Exhibit 10.1

 

Date       October 1, 2014

 

Share purchase agreement

 

relating to

 

ELEQT Limited

 

 

 

  

Contents

 

Clauses     1. Interpretation 1 2. Sale and purchase 5 3. Purchase Price 5 4.
Completion 6 5. Warranties 7 6. Forced sale of EFactor Shares 8 7. Limitations
on Claims 8 8. Tax Covenant 10 9. Restrictive covenants 10 10. Confidentiality
and announcements 13 11. Costs 15 12. Notices 15 13. General 17       Schedules
      Schedule 1      Particulars of Sellers 21     Schedule 2      Particulars
of the Company and the Subsidiaries 23     Schedule 3      Completion 25      
Part 1. What the Sellers shall deliver to EFactor at Completion 25       Part 2.
Matters for the board meetings at Completion 26       Schedule 4        Earn-out
Consideration 27 1 Definitions 27 2. Revenue Growth Amount 28 3. Gross Profit
Margin Amount 28 4. Member Spend Growth Amount 29 5. Membership Growth Amount 29
6. Earn-out Consideration 29 7. Earn-out Statement and agreement of Earn-out
Consideration 30 8. Expert determination 30       Schedule 5        Warranties
33       Part 1. General Warranties 33 1. Power to sell the Sale Shares 33 2.
Shares in ELEQT and the Subsidiaries 33 3. Constitutional and corporate
documents 34 4. Information 34 5. Compliance with laws 35 6. Licences and
consents 35 7. Insurance 35 8. Powers of attorney 35

 

 

 

 

9. Disputes and investigations 36 10. Defective products and services 36 11.
Customers and suppliers 37 12. Contracts 37 13. Transactions with the Sellers 38
14. Finance and guarantees 39 15. Liabilities 40 16. Effect of sale of Sale
Shares 40 17. Insolvency 41 18. Accounts 42 19. Changes since Accounts Date 42
20. Financial and other records 43 21. Assets 43 22. Plant and equipment 44 23.
Intellectual property 44 24. Information technology 46 25. Data protection 48
26. Employment 48 27. Retirement benefits 51 28. Property 51 29. Anti-corruption
53 30. Competition 53       Part 2. Tax Warranties 54 1. General 54 2.
Chargeable gains 55 3. Capital Losses 55 4. Distributions and other payments 55
5. Loan relationships 55 6. Close companies 55 7. Group relief 55 8. Groups of
companies 55 9. Intangible assets 56 10. Company residence and overseas
interests 56 11. Transfer pricing 56 12. Anti-avoidance 56 13. Value Added Tax
56       Schedule 6      Tax Covenant 57 1. Interpretation 57 2. Covenant 59 3.
Payment date and interest 60 4. Exclusions 61 5. Limitations 61 6. Savings 62 7.
Corporation tax returns 62 8. Conduct of Tax Claims 62

 

 

 

 

9. Grossing up 63 10. General 63       Schedule 7       Intellectual Property
Rights 64       Part 1. Registered Intellectual Property Rights 64       Part 2.
Material unregistered Intellectual Property Rights 64       Part 3. Intellectual
Property Rights licensed from third parties 64       Part 4. Intellectual
Property Rights licensed to third parties       Schedule 8 Information
technology 65       Part 1. Particulars of IT System 65       Part 2.
Particulars of IT Contracts 66       Schedule 9 The Properties 68       Schedule
10 The Seller Representative 69       Schedule 11 Provisions relating to EFactor
Shares 71

 

 

 

 

DATE

 

2014

 

Parties

 

(1)The several persons whose names and addresses are set out in Part 1 of
Schedule 1 (Sellers).

 

(2)The several persons whose names and addresses are set out in Part 2 of
Schedule 1 (Managers).

 

(3)EFactor Group Corp., a corporation incorporated and registered in Nevada, USA
whose principal executive office is at 605 Market Street, Suite 600, San
Francisco, CA 94105, USA (EFactor).

 

Introduction

 

(A)ELEQT is a private company limited by shares incorporated in England and
Wales.

 

(B)ELEQT has an issued share capital of £123.75 divided into 12,375 ordinary
shares of £0.01 each.

 

(C)Further particulars of ELEQT and of the Subsidiaries at the date of this
agreement are set out in Schedule 2Schedule 2.

 

(D)Each Seller is the legal and beneficial owner of the legal and beneficial
title to the number of Sale Shares set out opposite his name in Schedule 1.

 

(E)The Sellers have agreed to sell and EFactor has agreed to buy the Sale Shares
subject to the terms and conditions of this agreement.

 

Agreed terms

 

1.Interpretation

 

1.1The definitions and rules of interpretation in this clause apply in this
agreement.

 

Accounts: the audited financial statements of ELEQT and the Subsidiaries as at
and to the Accounts Date and 31 December 2012, comprising the individual
accounts of ELEQT and the Subsidiaries, and in the case of ELEQT, the
consolidated group accounts of ELEQT and the Subsidiaries, including in each
case the balance sheet and profit and loss account for the 12 months period
ending on such dates together with the notes on them, the cash flow statement
and the auditors' and directors' reports (copies of which are included in the
Disclosure Bundle).

 

Accounts Date: 31 December 2013.

 

Business: the business carried on by ELEQT and the Subsidiaries, namely a social
media platform company targeting high net worth individuals.

 

Business Day: a day other than a Saturday, Sunday or public holiday in England
when banks in London are open for business.

 

CAA 2001: the Capital Allowances Act 2001.

 

Claim: a claim for breach of any of the Warranties or a claim under the Tax
Covenant.

 

Combined Membership: The Membership of both EFactor.com and Eleqt, Ltd.

 

Completion: completion of the sale and purchase of the Sale Shares in accordance
with this agreement.

 

Completion Date: has the meaning given in clause 4.2.

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Completion Consideration: 31,000,000 shares of EFactor Group Corp $0.001 par
value common stock

 

Completion Shares: 31,000,000 shares of EFactor Group Corp $0.001 par value
common stock

 

Connected: has, in relation to a person, the meaning given in section 1122 of
the CTA 2010.

 

Control: shall be as defined in section 1124 of the Corporation Tax Act 2010,
and the expression change of Control shall be construed accordingly.

 

CTA 2009: the Corporation Tax Act 2009.

 

CTA 2010: the Corporation Tax Act 2010.

 

Director: the directors of ELEQT and its Subsidiaries named in Schedule 2.

 

Disclosed: fairly disclosed (with sufficient details to identify the nature and
scope of the matter disclosed) in or under the Disclosure Letter.

 

Disclosure Bundle: as defined in the Disclosure Letter.

 

Disclosure Letter: the letter from the Warrantors to EFactor, in agreed form,
with the same date as this agreement that is described as the Disclosure Letter,
including the Disclosure Bundle.

 

DPA 1998: the Data Protection Act 1998.

 

Earn-out Consideration: the aggregate additional consideration (if any) payable
for the Sale Shares as calculated in accordance with Schedule 4.

 

EFactor.com: E-Factor Corp a Delaware corporation located at 650 Market Street,
Suite 600, San Francisco CA 94105, USA.

 

EFactor Shares: shares of common stock of $0.001 each in the capital of EFactor
Group Corp.

 

EFactor's Solicitors: Keystone Law of 53 Davies Street, London W1K 5JH.

 

ELEQT: ELEQT Limited, a company incorporated and registered in England and Wales
with company number 07865035 whose registered office is at 29 Portland Place,
London W1B 1QB, further details of which are set out in Part 1 of Schedule 2.

 

Employee: has the meaning set out in paragraph 26.1 of Part 1 of Schedule 5.

 

Encumbrance: any interest or equity of any person (including any right to
acquire, option or right of pre-emption) or any mortgage, charge, pledge, lien,
assignment, hypothecation, security interest, title retention or any other
security agreement or arrangement.

 

FSMA: the Financial Services and Markets Act 2000.

 

Group: in relation to a company, that company, any subsidiary or any holding
company from time to time of that company, and any subsidiary from time to time
of a holding company of that company. Each company in a Group is a member of the
Group.

 

ICTA 1988: the Income and Corporation Taxes Act 1988.

 

IHTA 1984: the Inheritance Tax Act 1984.

 

Intellectual Property Rights: has the meaning given in paragraph 23.1 of Part 1
of Schedule 5.

 

ITA 2007: the Income Tax Act 2007.

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ITEPA 2003: the Income Tax (Earnings and Pensions) Act 2003.

 

Leak Out Agreement: the leak out agreement, in the agreed form, setting out
certain limitations on the Sellers’ ability to sell EFactor Group Shares.

