theshares of Class A Common Stock that may be issued in connection with such proposed Redemption would beexchanged or converted or become exchangeable or convertible45into cash or other securities or property and/or (iii) the closing of an underwritten distribution of the shares of Class ACommon Stock that may be issued in connection with such proposed Redemption. Subject to Section 11.03 and unlessthe Redeeming Member timely has delivered a Retraction Notice as provided in Section 11.01(c) or has revoked ordelayed a Redemption as provided in Section 11.01(b) or (d), on the Redemption Date (to be effective immediately priorto the close of business on the Redemption Date):(i)the Redeeming Member shall transfer and surrender, free and clear of all liens andencumbrances (x) the Redeemed Units to the Company, and (y) a number of shares of Class B Common Stockequal to the number of Redeemed Units to the Corporation to the extent applicable;(ii)the Company shall (x) cancel the Redeemed Units, (y) transfer to the Redeeming Memberthe consideration to which the Redeeming Member is entitled under Section 11.01(b), and (z) if the Units arecertificated, issue to the Redeeming Member a certificate for a number of Common Units equal to the difference(if any) between the number of Common Units evidenced by the certificate surrendered by the RedeemingMember pursuant to clause (i) of this Section 11.01(a) and the Redeemed Units; and(iii)the Corporation shall cancel for no consideration the shares of Class B Common Stock (andthe Corporation shall take all actions necessary to retire such shares transferred to the Corporation and suchshares shall not be re-issued by the Corporation) upon a transfer of such shares of Class B Common Stock thatwere Transferred pursuant to Section 11.01(a)(i)(y) above.(b)In exercising its Redemption Right, a Redeeming Member shall, to the fullest extent permitted byapplicable Law, be entitled to receive the Share Settlement or the Cash Settlement; provided, that the Corporation shallhave the option (as determined solely by its independent directors (within the meaning of the rules of the NASDAQ) whoare disinterested) as provided in Section 11.02 and subject to Section 11.01(e) to select whether the redemptionpayment is made by means of a Share Settlement or a Cash Settlement. Within three (3) Business Days of delivery ofthe Redemption Notice, the Corporation shall give written notice (the “Contribution Notice”) to the Company (with acopy to the Redeeming Member) of its intended settlement method; provided, that if the Corporation does not timelydeliver a Contribution Notice, the Corporation shall be deemed to have elected the Share Settlement method (subject tothe limitations set forth above). (c)In the event the Corporation elects the Cash Settlement in connection with a Redemption, theRedeeming Member may retract its Redemption Notice by giving written notice (the “Retraction Notice”) to theCompany (with a copy to the Corporation) within three (3) Business Days of delivery of the Contribution Notice. Thetimely delivery of a Retraction Notice shall terminate all of the Redeeming Member’s, Company’s and46the Corporation’ rights and obligations under this Section 11.01 arising from the Redemption Notice.(d)In the event the Corporation elects a Share Settlement in connection with a Redemption, aRedeeming Member shall be entitled to revoke its Redemption Notice or delay the consummation of a Redemption if anyof the following conditions exists:(i)any registration statement pursuant to which the resale of the Class A Common Stock to beregistered for such Redeeming Member at or immediately following the consummation of the Redemption shallhave ceased to be effective pursuant to any action or inaction by the SEC or no such resale registrationstatement has yet become effective;(ii)the Corporation shall have failed to cause any related prospectus to be supplemented by anyrequired prospectus supplement necessary to effect such Redemption;(iii)the Corporation shall have exercised its right to defer, delay or suspend the filing oreffectiveness of a registration statement and such deferral, delay or suspension shall affect the ability of suchRedeeming Member to have its Class A Common Stock registered at or immediately following theconsummation of the Redemption;(iv)the Corporation shall have disclosed in good faith to such Redeeming Member any materialnon-public information concerning the Corporation, the receipt of which results in such Redeeming Memberbeing prohibited or restricted from selling Class A Common Stock at or immediately following the Redemptionwithout disclosure of such information (and the Corporation does not permit disclosure);(v)any stop order relating to the registration statement pursuant to which the Class A CommonStock was to be registered by such Redeeming Member at or immediately following the Redemption shall havebeen issued by the SEC;(vi)there shall have occurred a material disruption in the securities markets generally or in themarket or markets in which the Class A Common Stock is then traded;(vii)there shall be in effect an injunction, a restraining order or a decree of any nature of anyGovernmental Entity that restrains or prohibits the Redemption;(viii)the Corporation shall have failed to comply in all material respects with its obligationsunder the Registration Rights Agreement, and such failure shall have affected the ability of such RedeemingMember to consummate the resale of47Class A Common Stock to be received upon such redemption pursuant to an effective registration statement; or(ix)the Redemption Date would occur three (3) Business Days or less prior to, or during, aBlack-Out Period;If a Redeeming Member delays the consummation of a Redemption pursuant to this Section 11.01(d), theRedemption Date shall occur on the fifth (5th) Business Day following the date on which the conditions giving rise tosuch delay cease to exist (or such earlier day as the Corporation, the Company and such Redeeming Member mayagree in writing).(e)The number of shares of Class A Common Stock or the Redeemed Units Equivalent that aRedeeming Member is entitled to receive under Section 11.01(b) (whether through a Share Settlement or CashSettlement) shall not be adjusted on account of any Distributions previously made with respect to the Redeemed Units ordividends previously paid with respect to Class A Common Stock; provided, however, that if a Redeeming Membercauses the Company to redeem Redeemed Units and the Redemption Date occurs subsequent to the record date forany Distribution with respect to the Redeemed Units but prior to payment of such Distribution, the Redeeming Membershall be entitled to receive such Distribution with respect to the Redeemed Units on the date that it is madenotwithstanding that the Redeeming Member transferred and surrendered the Redeemed Units to the Company prior tosuch date; provided, further, however, that a Redeeming Member shall be entitled to receive any and all TaxDistributions that such Redeeming Member otherwise would have received in respect of income allocated to suchMember for the portion of any Fiscal Year irrespective of whether such Tax Distribution(s) are declared or made after theRedemption Date.(f)In the case of a Share Settlement, in the event of a reclassification or other similar transaction as aresult of which the shares of Class A Common Stock are converted into another security, then in exercising itsRedemption Right a Redeeming Member shall be entitled to receive the amount of such security that the RedeemingMember would have received if such Redemption Right had been exercised and the Redemption Date had occurredimmediately prior to the record date of such reclassification or other similar transaction.Section 11.02Election and Contribution of the Corporation. In connection with the exercise of aRedeeming Member’s Redemption Rights under Section 11.01(a), the Corporation shall contribute to the Company theconsideration the Redeeming Member is entitled to receive under Section 11.01(b). The Corporation, at its option (asdetermined solely by its independent directors (within the meaning of the rules of the NASDAQ) who are disinterested)subject to the limitations set forth in Section 11.01(b), shall determine whether to contribute, pursuant to Section 11.01(b),the Share Settlement or the Cash Settlement. Unless the Redeeming Member has timely delivered a Retraction Noticeas provided in Section 11.01(c), or has revoked or delayed a Redemption as provided in Section 11.01(b) or (d), on theRedemption Date (to be effective immediately prior to the close of business on the Redemption Date) (i) the48Corporation shall make its Capital Contribution to the Company (in the form of the Share Settlement or the CashSettlement) required under this Section 11.02, and (ii) in the event of a Share Settlement, the Company shall issue to theCorporation a number of Common Units equal to the number of Redeemed Units surrendered by the RedeemingMember. Notwithstanding any other provisions of this Agreement to the contrary, in the event that the Corporation electsa Cash Settlement, the Corporation shall only be obligated to contribute to the Company an amount in respect of suchCash Settlement equal to the net proceeds (after deduction of any Discounts) from the sale by the Corporation of anumber of shares of Class A Common Stock equal to the number of Redeemed Units to be redeemed with such CashSettlement, which in no event shall exceed the amount paid by the Company to the Redeeming Member as CashSettlement; provided, that (i) the Discount shall be an expense of the Company as described in Section 6.06 and (ii) forthe avoidance of doubt, if the Cash Settlement to which the Redeeming Member is entitled exceeds the amount that iscontributed to the Company by the Corporation, the Company shall still be required to pay the Redeeming Member thefull amount of the Cash Settlement. The timely delivery of a Retraction Notice shall terminate all of the Company’s andthe Corporation’ rights and obligations under this Section 11.02 arising from the Redemption Notice.Section 11.03Exchange Right of the Corporation.(a)Notwithstanding anything to the contrary in this Article XI (save for the limitations set forth in Section11.01(b) regarding the option to select the Share Settlement or the Cash Settlement, and without limitation to the rights ofthe Members under Section 11.01, including the right to revoke a Redemption Notice), the Corporation may, in its soleand absolute discretion (as determined solely by its independent directors (within the meaning of the rules of theNASDAQ) who are disinterested) (subject to the limitations set forth on such discretion in Section 11.01(b)), elect toeffect on the Redemption Date the exchange of Redeemed Units for the Share Settlement or Cash Settlement, as thecase may be, through a direct exchange of such Redeemed Units and such consideration between the RedeemingMember and the Corporation (a “Direct Exchange”). Upon such Direct Exchange pursuant to this Section 11.03, theCorporation shall acquire the Redeemed Units and shall be treated for all purposes of this Agreement as the owner ofsuch Units.(b)The Corporation may, at any time prior to a Redemption Date, deliver written notice (an “ExchangeElection Notice”) to the Company and the Redeeming Member setting forth its election to exercise its right toconsummate a Direct Exchange; provided, that such election is subject to the limitations set forth in Section 11.01(b) anddoes not prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the RedemptionDate. An Exchange Election Notice may be revoked by the Corporation at any time; provided, that any such revocationdoes not prejudice the ability of the parties to consummate a Redemption or Direct Exchange on the Redemption49Date. The right to consummate a Direct Exchange in all events shall be exercisable for all the Redeemed Units thatwould have otherwise been subject to a Redemption.(c)Except as otherwise provided by this Section 11.03, a Direct Exchange shall be consummatedpursuant to the same timeframe as the relevant Redemption would have been consummated if the Corporation had notdelivered an Exchange Election Notice and as follows:(i)the Redeeming Member shall transfer and surrender, free and clear of all liens andencumbrances (x) the Redeemed Units, and (y) a number of shares of Class B Common Stock equal to thenumber of Redeemed Units, to the extent applicable, in each case, to the Corporation;(ii)the Corporation shall (x) pay to the Redeeming Member the consideration to which theRedeeming Member is entitled under Section 11.01(b), and (y) cancel for no consideration the shares of ClassB Common Stock (and the Corporation shall take all actions necessary to retire such shares transferred to theCorporation and such shares shall not be re-issued by the Corporation) upon a transfer of such shares of ClassB Common Stock that were Transferred pursuant to Section 11.03(c)(i)(y) above; and(iii)the Company shall (x) register the Corporation as the owner of the Redeemed Units and (y)if the Units are certificated, issue to the Redeeming Member a certificate for a number of Common Units equalto the difference (if any) between the number of Common Units evidenced by the certificate surrendered by theRedeeming Member pursuant to Section 11.03(c)(i)(x) and the Redeemed Units, and issue to the Corporation acertificate for the number of Redeemed Units.Section 11.04Reservation of shares of Class A Common Stock; Listing; Certificate of the Corporation. Atall times the Corporation shall reserve and keep available out of its authorized but unissued Class A Common Stock,solely for the purpose of issuance upon a Redemption or Direct Exchange, such number of shares of Class A CommonStock as shall be issuable upon any such Redemption or Direct Exchange pursuant to Share Settlements; provided thatnothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of anysuch Redemption or Direct Exchange by delivery of purchased Class A Common Stock (which may or may not be heldin the treasury of the Corporation) or the delivery of cash pursuant to a Cash Settlement. The Corporation shall deliverClass A Common Stock that has been registered under the Securities Act with respect to any Redemption or DirectExchange to the extent a registration statement is effective and available for such shares. The Corporation shall use itscommercially reasonable efforts to list the Class A Common Stock required to be delivered upon any such Redemptionor Direct Exchange prior to such delivery upon each national securities exchange upon which the outstanding shares ofClass A Common Stock are listed at the time of such Redemption or Direct Exchange (it being understood that any suchshares may be subject to transfer restrictions under applicable securities Laws). The Corporation covenants that allClass A Common Stock issued upon a Redemption or Direct Exchange will, upon issuance, be validly issued, fully50paid and non-assessable. The provisions of this Article XI shall be interpreted and applied in a manner consistent withthe corresponding provisions of the Corporation’s certificate of incorporation.Section 11.05Effect of Exercise of Redemption or Exchange Right. This Agreement shall continuenotwithstanding the consummation of a Redemption or Direct Exchange and all governance or other rights set forthherein shall be exercised by the remaining Members and the Redeeming Member (to the extent of such RedeemingMember’s remaining interest in the Company). No Redemption or Direct Exchange shall relieve such RedeemingMember of any prior breach of this Agreement.Section 11.06Tax Treatment. Unless otherwise required by applicable Law, the parties heretoacknowledge and agree a Redemption or a Direct Exchange, as the case may be, shall be treated as a direct exchangebetween the Corporation and the Redeeming Member for U.S. federal and applicable state and local income taxpurposes.ARTICLE XII.ADMISSION OF MEMBERSSection 12.01Substituted Members. Subject to the provisions of Article X hereof, in connection with thePermitted Transfer of a Company Interest hereunder, the Permitted Transferee shall become a Substituted Member onthe effective date of such Transfer, which effective date shall not be earlier than the date of compliance with theconditions to such Transfer, and such admission shall be shown on the books and records of the Company, including theSchedule of Members.Section 12.02Additional Members. Subject to the provisions of Article X hereof, any Person that is not aMember as of the Effective Time may be admitted to the Company as an additional Member (any such Person, an“Additional Member”) only upon furnishing to the Manager (a) duly executed Joinder and counterparts to any applicableOther Agreements and (b) such other documents or instruments as may be reasonably necessary or appropriate to effectsuch Person’s admission as a Member (including entering into such documents as may reasonably be requested by theManager). Such admission shall become effective on the date on which the Manager determines in its sole discretionthat such conditions have been satisfied and when any such admission is shown on the books and records of theCompany, including the Schedule of Members.ARTICLE XIII.WITHDRAWAL AND RESIGNATION; TERMINATION OF RIGHTSSection 13.01Withdrawal and Resignation of Members. Except in the event of Transfers pursuant toSection 10.06, no Member shall have the power or right to withdraw or otherwise resign as a Member from the Companyprior to the dissolution and winding up of the Company pursuant to Article XIV. Any Member, however, that attempts towithdraw or otherwise resign as a Member from the Company without the prior written consent of the Manager upon orfollowing the dissolution and winding up of51the Company pursuant to Article XIV, but prior to such Member receiving the full amount of Distributions from theCompany to which such Member is entitled pursuant to Article XIV, shall be liable to the Company for all damages(including all lost profits and special, indirect and consequential damages) directly or indirectly caused by the withdrawalor resignation of such Member. Upon a Transfer of all of a Member’s Units in a Transfer permitted by this Agreement,subject to the provisions of Section 10.06, such Member shall cease to be a Member.ARTICLE XIV.DISSOLUTION AND LIQUIDATIONSection 14.01Dissolution. The Company shall not be dissolved by the admission of Additional Membersor Substituted Members or the attempted withdrawal, removal, dissolution, bankruptcy or resignation of a Member. TheCompany shall dissolve, and its affairs shall be wound up, upon:(a)the decision of the Manager together with holders of a majority of the Common Units entitled to votethen outstanding to dissolve the Company (excluding for purposes of such calculation the Corporation and the Blockersand all Common Units held directly or indirectly by any of them);(b)a dissolution of the Company under Section 18-801(4) of the Delaware Act, unless the Company iscontinued without dissolution pursuant thereto; or(c)the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Delaware Act.Except as otherwise set forth in this Article XIV, the Company is intended to have perpetual existence. An Event ofWithdrawal shall not in and of itself cause a dissolution of the Company and the Company shall continue in existencesubject to the