 

Liability: the amount of any Substantiated Claim plus the amount of any claim
under the Tax Covenant that has been:

 

(a)agreed in writing by the parties to that claim, both as to liability and
quantum; or

 

(b)finally adjudicated by a court of competent jurisdiction and no right of
appeal lies in respect of such adjudication, or the parties are debarred by
passage of time or otherwise from making an appeal.

 

Management Accounts: the unaudited consolidated balance sheet as at 31st July
2014 and the unaudited consolidated profit and loss account of ELEQT and the
Subsidiaries (including any notes thereon) for the period of 7 months ended 31st
July 2014 (a copy of which is included in the Disclosure Bundle).

 

Manager Entities: the Managers, Leaderstreight Ltd, Porsiencaso Ltd and Universe
Consulting Ltd.

 

Properties: the properties referred to in Schedule 9 and Property means any one
of them or part or parts of any one of them.

 

Purchase Price: the consideration for the Sale Shares to be paid by EFactor in
accordance with clause 3.

 

Sale Shares: the 12,375 ordinary shares of £0.01 each in ELEQT, all of which
have been issued and are fully paid, and which comprise the whole of the issued
share capital of ELEQT.

 

Seller Proportions: the proportions (expressed as a percentage) set out against
the names of the Sellers in Schedule 1.

 

Seller Representative: as defined in Schedule 10.

 

Sellers’ Warranties: each Warranty in paragraphs 1.1 to 1.5 (inclusive) of Part
1 of Schedule 5.

 

Subsidiaries: the companies, details of which are set out in Schedule 2, each a
Subsidiary.

 

Substantiated Claim: a Claim that has been:

 

(c)agreed in writing by the parties to the Claim, both as to liability and
quantum; or

 

(d)finally adjudicated by a court of competent jurisdiction and no right of
appeal lies in respect of such adjudication, or the parties are debarred by
passage of time or otherwise from making an appeal.

 

Tax or Taxation: has the meaning given in paragraph 1.1 of Schedule 6.

 

Tax Covenant: the tax covenant set out in Schedule 6.

 

Tax Warranties: the Warranties set out in Part 2 of Schedule 5.

 

Taxation Authority: has the meaning given in paragraph 1.1 of Schedule 6.

 

Taxation Statute: has the meaning given in paragraph 1.1 of Schedule 6.

 

TCGA 1992: the Taxation of Chargeable Gains Act 1992.

 

TIOPA 2010: the Taxation (International and Other Provisions) Act 2010.

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TMA 1970: the Taxes Management Act 1970.

 

Transaction: the transaction contemplated by this agreement or any part of that
transaction.

 

US GAAP: generally accepted accounting principles, standards and practices
applied in the United States.

 

VATA 1994: the Value Added Tax Act 1994.

 

Warranties: the warranties given pursuant to clause 5 and set out in Schedule 5.

 

Warrantors: shall mean:

 

(a)in respect of all of the Warrantors’ Warranties and the Tax Covenant, the
Manager Entities; and

 

(b)in respect of the Sellers’ Warranties, all of the Sellers.

 

Warrantors’ Warranties: all of the Warranties other than the Sellers’
Warranties.

 

$: United States dollars.

 

1.2Clause, Schedule and paragraph headings shall not affect the interpretation
of this agreement.

 

1.3References to clauses and Schedules are to the clauses of and Schedules to
this agreement and references to paragraphs are to paragraphs of the relevant
Schedule.

 

1.4The Schedules form part of this agreement and shall have effect as if set out
in full in the body of this agreement. Any reference to this agreement includes
the Schedules.

 

1.5A reference to this agreement or to any other agreement or document referred
to in this agreement is a reference to this agreement or such other agreement or
document as varied or novated in accordance with its terms from time to time.

 

1.6Unless the context otherwise requires, words in the singular shall include
the plural and the plural shall include the singular.

 

1.7Unless the context otherwise requires, a reference to one gender shall
include a reference to the other genders.

 

1.8A person includes a natural person, corporate or unincorporated body (whether
or not having separate legal personality) and that person's personal
representatives, successors and permitted assigns.

 

1.9A reference to a party shall include that party's personal representatives,
successors and permitted assigns.

 

1.10A reference to a company shall include any company, corporation or other
body corporate, wherever and however incorporated or established.

 

1.11A reference to a holding company or a subsidiary means a holding company or
a subsidiary (as the case may be) as defined in section 1159 of the Companies
Act 2006 and for the purposes only of the membership requirement contained in
sections 1159(1)(b) and (c), a company shall be treated as a member of another
company even if its shares in that other company are registered in the name of:

 

(a)another person (or its nominee), by way of security or in connection with the
taking of security; or

 

(b)its nominee.

 

1.12A reference to the Sellers shall include a reference to each of them.

 

1.13A reference to writing or written includes fax and e-mail.

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1.14Any words following the terms including, include, in particular, for example
or any similar expression shall be construed as illustrative and shall not limit
the sense of the words, description, definition, phrase or term preceding those
terms.

 

1.15Where the context permits, other and otherwise are illustrative and shall
not limit the sense of the words preceding them.

 

1.16References to a document in agreed form are to that document in the form
agreed by the parties and initialled by them or on their behalf for
identification.

 

1.17A reference to a statute or statutory provision is a reference to it as
amended, extended or re-enacted from time to time provided that, as between the
parties, no such amendment, extension or re-enactment made after the date of
this agreement shall apply for the purposes of this agreement to the extent that
it would impose any new or extended obligation, liability or restriction on, or
otherwise adversely affect the rights of, any party.

 

1.18A reference to a statute or statutory provision shall include all
subordinate legislation made from time to time under that statute or statutory
provision.

 

1.19Any reference to an English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court, official or any legal
concept or thing shall, in respect of any jurisdiction other than England, be
deemed to include a reference to that which most nearly approximates to the
English legal term in that jurisdiction.

 

1.20Any obligation on a party not to do something includes an obligation not to
allow that thing to be done.

 

2.Sale and purchase

 

2.1On the terms of this agreement, the Sellers shall sell and EFactor shall buy,
with effect from Completion, the Sale Shares with full title guarantee free from
all Encumbrances and together with all rights that attach (or may in the future
attach) to the Sale Shares including, in particular, the right to receive all
dividends and distributions declared, made or paid on or after the date of this
agreement.

 

2.2Each Seller severally waives any right of pre-emption or other restriction on
transfer in respect of the Sale Shares (or any of them) conferred on him under
the articles of association of ELEQT or otherwise.

 

2.3EFactor is not obliged to complete the purchase of any of the Sale Shares
unless the purchase of all the Sale Shares is completed simultaneously.

 

3.Purchase Price

 

3.1 The Purchase Price is the aggregate of:

 

(a)the Completion Consideration, which shall be satisfied on Completion by the
allotment and issue to each of the Sellers, credited as fully paid, of the
Completion Shares in the Seller Proportions; and

 

(b)the Earn-out Consideration, which shall be calculated and satisfied in
accordance with Schedule 4.

 

3.2The provisions of Schedule 11 shall apply in relation to all EFactor Shares
issued pursuant to this agreement.

 

3.3The Purchase Price shall be deemed to be reduced by the amount of any payment
made to EFactor for each and any:

 

(a)Claim; or

 

(b)claim under the Tax Covenant.

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4.Completion

 

4.1Completion shall take place on the Completion Date via EchoSign (or at any
other place or in any other method as may have been agreed in writing by the
parties).

 

4.2In this agreement, Completion Date means the date of this agreement.

 

4.3At Completion:

 

(a)the Sellers shall:

 

(i)deliver or cause to be delivered to EFactor the documents and evidence set
out in Part 1 of Schedule 3;

 

(ii)procure that a board meeting of ELEQT and each of the Subsidiaries is held
at which the matters set out in Part 2 of Schedule 3 are carried out; and

 

(iii)deliver any other documents referred to in this agreement as being required
to be delivered by the Sellers; and

 

(iv)provide evidence of the working capital source for the next six months
preceding the closing of the of the Transaction, with the following guidelines.

 

(A)Revenue collected, during the initial six (6) months along with direct costs
associated with this incremental Revenue collected from EFactor.com will be
attributed to the ELEQT P&L and can be contributed to ELEQT/EFactor.com working
capital., fixed costs such as hosting expense and website maintenance will
continue with EFactor Group Corp. until such time ELEQT has had an opportunity
to review,

 

(B)Unpaid parts of ELEQT agreed upon management team fees and unpaid expenses
incurred for ELEQT/Efactor.com business during these six (6) months, will be
accrued and paid out as cash flow allows, after the successful completion of the
next substantial raise (defined as: greater than $2,000,000) in increments
limited to 10% of net proceeds) or may be converted after six (6) months to
common stock at the price per share on the Closing Date.

 

(C)During these six (6) months fees, expenses and out of pocket costs related to
EFactor Group Corp or any group company other than the two social networking
companies will be paid out in a normal fashion by those respective entities.

 

(b)EFactor shall (subject to the Sellers complying with their obligations in
clause 4.3(a)):

 

(i)Instruct its Transfer Agent, Pacific Stock Transfer, to issue to the Seller
Representative share certificates in respect of the Completion Shares;

 

(ii)disclose all particulars and terms of the funds raised under their most
recent offering

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(iii)appoint Ruud Smeets as member of the board of directors of EFactor, and
subsequently file a Board Resolution confirming such appointment; and

 

(iv)warrant and provide evidence of the working capital source for the next six
months preceding the closing of the of the Transaction and warrant that none of
the funds provided to Eleqt Ltd will be used for other group companies including
the holding company of EFactor Group Corp,‏ and

 

(v)deliver to the Seller Representative a copy of the resolution adopted by the
board of directors of EFactor approving Completion and the execution and
delivery of any documents to be delivered by EFactor at Completion.

 

4.4If either party does not comply with their obligations in clause 4.3 in any
material respect, the other party may (without prejudice to any other rights or
remedies it has):

 

(a)proceed to Completion; or

 

(b)defer Completion to a date no more than 14 days after the date on which
Completion would otherwise have taken place; or

 

(c)rescind this agreement by notice in writing to the appointed representative
of the other party.

 

4.5EFactor may defer Completion under clause 4.4(b) only once, but otherwise
this clause 4 applies to a Completion so deferred as it applies to a Completion
that has not been deferred.

 

4.6As soon as possible after Completion, the Sellers shall send to EFactor (at
944 Hidden Lake Road, Naperville, Il 60565 ATT Mark V Noffke Chief Financial
Officer) all records, correspondence, documents, files, memoranda and other
papers relating to ELEQT and the Subsidiaries which are not kept at any of the
Properties and which are not required to be delivered at Completion.

 

5.Warranties

 

5.1Each Seller warrants to EFactor in the terms of the Sellers’ Warranties in
relation to the Sale Shares held by it.

 

5.2The Warrantors warrant to EFactor in the terms of the Warrantors’ Warranties.

 

5.3Warranties qualified by the expression so far as the Warrantors are aware or
any similar expression are deemed to be given to the best of the knowledge,
information and belief of the Warrantors after they have made due and careful
enquiries including (but not limited to) enquiries of:

 

(a)the other Warrantors and the directors of ELEQT and each of the Subsidiaries;
and

 

(b)the professional advisers to ELEQT and the Subsidiaries, including (but not
limited to) their legal advisers, accountants and auditors.

 

5.4Each of the Warranties is separate and, unless otherwise specifically
provided, is not limited by reference to any other Warranty or any other
provision in this agreement.

 

5.5The Warranties are given subject to matters Disclosed in the Disclosure
Letter.

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5.6The Warrantors agree that the supply of any information by or on behalf of
ELEQT, any of the Subsidiaries or any of their respective employees, directors,
agents or officers (Officers) to the Warrantors or their advisers in connection
with the Warranties, the Disclosure Letter or otherwise shall not constitute a
warranty, representation or guarantee as to the accuracy of such information in
favour of the Warrantors. Each Warrantor unconditionally and irrevocably waives
all and any rights and claims that he may have against any of ELEQT, the
Subsidiaries or the Officers on whom that Warrantor has, or may have, relied in
connection with the preparation of the Disclosure Letter, or agreeing the terms
of this agreement, and further undertakes to EFactor, ELEQT, each of the
Subsidiaries and the Officers not to make any such claims.

 

The rights and remedies of EFactor in respect of any Claim or claim under the
Tax Covenant shall not be affected by Completion or any rescission or failure by
EFactor to rescind this agreement.

 

6.Forced sale of EFactor Shares

 

6.1Subject to the provisions of clause 7, each Seller irrevocably agrees to pay
to EFactor the amount of any Liability owed by such Seller (Seller Liability).

 

6.2If a Seller’s obligations under clause 6.1 in respect of any Seller Liability
are not satisfied (for any reason) within 10 Business Days after the Seller
Liability arising, EFactor (if it is able to do so) may sell, on behalf of that
Seller, a sufficient number of that Seller’s EFactor Shares to meet those
obligations or any part of them (after deduction of brokerage and any other
charges or taxes on the sale).

 

6.3From the net proceeds of sale, EFactor shall meet (or reimburse) the relevant
Seller Liability and pay any balance to the Seller. However, the Seller’s
obligations under clause 6.1 shall not be affected by any failure or inability
of EFactor to sell EFactor Shares under clause 6.2.

 

6.4Each Seller appoints EFactor (acting by any of its officers from time to
time) as the Seller’s attorney to sell EFactor Shares and deal with the proceeds
of sale in accordance with clause 6.2 in the Seller’s name and on the Seller’s
behalf.

 

6.5EFactor may appoint one or more persons to act as substitute attorney for the
Seller and to exercise one or more of the powers conferred on EFactor by this
clause 6.4, other than the power to appoint a substitute attorney. EFactor may
subsequently revoke any such appointment.

 

6.6The power of attorney granted in clause 6.4 may not be revoked without the
consent of EFactor and is given by way of security to secure the interest of
EFactor (for itself and as trustee under this agreement on behalf of ELEQT or
any Subsidiary) as a person entitled to the amount of the Seller Liability.

 

6.7A person who deals in good faith with the Seller’s attorney appointed under
clause 6.4 may accept a written statement signed by that person that this power
of attorney has not been revoked as conclusive evidence of that fact.

 

6.8A Seller shall have no rights to compensation or damages on account of any
loss which arises or is increased in whole or in part from the actions of an
attorney pursuant to and in accordance with this clause 6.

 

7.Limitations on Claims

 

7.1Save as provided in clause 7.6, the provisions of:

 

(a)this clause 7 limit the liability of the Warrantors in relation to any Claim
and (where specifically provided) any claim under the Tax Covenant; and

 

(b)paragraphs 4 and 5 of Schedule 6 limit the liability of the Warrantors in
relation to any claim under the Tax Covenant.

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7.2The total aggregate liability of the Warrantors for all Claims and
Substantiated Claims and all claims under the Tax Covenant shall not exceed an
amount equal to the sum of:

 

(a)in respect of any Claim, Substantiated Claim or claim under the Tax Covenant
notified to the Warrantors prior to the end of the Earn-out Period, the Earn-out
Amount (as defined in Schedule 4) at a value of the average weighted share price
in the twelve (12) months preceding the completion date; and

 

(b)in respect of any Claim, Substantiated Claim or claim under the Tax Covenant
notified to the Warrantors after the end of the Earn-out Period, $500,000.

 

7.3The Warrantors shall not be liable for a Claim unless the amount of the
Warrantors' liability in respect of such Claim (together with any connected
Claims), when aggregated with the Warrantors' liability for all Substantiated
Claims and all claims under the Tax Covenant, exceeds $50,000 or individually
exceeds $25,000, in which case the Warrantors shall be liable for the whole
amount claimed (and not just the amount by which either such threshold is
exceeded). For the purposes of this clause 7, a Claim is connected with another
Claim if the Claims arise from the same event or set of circumstances, or relate
to the same subject matter.

 

7.4The Warrantors shall not be liable for a Claim unless notice in writing
summarising the nature of the Claim (in so far as it is known to EFactor) and,
as far as is reasonably practicable, the amount claimed, has been given by or on
behalf of EFactor to the Seller Representative or the relevant Warrantors:

 

(a)in the case of a claim made under the Tax Warranties, on or before the
seventh anniversary of Completion; or

 

(b)in any other case, prior to the expiry of the period of 2 years commencing on
the Completion Date.

 

7.5The Warrantors shall not be liable for a Claim or a claim under the Tax
Covenant to the extent that the Claim or claim under the Tax Covenant:

 

(a)relates to matters Disclosed; or

 

(b)relates to any matter specifically provided against, reserved for or
otherwise specifically taken into account and fully provided for in the
Accounts.

 

7.6Nothing in this clause 7 or Schedule 6 applies to exclude or limit the
liability of the Warrantors:

 

(a)to the extent that a Claim or a claim under the Tax Covenant arises or is
delayed as a result of dishonesty, fraud, wilful misconduct or wilful
concealment by any of the Sellers or Warrantors; or

 

(b)in respect of a breach of any of the warranties in paragraphs 1.1 to 1.5
(inclusive), 2.1, 2.2, 2.4 or 2.5 of Part 1 of Schedule 5.

 

7.7In the case of:

 

(a)a Claim against all of the Sellers or all of the Warrantors; or

 

(b)a claim under the Tax Covenant;

 

EFactor agrees that the Sellers’ or Warrantors’ liability for each such claim
shall first be satisfied by reducing the Earn-out Amount (as defined in Schedule
4) by the amount of such liability. If and to the extent that the total
liability for all such claims exceeds the Earn-out Amount, the remaining amount
shall be satisfied by the Manager Entities and Arthur de Groot only, subject to
the other provisions of this clause 7.