terms and conditions of this Agreement.Section 14.02Winding up and Termination. Subject to Section 14.05, on dissolution of the Company, theManager shall act as liquidating trustee or may appoint one or more Persons as liquidating trustee (each such Person, a“liquidator”). The liquidators shall proceed diligently to wind up the affairs of the Company and make final distributionsas provided herein and in the Delaware Act. The costs of liquidation shall be borne as a Company expense. Until finaldistribution, the liquidators shall continue to operate the Company properties with all of the power and authority of theManager. The steps to be accomplished by the liquidators are as follows:(a)as promptly as possible after dissolution and again after final liquidation, the liquidators shall cause aproper accounting to be made by a recognized firm of certified public accountants of the Company’s assets, liabilitiesand operations through the last day of the calendar month in which the dissolution occurs or the final liquidation iscompleted, as applicable;52(b)the liquidators shall pay, satisfy or discharge from Company funds, or otherwise make adequateprovision for payment and discharge thereof (including, without limitation, the establishment of a cash fund forcontingent, conditional and unmatured liabilities in such amount and for such term as the liquidators may reasonablydetermine) all of the debts, liabilities and obligations of the Company; and(c)all remaining assets of the Company shall be distributed to the Members in accordance with Article IVby the end of the Taxable Year during which the liquidation of the Company occurs (or, if later, by ninety (90) days afterthe date of the liquidation). The distribution of cash and/or property to the Members in accordance with the provisions of this Section 14.02and Section 14.03 below constitutes a complete return to the Members of their Capital Contributions, a completedistribution to the Members of their interest in the Company and all the Company’s property and constitutes acompromise to which all Members have consented within the meaning of the Delaware Act. To the extent that a Memberreturns funds to the Company, it has no claim against any other Member for those funds.Section 14.03Deferment; Distribution in Kind. Notwithstanding the provisions of Section 14.02, butsubject to the order of priorities set forth therein, if upon dissolution of the Company the liquidators determine that animmediate sale of part or all of the Company’s assets would be impractical or would cause undue loss (or wouldotherwise not be beneficial) to the Members, the liquidators may, in their sole discretion, defer for a reasonable time theliquidation of any assets except those necessary to satisfy Company liabilities (other than loans to the Company byMembers) and reserves. Subject to the order of priorities set forth in Section 14.02, the liquidators may, in their solediscretion, distribute to the Members, in lieu of cash, either (a) all or any portion of such remaining Company assets in-kind in accordance with the provisions of Section 14.02(c), (b) as tenants in common and in accordance with theprovisions of Section 14.02(c), undivided interests in all or any portion of such Company assets or (c) a combination ofthe foregoing. Any such Distributions in kind shall be subject to (y) such conditions relating to the disposition andmanagement of such assets as the liquidators deem reasonable and equitable and (z) the terms and conditions of anyagreements governing such assets (or the operation thereof or the holders thereof) at such time. Any Company assetsdistributed in kind will first be written up or down to their Fair Market Value, thus creating Profit or Loss (if any), whichshall be allocated in accordance with Article V. The liquidators shall determine the Fair Market Value of any propertydistributed in accordance with the valuation procedures set forth in Article XV.Section 14.04Cancellation of Certificate. On completion of the winding up of the Company as providedherein, the Manager (or such other Person or Persons as the Delaware Act may require or permit) shall file a certificate ofcancellation of the Certificate with the Secretary of State of Delaware, cancel any other filings made pursuant to thisAgreement that are or should be canceled and take such other actions as may be necessary to terminate theCompany. The Company shall continue in existence for all purposes of this Agreement until it is terminated pursuant tothis Section 14.04.53Section 14.05Reasonable Time for Winding Up. A reasonable time shall be allowed for the orderlywinding up of the business and affairs of the Company and the liquidation of its assets pursuant to Sections 14.02 and14.03 in order to minimize any losses otherwise attendant upon such winding up.Section 14.06Return of Capital. The liquidators shall not be personally liable for the return of CapitalContributions or any portion thereof to the Members (it being understood that any such return shall be made solely fromCompany assets).ARTICLE XV.VALUATIONSection 15.01Determination. “Fair Market Value” of a specific Company asset will mean the amountwhich the Company would receive in an all-cash sale of such asset in an arms-length transaction with a willingunaffiliated third party, with neither party having any compulsion to buy or sell, consummated on the day immediatelypreceding the date on which the event occurred which necessitated the determination of the Fair Market Value (and aftergiving effect to any transfer taxes payable in connection with such sale), as such amount is determined by the Manager(or, if pursuant to Section 14.02, the liquidators) in its good faith judgment using all factors, information and data it deemsto be pertinent.Section 15.02Dispute Resolution. If any Member or Members dispute the accuracy of any determinationof Fair Market Value in accordance with Section 15.01, and the Manager and such Member(s) are unable to agree on thedetermination of the Fair Market Value of any asset of the Company, the Manager and such Member(s) shall each selecta nationally recognized investment banking firm experienced in valuing securities of closely-held companies such as theCompany in the Company’s industry (the “Appraisers”), who shall each determine the Fair Market Value of the asset orthe Company (as applicable) in accordance with the provisions of Section 15.01. The Appraisers shall be instructed togive written notice of their determination of the Fair Market Value of the asset or the Company (as applicable) within thirty(30) days of their appointment as Appraisers. If Fair Market Value as determined by an Appraiser is higher than FairMarket Value as determined by the other Appraiser by 10% or more, and the Manager and such Member(s) do nototherwise agree on a Fair Market Value, the original Appraisers shall designate a third Appraiser meeting the samecriteria used to select the original two. If Fair Market Value as determined by an Appraiser is within 10% of the FairMarket Value as determined by the other Appraiser (but not identical), and the Manager and such Member(s) do nototherwise agree on a Fair Market Value, the Manager shall select the Fair Market Value of one of the Appraisers. Thefees and expenses of the Appraisers shall be borne by the Company.54ARTICLE XVI.GENERAL PROVISIONSSection 16.01Power of Attorney.(a)Each Member who is a natural person hereby constitutes and appoints the Manager (or the liquidator,if applicable) with full power of substitution, as his or her true and lawful agent and attorney-in-fact, with full power andauthority in his or her name, place and stead, to:(i)execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A)this Agreement, all certificates and other instruments and all amendments thereof which the Manager deemsappropriate or necessary to form, qualify, or continue the qualification of, the Company as a limited liabilitycompany in the State of Delaware and in all other jurisdictions in which the Company may conduct business orown property; (B) all instruments which the Manager deems appropriate or necessary to reflect any amendment,change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances andother instruments or documents which the Manager deems appropriate or necessary to reflect the dissolutionand winding up of the Company pursuant to the terms of this Agreement, including a certificate of cancellation;and (D) all instruments relating to the admission, substitution or withdrawal of any Member pursuant to ArticleXII or XIII; and(ii)sign, execute, swear to and acknowledge all ballots, consents, approvals, waivers,certificates and other instruments appropriate or necessary, in the reasonable judgment of the Manager, toevidence, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by theMembers hereunder or is consistent with the terms of this Agreement, in the reasonable judgment of theManager, to effectuate the terms of this Agreement.(b)The foregoing power of attorney is irrevocable and coupled with an interest, and shall survive thedeath, disability, incapacity, dissolution, bankruptcy, insolvency or termination of any Member and the transfer of all orany portion of his or her Company Interest and shall extend to such Member’s heirs, successors, assigns and personalrepresentatives.Section 16.02Confidentiality.(a)Each of the Members agrees to hold the Company’s Confidential Information in confidence and maynot disclose such information except as otherwise authorized separately in writing by the Manager. “ConfidentialInformation” as used herein includes all information concerning the Company or its Subsidiaries in the possession of orfurnished to any Member, including but not limited to, ideas, financial product structuring, business strategies,innovations and materials, all aspects of the Company’s business plan, proposed operation and products, corporatestructure, financial and organizational information, analyses, proposed partners, software code and55system and product designs, employees and their identities, equity ownership, the methods and means by which theCompany plans to conduct its business, all trade secrets, trademarks, tradenames and all intellectual propertyassociated with the Company’s business. With respect to each Member, Confidential Information does not includeinformation or material that: (a) is rightfully in the possession of such Member at the time of disclosure by the Company;(b) before or after it has been disclosed to such Member by the Company, becomes part of public knowledge, not as aresult of any action or inaction of such Member in violation of this Agreement; (c) is approved for release by writtenauthorization of the Chief Executive Officer, Chief Financial Officer or Senior Vice President, General Counsel andSecretary of the Company or of the Corporation, or any other officer designated by the Manager; (d) is disclosed to suchMember or their representatives by a third party not, to the knowledge of such Member in violation of any obligation ofconfidentiality owed to the Company with respect to such information; or (e) is or becomes independently developed bysuch Member or their respective representatives without use or reference to the Confidential Information.(b)Each of the Members may disclose Confidential Information to its Subsidiaries, Affiliates, partners,directors, officers, employees, counsel, advisers, consultants, outside contractors and other agents, on the condition thatsuch Persons keep the Confidential Information confidential to the same extent as such disclosing party is required tokeep the Confidential Information confidential, solely to the extent it is reasonably necessary or appropriate to fulfill itsobligations or to exercise its rights under this Agreement; provided, that the disclosing party shall remain liable withrespect to any breach of this Section 16.02 by any such Subsidiaries, Affiliates, partners, directors, officers, employees,counsel, advisers, consultants, outside contractors and other agents.(c)Notwithstanding Section 16.02(a) or Section 16.02(b), each of the Members may disclose ConfidentialInformation (i) to the extent that such party is legally compelled (by oral questions, interrogatories, request for informationor documents, subpoena, civil investigative demand or similar process) to disclose any of the Confidential Information,(ii) for purposes of reporting to its stockholders and direct and indirect equity holders the performance of the Companyand its Subsidiaries and for purposes of including applicable information in its financial statements to the extent requiredby applicable Law or applicable accounting standards; (iii) to any bona fide prospective purchaser of the equity or assetsof a Member, or the Common Units held by such Member, or a prospective merger partner of such Member (provided,that (i) such Persons will be informed by such Member of the confidential nature of such information and shall agree inwriting to keep such information confidential in accordance with the contents of this Agreement and (ii) each Member willbe liable for any breaches of this Section 16.02 by any such Persons), or (iv) to the extent required to be disclosed byapplicable Law. Notwithstanding any of the foregoing, nothing in this Section 16.02 will restrict in any manner the abilityof the Corporation to comply with its disclosure obligations under Law, and the extent to which any ConfidentialInformation is necessary or desirable to disclose.Section 16.03Amendments. This Agreement may be amended or modified upon the consent of theManager and a majority of the Common Units entitled to vote then outstanding (excluding for purposes of such allCommon Units held directly or56indirectly by the Corporation), which majority shall include the Common Units held by ACON and its PermittedTransferees for so long as ACON and such Permitted Transferees own five percent (5%) of the CommonUnits. Notwithstanding the foregoing, no amendment or modification:(a)to this Section 16.03 may be made without the prior written consent of the Manager and each of theMembers;(b)to any of the terms and conditions of this Agreement which terms and conditions expressly require theapproval or action of certain Persons may be made without obtaining the consent of the requisite number or specifiedpercentage of such Persons who are entitled to approve or take action on such matter;(c)to any of the terms and conditions of Article VI (and related definitions as used directly or indirectlytherein) may be made without the prior written consent of the Manager; and(d)to any of the terms and conditions of this Agreement which would (A) reduce the amounts distributableto a Member pursuant to Articles IV and XIV in a manner that is not pro rata with respect to all Members, (B) increase theliabilities of such Member hereunder, (C) otherwise materially and adversely affect a holder of Units in a mannermaterially different than any other holder of Units of the same class or series (other than amendments, modifications andwaivers necessary to implement the provisions of Article XII) or (D) materially and adversely affect the rights of anyMember under Article XI, shall be effective against such affected Member or holder of Units, as the case may be, withoutthe prior written consent of such Member or holder of Units, as the case may be.Notwithstanding any of the foregoing, the Manager may make any amendment (i) of an administrative naturethat is necessary in order to implement the substantive provisions hereof, without the consent of any other Member;provided, that any such amendment does not adversely change the rights of the Members hereunder in any respect, or(ii) to reflect any changes to the Class A Common Stock.Section 16.04Title to Company Assets. Company assets shall be owned by the Company as an entity,and no Member, individually or collectively, shall have any ownership interest in such Company assets or any portionthereof. The Company shall hold title to all of its property in the name of the Company and not in the name of anyMember. All Company assets shall be recorded as the property of the Company on its books and records, irrespective ofthe name in which legal title to such Company assets is held. The Company’s credit and assets shall be used solely forthe benefit of the Company, and no asset of the Company shall be transferred or encumbered for, or in payment of, anyindividual obligation of any Member.Section 16.05Addresses and Notices. Any notice, request, demand or instruction specified or permittedby this Agreement will be in writing and will be either personally delivered, or received by certified mail, return receiptrequested, or sent by reputable overnight courier service (charges prepaid) to the Company or by electronic57mail at the address set forth below and to any other recipient and to any Member at such address as indicated by theCompany’s records, or at such address or to the attention of such other person as the recipient party has specified byprior written notice to the sending party. Notices will be deemed to have been given hereunder when deliveredpersonally or sent by telecopier (provided confirmation of transmission is received), three (3) days after deposit in theU.S. mail and one (1) day after deposit with a reputable overnight courier service or if sent by electronic mail, uponconfirmed receipt. Whenever any notice is required to be given by Law or this Agreement, a written waiver thereof signedby the Person entitled to such notice, whether before or after the time stated at which such notice is required to be given,shall be deemed equivalent to the giving of such notice. To the Company:Funko Acquisition Holdings, L.L.C.2802 Wetmore Avenue,Everett, Washington 98201Attn: Russell Nickel, Chief Financial OfficerTracy Daw, Senior Vice President, General Counsel and SecretaryE-mail: russell@funko.comtracy@funko.comwith a copy (which copy shall not constitute notice) to:Latham & Watkins LLP885 Third AvenueNew York, New York 10022Attn: Marc JaffeIan SchumanFacsimile: (212) 751-4864E-mail: marc.jaffe@lw.comian.schuman@lw.comSection 16.06Binding Effect; Intended Beneficiaries. This Agreement shall be binding upon and inure tothe benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives andpermitted assigns. Section 16.07Creditors. None of the provisions of this Agreement shall be for the benefit of orenforceable by any creditors of the Company or any of its Affiliates, and no creditor who makes a loan to the Company orany of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the Companyin favor of such creditor) at any time as a result of making the loan any direct or indirect interest in Company Profits,Losses, Distributions, capital or property other than as a secured creditor.Section 16.08Waiver. No failure by any party to insist upon the strict performance of any covenant, duty,agreement or condition of this Agreement or to58exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any othercovenant, duty, agreement or condition.Section 16.09Counterparts. This Agreement may be executed in separate counterparts, each of whichwill be an original and all of which together shall constitute one and the same agreement binding on all the partieshereto.Section 16.10Applicable Law. This Agreement shall be governed by, and construed in accordance with,the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whetherof the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction otherthan the State of Delaware. Any suit, dispute, action or proceeding seeking to enforce any provision of, or based on anymatter arising out of or in connection with, this Agreement shall be heard in the state or federal courts of the State ofDelaware, and the parties hereby consent to the exclusive jurisdiction of such court (and of the appropriate appellatecourts) in any such suit, action or proceeding and waives any objection to venue laid therein. TO THE FULLESTEXTENT PERMITTED BY APPLICABLE LAW, PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BESERVED ON ANY PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTIONOF ANY SUCH COURT (INCLUDING BY PREPAID CERTIFIED MAIL WITH A VALIDATED PROOF OF MAILINGRECEIPT) AND SHALL HAVE THE SAME LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTYPERSONALLY WITHIN THE STATE OF DELAWARE. WITHOUT LIMITING THE FOREGOING, TO THE FULLESTEXTENT PERMITTED BY LAW, THE PARTIES AGREE THAT SERVICE OF PROCESS UPON SUCH PARTY ATTHE ADDRESS REFERRED TO IN SECTION 16.05 (INCLUDING BY PREPAID CERTIFIED MAIL WITH AVALIDATED PROOF OF MAILING RECEIPT), TOGETHER WITH WRITTEN NOTICE OF SUCH SERVICE TO SUCHPARTY, SHALL BE DEEMED EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY.Section 16.11Severability. Whenever possible, each provision of this Agreement will be interpreted insuch manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to beinvalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity,illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any otherjurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal orunenforceable provision had never been contained herein.Section 16.12Further Action. The parties shall execute and deliver all documents, provide allinformation and take or refrain from taking such actions as may be necessary or appropriate to achieve the purposes ofthis Agreement.Section 16.13Delivery by Electronic Transmission. This Agreement and any signed agreement orinstrument entered into in connection with this Agreement or contemplated hereby, and any amendments hereto orthereto, to the extent signed and delivered by means of an electronic transmission, including by a facsimile machine orvia59email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered tohave the same binding legal effect as if it were the original signed version thereof delivered in person. At the request ofany party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute originalforms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise theuse of electronic transmission by a facsimile machine or via email to deliver a signature or the fact that any signature oragreement or instrument was transmitted or communicated through such electronic transmission as a defense to theformation of a contract and each such party forever waives any such defense.Section 16.14Right of Offset. Whenever the Company is to pay any sum (other than pursuant to ArticleIV) to any Member, any amounts that such Member owes to the Company which are not the subject of a good faithdispute may be deducted from that sum before payment. For the avoidance of doubt, the distribution of Units to theCorporation shall not be subject to this Section 16.14.Section 16.15Entire Agreement. This Agreement, those documents expressly referred to herein(including the Registration Rights Agreement and the Tax Receivable Agreement), any indemnity agreements enteredinto in connection with the Initial LLC Agreement with any member of the board of directors at that time and otherdocuments of even date herewith embody the complete agreement and understanding among the parties and supersedeand preempt any prior understandings, agreements or representations by or among the parties, written or oral, whichmay have related to the subject matter hereof in any way. For the avoidance of doubt, the Initial LLC Agreement issuperseded by this Agreement as of the Effective Time and shall be of no further force and effect thereafter.Section 16.16Remedies. Each Member shall have all rights and remedies set forth in this Agreementand all rights and remedies which such Person has been granted at any time under any other agreement or contract andall of the rights which such Person has under any Law. Any Person having any rights under any provision of thisAgreement or any other agreements contemplated hereby shall be entitled to enforce such rights specifically (withoutposting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and toexercise all other rights granted by Law.Section 16.17Descriptive Headings; Interpretation. The descriptive headings of this Agreement areinserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by thecontext, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, andthe singular form of nouns, pronouns and verbs shall include the plural and vice versa. The use of the word “including”in this Agreement shall be by way of example rather than by limitation. Reference to any agreement, document orinstrument means such agreement, document or instrument as amended or otherwise modified from time to time inaccordance with the terms thereof, and if applicable hereof. Without limiting the generality of the immediately precedingsentence, no amendment or other modification60to any agreement, document or instrument that requires the consent of any Person pursuant to the terms of thisAgreement or any other agreement will be given effect hereunder unless such Person has consented in writing to suchamendment or modification. Wherever required by the context, references to a Fiscal Year shall refer to a portionthereof. The use of the words “or,” “either” and “any” shall not be exclusive. The parties hereto have participated jointlyin the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises,this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shallarise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. 61 IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf thisSecond Amended and Restated Limited Liability Company Agreement as of the date first written above.COMPANY:FUNKO ACQUISITION HOLDINGS, L.L.C. By: /s/Tracy Daw Name:Title:[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Brian Mariotti Name: Brian MariottiTitle: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Russell Nickel Name: Russel NickelTitle: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Tracy Daw Name: Tracy DawTitle: SVP & General Counsel [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Andrew Perlmutter Name: Andrew PerlmutterTitle: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Charles Denson Name: Charles DensonTitle: Director[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Adam Kriger Name: Adam KrigerTitle: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:ACON FUNKO INVESTORS, L.L.C. By ACON Funko Manager, L.L.C., itsManager By: /s/Kenneth Brotman Name: Kenneth BrotmanTitle: Managing Director [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:ACON FUNKO INVESTORS, HOLDINGS, L.L.C. By ACON Funko Holdings 1, L.L.C.,its managing member By: /s/Kenneth Brotman Name: Kenneth BrotmanTitle: Managing Director[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:AEP III FUNKO INVESTORS, L.L.C. By ACON Funko Holdings 2, L.L.C.,its managing member By: /s/Kenneth Brotman Name: Kenneth BrotmanTitle: Managing Director[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:QUADREN INVESTMENT INC. By: /s/Kenneth Brotman Name: Kenneth BrotmanTitle: President [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:ACON FUNKO INVESTORS HOLDINGS 3, L.L.C. By ACON Equity GenPar L.L.C.,its managing member By: /s/Kenneth Brotman Name: Kenneth BrotmanTitle: Managing Member[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:FUNKO INTERNATIONAL, LLC, a Delaware Limited LiabilityCompany By: FUNDAMENTAL CAPITAL, LLC, a Delaware limitedliability company By: FUNDAMENTAL CAPITAL PARTNERS, LLC, aDelaware limited liability companyManager By: /s/Richard McNally Name: Richard McNallyTitle: Manager[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:FUNDAMENTAL CAPITAL, LLC, a Delaware limited liabilitycompany, By: FUNDAMENTAL CAPITAL PARTNERS, LLC,a Delaware limited liability companyManager By: /s/Richard McNally Name: Richard McNallyTitle: Manager[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:GLADSTONE INVESTMENT CORPORATION By: /s/David Gladstone Name: David GladstoneTitle: CEO[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:GLADSTONE CAPITAL CORPORATION By: /s/Bob Marcotte Name: Bob MarcotteTitle: President[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:JON P. AND TRISHAWN P. KIPP CHILDREN’S TRUST U/A/D5/31/14 By: /s/Shauna M. Kipp trustee Name: Title: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Kurt Dicus Name: Kurt DicusTitle: Sr. Director of I.T.[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:VICTORIA ANNE MARIOTTI, AS TRUSTEE OF BRIAN R.MARIOTTI GRANTOR RETAINED ANNUITY TRUST By: /s/Victoria Anne Mariotti Name: Victoria Anne MariottiTitle: Trustee[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Jacob Matson Name: Jacob MatsonTitle: Dir. Innovation[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:VICTORIA ANNE MARIOTTI, AS TRUSTEE OF MARIOTTIFAMILY IRREVOCABLE TRUST By: /s/Victoria Anne Mariotti Name: Victoria Anne MariottiTitle: Trustee[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Robert Mitchell Name: Robert MitchellTitle: Sr. Director, Operations[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:CERBERUS ASRS HOLDINGS, LLC By: /s/Daniel E. Wolf Name: Daniel E. WolfTitle: Vice President[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Sean Wilkinson Name: Sean WilkinsonTitle: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Timothy Spiller Name: Timothy SpillerTitle: Director of Operations[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:TREVOR SCHULTZ, AS TRUSTEE OF THE TREVORSCHULTZ FAMILY TRUST, DATED DECEMBER 8, 2011 By: /s/Trevor Schultz Name: Trevor SchultzTitle: Trustee[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Sanjay Srivastava Name: Sanjay SrivastavaTitle: Director, Analytics[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:DALE SCHULTZ, AS TRUSTEE OF THE DALE SCHULTZFAMILY TRUST, DATEDDECEMBER 8, 2011 By: /s/Dale Schultz Name: Dale SchultzTitle: Trustee[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Mark Robben Name: Mark RobbenTitle: Director of Marketing[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Andrew Oddie Name: Andrew OddieTitle: MD EMEA[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Doug Kikendall Name: Doug KikendallTitle: Member[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Laurie Anderson Name: Laurie AndersonTitle: Controller[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Gustavo Rubio Escudero Name: Gustavo Rubio EscuderoTitle: Director, Digital[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Sarathy Annamraju Name: Sarathy AnnamrajuTitle: CIO[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Robert Schwartz Name: Robert SchwartzTitle: Designer[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Anne Aquino Name: Anne AquinoTitle: Retail Fulfillment Manager[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Melissa Alton Name: Melissa AltonTitle: Director of Procurement[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Allison Dinan Name: Allison DinanTitle: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Benjamin Butcher Name: Benjamin ButcherTitle: [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Johanna Gepford Name: Johanna GepfordTitle: SVP Sales[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:By: /s/Michael Becker Name: Michael BeckerTitle: V.P. Apparel[Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2MEMBER:DRAWBRIDGE SPECIAL OPPORTUNITIES FUND LP By: Drawbridge Special Opportunities GP LLC, its generalpartner By: /s/Constantine Dakolias Name: Constantine M. DakoliasTitle: President [Signature Page to Second Amended and Restated Limited Liability Company Agreement] US-DOCS\95946057.2 SCHEDULE 1SCHEDULE OF PRE-IPO MEMBERSMemberOriginal Class AUnitsOriginalWarrantsfor Class AUnitsOriginalOptions forClass AUnitsOriginalSP UnitsOriginalCommonUnitsOriginalWarrantsforCommonUnitsOriginalHR UnitsACON Funko Investors, L.L.C.64,718.608------ACON Funko Investors Holdings,L.L.C.30,657.595 Quadren Investment Inc.36,081.486 AEP III Funko Investors, L.L.C.12,926.645 ACON Funko Investors Holdings3, L.L.C.8.115 Funko International, LLC34,096.3140-----5,415.1470Fundamental Capital, LLC7,456.8803-----1,174.4932Gladstone InvestmentCorporation------ 933.6460Gladstone Capital Corporation------ 933.6460 MemberOriginal Class AUnitsOriginalWarrantsfor Class AUnitsOriginalOptions forClass AUnitsOriginalSP UnitsOriginalCommonUnitsOriginalWarrantsforCommonUnitsOriginalHR UnitsBrian Mariotti22,717.7991---3,500-1,838.9465Brian R. Mariotti GrantorRetained Annuity Trust813.6834------Mariotti Family Irrevocable Trust1,625.3668------Jon P. and Trishawn P. KippChildren's Trust uad 5/31/1411,542.8754----- 970.9919Benjamin Butcher150.00-413.3913-1,000- 58.4364Johanna Gepford186.3988-513.4659-1,000- 71.3661Andrew Perlmutter251.9768-1,033.4783-1,250- 146.0909Russell Nickel290.0118-546.6765-1,000- 77.1360Sean Wilkinson------ 29.1657Anne Aquino------ 11.6663 MemberOriginal Class AUnitsOriginalWarrantsfor Class AUnitsOriginalOptions forClass AUnitsOriginalSP UnitsOriginalCommonUnitsOriginalWarrantsforCommonUnitsOriginalHR UnitsRobert Schwartz------ 11.6663Timothy Spiller30.8200----- 11.6663Allison Dinan72.6540-779.88--- 29.3623Jacob Matson107.2370-165.8139-25- 10.8348Doug Kikendall256.833------Mark Robben35.9570---35--Charles Denson----209--Adam Kriger----209--Sarathy Annamraju120.999---1,000--Tracy Daw120.999---500--Michael Becker----200--Robert Mitchell----100-- MemberOriginal Class AUnitsOriginalWarrantsfor Class AUnitsOriginalOptions forClass AUnitsOriginalSP UnitsOriginalCommonUnitsOriginalWarrantsforCommonUnitsOriginalHR UnitsLaurie Jo Anderson----100--Melissa Alton----50--Sanjay Srivastava----75--Kurt Dicus----75--Gustavo Rubio Escudero----75--Andrew Oddie846.5826------Dale Schultz Trust357.09------Trevor Schultz Trust357.09------Cerberus ASRS Holdings LLC46.0061,300.1912---69.216-Drawbridge SpecialOpportunities Fund LP-474.1688---25.2452-  SCHEDULE 2*SCHEDULE OF MEMBERSMemberCommon Units(Vested)Common Units(Unvested)OptionsContact Informationfor Notice1. Funko, Inc.10,417,982--2802 WetmoreAvenueEverett,WA 982012. ACON Funko Investors,L.L.C.10,495,687--1133Connecticut AvenueNW,Suite 700,WashingtonDC 200363. Funko SubsidiaryHoldings 1, L.L.C.4,971,870--2802 WetmoreAvenueEverett,WA 982014. Funko SubsidiaryHoldings 2, L.L.C.2,096,368--2802 WetmoreAvenueEverett,WA 982015. Funko SubsidiaryHoldings 3, Inc.5,851,485--2802 WetmoreAvenueEverett,WA 982016. Funko International,LLC5,686,538--4 EmbarcaderoCenterSuite 1400San FranciscoCA 94111 7. Fundamental Capital,LLC1,243,138--4 EmbarcaderoCenterSuite 1400San FranciscoCA 941118. Gladstone InvestmentCorporation33,181--1521Westbranch DriveSuite 100McLeanVA 221029. Gladstone CapitalCorporation33,181- 1521Westbranch DriveSuite 100McLeanVA 2210210. Brian Mariotti3,742,823726,807-2808 WetmoreAvenueEverett WA 9820111. Brian R. Mariotti GrantorRetained Annuity Trust412,075--120 C AvenueUnit 208CoronadoCA 9211812. Mariotti FamilyIrrevocable Trust206,037--120 C AvenueUnit 208CoronadoCA 9211813. Jon P. and Trishawn P.Kipp Children's Trustuad 5/31/141,910,084--12051 87thAvenue NEKirklandWA 9803414. Ben Butcher86,954207,66066,6123234 NE 100thStreetSeattleWA 98125 15. Johanna Gepford86,979194,16382,7374930 125thAvenue NESnohomishWA 9829016. Andrew Perlmutter138,258259,575166,52914424 156thAvenue NEWoodinvilleWA 9807217. Russell Nickel124,163207,66087,927511 NE 84thStreetSeattleWA 9811518. Sean Wilkinson1,037--3312 NE 185thStreetLake ForestParkWA 9815519. Anne Lorraine Aquino414--602 102nd PlSEUnit BEverettWA 9820820. Robert Schwartz414--19517 88thAvenue WEdmondsWA 9802621. Timothy Spiller3,710--1715 PineAvenueSnohomishWA 9829022. Allison Dinan10,799-125,5056180 NE 185thStreetKenmoreWA 9802823. Jacob Matson12,2743,84226,5573225 139th PLSEMill CreekWA 9801224. Douglas Kikendall27,466--825 NE 7thStreetSeattleWA 98115 25. Mark Robben3,8455,378-10736Densmore AvenueSeattleWA 9813326. Charles Denson16,05816,059-2 CenterpointeDriveSuite 140Lake OswegoOR 9703527. Adam Kriger16,05816,059-1485 StoneCanyon RoadLos AngelesCA 9007728. Andy Oddie159,485--12 CulmstockRoadLondonSW11 6LX29. Dale Schultz FamilyTrust Dated December8, 201183,156--25232 PradoDela PumaCalabasasCA 9130230. Trevor Schultz FamilyTrust Dated December8, 201183,156--25232 PradoDela PumaCalabasasCA 9130231. Cerberus ASRSHoldings, LLC178,617--875 ThirdAvenue12th FloorNew YorkNY 1002232. Drawbridge SpecialOpportunities Fund LP61,781--FortressInvestment Group1345 Avenueof the Americas46th FloorNew YorkNY 10105 33. Sarathy Annamraju62,644115,254-11014 NE 58thPlKirklandWA 9803334. Tracy Daw43,43657,627-3837 212thAvenue SESammamishWA 9807535. Sanjay Srivastava2,8818,644-7810 238thAvenue NERedmondWA 9805336. Gustavo RubioEscudero2,8818,644-2456 172ndAvenue NERedmondWA 9805237. Kurt Dicus2,8818,644-14170 NE183rd StreetUnit 433WoodinvilleWA 9807238. Laurie Anderson3,84111,526-12524 NE168th Ct WoodinvilleWA 9807239. Robert Mitchell-15,367-5000 SE 2ndPlRentonWA 9805940. Michael Becker-30,734-1830 AvenidaDel Mundo #1103CoronadoCA 9211841. Melissa Alton-7,684-3406 124thStreet SEEverettWA 98208Total48,313,6371,901,327555,867 * This Schedule of Members shall be updated from time to time to reflect any adjustment with respect to any subdivision (by Unit split orotherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Common Units, or to reflect any additional issuances ofCommon Units pursuant to this Agreement. Exhibit AFORM OF JOINDER AGREEMENTThis JOINDER AGREEMENT, dated as of _________________, 20___ (this “Joinder”), is delivered pursuantto that certain Second Amended and Restated Limited Liability Company Agreement, dated as of November 1, 2017 (asamended, restated, amended and restated, supplemented or otherwise modified from time to time, the “LLC Agreement”)by and among Funko Acquisition Holdings, L.L.C., a Delaware limited liability company (the “Company”), Funko, Inc., aDelaware corporation and the managing member of the Company (“Holdings”), and each of the Members from time totime party thereto. Capitalized terms used but not otherwise defined herein have the respective meanings set forth in theLLC Agreement. 1.Joinder to the LLC Agreement. Upon the execution of this Joinder by the undersigned and delivery hereof toHoldings, the undersigned hereby is and hereafter will be a Member under the LLC Agreement and a partythereto, with all the rights, privileges and responsibilities of a Member thereunder. The undersigned herebyagrees that it shall comply with and be fully bound by the terms of the LLC Agreement as if it had been asignatory thereto as of the date thereof. 2.Incorporation by Reference. All terms and conditions of the LLC Agreement are hereby incorporated byreference in this Joinder as if set forth herein in full. 3.Address. All notices under the LLC Agreement to the undersigned shall be direct to:[Name] [Address] [City, State, Zip Code] Attn: Facsimile: E-mail:IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and yearfirst above written.