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7.8The Warrantors shall not be liable for any Claim to the extent that the Claim
would arise or the amount of the Claim would be increased after the date of this
Agreement as a result of:

 

(a)the enactment of any legislation with retrospective effect; or

 

(b)a judgement or change in the interpretation or application of any law or of
any ruling or practice of any administrative

 

7.9The amount of the Warrantors’ liability for any Claim shall be reduced by any
sum which is recovered (whether by way of insurance, indemnification or
otherwise) by EFactor in respect of the loss or damage suffered by reason of the
relevant breach, less the amount of any reasonable costs and expenses incurred
in obtaining payment of that sum and of any Tax for which EFactor may be liable
by reason of its receipt of that sum and if the Warrantors have paid to EFactor
any amount in respect of the Claim before the recovery of that sum, EFactor
shall repay to them, or procure the repayment to them of, the amount by which
its liability is so reduced.

 

7.10EFactor shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution more than once in respect of the same loss.

 

7.11If any matter which will or might give rise to a Claim comes to the notice
of EFactor, the following provisions shall apply:

 

(a)EFactor shall as soon as reasonably possible notify the Warrantors in writing
of the matter and make available to them all information and documents in the
possession or under the control of EFactor in so far as they relate to that
matter; and

 

(b)EFactor shall not make any admission of liability or take any other action
(except as required by law) in connection with the matter without the previous
written consent of the Warrantors (which shall not be unreasonably delayed or
withheld) subject to such consent having been received within 5 business days of
notification by EFactor.

 

7.12EFactor shall in accordance with its obligations at comment law take steps
to mitigate its loss which in the absence of mitigation might give rise to a
liability in respect of a Claim.

 

8.Tax Covenant

 

The provisions of Schedule 6 apply in this agreement in relation to Taxation.

 

9.Restrictive covenants

 

9.1In this clause, the following words and expressions shall have the following
meanings:

 

Covenantors: the Managers.

 

QPL Business: the business of providing concierge services and travel agency
services carried on by Quintessentially Publishing Limited and its subsidiaries.

 

QPL Customer: any person who is at Completion, or who has been at any time
during the period of 12 months immediately preceding the Completion Date, a
member, client or customer of, or in the habit of dealing with, Quintessentially
Publishing Limited or any of its subsidiaries and whose contact details are in
the possession of EFactor, ELEQT or any Subsidiary.

 

Restricted Business: any business which is or would be in competition with any
part of the Business, as the Business was carried on at the Completion Date.

10

 

 

Restricted Customer: any person who is at Completion, or who has been at any
time during the period of 12 months immediately preceding the Completion Date, a
member, client or customer of, or in the habit of dealing with, ELEQT or any of
the Subsidiaries.

 

Restricted Person: any person who is at Completion, employed or directly or
indirectly engaged by ELEQT or any of the Subsidiaries in an executive,
managerial, sales or technical role.

 

9.2Each Covenantor covenants that he shall not:

 

(a)at any time during the period of 3 years commencing on the Completion Date,
in the United States, the United Kingdom or The Netherlands, carry on or be
employed, engaged, concerned or interested in, a Restricted Business; or

 

(b)at any time during the period of 3 years commencing on the Completion Date:

 

(i)canvass, solicit or otherwise seek the custom of any Restricted Customer with
a view to providing services to that Restricted Customer in competition with the
Business (or any part of it); or

 

(ii)induce or attempt to induce a Restricted Customer to cease or refrain from
conducting business with, or to reduce the amount of business conducted with or
to vary adversely the terms upon which it conducts business with ELEQT or any of
the Subsidiaries, or do any other thing which is reasonably likely to have such
an effect; or

 

(c)at any time during the period of 3 years commencing on the Completion Date,
have any business dealings with a Restricted Customer in connection with the
provision of services to that Restricted Customer in competition with the
Business (or any part of it); or

 

(d)at any time during the period of 3 years commencing on the Completion Date,
have any business dealings with, solicit, entice or attempt to entice away any
person who is at Completion, or has been at any time during the period of 12
months immediately preceding the Completion Date, a supplier of services to
ELEQT or any of the Subsidiaries, if such dealings, solicitation or enticement
causes or is reasonably likely to cause such supplier to cease supplying, or
reduce its supply of services to ELEQT or any of the Subsidiaries, or to vary
adversely the terms upon which it conducts business with ELEQT or any of the
Subsidiaries; or

 

(e)at any time during the period of 3 years commencing on the Completion Date:

 

(i)offer employment to, enter into a contract for the services of, or otherwise
entice or attempt to entice away from ELEQT or any of the Subsidiaries, any
Restricted Person; or

 

(ii)procure or facilitate the making of any such offer or attempt by any other
person in relation to a Restricted Person; or

 

(f)at any time after Completion, use in the course of any business:

 

(i)the word "ELEQT"; or

 

(ii)any trade or service mark, business or domain name, design or logo which, at
Completion, was or had been used by ELEQT or any of the Subsidiaries in
connection with the Business; or

11

 

  

(iii)anything which is, in the reasonable opinion of EFactor, capable of
confusion with such words, mark, name, design or logo; or

 

(g)at any time after Completion, present himself or permit himself to be
presented as:

 

(i)connected in any capacity with ELEQT or any of the Subsidiaries (save in the
normal course of his employment or engagement by ELEQT, EFactor or a Subsidiary,
to the extent that such employment continues after Completion); or

 

(ii)interested or concerned in any way in the Sale Shares (or any of them); or

 

(h)at any time after Completion, do or say anything which may be harmful to the
reputation of EFactor, ELEQT or any of the Subsidiaries.

 

9.3The covenants in clause 9.2 are intended for the benefit of, and shall be
enforceable by each of EFactor, ELEQT and the Subsidiaries and apply to actions
carried out by a Covenanter in any capacity (including as shareholder, partner,
director, principal, consultant, officer, employee, agent or otherwise) and
whether directly or indirectly, on a Covenantor's own behalf or on behalf of, or
jointly with, any other person.

 

9.4Nothing in clause 9.2 shall prevent any Covenantor from holding for
investment purposes only:

 

(a)units of any authorised unit trust; or

 

(b)not more than 3% of any class of shares or securities of any company traded
on a recognised investment exchange (within the meaning of FSMA).

 

9.5Each of the covenants in clause 9.2 is a separate undertaking by each
Covenantor in relation to himself and his interests and shall be enforceable by
EFactor, ELEQT and the Subsidiaries separately and independently of their right
to enforce any one or more of the other covenants contained in that clause.

 

9.6The parties acknowledge that the Covenantors have confidential information
relating to the Business and that EFactor is entitled to protect the goodwill of
the Business as a result of buying the Sale Shares. Accordingly, each of the
covenants in clause 9.2 is considered fair and reasonable by the parties.

 

9.7Quintessentially Publishing Limited covenants that it shall not:

 

(a)at any time during the period of 3 years commencing on the Completion Date,
in the United States, the United Kingdom or The Netherlands, carry on or be
employed, engaged, concerned or interested in, a Restricted Business; or

 

(b)at any time during the period of 3 years commencing on the Completion Date,
canvass, solicit or otherwise seek the custom of any Restricted Customer whose
contact details are in the possession of Quintessentially Publishing Limited or
any of its subsidiaries with a view to providing services to that Restricted
Customer in competition with the Business (or any part of it); or

 

(c)at any time during the period of 3 years commencing on the Completion Date:

 

(i)offer employment to, enter into a contract for the services of, or otherwise
entice or attempt to entice away from ELEQT or any of the Subsidiaries, any
Restricted Person; or

12

 

  

(ii)procure or facilitate the making of any such offer or attempt by any other
person in relation to a Restricted Person;

 

(d)at any time after Completion, use in the course of any business:

 

(i)the word "ELEQT"; or

 

(ii)any trade or service mark, business or domain name, design or logo which, at
Completion, was or had been used by ELEQT or any of the Subsidiaries in
connection with the Business; or

 

(iii)anything which is, in the reasonable opinion of EFactor, capable of
confusion with such words, mark, name, design or logo.

 

9.8EFactor covenants that it shall not (and shall ensure that ELEQT and any
Subsidiaries shall not) at any time during the period of 3 years commencing on
the Completion Date, in the United States, the United Kingdom or The
Netherlands, canvass, solicit or otherwise seek the custom of any QPL Customer
with a view to providing services to that QPL Customer in competition with the
QPL Business (or any part of it). For the avoidance of doubt, this shall not
preclude EFactor, ELEQT or any of the Subsidiaries from entering into any
referral agreement for introductions to third party travel suppliers or
advertising partnerships with travel agencies).

 

9.9The consideration for the covenants contained in clause 9.2 is included in
the Purchase Price.

 

9.10The obligations and liability of the parties under this clause 9 shall be
several and extend only to any loss or damage arising out of their own breaches.

 

10.Confidentiality and announcements

 

10.1Each Seller severally undertakes to each of EFactor, ELEQT and the
Subsidiaries that he shall:

 

(a)keep confidential the terms of this agreement and all confidential
information or trade secrets in his possession concerning the business, affairs,
customers, clients or suppliers of ELEQT, the Subsidiaries or any member of
EFactor's Group;

 

(b)not disclose any of the information referred in clause 10.1(a) in whole or in
part to any third party, except as expressly permitted by this clause 10; and

 

(c)not make any use of any of the information referred in clause 10.1(a), other
than to the extent necessary for the purpose of exercising or performing his
rights and obligations under this agreement.

 

10.2EFactor undertakes to each Seller that it shall:

 

(a)keep confidential the terms of this agreement and all confidential
information or trade secrets in its possession concerning the business, affairs,
customers, clients or suppliers of any Seller;

 

(b)not disclose any of the information referred in clause 10.2(a) in whole or in
part to any third party, except as expressly permitted by this clause 10; and

 

(c)not make any use of any of the information referred in clause 10.2(a), other
than to the extent necessary for the purpose of exercising or performing its
rights and obligations under this agreement.

 

(d)Such confidentiality shall not apply where regulations dictate any of this
information shall be made public by EFactor Group Corp.

13

 

  

10.3Nothing in this agreement shall be construed as imposing on EFactor an
obligation to keep confidential, or restrict its use after Completion, of any
information relating to ELEQT or any of the Subsidiaries.

 

10.4Notwithstanding any other provision of this agreement, no party shall be
obliged to keep confidential or to restrict its use of any information that:

 

(a)is or becomes generally available to the public (other than as a result of
its disclosure by the receiving party or any person to whom it has disclosed the
information in accordance with clause 10.5(a) in breach of this agreement); or

 

(b)was, is or becomes available to the receiving party on a non-confidential
basis from a person who, to the receiving party's knowledge, is not bound by a
confidentiality agreement with the disclosing party or otherwise prohibited from
disclosing the information to the receiving party.

 

10.5Any party may disclose any information that it is otherwise required to keep
confidential under this clause 10:

 

(a)to those of its employees, officers, consultants, representatives or advisers
(or those of any member of its Group) who need to know such information to
enable them to advise on this agreement, or to facilitate the Transaction,
provided that the party making the disclosure informs the recipient of the
confidential nature of the information before disclosure and procures that each
recipient shall, in relation to any such information disclosed to him, comply
with the obligations set out in this clause 10 as if they were that party. The
party making a disclosure under this shall, at all times, be liable for the
failure of its recipients to comply with the obligations set out in this clause
10; or

 

(b)in the case of EFactor only, to a proposed transferee of the Sale Shares for
the purpose of enabling the proposed transferee to evaluate the proposed
transfer; or

 

(c)in the case of EFactor only, to its funders, potential investors and their
respective advisers, employees, officers, representatives or consultants; or

 

(d)in the case of EFactor only, with the prior consent in writing of the Seller
Representative; or

 

(e)if such information relates to one party only, with the prior consent in
writing of that party; or

 

(f)to confirm that the Transaction has taken place, or the date of the
Transaction (but without otherwise revealing any other terms of the Transaction
or making any other announcement); or

 

(g)to the extent that the disclosure is required:

 

(i)by the laws of any jurisdiction to which that party is subject; or

 

(ii)by an order of any court of competent jurisdiction, or any regulatory,
judicial, governmental or similar body, or any Taxation Authority or securities
exchange of competent jurisdiction; or

 

(iii)to make any filing with, or obtain any authorisation from, a regulatory,
governmental or similar body, or any Taxation Authority or securities exchange
of competent jurisdiction; or

 

(iv)to protect that party's interest in any legal proceedings,

14

 

  

PROVIDED that in each case (and to the extent it is legally permitted to do so)
the party making the disclosure gives the other parties as much notice of such
disclosure as possible.

 

10.6Each party shall supply any other party with such information about itself,
its Group or this agreement as that other party may reasonably require for the
purposes of satisfying the requirements of any law or any judicial,
governmental, regulatory or similar body or any securities exchange of competent
jurisdiction to which that other party is subject.

 

10.7Subject to clauses 10.8, 10.9 and 10.10, no party shall make, or permit any
person to make, any public announcement, communication or circular
(announcement) concerning this agreement or the Transaction without the prior
written consent of the other parties (such consent not to be unreasonably
withheld or delayed).

 

10.8Nothing in clause 10.7 shall prevent any party from making any announcement
required by law or any governmental or regulatory authority (including, without
limitation, any relevant securities exchange), or by any court or other
authority of competent jurisdiction.

 

10.9The parties shall issue a press release written by EFactor’s Investor
Relations Manager in mutually agreed form within 4 days following Completion.

 

10.10EFactor may, at any time after Completion announce its acquisition of the
Sale Shares in the agreed form to any employees, clients, customers or suppliers
of ELEQT, the Subsidiaries or any other member of EFactor's Group.

 

10.11The obligations and liability of the Sellers under this clause 10 shall be
several and extend only to any loss or damage arising out of their own breaches.

 

11.Costs

 

11.1Except as expressly provided in this agreement, each party shall pay its own
costs and expenses incurred in connection with the negotiation, preparation and
execution of this agreement (and any documents referred to in it). For the
avoidance of doubt, none of ELEQT or the Subsidiaries shall be liable to pay any
of such costs and expenses of the Sellers.

 

12.Notices

 

12.1For the purposes of this clause 12, but subject to clause 12.9, notice
includes any other communication.

 

12.2A notice given to a party under or in connection with this agreement:

 

(a)shall be in writing and in English;

 

(b)shall be sent to the relevant party for the attention of the contact and to
the address or fax number or email address specified in Schedule 1 or clause
12.5 (as the case may be), or such other address, fax number, email address or
person as that party may notify to the others in accordance with the provisions
of this clause 12;

 

(c)shall be:

 

(i)delivered by hand; or

 

(ii)sent by fax; or

 

(iii)sent by email; or

 

(iv)sent by pre-paid first class post, recorded delivery or special delivery; or

 

(v)Sent by Echosign; or

15

 

  

(vi)sent by airmail or by reputable international overnight courier (if the
notice is to be served by post to an address outside the country from which it
is sent); and

 

(d)is deemed received as set out in clause 12.7.

 

12.3Any notice to be given under this agreement to:

 

(a)all of the Sellers, is deemed to have been properly given if it is given to
12.5the Seller Representative; or

 

(b)some only of the Sellers, shall be given to the Seller concerned to his
address or fax number or email address as set out in or to the Seller
Representative.

 

12.4Any notice to be given under this agreement by:

 

(a)all of the Sellers, is deemed to have been properly given if it is given by
the Seller Representative; or

 

(b)some only of the Sellers, shall be given by the Seller concerned or by the
Seller Representative.

 

12.5The addresses, fax numbers and email addresses for service of notices on the
Seller Representative and EFactor are:

 

(a)Seller Representative:

 

(i)name: Ruud Smeets

 

(ii)address: Damasco Resort 116-118

 

(iii)for the attention of: Ruud Smeets

 

(iv)fax number: +31 848392604

 

(v)email address: ruud.smeets@eleqt.com

 

(b)EFactor:

 

(i)address: 605 Market Street, Suite 600 San Francisco, CA 94105, USA

 

(ii)for the attention of: Adriaan Reinders or Marion Freijsen

 

(iii)fax number: +1 647 390-2407

 

(iv)email address adrie@efactorgroup.com

 

12.6A party may change its details for service of notices as specified in clause
12.5 or Schedule 1 (as the case may be) by giving notice to each of the other
parties. Any change notified pursuant to this clause shall take effect at 9.00
am (UK time) on the later of:

 

(a)the date (if any) specified in the notice as the effective date for the
change; or

 

(b)5 Business Days after deemed receipt of the notice of change.

 

12.7Delivery of a notice is deemed to have taken place (provided that all other
requirements in this clause have been satisfied):

 

(a)if delivered by hand, on signature of a delivery receipt or at the time the
notice is left at the address; or

 

(b)if sent by fax or email, at the time of transmission; or

 

(c)if sent by pre-paid first class post, recorded delivery or special delivery
to an address in the UK, at 9.00 am on the second Business Day after posting; or

16

 

  

(d)if sent by pre-paid airmail to an address outside the country from which it
is sent, at 9.00 am on the fifth Business Day after posting; or

 

(e)if sent by reputable international overnight courier to an address outside
the country from which it is sent, on signature of a delivery receipt or at the
time the notice is left at the address; or

 

(f)if deemed receipt under the previous paragraphs of this clause 12.7 would
occur outside business hours (meaning 9.00 am to 5.30 pm Monday to Friday on a
day that is not a public holiday in the place of deemed receipt), at 9.00 am on
the day when business next starts in the place of deemed receipt. For the
purposes of this clause, all references to time are to local time in the place
of deemed receipt.