[NAME OF NEW MEMBER]By:Name:Title: Acknowledged and agreedas of the date first set forth above: FUNKO ACQUISITION HOLDINGS, L.L.C.By: FUNKO, INC., its Managing MemberBy:Name:Title:  Exhibit B-1FORM OF AGREEMENT AND CONSENT OF SPOUSEThe undersigned spouse of _____________________________ (the “Member”), a party to that certain SecondAmended and Restated Limited Liability Company Agreement, dated as of November 1, 2017 (as amended, restated,amended and restated, supplemented or otherwise modified from time to time, the “Agreement”) by and among FunkoAcquisition Holdings, L.L.C., a Delaware limited liability company (the “Company”), Funko, Inc., a Delaware corporationand the managing member of the Company (“Holdings”), and each of the Members from time to time party thereto(capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Agreement),acknowledges on her own behalf that:I have read the Agreement and understand its contents. I acknowledge and understand that under theAgreement, any interest I may have, community property or otherwise, in the Units owned by the Member is subject to theterms of the Agreement which include certain restrictions on transfer.I hereby consent to and approve the Agreement. I agree that said Units and any interest I may have, communityproperty or otherwise, in such Units are subject to the provisions of the Agreement and that I will take no action at anytime to hinder operation of the Agreement on said Units or any interest I may have, community property or otherwise, insaid Units.I hereby acknowledge that the meaning and legal consequences of the Agreement have been explained fully tome and are understood by me, and that I am signing this Agreement and consent without any duress and of free will.Dated: _____________________________ [NAME OF SPOUSE]By:Name:  Exhibit B-2FORM OF SPOUSE’S CONFIRMATION OF SEPARATE PROPERTYThe undersigned spouse of _____________________________ (the “Member”), a party to that certain SecondAmended and Restated Limited Liability Company Agreement, dated as of November 1, 2017 (as amended, restated,amended and restated, supplemented or otherwise modified from time to time, the “Agreement”) by and among FunkoAcquisition Holdings, L.L.C., a Delaware limited liability company (the “Company”), Funko, Inc., a Delaware corporationand the managing member of the Company (“Holdings”), and each of the Members from time to time party thereto(capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Agreement),acknowledges and confirms on his or her own behalf that the Units owned by said Member are the sole and separateproperty of said Member, and I hereby disclaim any interest in same.I hereby acknowledge that the meaning and legal consequences of this Member’s spouse’s confirmation ofseparate property have been fully explained to me and are understood by me, and that I am signing this Member’sspouse’s confirmation of separate property without any duress and of free will.Dated: _____________________________ [NAME OF SPOUSE]By:Name: Exhibit C METHODOLOGY FOR ALLOCATION OF EXCESS NONRECOURSE LIABILITIES  752 Debt Allocation Illustration Total Excess Non Recourse ("Tier 3") Liabilities: 175,000,000 Section 704(c) SummaryEstimated Section 704(b) Value of Company property subject to nonrecourse liabilities as of the Effective Time1,000,000,000Estimated Tax basis of Company property subject to nonrecourse liabilities as of the Effective Time750,000,000Aggregate amount of built-in gain on Section 704(c) property as of the Effective Time250,000,000 (a)(b)(c)(d)(e)(f)= (d) + (f)MemberEstimatedNegative TaxCapital704(c) Gain inExcess of Tier2 / 704(c)MinimumGainLesser of:(a) or (b)Tier 3A: inproportion to(c)Remainingpartner704(c)minimumgainTier 3B: inproportion to(e)Total ExcessNonrecourseLiabilitiesTotal Partnership30,000,000250,000,00030,000,00030,000,000220,000,000145,000,000175,000,000Partner 1-------Partner 2-150,000,000--150,000,00098,863,63698,863,636Partner 315,000,00050,000,00015,000,00015,000,00035,000,00023,068,18238,068,182Partner 410,000,00030,000,00010,000,00010,000,00020,000,00013,181,81823,181,818Partner 55,000,00020,000,0005,000,0005,000,00015,000,0009,886,36414,886,364Total30,000,000250,000,00030,000,00030,000,000220,000,000145,000,000175,000,000  Exhibit 10.28REGISTRATION RIGHTS AGREEMENTThis REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of November 1, 2017 by andamong Funko, Inc., a Delaware corporation (the “Corporation”), and each Person identified on the Schedule of Holdersattached hereto as of the date hereof (such Persons, collectively, the “Original Equity Owner Parties”).RecitalsWHEREAS, the Corporation is contemplating an offer and sale of its shares of Class A common stock, parvalue $0.0001 per share (the “Class A Common Stock” and such shares, the “Shares”), to the public in an underwritteninitial public offering (the “IPO”);WHEREAS, the Corporation desires to use a portion of the net proceeds from the IPO to purchase CommonUnits (as defined below) of Funko Acquisition Holdings, L.L.C., a Delaware limited liability company (the “Company”),and the Company desires to issue its Common Units to the Corporation in exchange for such portion of the net proceedsfrom the IPO;WHEREAS, immediately prior to the consummation of the issuance of Common Units by the Company to theCorporation, the Original Equity Owner Parties and certain other Persons that hold equity interests in the Company arethe sole members of the Company (the Original Equity Owner Parties, together with such other Persons, the “OriginalEquity Owners”);WHEREAS, immediately prior to or simultaneous with the purchase by the Corporation of the Common Units,the Corporation, the Company and the Original Equity Owners will enter into that certain Second Amended and RestatedLimited Liability Company Agreement of the Company (such agreement, as it may be amended, restated, amended andrestated, supplemented or otherwise modified form time to time, the “LLC Agreement”);WHEREAS, in connection with the closing of the IPO, (i) the Corporation will become the sole managingmember of the Company, (ii) under the LLC Agreement, the equity interests held by the Original Equity Owners prior tosuch time will be cancelled and new Common Units (as defined in the LLC Agreement, the “Common Units”) of theCompany will be issued, (iii) each Person identified on the Schedule of Holders attached hereto as a “Former EquityOwner” (such Persons, collectively, the “Former Equity Owners”) will exchange their indirect interest in the CommonUnits for shares of Class A Common Stock, (iv) each Person identified on the Schedule of Holders attached hereto as a“Continuing Equity Owner Party” (such Persons, collectively, the “Continuing Equity Owner Parties”) and certain otherOriginal Equity Owners will become non-managing members of the Company, but otherwise continue to hold CommonUnits in the Company (such persons, collectively, the “Continuing Equity Owners”), and (v) in consideration of theCorporation acquiring the Common Units and  becoming the managing member of the Company and for other good consideration, the Company has provided theContinuing Equity Owners with a redemption right pursuant to which the Continuing Equity Owners can redeem theirCommon Units for, at the Corporation’s option, shares of Class A Common Stock or cash on the terms set forth in theLLC Agreement; andWHEREAS, in connection with the IPO and the transactions described above, the Corporation has agreed togrant to the Holders (as defined below) certain rights with respect to the registration of the Registrable Securities (asdefined below) on the terms and conditions set forth herein.NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agreeas follows:Section 1.Definitions. For purposes of this Agreement, the following terms shall have the meaningsspecified in this Section 1:“Acquired Common” has the meaning set forth in Section 9.“Additional Holder” has the meaning set forth in Section 9, and shall be deemed to include each suchPerson’s Affiliates, immediate family members, heirs, successors and assigns who may succeed to such Person as aHolder hereunder.“Affiliate” of any Person means any other Person controlled by, controlling or under common control with suchPerson; provided that the Corporation and its Subsidiaries shall not be deemed to be Affiliates of any Holder. As used inthis definition, “control” (including, with its correlative meanings, “controlling,” “controlled by” and “under common controlwith”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies(whether through ownership of securities, by contract or otherwise).“Agreement” has the meaning set forth in the recitals.“Automatic Shelf Registration Statement” has the meaning set forth in Section 2(a).“Business Day” means any day of the year on which national banking institutions in New York are open to thepublic for conducting business and are not required or authorized to close.“Capital Stock” means (i) with respect to any Person that is a corporation, any and all shares, interests orequivalents in capital stock of such corporation (whether voting or nonvoting and whether common or preferred), (ii) withrespect to any Person that is not a corporation, individual or governmental entity, any and all partnership, membership,limited liability company or other equity interests of such Person that confer on the holder thereof the right to receive ashare of the profits and losses of, or the distribution of assets of the issuing Person, and (iii) any and all warrants, rights2  (including conversion and exchange rights) and options to purchase any security described in the clause (i) or (ii) above.“Class A Common Stock” has the meaning set forth in the recitals.“Class B Common Stock” means the Corporation’s Class B common stock, par value $0.0001 per share.“Common Units” has the meaning set forth in the recitals.“Company” has the meaning set forth in the recitals.“Continuing Equity Owner Parties” has the meaning set forth in the recitals, and shall be deemed to includetheir respective Affiliates, immediate family members, heirs, successors and assigns who may succeed to such Personas a Holder hereunder.“Continuing Equity Owners” has the meaning set forth in the recitals.“Controlling Holder” means each of the Controlling Holders as identified on the Schedule of Holders, so longas such Holders continue to hold Registrable Securities.“Corporation” has the meaning set forth in the recitals.“Demand Registrations” has the meaning set forth in Section 2(a).“End of Suspension Notice” has the meaning set forth in Section 2(f)(ii).“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from time to time, or anysuccessor federal law then in force, together with all rules and regulations promulgated thereunder.“FINRA” means the Financial Industry Regulatory Authority.“Former Equity Owners” has the meaning set forth in the recitals, and shall be deemed to include theirrespective Affiliates, immediate family members, heirs, successors and assigns who may succeed to such Person as aHolder hereunder.“Free Writing Prospectus” means a free-writing prospectus, as defined in Rule 405.“Holdback Period” has the meaning set forth in Section 4(a)(i).“Holder” means any Person that is a party to this Agreement from time to time, as set forth on the signaturepages hereto.“Holder Indemnified Parties” has the meaning set forth in Section 7(a).“IPO” has the meaning set forth in the recitals.3  “Joinder” has the meaning set forth in Section 9.“LLC Agreement” has the meaning set forth in the recitals.“Long-Form Registrations” has the meaning set forth in Section 2(a).“MNPI” means material non-public information within the meaning of Regulation FD promulgated under theExchange Act.“Original Equity Owner Parties” has the meaning set forth in the recitals, and shall be deemed to include theirrespective Affiliates, immediate family members, heirs, successors and assigns who may succeed to such Person as aHolder hereunder.“Original Equity Owners” has the meaning set forth in the recitals.“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a jointstock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department,agency or political subdivision thereof.“Piggyback Registrations” has the meaning set forth in Section 3(a).“Public Offering” means any sale or distribution to the public of Capital Stock of the Corporation pursuant to anoffering registered under the Securities Act, whether by the Corporation, by Holders and/or by any other holders of theCorporation’s Capital Stock.“Registrable Securities” means (i) any Class A Common Stock (A) issued by the Corporation in connectionwith the IPO in exchange for the Common Units of the Former Equity Owners or (B) issued by the Corporation in a ShareSettlement in connection with (x) the redemption by the Company of Common Units owned by any Continuing EquityOwner Parties or (y) at the election of the Corporation, in a direct exchange for Common Units owned by any ContinuingEquity Owner Party, in each case in accordance with the terms of the LLC Agreement, (ii) any Capital Stock of theCorporation or of any Subsidiary of the Corporation issued or issuable with respect to the securities referred to in clause(i) above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidationor other reorganization, and (iii) any other Shares owned, directly or indirectly, by Holders. As to any particularRegistrable Securities owned by any Person, such securities shall cease to be Registrable Securities on the date suchsecurities (a) have been sold or distributed pursuant to a Public Offering, (b) have been sold in compliance with Rule 144following the consummation of the IPO, (c) have been repurchased by the Corporation or a Subsidiary of the Corporationor (d) may be disposed of pursuant to Rule 144 in a single transaction without volume limitation or other restrictions ontransfer thereunder. For purposes of this Agreement, a Person shall be deemed to be a Holder, and the RegistrableSecurities shall be deemed to be in existence, whenever such Person has the right to acquire, directly or indirectly, suchRegistrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but4  disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actuallybeen effected, and such Person shall be entitled to exercise the rights of a holder of Registrable Securities hereunder;provided a holder of Registrable Securities may only request that Registrable Securities in the form of Capital Stock ofthe Corporation that is registered or to be registered as a class under Section 12 of the Exchange Act be registeredpursuant to this Agreement. For the avoidance of doubt, (x) while Common Units and/or shares of Class B CommonStock may constitute Registrable Securities, under no circumstances shall the Corporation be obligated to registerCommon Units or shares of Class B Common Stock, and only Shares issuable upon redemption or exchange ofCommon Units will be registered and (y) in no event will Common Units held by the Blockers (as defined in the LLCAgreement) be considered Registrable Securities. “Registration Expenses” has the meaning set forth in Section 6(a).“Rule 144,” “Rule 158,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under theSecurities Act (or any successor provision) by the Securities and Exchange Commission, as the same shall be amendedfrom time to time, or any successor rule then in force.“Sale Transaction” has the meaning set forth in Section 4(a)(i).“Schedule of Holders” means the schedule attached to this Agreement entitled “Schedule of Holders,” whichshall reflect each Holder from time to time party to this Agreement.“Securities” has the meaning set forth in Section 4(a)(i).“Securities Act” means the U.S. Securities Act of 1933, as amended from time to time, or any successor federallaw then in force, together with all rules and regulations promulgated thereunder.“Share Settlement” means “Share Settlement” as defined in the LLC Agreement.“Shares” has the meaning set forth in the recitals.“Shelf Offering” has the meaning set forth in Section 2(d)(ii).“Shelf Offering Notice” has the meaning set forth in Section 2(d)(ii).“Shelf Offering Request” has the meaning set forth in Section 2(d)(ii).“Shelf Registrable Securities” has the meaning set forth in Section 2(d)(ii).“Shelf Registration” has the meaning set forth in Section 2(a).“Shelf Registration Statement” has the meaning set forth in Section 2(d)(i).5  “Short-Form Registrations” has the meaning set forth in Section 2(a).“Subsidiary” means, with respect to the Corporation, any corporation, limited liability company, partnership,association or other business entity of which (i) if a corporation, a majority of the total voting power of Capital Stock ofsuch Person entitled (without regard to the occurrence of any contingency) to vote in the election of directors is at thetime owned or controlled, directly or indirectly, by the Corporation, or (ii) if a limited liability company, partnership,association or other business entity, either (x) a majority of the Capital Stock of such Person entitled (without regard tothe occurrence of any contingency) to vote in the election of managers, general partners or other oversight board vestedwith the authority to direct management of such Person is at the time owned or controlled, directly or indirectly, by theCorporation or (y) the Corporation or one of its Subsidiaries is the sole manager or general partner of such Person.“Suspension Event” has the meaning set forth in Section 2(f)(ii).“Suspension Notice” has the meaning set forth in Section 2(f)(ii).“Suspension Period” has the meaning set forth in Section 2(f)(i).“Underwritten Takedown” has the meaning set forth in Section 2(d)(ii).“Violation” has the meaning set forth in Section 7(a).“WKSI” means a “well-known seasoned issuer” as defined under Rule 405.Section 2.Demand Registrations.(a)Requests for Registration. Subject to the terms and conditions of this Agreement, at any time fromand after 180 days following the IPO, each Controlling Holder may request registration under the Securities Act of all orany portion of their Registrable Securities on Form S-1 or any similar long-form registration (“Long-FormRegistrations”), and each Controlling Holder may request registration under the Securities Act of all or any portion oftheir Registrable Securities on Form S-3 or any similar short-form registration (“Short-Form Registrations”) if available;provided that the Company shall not be obligated to file registration statements relating to any Long-Form Registration orShort-Form Registration under this Section 2(a) unless the market value of the Registrable Securities proposed to beregistered is at least $15 million (or, if less, such Registrable Securities represent all Registrable Securities then held bythe Controlling Holder requesting such registration). All registrations requested pursuant to this Section 2(a) are referredto herein as “Demand Registrations.” The Controlling Holder making a Demand Registration may request that theregistration be made pursuant to Rule 415 under the Securities Act (a “Shelf Registration”) and, if the Corporation is aWKSI at the time any request for a Demand Registration is submitted to the Corporation, that such Shelf Registration bean automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an “Automatic ShelfRegistration Statement”). Except to the extent that Section 2(d) applies, upon receipt of the request for the DemandRegistration, the Corporation shall as promptly as6  reasonably practicable (but in no event later than ten days after receipt of the request for the Demand Registration) givewritten notice of the Demand Registration to all other Holders who hold Registrable Securities and, subject to the termsof Section 2(e), shall include in such Demand Registration (and in all related registrations and qualifications under stateblue sky laws and in any related underwriting) all Registrable Securities with respect to which the Corporation hasreceived written requests for inclusion therein within (i) 15 days, in the case of any notice with respect to a Long-FormRegistration, or (ii) ten days, in the case of any notice with respect to a Short-Form Registration, after the receipt of theCorporation’s notice. Each Holder agrees that such Holder shall treat as confidential the receipt of the notice of DemandRegistration and shall not disclose or use the information contained in such notice of Demand Registration without theprior written consent of the Corporation or until such time as the information contained therein is or becomes available tothe public generally, other than as a result of disclosure by the Holder in breach of the terms of thisAgreement. Notwithstanding the foregoing, the Corporation shall not be required to take any action that would otherwisebe required under this Section 2 if such action would violate Section 4(a) hereof or any similar provision contained in theunderwriting agreement entered into in connection with any underwritten Public Offering.