 

12.8To prove service, it is sufficient to prove that:

 

(a)if delivered by hand or by reputable international overnight courier, the
notice was delivered to the correct address; or

 

(b)if sent by fax or email, a transmission report was received confirming that
the notice was successfully transmitted to the correct fax number or email
address; or

 

(c)if sent by post or by airmail, the envelope containing the notice was
properly addressed, paid for and posted.

 

12.9This clause 12 does not apply to the service of any proceedings or other
documents in any legal action or, where applicable, any arbitration or other
method of dispute resolution.

 

12.10A notice given under or in connection with this agreement is valid if sent
by e-mail.

 

13.General

 

13.1The provisions of Schedule 10 shall have effect in respect of the
appointment of a Seller Representative.

 

13.2Each party shall (at its own expense) promptly execute and deliver such
documents and perform such acts as another party may reasonably require from
time to time for the purpose of giving full effect to this agreement.

 

13.3Each Seller severally undertakes to EFactor that, if and for so long as he
remains the registered holder of any of the Sale Shares after Completion, he
shall:

 

(a)hold such Sale Shares together with all dividends and any other distributions
of profits, surplus or other assets in respect of such Sale Shares and all
rights arising out of or in connection with them, in trust for EFactor;

 

(b)at all times after Completion, deal with and dispose of such Sale Shares,
dividends, distributions, assets and rights as EFactor shall direct;

 

(c)exercise all voting rights attached to such Sale Shares in such manner as
EFactor shall direct; and

 

(d)if required by EFactor, execute all instruments of proxy or other documents
as may be necessary to enable EFactor to attend and vote at any meeting of
ELEQT.

 

13.4Subject to the further provisions of this clause 13, no party shall assign,
transfer, mortgage, charge, declare a trust of, or deal in any other manner with
any or all of its rights and obligations under this agreement (or any other
document referred to in it).

 

13.5Each party confirms it is acting on its own behalf and not for the benefit
of any other person, except as stated in Schedule 10.

17

 

 

13.6EFactor may assign or transfer its rights (but not its obligations) under
this agreement (or any document referred to in this agreement) to:

 

(a)another member of its Group; or

 

(b)any person to whom the Sale Shares are sold or transferred by EFactor
following Completion.

 

13.7EFactor may grant security over, or assign by way of security, any or all of
its rights under this agreement for the purposes of, or in connection with, the
financing (whether in whole or in part) by EFactor of any of its working capital
or other requirements. On the enforcement of any security of a kind referred to
in this clause 13.7, EFactor, or any administrative receiver of EFactor or any
person having the benefit of such security may assign any or all of the relevant
rights to any person, but the continuing party's liability to any assignee in
respect of those rights shall not be greater than if no assignment had taken
place.

 

13.8If there is an assignment or transfer of EFactor's rights in accordance with
clause 13.6 or 13.7:

 

(a)the Sellers may discharge their obligations under this agreement to EFactor
until the Seller Representative receives notice of the assignment or transfer;
and

 

(b)the assignee may enforce this agreement as if it were named in this agreement
as EFactor, but EFactor shall remain liable for any obligations under this
agreement.

 

13.9This agreement (together with the documents referred to in it) constitute
the entire agreement between the parties and supersede and extinguish all
previous discussions, correspondence, negotiations, drafts, agreements,
promises, assurances, warranties, representations and understandings between
them, whether written or oral, relating to their subject matter.

 

13.10No variation of this agreement shall be effective unless it is in writing
and signed by the parties (or their authorised representatives).

 

13.11A waiver of any right or remedy under this agreement or by law is only
effective if it is given in writing and is signed by the person waiving such
right or remedy. Any such waiver shall apply only to the circumstances for which
it is given and shall not be deemed a waiver of any subsequent breach or
default.

 

13.12A failure or delay by any person to exercise any right or remedy provided
under this agreement or by law shall not constitute a waiver of that or any
other right or remedy, nor shall it prevent or restrict any further exercise of
that or any other right or remedy.

 

13.13No single or partial exercise of any right or remedy provided under this
agreement or by law shall prevent or restrict the further exercise of that or
any other right or remedy.

 

13.14A party that waives a right or remedy provided under this agreement or by
law in relation to one party, or takes or fails to take any action against that
party, does not affect its rights in relation to any other party.

 

13.15If a party fails to make any payment due to any other party under this
agreement by the due date for payment, then the defaulting party shall pay
interest on the overdue amount at the rate of 4% per annum above HSBC's base
rate from time to time. Such interest shall accrue on a daily basis from the due
date until actual payment of the overdue amount, whether before or after
judgment. The defaulting party shall pay the interest together with the overdue
amount.

18

 

 

13.16If any provision or part-provision of this agreement is or becomes invalid,
illegal or unenforceable, it shall be deemed modified to the minimum extent
necessary to make it valid, legal and enforceable. If such modification is not
possible, the relevant provision or part-provision shall be deemed deleted. Any
modification to or deletion of a provision or part-provision under this clause
shall not affect the validity and enforceability of the rest of this agreement.

 

13.17This agreement (other than obligations that have already been fully
performed) remains in full force after Completion.

 

13.18Except as expressly provided in clause 13.19, a person who is not a party
to this agreement shall not have any rights under the Contracts (Rights of Third
Parties) Act 1999 to enforce any term of this agreement.

 

13.19The following provisions are intended to benefit future buyers of the Sale
Shares and (to the extent that they are identified in the relevant clauses as
recipients of rights or benefits under that clause), ELEQT, the Subsidiaries and
the Officers (as defined in clause 5.6), and shall be enforceable by each of
them to the fullest extent permitted by law:

 

(a)clause 5 and Schedule 5 (subject to clause 6);

 

(b)clause 8 and Schedule 6;

 

(c)clause 9; and

 

(d)clause 10.

 

13.20The rights of the parties to terminate, rescind or agree any variation,
waiver or settlement under this agreement are not subject to the consent of any
other person.

 

13.21This agreement (and the documents referred to in it) are made for the
benefit of the parties and their successors and permitted assigns, and the
rights and obligations of the parties under this agreement shall continue for
the benefit of, and shall be binding on, their respective successors and
permitted assigns.

 

13.22This agreement may be executed in any number of counterparts, each of which
when executed shall constitute a duplicate original, but all the counterparts
shall together constitute the one agreement.

 

13.23No counterpart shall be effective until each party has executed at least
one counterpart.

 

13.24Transmission of the executed signature page of a counterpart of this
agreement by:

 

(a)fax; or

 

(b)e-mail (in PDF, JPEG or other agreed format),

 

(c)or Echosign,

 

shall take effect as delivery of an executed counterpart of this agreement. If
any such method of delivery is adopted, without prejudice to the validity of the
agreement thus made, each party shall provide the others with the original of
such counterpart as soon as reasonably possible thereafter.

 

13.25Except as expressly provided in this agreement, the rights and remedies
provided under this agreement are in addition to, and not exclusive of, any
rights or remedies provided by law.

 

13.26Without prejudice to any other rights or remedies that any party may have,
the parties acknowledge and agree that damages alone would not be an adequate
remedy for any breach of the terms of clause 9 or 10 by a party. Accordingly,
each party shall be entitled to the remedies of injunction, specific performance
or other equitable relief for any threatened or actual breach of the terms of
such clauses.

19

 

  

13.27If this agreement is translated into any language other than English, the
English language version shall prevail.

 

13.28This agreement and any dispute or claim arising out of or in connection
with it or its subject matter or formation (including non-contractual disputes
or claims) shall be governed by and construed in accordance with the law of
England and Wales.

 

13.29Each party irrevocably agrees that the courts of England and Wales shall
have non-exclusive jurisdiction to settle any dispute or claim arising out of or
in connection with this agreement or its subject matter or formation (including
non-contractual disputes or claims).

 

13.30Each Seller irrevocably appoints the Sellers’ Representative as its agent
to receive on its behalf in England or Wales service of any process in any legal
action or any other proceedings under or in relation to this agreement. Such
service shall be deemed completed on delivery to such agent (whether or not it
is forwarded to and received by the relevant Seller) and shall be valid until
such time as EFactor has received prior written notice that such agent has
ceased to act as agent. If for any reason such agent ceases to be able to act as
agent or no longer has an address in England or Wales, each Seller shall
forthwith appoint a firm of solicitors in England or Wales as substitute agent
and deliver to EFactor the new agent's name and address.

 

This agreement has been entered into on the date stated at the beginning of it.

 

20

 

  

Schedule 1 Particulars of Sellers

 

Part 1 – The Sellers

 

Seller  Number of Sales
Shares Held   Seller
Proportions   Address     1,741    14.07%         291    2.35%          978  
 7.90%          151    1.22%          159    1.28%          172    1.39%        
 241    1.95%          301    2.43%          142    1.15%          65    0.53% 
        119    0.96%          69    0.56%          57    0.46%          32  
 0.26%          84    0.68%          126    1.02%          59    0.48%        
 385    3.11%          180    1.45%          57    0.46%          701    5.66% 
        80    0.65%          4    0.03%          4    0.03%          36  
 0.29%          15    0.12%          81    0.65%          71    0.57%        
 276    2.23%          4,976    40.21%          140    1.13%          303  
 2.45%          58    0.47%          58    0.47%          39    0.32%        
 30    0.24%          40    0.32%          4    0.03%          30    0.24%     
    20    0.16%      Total   12,375           

 

21

 

 

Part 2 – The Managers

 

Name   Address Ruud Smeets   Damasco Resort 116-118, Willemstad, Curacao Ronald
de la Fuente-Saez   Anasaweg 74, Willemstad, Curacao Jim van Luipen   Ajaxweg
14, Willemstad, Curacao Arthur de Groot  

Watteaustraat 48hs

1077ZN Amsterdam‏

 

 

22

 

  

Schedule 2   Particulars of the Company and the Subsidiaries

 

Part 1 ELEQT

 

Name: ELEQT Limited Registration number: 07865035 Registered office: 29 Portland
Place, London W1B 1QB Issued share capital:

Amount: £123.75

Divided into: 12,375 ordinary shares of £0.01 each

Registered shareholders (and number of Sale Shares held): As set out in Schedule
1 Directors:

Paul Thomas Drummond

Jonathan Andrew Goss

Simon Johannes Quist

Ruud Matthijs Smeets

Thomas Thomsen

Secretary: None  Accountants: Beckstead & Company, Henderson, NV Registered
charges: None

  

Part 2 Subsidiaries

 

Name:

Elysiants N.V. 

Registration number: 102614 Registered office: Hoogstraat, 20 – 22 Curacao,
Netherlands Antilles Issued share capital:

Amount: $19,907.11

Divided into: 566,766 Class A shares, 1,323,945 B shares and 100,000 C shares

Registered shareholders (and number of shares held): 566,766 Class A shares,
1,323,945 B shares and 100,000 C shares all registered in the name of ELEQT
Directors:

Ronald de la Fuente-Saez

Ruud Smeets

Accountants: Beckstead & Company Registered charges: None  

 

23

 

 

Name: Qubers Limited. Registration number: Registered in England and Wales under
registration no. 07908912 Registered office:  29 Portland Place, London W1B 1QB

Issued share capital

Amount: £100

Divided into: 10,000 ordinary shares of £0.01 each

Registered shareholders (and number of shares held): 10,000 ordinary shares of
£1.00 each registered in the name of ELEQT Directors: ELEQT, Paul Drummond
Secretary: None

 

Name: Elysiants International B.V. Registration number: Registered with the
Amsterdam Chamber of Commerce under number 34386332 Registered office:
Saxen-Weimarlaan 58hs, 1075 CE, Amsterdam

Issued share capital

Amount: €90,000

Divided into: 90,000 Ordinary Shares of €1 each

Registered shareholder (and number of shares held): 90,000 Ordinary Shares of €1
each registered in the name of Elysiants N.V. Directors: Elysiants N.V.
Secretary: None

 

Name: Elysiants Hong Kong Limited Registration number: 1487703 Registered
office: 14a Union Bay, Commercial Centre, 283 Queen’s Road Central, Hong Kong

Issued share capital

Amount: HKD1

Divided into: 90 Ordinary Shares of HKD0.01 each

Registered shareholder (and number of shares held): Elysiants International BV
(60 shares) and Superspeed Holdings Limited (BVI) (30 shares) Directors: Ronald
de la Fuente and Valerie Soh Secretary: None

 

24

 

  

Schedule 3 Completion

 

Part 1. What the Sellers shall deliver to EFactor at Completion

 

At Completion, the Sellers shall deliver, or cause to be delivered, to EFactor
the following:

 

(a)transfers of the Sale Shares, in agreed form, executed by the registered
holders in favour of EFactor;

 

(b)the share certificates for the Sale Shares in the names of the registered
holders or an indemnity, in agreed form, for any lost certificates;

 

(c)any waivers, consents or other documents required to enable EFactor to be
registered as the holder of the Sale Shares, in each case in agreed form;

 

(d)an irrevocable power of attorney, in agreed form, given by each Seller in
favour of EFactor to enable the attorney (or its proxies) to exercise all voting
and other rights attaching to the Sale Shares before the transfer of the Sale
Shares is registered in the register of members of ELEQT; the original or a duly
certified copy of any power of attorney under which any document to be delivered
to EFactor under this agreement has been executed;

 

(e)the share certificates in respect of all issued shares in the capital of each
of the Subsidiaries;

 

(f)in relation to ELEQT and each of the Subsidiaries, the statutory registers
and minute books (duly written up to the time of Completion), the common seal
(if any), certificate of incorporation and any certificates of incorporation on
change of name;

 

(g)the written resignation, in agreed form and executed as a deed, of the
following directors of ELEQT and the Subsidiaries, from their respective offices
and any further remuneration agreements if applicable with ELEQT or Subsidiary:

 

Thomas Thomsen

 

Paul Drummond

 

Simon Quist

 

Jon Goss

 

(h)signed prints of the special resolution of ELEQT, in agreed form to adopt new
articles of association of ELEQT in such form as EFactor requires;

 

(i)a print of the new articles of association of ELEQT in the form required by
EFactor, and appropriate for filing at Companies House;

 

(j)signed minutes, in agreed form, of each of the board meetings required to be
held pursuant to Part 2 of this Schedule;

 

(k)in relation to ELEQT and each Subsidiary:

 

(i)statements from each bank at which it has an account, giving the balance of
each account at the close of business on the last Business Day before
Completion;

 

(ii)all cheque books in current use and written confirmation that no cheques
have been written since the statements delivered above were prepared;

 

(iii)details of its cash book balances; and

25

 

  

(iv)reconciliation statements reconciling the cash book balances and the cheque
books with the bank statements delivered above;

 

(l)all leases relating to the Properties;

 

(m)evidence, in agreed form, that any indebtedness or other liability of the
kind described in paragraph 13.1 of Part 1 of Schedule 5 has been repaid or
discharged;

 

(n)a Leak Out Agreement signed by each Seller;

 

(o)the service agreements, in agreed form, to be made between EFactor and the
Managers (or their Management Companies) on Completion, duly executed by the
relevant persons.

 

(p)Confirmation of sufficient working capital for the first six (6) months held
in ELEQT’s bank accounts or written agreements that such shall be transferred to
said bank accounts within three (3) month following Completion.

 

Part 2. Matters for the board meetings at Completion

 

The Sellers shall cause a board meeting of ELEQT and each of the Subsidiaries to
be held at Completion at which the following matters shall take place:

 

(a)in the case of ELEQT only, the approval of the registration of the transfer
of the Sale Shares, subject only to the transfers being stamped at the cost of
EFactor;

 

(b)approval of Adriaan Reinders and Marion Freijsen as directors of ELEQT and of
each of the Subsidiaries;

 

The directors of EFactor shall hold a board meeting at or within 4 days post
Completion at which the following matters shall take place:

 

(c)the approval of the appointment of Ruud Smeets as member of the board of
directors of EFactor;

 

 

26

 

 

Schedule 4 Earn-out Consideration

 

1Definitions

 

The definitions in this paragraph apply in this Schedule.

 

Earn-out Amount: will not exceed the amount of 3,633,333 shares of EFactor Group
Corp $0.001 par value Common Stock...

 

Earn-out Consideration: the above amount of Shares to be released at the end of
the Earn-Out Period subject to financial milestones having been achieved.

 

Earn-out Period: the period beginning on 1 October 2014 and ending on 31st
September 2015.

 

Earn-out Statement: has the meaning given in paragraph 7.2.

 

EFactor.com: EFactor.com, a subsidiary of EFactor Group Corp.

 

Expert: a member of an independent firm of chartered accountants of
international repute appointed in accordance with paragraph 8 to resolve any
dispute arising between the parties in connection with the preparation of any
Earn-out Statement or the calculation of the resulting Earn-out Consideration in
relation to the Earn-out Period.