(b)Long-Form Registrations. The Controlling Holders shall be entitled to request an unlimited number ofLong-Form Registrations in which the Corporation shall pay all Registration Expenses, regardless of whether anyregistration statement is filed or any such Demand Registration is consummated. All Long-Form Registrations shall beunderwritten registrations unless otherwise approved by the applicable Controlling Holder.(c)Short-Form Registrations. In addition to the Long-Form Registrations described in Section 2(b), eachControlling Holder shall be entitled to request an unlimited number of Short-Form Registrations in which the Corporationshall pay all Registration Expenses, regardless of whether any registration statement is filed or any such DemandRegistration is consummated. Demand Registrations shall be Short-Form Registrations whenever the Corporation ispermitted to use any applicable short form and if the managing underwriters (if any) agree to the use of a Short-FormRegistration. After the Corporation has become subject to the reporting requirements of the Exchange Act, theCorporation shall use its reasonable best efforts to make Short-Form Registrations available for the sale of RegistrableSecurities.(d)Shelf Registrations. (i)Subject to the availability of required financial information, as promptly as practicable after theCorporation receives written notice of a request for a Shelf Registration, the Corporation shall file with theSecurities and Exchange Commission a registration statement under the Securities Act for the ShelfRegistration (a “Shelf Registration Statement”). The Corporation shall use its reasonable best efforts to causeany Shelf Registration Statement to be declared effective under the Securities Act as soon as practicable afterthe initial filing of such Shelf Registration Statement, and once effective, the Corporation7  shall cause such Shelf Registration Statement to remain continuously effective for such time period as isspecified in the request by the Holders, but for no time period longer than the period ending on the earliest of(A) the third anniversary of the initial effective date of such Shelf Registration Statement, (B) the date on whichall Registrable Securities covered by such Shelf Registration Statement have been sold pursuant to the ShelfRegistration Statement, and (C) the date as of which there are no longer any Registrable Securities covered bysuch Shelf Registration Statement in existence. Without limiting the generality of the foregoing, the Corporationshall use its reasonable best efforts to prepare a Shelf Registration Statement with respect to all of theRegistrable Securities owned by or issuable to the Original Equity Owner Parties in accordance with the termsof the LLC Agreement (or such other number of Registrable Securities specified in writing by the Holder withrespect to the Registrable Securities owned by or issuable to such Holder) to enable and cause such ShelfRegistration Statement to be filed and maintained with the Securities and Exchange Commission as soon aspracticable after the later to occur of (i) the expiration of the Holdback Period and (ii) the Corporation becomingeligible to file a Shelf Registration Statement for a Short-Form Registration; provided that any of the OriginalEquity Owner Parties may, with respect to itself, instruct the Corporation in writing not to include in such ShelfRegistration Statement the Registrable Securities owned by or issuable to such Holder. In order for any of theOriginal Equity Owner Parties to be named as a selling securityholder in such Shelf Registration Statement, theCorporation may require such Holder to deliver all information about such Holder that is required to be includedin such Shelf Registration Statement in accordance with applicable law, including Item 507 of Regulation S-Kpromulgated under the Securities Act, as amended from time to time, or any similar successor rule thereto.Notwithstanding anything to the contrary in Section 2(d)(ii), any Holder that is named as a selling securityholderin such Shelf Registration Statement may make a secondary resale under such Shelf Registration Statementwithout the consent of the Holders representing a majority of the Registrable Securities or any other Holder ifsuch resale does not require a supplement to the Shelf Registration Statement.(ii)In the event that a Shelf Registration Statement is effective, Holders representing RegistrableSecurities either (a) with a market value of at least $15 million, or (b) that represent at least 10% of theaggregate market value of the Registrable Securities registered pursuant to such Shelf Registration Statementshall have the right at any time or from time to time to elect to sell pursuant to an offering (including anunderwritten offering (an “Underwritten Takedown”)) Registrable Securities available for sale pursuant to suchregistration statement (“Shelf Registrable Securities”), so long as the Shelf Registration Statement remains ineffect, and the Corporation shall pay all Registration Expenses in connection therewith; provided that eachControlling Holder shall have the right at any time and from time to time to elect to sell pursuant to an offering(including an Underwritten Takedown) pursuant to a Shelf Offering Request (as defined below) made by suchControlling Holder. The applicable Holders shall make such election by delivering to the Corporation a8  written request (a “Shelf Offering Request”) for such offering specifying the number of Shelf RegistrableSecurities that such Holders desire to sell pursuant to such offering (the “Shelf Offering”). In the case of anUnderwritten Takedown, as promptly as practicable, but no later than two Business Days after receipt of a ShelfOffering Request, the Corporation shall give written notice (the “Shelf Offering Notice”) of such Shelf OfferingRequest to all other holders of Shelf Registrable Securities. The Corporation, subject to Sections 2(e) and 8hereof, shall include in such Shelf Offering the Shelf Registrable Securities of any other Holder that shall havemade a written request to the Corporation for inclusion in such Shelf Offering (which request shall specify themaximum number of Shelf Registrable Securities intended to be sold by such Holder) within five BusinessDays after the receipt of the Shelf Offering Notice. The Corporation shall, as expeditiously as possible (and inany event within ten Business Days after the receipt of a Shelf Offering Request, unless a longer period isagreed to by the Holders representing a majority of the Registrable Securities that made the Shelf OfferingRequest), use its reasonable best efforts to facilitate such Shelf Offering. Each Holder agrees that such Holdershall treat as confidential the receipt of the Shelf Offering Notice and shall not disclose or use the informationcontained in such Shelf Offering Notice without the prior written consent of the Corporation or until such time asthe information contained therein is or becomes available to the public generally, other than as a result ofdisclosure by the Holder in breach of the terms of this Agreement.(iii)Notwithstanding the foregoing, if any Holder desires to effect a sale of Shelf RegistrableSecurities that does not constitute an Underwritten Takedown, the Holder shall deliver to the Corporation aShelf Offering Request no later than two Business Days prior to the expected date of the sale of such ShelfRegistrable Securities, and subject to the limitations set forth in Section 2(d)(i), the Corporation shall file andeffect an amendment or supplement to its Shelf Registration Statement for such purpose as soon as reasonablypracticable.(iv)Notwithstanding the foregoing, if a Controlling Holder wishes to engage in an underwrittenblock trade off of a Shelf Registration Statement (either through filing an Automatic Shelf Registration Statementor through a take-down from an existing Shelf Registration Statement), then notwithstanding the foregoing timeperiods, such Holders only need to notify the Corporation of the block trade Shelf Offering two Business Daysprior to the day such offering is to commence (unless a longer period is agreed to by Holders representing amajority of the Registrable Securities wishing to engage in the underwritten block trade) and the Corporationshall promptly notify other Holders and such other Holders must elect whether or not to participate by the nextBusiness Day (i.e., one Business Day prior to the day such offering is to commence) (unless a longer period isagreed to by the Holders representing a majority of the Registrable Securities wishing to engage in theunderwritten block trade) and the Corporation shall as expeditiously as possible use its reasonable best effortsto facilitate such offering (which may close as early as two Business Days after the9  date it commences); provided that Holders representing a majority of the Registrable Securities wishing toengage in the underwritten block trade shall use commercially reasonable efforts to work with the Corporationand the underwriters prior to making such request in order to facilitate preparation of the registration statement,prospectus and other offering documentation related to the underwritten block trade.(v)The Corporation shall, at the request of Holders representing a majority of the RegistrableSecurities covered by a Shelf Registration Statement, file any prospectus supplement or, if the applicable ShelfRegistration Statement is an Automatic Shelf Registration Statement, any post-effective amendments andotherwise take any action necessary to include therein all disclosure and language deemed necessary oradvisable by such Holders to effect such Shelf Offering.(e)Priority on Demand Registrations and Shelf Offerings. The Corporation shall not include in anyDemand Registration or Shelf Offering any securities that are not Registrable Securities without the prior written consentof Holders representing a majority of the Registrable Securities included in such registration or offering. If a DemandRegistration or a Shelf Offering is an underwritten offering and the managing underwriters advise the Corporation inwriting that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested tobe included in such offering exceeds the number of Registrable Securities and other securities, if any, that can be soldtherein without adversely affecting the marketability, proposed offering price, timing or method of distribution of theoffering, the Corporation shall include in such registration or offering, as applicable, (i) first, the Registrable Securities ofHolders requested to be included in such registration which, in the opinion of the underwriters, can be sold without anysuch adverse effect, pro rata among the such Holders on the basis of the number of Registrable Securities owned byeach such Holder that such Holder of Registrable Securities shall have requested to be included therein, (ii) second,other securities requested to be included in such registration which, in the opinion of the underwriters, can be soldwithout any such adverse effect, and (iii) third, securities the Corporation requested to be included in such registration forits own account which, in the opinion of the underwriters, can be sold without any such adverse effect. Alternatively, ifthe number of Registrable Securities which can be included on a Shelf Registration Statement is otherwise limited byInstruction I.B.6 to Form S-3 (or any successor provision thereto), the Corporation shall include in such registration oroffering prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securitiesrequested to be included which can be included on such Shelf Registration Statement in accordance with therequirements of Form S-3, pro rata among the respective Holders thereof on the basis of the amount of RegistrableSecurities owned by each such Holder that such Holder of Registrable Securities shall have requested to be includedtherein.10  (f)Restrictions on Demand Registration and Shelf Offerings.(i)The Corporation shall not be obligated to effect any Demand Registration within 90 days afterthe effective date of a previous Demand Registration or a previous registration in which Registrable Securitieswere included pursuant to Section 3. The Corporation may postpone, for up to 60 days from the date of therequest, the filing or the effectiveness of a registration statement for a Demand Registration or suspend the useof a prospectus that is part of a Shelf Registration Statement for up to 60 days from the date of the SuspensionNotice (as defined below) and therefore suspend sales of the Shelf Registrable Securities (such period, the“Suspension Period”) by providing written notice to the Holders of Registrable Securities or Shelf RegistrableSecurities, as applicable, if (A) the Corporation’s board of directors determines in its reasonable good faithjudgment that the offer or sale of Registrable Securities would reasonably be expected to have a materialadverse effect on any proposal or plan by the Corporation or any Subsidiary to engage in any materialacquisition of assets or stock (other than in the ordinary course of business) or any material merger,consolidation, tender offer, recapitalization, reorganization or other transaction involving the Corporation or anySubsidiary, (B) upon advice of counsel, the sale of Registrable Securities pursuant to the registration statementwould require disclosure of MNPI not otherwise required to be disclosed under applicable law, and (C) either(x) the Corporation has a bona fide business purpose for preserving the confidentiality of such transaction or (y)disclosure of such MNPI would have a material adverse effect on the Corporation or the Corporation’s ability toconsummate such transaction; provided that in such event, the Holders shall be entitled to withdraw suchrequest for a Demand Registration or underwritten Shelf Offering and the Corporation shall pay all RegistrationExpenses in connection with such Demand Registration or Shelf Offering. The Corporation may delay aDemand Registration hereunder only once in any twelve-month period, except with the consent of eachControlling Holder. The Corporation also may extend the Suspension Period with the consent of eachControlling Holder. (ii)In the case of an event that causes the Corporation to suspend the use of a ShelfRegistration Statement as set forth in paragraph (f)(i) above or pursuant to applicable subsections of Section5(a)(vi) (a “Suspension Event”), the Corporation shall give a notice to the Holders of Registrable Securitiesregistered pursuant to such Shelf Registration Statement (a “Suspension Notice”) to suspend sales of theRegistrable Securities and such notice shall state generally the basis for the notice and that such suspensionshall continue only for so long as the Suspension Event or its effect is continuing. If the basis of suchsuspension is nondisclosure of MNPI, the Corporation shall not be required to disclose the subject matter ofsuch MNPI to Holders. A Holder shall not effect any sales of the Registrable Securities pursuant to such ShelfRegistration Statement (or such filings) at any time after it has received a Suspension Notice from theCorporation and prior to receipt of an End of Suspension Notice (as defined below). Each Holder agrees thatsuch Holder shall treat as confidential11  the receipt of the Suspension Notice and shall not disclose or use the information contained in suchSuspension Notice without the prior written consent of the Corporation or until such time as the informationcontained therein is or becomes available to the public generally, other than as a result of disclosure by theHolder in breach of the terms of this Agreement. Holders may recommence effecting sales of the RegistrableSecurities pursuant to the Shelf Registration Statement (or such filings) following further written notice to sucheffect (an “End of Suspension Notice”) from the Corporation, which End of Suspension Notice shall be givenby the Corporation to the Holders and their counsel, if any, promptly following the conclusion of anySuspension Event; provided that in no event shall an End of Suspension Notice be given after the end of theSuspension Period unless with the consent of each Controlling Holder.(iii)Notwithstanding any provision herein to the contrary, if the Corporation gives a SuspensionNotice with respect to any Shelf Registration Statement pursuant to this Section 2(f), the Corporation agreesthat it shall (A) extend the period of time during which such Shelf Registration Statement shall be maintainedeffective pursuant to this Agreement by the number of days during the period from the date of receipt by theHolders of the Suspension Notice to and including the date of receipt by the Holders of the End of SuspensionNotice, and (B) provide copies of any supplemented or amended prospectus necessary to resume sales, withrespect to each Suspension Event; provided that such period of time shall not be extended beyond the date thatthere are no longer Registrable Securities covered by such Shelf Registration Statement.(g)Selection of Underwriters. Controlling Holder(s) initiating any Demand Registration representing amajority of the Registrable Securities included in such Demand Registration shall have the right to select the investmentbanker(s) and manager(s) to administer the offering (including assignment of titles), subject to the Corporation’s approvalnot be unreasonably withheld, conditioned or delayed. If any Shelf Offering is an Underwritten Takedown, the Holdersrepresenting a majority of the Registrable Securities participating in such Underwritten Takedown shall have the right toselect the investment banker(s) and manager(s) to administer the offering relating to such Shelf Offering (includingassignment of titles), subject to the Corporation’s approval not to be unreasonably withheld, conditioned or delayed.(h)Fulfillment of Registration Obligations. Notwithstanding any other provision of this Agreement, aregistration requested pursuant to this Section 2 shall not be deemed to have been effected: (i) if the number ofRegistrable Securities requested to be included in a Long-Form Registration by the initiating Controlling Holder is cutback by the managing underwriters pursuant to Section 2(e) by more than twenty percent (20%); (ii) if the registrationstatement is withdrawn without becoming effective in accordance with Section 2(f) or otherwise without the consent ofthe initiating Controlling Holder; (iii) if after it has become effective such registration is interfered with by any stop order,injunction or other order or requirement of the Securities and Exchange Commission or any other governmental authorityfor any reason other than a misrepresentation or an omission by the Holder making such Demand Registration, or12  an Affiliate of such Holder (other than the Corporation and its controlled Affiliates), and, as a result thereof, theRegistrable Securities requested to be registered cannot be completely distributed in accordance with the plan ofdistribution set forth in the related registration statement; (iv) if the registration does not contemplate an underwrittenoffering, if it does not remain effective for at least 180 days (or such shorter period as will terminate when all securitiescovered by such registration statement have been sold or withdrawn); or if such registration statement contemplates anunderwritten offering, if it does not remain effective for at least 180 days plus such longer period as, in the opinion ofcounsel for the underwriter or underwriters, a prospectus is required by applicable law to be delivered in connection withthe sale of Registrable Securities by an underwriter or dealer; or (v) in the event of an underwritten offering, if theconditions to closing (including any condition relating to an overallotment option) specified in the purchase agreement orunderwriting agreement entered into in connection with such registration are not satisfied or waived other than by reasonof some wrongful act or omission by the Holder that made the Demand Registration, or an Affiliate of such Holder.(i)Other Registration Rights. The Corporation represents and warrants that it is not a party to, orotherwise subject to, any other agreement granting registration rights to any other Person with respect to any securities ofthe Corporation. Except as provided in this Agreement, the Corporation shall not grant to any Persons the right torequest the Corporation or any Subsidiary to register any Capital Stock of the Corporation or of any Subsidiary, or anysecurities convertible or exchangeable into or exercisable for such securities, without the prior written consent of theapplicable Controlling Holder.Section 3.Piggyback Registrations.(a)Right to Piggyback. Following the IPO, whenever the Corporation proposes to register any of itssecurities under the Securities Act (other than (i) pursuant to a Demand Registration, (ii) in connection with registrationson Form S-4 or S-8 promulgated by the Securities and Exchange Commission or any successor or similar forms or (iii) aregistration on any form that does not include substantially the same information as would be required to be included in aregistration statement covering the sale of Registrable Securities) and the registration form to be used may be used forthe registration of Registrable Securities (a “Piggyback Registration”), the Corporation shall give prompt written noticeto all Holders who hold Registrable Securities of its intention to effect such Piggyback Registration and, subject to theterms of Section 3(c), shall include in such Piggyback Registration (and in all related registrations or qualifications underblue sky laws and in any related underwriting) all Registrable Securities with respect to which the Corporation hasreceived written requests for inclusion therein within fifteen days after delivery of the Corporation’s notice.(b)Piggyback Expenses. The Registration Expenses of the Holders shall be paid by the Corporation inall Piggyback Registrations, whether or not any such registration became effective.13  (c)Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registrationon behalf of the Corporation, and the managing underwriters advise the Corporation in writing that in their opinion thenumber of securities requested to be included in such registration exceeds the number which can be sold in suchoffering without adversely affecting the marketability, proposed offering price, timing or method of distribution of theoffering, the Corporation shall include in such registration (i) first, the securities the Corporation proposes to sell, (ii)second, the Registrable Securities requested to be included in such registration which, in the opinion of the underwriters,can be sold without any such adverse effect, pro rata among the Holders on the basis of the number of RegistrableSecurities owned by each such Holder that such Holder of Registrable Securities shall have requested to be includedtherein, and (iii) third, other securities requested to be included in such registration which, in the opinion of theunderwriters, can be sold without any such adverse effect.(d)Selection of Underwriters. If any Piggyback Registration is an underwritten offering, the selection ofinvestment banker(s) and manager(s) for the offering shall be at the election of the Corporation (in the case of a primaryregistration) or at the election of the holders of other Corporation securities requesting such registration (in the case of asecondary registration); provided that Holders representing a majority of the Registrable Securities included in suchPiggyback Registration may request that one or more investment banker(s) or manager(s) be included in such offering(such request not to be binding on the Corporation or such other initiating holders of Corporation securities).(e)Right to Terminate Registration. The Corporation shall have the right to terminate or withdraw anyregistration initiated by it under this Section 3 whether or not any Holder has elected to include securities in suchregistration. The Registration Expenses of such withdrawn registration shall be borne by the Corporation in accordancewith Section 6.Section 4.Lock-Up Agreements. In connection with the IPO, each Controlling Holder, FunkoInternational, LLC and Fundamental Capital, LLC (each a “Lock-Up Party”) has entered into a customary lock-upagreement with Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & SmithIncorporated, as representatives (the “Representatives”) of the several underwriters, pursuant to which each Lock-UpParty has agreed to certain restrictions relating to the shares of Capital Stock and certain other securities held by them(collectively, the “Lock-Up Restrictions”) during the period ending 180 days after the date of the final prospectus issued inconnection with the IPO (such period, the “Lock-Up Period”). In the event that the Representatives consent to the releasefrom the Lock-Up Restrictions of any shares of Capital Stock (or other securities) held by a Lock-Up Party (any suchparty, the “Released Party,” and any shares of Capital Stock or other securities so released, the “Released Shares”),such Released Party hereby agrees not to sell or otherwise dispose of any Released Shares unless the samepercentage of the total number of outstanding shares of Class A Common Stock held by each other Lock-Up Party(assuming the exchange of all membership interests of the Company for a corresponding number of shares of Class ACommon Stock in accordance with the LLC14  Agreement) as is equal to the percentage of the total number of outstanding shares of Class A Common Stock of theReleased Party represented by the Released Shares (assuming the exchange of all membership interests of theCompany for a corresponding number of shares of Class A Common Stock in accordance with the LLC Agreement) isimmediately and fully released from any Lock-Up Restrictions on the same terms as the Released Shares. TheCorporation may impose stop-transfer instructions with respect to the shares of Capital Stock and other securities subjectto the Lock-Up Restrictions until the end of the Lock-Up Period.Section 5.Registration Procedures.(a)Whenever the Holders have requested that any Registrable Securities be registered pursuant to thisAgreement or have initiated a Shelf Offering, (x) such Holders shall, if applicable, cause such Registrable Securities tobe exchanged into shares of Class A Common Stock in accordance with the terms of the LLC Agreement prior to sale ofsuch Registrable Securities and (y) the Corporation shall use its reasonable best efforts to effect the registration and thesale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant theretothe Corporation shall as expeditiously as possible:(i)in accordance with the Securities Act and all applicable rules and regulations promulgatedthereunder, prepare and file with the Securities and Exchange Commission (subject to the availability ofrequired financial information) a registration statement, and all amendments and supplements thereto andrelated prospectuses, with respect to such Registrable Securities and use its reasonable best efforts to causesuch registration statement to become effective (provided that before filing a registration statement orprospectus or any amendments or supplements thereto, the Corporation shall furnish to the counsel selected bythe Controlling Holder(s) initiating a Demand Registration or, in all other cases, the Holders representing amajority of the Registrable Securities covered by such registration statement copies of all such documentsproposed to be filed, which documents shall be subject to the review and comment of such counsel);(ii)notify each holder of Registrable Securities of (A) the issuance by the Securities andExchange Commission of any stop order suspending the effectiveness of any registration statement or theinitiation of any proceedings for that purpose, (B) the receipt by the Corporation or its counsel of any notificationwith respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or theinitiation or threatening of any proceeding for such purpose and (C) the effectiveness of each registrationstatement filed hereunder;(iii)prepare and file with the Securities and Exchange Commission such amendments andsupplements to such registration statement and the prospectus used in connection therewith as may benecessary to keep such registration statement effective for a period ending when all of the securities15  covered by such registration statement have been disposed of in accordance with the intended methods ofdistribution by the sellers thereof set forth in such registration statement (but in any event not before theexpiration of any longer period required under the Securities Act or, if such registration statement relates to anunderwritten Public Offering, such longer period as in the opinion of counsel for the underwriters a prospectusis required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer)and comply with the provisions of the Securities Act with respect to the disposition of all securities covered bysuch registration statement during such period in accordance with the intended methods of disposition by thesellers thereof set forth in such registration statement;(iv)furnish to each seller of Registrable Securities thereunder such number of copies of suchregistration statement, each amendment and supplement thereto, the prospectus included in such registrationstatement (including each preliminary prospectus), each Free Writing Prospectus and such other documents assuch seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned bysuch seller;(v)use its reasonable best efforts to register or qualify such Registrable Securities under suchother securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and allother acts and things which may be reasonably necessary or advisable to enable such seller to consummatethe disposition in such jurisdictions of the Registrable Securities owned by such seller (provided that theCorporation shall not be required to (A) qualify generally to do business in any jurisdiction where it would nototherwise be required to qualify but for this subparagraph, (B) consent to general service of process in any suchjurisdiction or (C) subject itself to taxation in any such jurisdiction);(vi)notify each seller of such Registrable Securities (A) promptly after it receives notice thereof,of the date and time when such registration statement and each post-effective amendment thereto has becomeeffective or a prospectus or supplement to any prospectus relating to a registration statement has been filed andwhen any registration or qualification has become effective under a state securities or blue sky law or anyexemption thereunder has been obtained, (B) promptly after receipt thereof, of any request by the Securitiesand Exchange Commission for the amendment or supplementing of such registration statement or prospectusor for additional information and (C) at any time when a prospectus relating thereto is required to be deliveredunder the Securities Act, of the happening of any event as a result of which the prospectus included in suchregistration statement contains an untrue statement of a material fact or omits any fact necessary to make thestatements therein not misleading, and, subject to Section 2(f), at the request of any such seller, the Corporationshall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasersof such Registrable Securities, such prospectus shall not contain16  an untrue statement of a material fact or omit to state any fact necessary to make the statements therein notmisleading;(vii)use reasonable best efforts to cause all such Registrable Securities to be listed on eachsecurities exchange on which similar securities issued by the Corporation are then listed and, if not so listed, tobe listed on a securities exchange and, without limiting the generality of the foregoing, to arrange for at leasttwo market markers to register as such with respect to such Registrable Securities with FINRA;(viii)use reasonable efforts to provide a transfer agent and registrar for all such RegistrableSecurities not later than the effective date of such registration statement;(ix)enter into and perform such customary agreements (including underwriting agreements incustomary form) and take all such other actions as the Holders representing a majority of the RegistrableSecurities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate thedisposition of such Registrable Securities (including, without limitation, effecting a stock split, combination ofshares, recapitalization or reorganization);(x)make available for inspection by any seller of Registrable Securities, any underwriterparticipating in any disposition pursuant to such registration statement and any attorney, accountant or otheragent retained by any such seller or underwriter, all financial and other records, pertinent corporate andbusiness documents and properties of the Corporation as shall be necessary to enable them to exercise theirdue diligence responsibility, and cause the Corporation’s officers, directors, employees, agents, representativesand independent accountants to supply all information reasonably requested by any such seller, underwriter,attorney, accountant or agent in connection with such registration statement;(xi)take all reasonable actions to ensure that any Free-Writing Prospectus utilized in connectionwith any Demand Registration or Piggyback Registration hereunder complies in all material respects with theSecurities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained inaccordance with the Securities Act to the extent required thereby and, when taken together with the relatedprospectus, shall not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements therein, in light of the circumstances under which they were made, not misleading;(xii)otherwise use its reasonable best efforts to comply with all applicable rules and regulationsof the Securities and Exchange Commission, and make available to its security holders, as soon as reasonablypracticable, an earnings statement covering the period of at least twelve months beginning with the first day ofthe Corporation’s first full calendar quarter after the effective date17  of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of theSecurities Act and Rule 158;(xiii)to the extent that a Holder, in its sole and exclusive judgment, might be deemed to be anunderwriter of any Registrable Securities or a controlling person of the Corporation, permit such Holder toparticipate in the preparation of such registration or comparable statement and allow such Holder to providelanguage for insertion therein, in form and substance satisfactory to the Corporation, which in the reasonablejudgment of such Holder and its counsel should be included;(xiv)in the event of the issuance of any stop order suspending the effectiveness of a registrationstatement, or the issuance of any order suspending or preventing the use of any related prospectus orsuspending the qualification of any Class A Common Stock included in such registration statement for sale inany jurisdiction use reasonable efforts promptly to obtain the withdrawal of such order;(xv)use its reasonable best efforts to cause such Registrable Securities covered by suchregistration statement to be registered with or approved by such other governmental agencies or authorities asmay be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;(xvi)cooperate with the Holders of Registrable Securities covered by the registration statementand the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (notbearing any restrictive legends) representing securities to be sold under the registration statement and enablesuch securities to be in such denominations and registered in such names as the managing underwriter, oragent, if any, or such Holders may request;(xvii)cooperate with each Holder of Registrable Securities covered by the registration statementand each underwriter or agent participating in the disposition of such Registrable Securities and theirrespective counsel in connection with any filings required to be made with FINRA;(xviii)use its reasonable best efforts to make available the executive officers of the Corporationto participate with the Holders of Registrable Securities covered by the registration statement and anyunderwriters in any “road shows” or other selling efforts that may be reasonably requested by the Holders inconnection with the methods of distribution for the Registrable Securities;(xix)in the case of any underwritten Public Offering, use its reasonable best efforts to obtain oneor more cold comfort letters from the Corporation’s independent public accountants in customary form andcovering such matters of18  the type customarily covered by cold comfort letters as the Holders representing a majority of the RegistrableSecurities being sold reasonably request;(xx)in the case of any underwritten Public Offering, use its reasonable best efforts to provide alegal opinion of the Corporation’s outside counsel, dated the closing date of the Public Offering, in customaryform and covering such matters of the type customarily covered by legal opinions of such nature, which opinionshall be addressed to the underwriters and the Holders of such Registrable Securities being sold;(xxi)if the Corporation files an Automatic Shelf Registration Statement covering any RegistrableSecurities, use its reasonable best efforts to remain a WKSI (and not become an ineligible issuer (as defined inRule 405 under the Securities Act)) during the period during which such Automatic Shelf RegistrationStatement is required to remain effective;(xxii)if the Corporation does not pay the filing fee covering the Registrable Securities at the timean Automatic Shelf Registration Statement is filed, pay such fee at such time or times as the RegistrableSecurities are to be sold; and(xxiii)if the Automatic Shelf Registration Statement has been outstanding for at least three (3)years, at the end of the third year, file a new Automatic Shelf Registration Statement covering the RegistrableSecurities, and, if at any time when the Corporation is required to re-evaluate its WKSI status the Corporationdetermines that it is not a WKSI, use its reasonable efforts to refile the Shelf Registration Statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the periodduring which such registration statement is required to be kept effective.(b)Any officer of the Corporation who is a Holder agrees that if and for so long as he or she is employedby the Corporation or any Subsidiary thereof, he or she shall participate fully in the sale process in a manner customaryand reasonable for persons in like positions and consistent with his or her other duties with the Corporation and inaccordance with applicable law, including the preparation of the registration statement and the preparation andpresentation of any road shows.(c)The Corporation may require each Holder requesting, or electing to participate in, any registration tofurnish the Corporation such information regarding such Holder and the distribution of such Registrable Securities as theCorporation may from time to time reasonably request in writing.(d)If the Original Equity Owner Parties or any of their respective Affiliates seek to effectuate an in-kinddistribution of all or part of their respective Registrable Securities to their respective direct or indirect equityholders, theCorporation shall, subject to any applicable lock-ups, work with the foregoing persons to facilitate such in-kinddistribution in the manner reasonably requested and such distributees shall have19  the right to become a party to this Agreement by the joinder in the form of Exhibit A hereto and thereby have all of therights of such Original Equity Owner Parties under this Agreement, other than the Demand Registration rights of aControlling Holder.Section 6.Registration Expenses.(a)The Corporation’s Obligation. All expenses incident to the Corporation’s performance of orcompliance with this Agreement (including, without limitation, all registration, qualification and filing fees, fees andexpenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees anddisbursements of custodians, and fees and disbursements of counsel for the Corporation and all independent certifiedpublic accountants, underwriters (excluding underwriting discounts and commissions) and other Persons retained by theCorporation) (all such expenses being herein called “Registration Expenses”), shall be borne as provided in thisAgreement, except that the Corporation shall, in any event, pay its internal expenses (including, without limitation, allsalaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annualaudit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to beregistered on each securities exchange on which similar securities issued by the Corporation are then listed. EachPerson that sells securities pursuant to a Demand Registration or Piggyback Registration hereunder shall bear and payall underwriting discounts and commissions applicable to the securities sold for such Person’s account.(b)Counsel Fees and Disbursements. In connection with each Demand Registration, each PiggybackRegistration and each Shelf Offering, the Corporation shall reimburse the Holders of Registrable Securities included insuch registration for the reasonable fees and disbursements of not more than one law firm (as selected by the ControllingHolders of a majority of the Registrable Securities of all Controlling Holders included in such registration, or if noRegistrable Securities of any Controlling Holders are included in such registration, by Holders of a majority of theRegistrable Securities included in such registration) engaged to represent such Holders in connection with suchregistration.Section 7.Indemnification and Contribution.(a)By the Corporation. The Corporation shall indemnify and hold harmless, to the extent permitted bylaw, each Holder, such Holder’s officers, directors, managers, employees, partners, stockholders, members, trustees,Affiliates, agents and representatives, and each Person who controls such Holder (within the meaning of the SecuritiesAct) (the “Holder Indemnified Parties”) against all losses, claims, actions, damages, liabilities and expenses (includingwith respect to actions or proceedings, whether commenced or threatened, and including reasonable attorney fees andexpenses) caused by, resulting from, arising out of, based upon or related to any of the following statements, omissionsor violations (each a “Violation”) by the Corporation: (i) any untrue or alleged untrue statement of material fact containedin (A) any registration statement, prospectus, preliminary prospectus or Free-Writing Prospectus, or any20  amendment thereof or supplement thereto or (B) any application or other document or communication (in this Section 7,collectively called an “application”) executed by or on behalf of the Corporation or based upon written informationfurnished by or on behalf of the Corporation filed in any jurisdiction in order to qualify any securities covered by suchregistration under the securities laws thereof, (ii) any omission or alleged omission of a material fact required to be statedtherein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by theCorporation of the Securities Act or any other similar federal or state securities laws or any rule or regulationpromulgated thereunder applicable to the Corporation and relating to action or inaction required of the Corporation inconnection with any such registration, qualification or compliance. In addition, the Corporation will reimburse suchHolder Indemnified Party for any legal or any other expenses reasonably incurred by them in connection withinvestigating or defending any such losses. Notwithstanding the foregoing, the Corporation shall not be liable in anysuch case to the extent that any such losses result from, arise out of, are based upon, or relate to an untrue statement oralleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus,preliminary prospectus or Free-Writing Prospectus or any amendment or supplement thereto, or in any application, inreliance upon, and in conformity with, written information prepared and furnished in writing to the Corporation by suchHolder Indemnified Party expressly for use therein or by such Holder Indemnified Party’s failure to deliver a copy of theregistration statement or prospectus or any amendments or supplements thereto after the Corporation has furnished suchHolder Indemnified Party with a sufficient number of copies of the same. In connection with an underwritten offering, theCorporation shall indemnify such underwriters, their officers and directors, and each Person who controls suchunderwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to theindemnification of the Holder Indemnified Parties.(b)By Each Holder. In connection with any registration statement in which a Holder is participating, eachsuch Holder shall furnish to the Corporation in writing such information and affidavits as the Corporation reasonablyrequests for use in connection with any such registration statement or prospectus and, to the extent permitted by law,shall indemnify the Corporation, its officers, directors, managers, employees, agents and representatives, and eachPerson who controls the Corporation (within the meaning of the Securities Act) against any losses, claims, damages,liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registrationstatement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission oralleged omission of a material fact required to be stated therein or necessary to make the statements therein notmisleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit sofurnished in writing by such Holder; provided that the obligation to indemnify shall be individual, not joint and several, foreach Holder and shall be limited to the net amount of proceeds received by such Holder from the sale of RegistrableSecurities pursuant to such registration statement.(c)Claim Procedure. Any Person entitled to indemnification hereunder shall (i) give prompt written noticeto the indemnifying party of any claim with respect to which21  it seeks indemnification (provided that the failure to give prompt notice shall impair any Person’s right to indemnificationhereunder only to the extent such failure has prejudiced the indemnifying party) and (ii) unless in such indemnifiedparty’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist withrespect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonablysatisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to anyliability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonablywithheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of aclaim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by suchindemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict ofinterest may exist between such indemnified party and any other of such indemnified parties with respect to suchclaim. In such instance, the conflicted indemnified parties shall have a right to retain one separate counsel, chosen bythe Holders representing a majority of the Registrable Securities included in the registration if such Holders areindemnified parties, at the expense of the indemnifying party.(d)Contribution. If the indemnification provided for in this Section 7 is held by a court of competentjurisdiction to be unavailable to, or is insufficient to hold harmless, an indemnified party or is otherwise unenforceablewith respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party shall contributeto the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action insuch proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of theindemnified party on the other hand in connection with the statements or omissions which resulted in such loss, claim,damage, liability or action as well as any other relevant equitable considerations; provided that the maximum amount ofliability in respect of such contribution shall be limited, in the case of each seller of Registrable Securities, to an amountequal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant tosuch registration. The relative fault of the indemnifying party and of the indemnified party shall be determined byreference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission tostate a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Theparties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 7(d) were to bedetermined by pro rata allocation or by any other method of allocation that does not take into account such equitableconsiderations. The amount paid or payable by an indemnified party as a result of the losses, claims, damages,liabilities or expenses referred to herein shall be deemed to include any legal or other expenses reasonably incurred bysuch indemnified party in connection with investigating or defending against any action or claim which is the subjecthereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(t) of the Securities Act) shallbe entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.22  (e)Release. No indemnifying party shall, except with the consent of the indemnified party, consent to theentry of any judgment or enter into any settlement that does not include as an unconditional term thereof giving by theclaimant or plaintiff to such indemnified party of a release from all liability in respect to such claim orlitigation. Notwithstanding anything to the contrary in this Section 7, an indemnifying party shall not be liable for anyamounts paid in settlement of any loss, claim, damage, liability, or action if such settlement is effected without theconsent of the indemnifying party, such consent not to be unreasonably withheld, conditioned or delayed.(f)Non-exclusive Remedy; Survival. The indemnification and contribution provided for under thisAgreement shall be in addition to any other rights to indemnification or contribution that any indemnified party may havepursuant to law or contract and shall remain in full force and effect regardless of any investigation made by or on behalfof the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive thetransfer of Registrable Securities and the termination or expiration of this Agreement. Notwithstanding the foregoing, tothe extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into inconnection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in theunderwriting agreement shall control.Section 8.Underwritten Registrations.(a)Participation. No Person may participate in any Public Offering hereunder which is underwrittenunless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangementsapproved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation,pursuant to any over-allotment or “green shoe” option requested by the underwriters; provided that no Holder shall berequired to sell more than the number of Registrable Securities such Holder has requested to include) and (ii) completesand executes all questionnaires, powers of attorney, indemnities, underwriting agreements, custody agreements andother documents required under the terms of such underwriting arrangements. Each Holder shall execute and deliversuch other agreements as may be reasonably requested by the Corporation and the lead managing underwriter(s) thatare consistent with such Holder’s obligations under Section 4, Section 5 and this Section 8(a) or that are necessary togive further effect thereto. To the extent that any such agreement is entered into pursuant to, and consistent with, Section4 and this Section 8(a), the respective rights and obligations created under such agreement shall supersede therespective rights and obligations of the Holders, the Corporation and the underwriters created pursuant to this Section8(a).(b)Price and Underwriting Discounts. In the case of an underwritten Demand Registration orUnderwritten Takedown requested by Holders pursuant to this Agreement, the price, underwriting discount and otherfinancial terms of the related underwriting agreement for the Registrable Securities shall be determined by the Holdersrepresenting a majority of the Registrable Securities included in such underwritten offering.23  (c)Suspended Distributions. Each Person that is participating in any registration under this Agreement,upon receipt of any notice from the Corporation of the happening of any event of the kind described in Section 5(a)(vi)(B)or (C), shall immediately discontinue the disposition of its Registrable Securities pursuant to the registration statementuntil such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by Section 5(a)(vi). In the event the Corporation has given any such notice, the applicable time period set forth in Section 5(a)(iii) duringwhich a Registration Statement is to remain effective shall be extended by the number of days during the period from andincluding the date of the giving of such notice pursuant to this Section 8(c) to and including the date when each seller ofRegistrable Securities covered by such registration statement shall have received the copies of the supplemented oramended prospectus contemplated by Section 5(a)(vi).Section 9.Additional Parties; Joinder. Subject to the prior written consent of each Controlling Holder, theCorporation may make any Person who acquires Class A Common Stock or rights to acquire Class A Common Stockfrom the Corporation after the date hereof (including without limitation any Person who acquires Common Units) a partyto this Agreement (each such Person, an “Additional Holder”) and to succeed to all of the rights and obligations of aHolder under this Agreement by obtaining an executed joinder to this Agreement from such Additional Holder in the formof Exhibit A attached hereto (a “Joinder”). Upon the execution and delivery of a Joinder by such Additional Holder, theClass A Common Stock of the Corporation acquired by such Additional Holder or issuable upon redemption orexchange of Common Units acquired by such Additional Holder (the “Acquired Common”) shall be RegistrableSecurities to the extent provided herein, such Additional Holder shall be a Holder under this Agreement with respect tothe Acquired Common, and the Corporation shall add such Additional Holder’s name and address to the Schedule ofHolders and circulate such information to the parties to this Agreement.Section 10.Rule 144. At all times after the Corporation has filed a registration statement with theSecurities and Exchange Commission pursuant to the requirements of either the Securities Act or the Exchange Act, theCorporation shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall takesuch further action as any Holder may reasonably request, including (i) instructing the transfer agent for the RegistrableSecurities to remove restrictive legends from any Registrable Securities sold pursuant to Rule 144 (to the extent suchremoval is permitted under Rule 144 and other applicable law), and (ii) cooperating with the Holder of such RegistrableSecurities to facilitate the transfer of such securities through the facilities of The Depository Trust Company, in suchamounts and credited to such accounts as such Holder may request (or, if applicable, the preparation and delivery ofcertificates representing such securities, in such denominations and registered in such names as such Holder mayrequest), all to the extent required to enable the Holders to sell Registrable Securities pursuant to Rule 144. Uponrequest, the Corporation shall deliver to any Holder a written statement as to whether it has complied with suchrequirements.24  Section 11.Subsidiary Public Offering. If, after an initial Public Offering of the Capital Stock of one of itsSubsidiaries (including the Company), the Corporation distributes securities of such Subsidiary to its equityholders, thenthe rights and obligations of the Corporation pursuant to this Agreement shall apply, mutatis mutandis, to suchSubsidiary, and the Corporation shall cause such Subsidiary to comply with such Subsidiary’s obligations under thisAgreement.Section 12.Transfer of Registrable Securities. Notwithstanding anything to the contrary containedherein, except in the case of (i) a transfer to the Corporation, (ii) a transfer by any Original Equity Owner Party or any of itsAffiliates to its respective equityholders, (iii) a Public Offering, (iv) a sale pursuant to Rule 144 after the completion of theIPO or (v) a transfer in connection with a sale of the Corporation, prior to transferring any Registrable Securities to anyPerson (including, without limitation, by operation of law), the transferring Holder shall cause the prospective transfereeto execute and deliver to the Corporation a Joinder agreeing to be bound by the terms of this Agreement. Any transfer orattempted transfer of any Registrable Securities in violation of any provision of this Agreement shall be void, and theCorporation shall not record such transfer on its books or treat any purported transferee of such Registrable Securities asthe owner thereof for any purpose.Section 13.MNPI Provisions.(a)Each Holder acknowledges that the provisions of this Agreement that require communications by theCorporation or other Holders to such Holder may result in such Holder and its Representatives (as defined below)acquiring MNPI (which may include, solely by way of illustration, the fact that an offering of the Corporation’s securities ispending or the number of Corporation securities or the identity of the selling Holders).(b)Each Holder agrees that it will maintain the confidentiality of such MNPI and, to the extent suchHolder is not a natural person, such confidential treatment shall be in accordance with procedures adopted by it in goodfaith to protect confidential information of third parties delivered to such Holder (“Policies”); provided that a holder maydeliver or disclose MNPI to (i) its directors, officers, employees, agents, attorneys, affiliates and financial and otheradvisors (collectively, the “Representatives”), but solely to the extent such disclosure reasonably relates to itsevaluation of exercise of its rights under this Agreement and the sale of any Registrable Securities in connection with thesubject of the notice, (ii) any federal or state regulatory authority having jurisdiction over such Holder, (iii) any Person ifnecessary to effect compliance with any law, rule, regulation or order applicable to such Holder, (iv) in response to anysubpoena or other legal process, or (v) in connection with any litigation to which such Holder is a party; provided further,that in the case of clause (i), the recipients of such MNPI are subject to the Policies or agree to hold confidential theMNPI in a manner substantially consistent with the terms of Section 13 and that in the case of clauses (ii) through (v),such disclosure is required by law and such Holder shall promptly notify the Corporation of such disclosure to the extentsuch Holder is legally permitted to give such notice.25  (c)Each Holder shall have the right, at any time and from time to time (including after receivinginformation regarding any potential Public Offering), to elect to not receive any notice that the Corporation or any otherHolders otherwise are required to deliver pursuant to this Agreement by delivering to the Corporation a written statementsigned by such Holder that it does not want to receive any notices hereunder (an “Opt-Out Request”); in which case andnotwithstanding anything to the contrary in this Agreement the Corporation and other Holders shall not be required to,and shall not, deliver any notice or other information required to be provided to Holders hereunder to the extent that theCorporation or such other Holders reasonably expect would result in a Holder acquiring MNPI. An Opt-Out Request maystate a date on which it expires or, if no such date is specified, shall remain in effect indefinitely. A Holder whopreviously has given the Corporation an Opt-Out Request may revoke such request at any time, and there shall be nolimit on the ability of a Holder to issue and revoke subsequent Opt-Out Requests; provided that each Holder shall usecommercially reasonable efforts to minimize the administrative burden on the Corporation arising in connection with anysuch Opt-Out Requests.Section 14.General Provisions.(a)Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreementmay be amended, modified, terminated or waived only with the prior written consent of the Corporation and eachControlling Holder; provided that no such amendment, modification, termination or waiver that would materially andadversely affect a Holder in a manner materially different than any other Holder (provided that the accession byAdditional Holders to this Agreement pursuant to Section 9 shall not be deemed to adversely affect any Holder), shall beeffective against such Holder without the consent of such Holder that is materially and adversely affected thereby. Thefailure or delay of any Person to enforce any of the provisions of this Agreement shall in no way be construed as a waiverof such provisions and shall not affect the right of such Person thereafter to enforce each and every provision of thisAgreement in accordance with its terms. A waiver or consent to or of any breach or default by any Person in theperformance by that Person of his, her or its obligations under this Agreement shall not be deemed to be a consent orwaiver to or of any other breach or default in the performance by that Person of the same or any other obligations of thatPerson under this Agreement.(b)Remedies. The parties to this Agreement shall be entitled to enforce their rights under this Agreementspecifically (without posting a bond or other security), to recover damages caused by reason of any breach of anyprovision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree andacknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be anadequate remedy for any such breach and that, in addition to any other rights and remedies existing hereunder, any partyshall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competentjurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of thisAgreement.26  (c)Severability. Whenever possible, each provision of this Agreement shall be interpreted in suchmanner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited,invalid, illegal or unenforceable in any respect under any applicable law or regulation in any jurisdiction, suchprohibition, invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any otherprovision of this Agreement in such jurisdiction or in any other jurisdiction, but this Agreement shall be reformed,construed and enforced in such jurisdiction as if such prohibited, invalid, illegal or unenforceable provision had neverbeen contained herein.(d)Entire Agreement. Except as otherwise provided herein, this Agreement contains the completeagreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes andpreempts any prior understandings, agreements or representations by or among the parties hereto, written or oral, whichmay have related to the subject matter hereof in any way.(e)Successors and Assigns. This Agreement shall bind and inure to the benefit and be enforceable bythe Corporation and its successors and assigns and the Holders and their respective successors and assigns (whetherso expressed or not). In addition, whether or not any express assignment has been made, the provisions of thisAgreement which are for the benefit Holders are also for the benefit of, and enforceable by, any subsequent or successorHolder.(f)Notices. Any notice, demand or other communication to be given under or by reason of the provisionsof this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to therecipient, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient but;if not, then on the next Business Day, (iii) one Business Day after it is sent to the recipient by reputable overnight courierservice (charges prepaid) or (iv) three Business Days after it is mailed to the recipient by first class mail, return receiptrequested. Such notices, demands and other communications shall be sent to the Corporation at the address specifiedbelow and to any Original Equity Owner Party or to any other party subject to this Agreement at such address asindicated on the Schedule of Holders, or at such address or to the attention of such other Person as the recipient partyhas specified by prior written notice to the sending party. Any party may change such party’s address for receipt of noticeby providing prior written notice of the change to the sending party as provided herein. The Corporation’s address is:Funko, Inc.2802 Wetmore AvenueEverett, Washington 98201Attn: General CounselWith a copy to:Latham & Watkins LLP885 Third Avenue27  New York, New York 10022Attn: Marc D. Jaffe, Esq.Facsimile: (212) 751-4864or to such other address or to the attention of such other Person as the recipient party has specified by prior written noticeto the sending party.(g)Business Days. If any time period for giving notice or taking action hereunder expires on a day that isnot a Business Day, the time period shall automatically be extended to the immediately following Business Day.(h)Governing Law. The corporate law of the State of Delaware shall govern all issues and questionsconcerning the relative rights of the Corporation and its stockholders. All other issues and questions concerning theconstruction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto shall begoverned by, and construed in accordance with, the laws of the State of New York, without giving effect to any choice oflaw or conflict of law rules or provisions (whether of the State of New York or any other jurisdiction) that would cause theapplication of the laws of any jurisdiction other than the State of New York.(i)MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOREACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TOCONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY INANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THEMATTERS CONTEMPLATED HEREBY.(j)CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH OF THE PARTIESIRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL COURTS OF THEUNITED STATES OF AMERICA LOCATED IN THE CITY AND COUNTY OF NEW YORK BOROUGH OFMANHATTAN, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THISAGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY ORTHEREBY. EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS,SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESSSET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDINGWITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THISPARAGRAPH. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANYOBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THISAGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY ANDTHEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY ANDTHEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD ORCLAIM IN ANY28  SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEENBROUGHT IN AN INCONVENIENT FORUM.(k)No Recourse. Notwithstanding anything to the contrary in this Agreement, the Corporation and eachHolder agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered inconnection with this Agreement, shall be had against any current or future director, officer, employee, general or limitedpartner or member of any Holder or of any Affiliate or assignee thereof, whether by the enforcement of any assessment orby any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expresslyagreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurredby any current or future officer, agent or employee of any Holder or any current or future member of any Holder or anycurrent or future director, officer, employee, partner or member of any Holder or of any Affiliate or assignee thereof, assuch for any obligation of any Holder under this Agreement or any documents or instruments delivered in connectionwith this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.(l)Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted forconvenience only and do not constitute a part of this Agreement. The use of the word “including” in this Agreement shallbe by way of example rather than by limitation.(m)No Strict Construction. The language used in this Agreement shall be deemed to be the languagechosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against anyparty.(n)Counterparts. This Agreement may be executed in multiple counterparts, any one of which need notcontain the signature of more than one party, but all such counterparts taken together shall constitute one and the sameagreement.(o)Electronic Delivery. This Agreement, the agreements referred to herein, and each other agreement orinstrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendmentshereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similarreproduction of such signed writing using a facsimile machine or electronic mail shall be treated in all manner andrespects as an original agreement or instrument and shall be considered to have the same binding legal effect as if itwere the original signed version thereof delivered in person. At the request of any party hereto or to any such agreementor instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all otherparties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronicmail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicatedthrough the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract andeach such party forever waives any such defense.29  (p)Further Assurances. In connection with this Agreement and the transactions contemplated hereby,each Holder shall execute and deliver any additional documents and instruments and perform any additional acts thatmay be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactionscontemplated hereby.(q)No Inconsistent Agreements. The Corporation shall not hereafter enter into any agreement withrespect to its securities which is inconsistent with or violates the rights granted to the Holders in this Agreement.* * * * * 30  IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date firstwritten above. FUNKO, INC. By:/s/ Tracy Daw Name: Title: [Signature Page to Registration Rights Agreement]  ACON FUNKO INVESTORS, L.L.C. By: ACON Funko Manager, L.L.C., its Manager By:/s/ Kenneth Brotman Name: Kenneth Brotman Title: Managing Director[Signature Page to Registration Rights Agreement]  FUNKO INTERNATIONAL, LLC, a Delaware Limited Liability Company By:FUNDAMENTAL CAPITAL, LLC, a Delaware limited liability company By:FUNDAMENTAL CAPITAL PARTNERS, LLC, a Delaware limited liability company Manager By:/s/ Richard McNally Name: Richard McNally Title: Manager[Signature Page to Registration Rights Agreement]  FUNDAMENTAL CAPITAL, LLC, a Delaware limited liability company, By:FUNDAMENTAL CAPITAL PARTNERS, LLC, a Delaware limited liability company Manager By:/s/ Richard McNally Name: Richard McNally Title: Manager[Signature Page to Registration Rights Agreement]  By:/s/ Brian Mariotti Name: Brian Mariotti Title: [Signature Page to Registration Rights Agreement]  ACON FUNKO INVESTORS HOLDINGS 1, L.L.C. By: ACON Funko Manager, L.L.C., its Managing Member By:/s/ Kenneth Brotman Name: Kenneth Brotman Title: Managing Director[Signature Page to Registration Rights Agreement]  ACON FUNKO INVESTORS HOLDINGS 2, L.L.C. By: ACON Equity GenPar, L.L.C., its Managing Member By:/s/ Kenneth Brotman Name: Kenneth Brotman Title: Managing Director[Signature Page to Registration Rights Agreement]  ACON FUNKO INVESTORS HOLDINGS 3, L.L.C. By: ACON Equity GenPar, L.L.C., its Managing Member By:/s/ Kenneth Brotman Name: Kenneth Brotman Title: Managing Director[Signature Page to Registration Rights Agreement]  JON P. AND TRISHAWN P. KIPP CHILDREN’S TRUST U/A/D 5/31/14 By:/s/ Shauna M. Kipp trustee Name: Title: [Signature Page to Registration Rights Agreement]  By:/s/ Tracy Daw Name: Tracy Daw Title: SVP & General Counsel [Signature Page to Registration Rights Agreement]  By:/s/ Russell Nickel Name: Russell Nickel Title: [Signature Page to Registration Rights Agreement]  By:/s/ Andrew Perlmutter Name: Andrew Perlmutter Title: [Signature Page to Registration Rights Agreement]  SCHEDULE OF HOLDERSHolderControlling Holder?Continuing Equity OwnerParty/Former Equity OwnerACON Funko Investors, L.L.C.YesContinuing Equity Owner PartyACON Funko Investors Holdings 1, L.L.C.YesFormer Equity OwnerACON Funko Investors Holdings 2, L.L.C.YesFormer Equity OwnerACON Funko Investors Holdings 3, L.L.C.YesFormer Equity OwnerFunko International, LLCNoContinuing Equity Owner PartyFundamental Capital, LLCNoContinuing Equity Owner PartyTracy DawNoContinuing Equity Owner PartyThe Jon P. and Trishawn P. Kipp Children’s Trust uad5/31/14NoContinuing Equity Owner PartyBrian MariottiNoContinuing Equity Owner PartyRussell NickelNoContinuing Equity Owner PartyAndrew PerlmutterNoContinuing Equity Owner Party  EXHIBIT AREGISTRATION RIGHTS AGREEMENT JOINDERThe undersigned is executing and delivering this Joinder pursuant to the Registration Rights Agreement datedas of November 1, 2017 (as the same may hereafter be amended, the “Registration Rights Agreement”), amongFunko, Inc., a Delaware corporation (the “Corporation”), and the other person named as parties therein.By executing and delivering this Joinder to the Corporation, and upon acceptance hereof by the Corporationupon the execution of a counterpart hereof, the undersigned hereby agrees to become a party to, to be bound by, and tocomply with the provisions of the Registration Rights Agreement as a Holder of Registrable Securities in the samemanner as if the undersigned were an original signatory to the Registration Rights Agreement, and the undersigned’sshares of Class A Common Stock shall be included as Registrable Securities under the Registration Rights Agreementto the extent provided therein. The Corporation is directed to add the address below the undersigned’s signature on thisJoinder to the Schedule of Holders attached to the Registration Rights Agreement.Accordingly, the undersigned has executed and delivered this Joinder as of the __________ day of__________, 20__. Signature of Stockholder Print Name of Stockholder Its: Address: Agreed and Accepted as of____________, 20__ Funko, Inc.By: Name:Its: EXHIBIT 21LIST OF SUBSIDIARIESFunko Acquisition Holdings, LLCFunko Holdings, LLCFunko, LLCLoungefly, LLCFunko UK, Ltd.A Large Evil Corporation Ltd. Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-221390) pertaining to the Funko,Inc. 2017 Incentive Award Plan of our report dated March 16, 2018, with respect to the consolidated financial statements of Funko,Inc. included in this Annual Report (Form 10-K) of Funko, Inc. for the year ended December 31, 2017. /s/ Ernst & Young LLP Seattle, WashingtonMarch 16, 2018 EXHIBIT 31.1CERTIFICATIONI, Brian Mariotti, certify that:1. I have reviewed this annual report on Form 10-K of Funko, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;(b) [Omitted];(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: March 16, 2018 /s/ Brian Mariotti Brian Mariotti Chief Executive Officer EXHIBIT 31.2CERTIFICATIONI, Russell Nickel, certify that:1. I have reviewed this Annual Report on Form 10-K of Funko, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this report is being prepared;(b) [Omitted];(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. Date: March 16, 2018 /s/ Russell Nickel Russell Nickel Chief Financial Officer EXHIBIT 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350In connection with this Annual Report on Form 10-K of Funko, Inc. (the “Company”) for the period ended December 31, 2017 (the “Report”),I, Brian Mariotti, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that, to the best of my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: March 16, 2018/s/ Brian Mariotti Brian Mariotti Chief Executive Officer EXHIBIT 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350In connection with this Annual Report on Form 10-K of Funko, Inc. (the “Company”) for the period ended December 31, 2017 (the “Report”),I, Russell Nickel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that, to the best of my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. Date: March 16, 2018/s/ Russell Nickel Russell Nickel Chief Financial Officer 

Continue reading text version or see original annual report in PDF format above