 

Gross Profit: in relation to the Earn-out Period, the sum of:

 

Gross profit (Net sales – Cost of goods sold) of EFactor.com’s social networking
business for that period; and

 

Gross profit (Net sales – Cost of goods sold) of the social networking business
of ELEQT and the Subsidiaries for that period, as shown in the Reference
Accounts for the Earn-out Period.

 

Gross Profit Margin: the Gross Profit divided by the Revenues, expressed as a
percentage.

 

Gross Profit Margin Amount: has the meaning given in paragraph 3.1.

 

Membership: the total number of people who are members of one or more of the
social networks owned and operated by:

 

(a)EFactor.com; and

 

(b)ELEQT and the Subsidiaries,

 

as at the end of the Earn-out Period, as shown in the Reference Accounts for the
Earn-out Period. For the avoidance of doubt, a person who is a member of more
than one such social networks shall be counted as one member for the purposes of
calculating the Membership.

 

Membership Growth: the amount by which the Combined Membership at the end of the
Earn-out Period exceeds the Combined Membership as of October 1, 2014. (2014
Membership), expressed as a percentage of the 2014 Membership.

 

Membership Growth Amount: has the meaning given in paragraph 5.13.1.

 

Member Spend: in relation to the Earn-out Period, the amount of the Revenues
received from the Membership, as shown in the Reference Accounts for the
Earn-out Period.

 

Member Spend Growth: the amount by which the Member Spend exceeds $100,000 (2014
Member Spend), expressed as a percentage of the 2014 Member Spend.

 

Member Spend Growth Amount: has the meaning given in paragraph 4.13.1.

27

 

 

Objection Notice: has the meaning given in paragraph 7.3.

 

Reference Accounts: in relation to the Earn-out Period, the individual audited
financial statements of EFactor.com, ELEQT and the Subsidiaries as at and to the
last day of the Earn-out Period, including in each case an audited balance sheet
and profit and loss account.

 

Resolution Notice: has the meaning set out in paragraph 7.6.

 

Revenue Growth Amount: has the meaning given in paragraph 2.1.

 

Revenues: in relation to the Earn-out Period, the sum of:

 

(c)the revenues of EFactor.com’s social networking business; and

 

(d)the consolidated revenues of the social networking business of ELEQT and the
Subsidiaries for that period,

 

as shown in the Reference Accounts for the Earn-out Period.

 

Review Period: has the meaning set out in paragraph 7.3.

 

2.Revenue Growth Amount

 

2.1Subject to paragraph 2.2, a portion of the Earn-out Consideration shall be
calculated on the basis of an amount (Revenue Growth Amount) which shall not
exceed 1,090,000 Shares of Common Stock and which shall depend on the amount of
the Revenues, as determined from the following table:

 

Revenues  Revenue Growth Amount  No more than 125% of $1,500,000   Nil  More
than 125% of $1,500,000 but no more than 140% of $1,500,000   272,500  More than
140% of $1,500,000 but no more than 150% of $1,500,000   545,000  More than 150%
of $1,500,000 but no more than 167% of $1,500,000   817,500  More than 167% of
$1,500,000   1,090,000 

 

2.2Notwithstanding the foregoing, if the Gross Profit Margin is not more than
20%, the Revenue Growth Amount shall be nil in any event.

 

3.Gross Profit Margin Amount

 

3.1A portion of the Earn-out Consideration shall be calculated on the basis of
an amount (Gross Profit Margin Amount) which shall not exceed 1,090,000 Shares
of Common Stock and which shall depend on the amount of the Gross Profit Margin,
as determined from the following table:

 

Gross Profit Margin  Gross Profit Margin Amount  No more than 15%   Nil  More
than 15% but no more than 25%   272,500  More than 25% but no more than 30% 
 545,000  More than 30% but no more than 50%   817,500  More than 50% 
 1,090,000 

 

28

 

 

4.Member Spend Growth Amount

 

4.1A portion of the Earn-out Consideration shall be calculated on the basis of
an amount (Member Spend Growth Amount) which shall not exceed 726,667 Shares of
Common Stock and which shall depend on the amount of the Member Spend Growth, as
determined from the following table:

 

Member Spend Growth  Member Spend Growth Amount  No more than 25%   Nil  More
than 25% but no more than 50%   181,667  More than 50% but no more than 75% 
 363,333  More than 75% but no more than 100%   545,000  More than 100% 
 726,667 

 

5.Membership Growth Amount

 

5.1A portion of the Earn-out Consideration shall be calculated on the basis of
an amount (Membership Growth Amount) which shall not exceed $400,000 and which
shall depend on the amount of the Membership Growth, as determined from the
following table:

 

Membership Growth  Membership Growth Amount  No more than 20%   Nil  More than
20% but no more than 40%   181,667  More than 40% but no more than 60% 
 363,333  More than 60% but no more than 80%   545,000  More than 80%   726,667 

 

6.Earn-out Consideration

 

6.1EFactor shall pay the Earn-out Consideration to the Sellers in respect of the
Earn-out Period. The Earn-out Consideration shall be satisfied by the allotment
and issue to each of the Sellers, credited as fully paid, of the relevant
EFactor Shares in the Seller Proportions.

 

6.2EFactor shall satisfy the Earn-out Consideration to the Sellers within 15
Business Days of the first of the following to occur:

 

(a)the Sellers accept, or are deemed to have accepted, the Earn-out Statement in
accordance with paragraph 7.4; or

 

(b)EFactor and the Seller Representative agree in writing all disputed matters
relating to the preparation of the Earn-out Statement; or

 

(c)EFactor and the Seller Representative receive notice of the Expert's
determination of the Revenues and EBITDA in accordance with paragraph 8.

29

 

 

6.3EFactor shall be entitled to withhold and set off against any Earn-out
Consideration otherwise due and payable to any Warrantor under this Schedule any
amount due and payable by that Warrantor to EFactor in respect of any Claim or
claim under the

 

Tax Covenant, or which may become payable by that Warrantor upon the settlement
or determination of any outstanding Claim or claim under the Tax Covenant.

 

7.Earn-out Statement and agreement of Earn-out Consideration

 

7.1In relation to the Earn-out Period, EFactor shall use its reasonable
endeavours to procure that the Reference Accounts for the Earn-out Period are
prepared and audited within 45 days of the last day of the Earn-out Period. The
Reference Accounts shall be prepared in accordance with US GAAP as in force at
the time of preparation.

 

7.2Within 45 days of completion of the audit of the Reference Accounts in
respect of the Earn-out Period, EFactor shall deliver to the Seller:

 

(a)a copy of the relevant Reference Accounts; and

 

(b)a statement prepared by EFactor's auditors (Earn-out Statement) setting out:

 

their calculation of the Revenue Growth Amount, the Gross Profit Margin Amount,
the Member Spend Growth Amount and the Membership Growth Amount; and

 

any adjustments made to the Reference Accounts in calculating the Revenue Growth
Amount, the Gross Profit Margin Amount, the Member Spend Growth Amount and the
Membership Growth Amount.

 

7.3The Seller Representative shall, within 5 days from receipt of the Reference
Accounts and the Earn-out Statement (Review Period), deliver to EFactor a
written notice stating whether or not the Sellers agree with the Earn-out
Statement. In the case of disagreement, the notice (Objection Notice) shall
specify the areas disputed by the Sellers and describe, in reasonable detail,
the basis for the dispute.

 

7.4If the Sellers fail to deliver an Objection Notice within the Review Period
the Sellers shall, with effect from the expiry of the Review Period, be deemed
to have agreed with the Earn-out Statement in the form delivered by EFactor.

 

7.5During the Review Period, the Seller Representative (and its agents and
advisers) shall have the right to inspect the books and records of ELEQT and the
Subsidiaries during normal business hours, and upon reasonable prior notice, for
the purpose of reviewing the Earn-out Statement and the calculation of the
Revenue Growth Amount, the Gross Profit Margin Amount, the Member Spend Growth
Amount and the Membership Growth Amount set out in it.

 

7.6If the Seller Representative serves an Objection Notice, the parties shall
negotiate in good faith to resolve the disputed matters and agree the amount of
the Revenue Growth Amount, the Gross Profit Margin Amount, the Member Spend
Growth Amount and the Membership Growth Amount. If the parties are unable to
reach agreement within 30 days following the service of an Objection Notice,
then at any time following the expiry of such period either EFactor or the
Seller Representative may, by written notice to the other (Resolution Notice),
require the disputed matters to be referred to an Expert for determination in
accordance with paragraph 8.

 

7.7Each party shall bear its own costs incurred in connection with the
preparation, review and agreement of the Earn-out Statement.

 

8.Expert determination

 

8.1If a Resolution Notice is served by either EFactor or the Seller
Representative, EFactor and the Seller Representative shall use all reasonable
endeavours to reach agreement regarding the identity of the person to be
appointed as the Expert and to agree the terms of his appointment with the
Expert as soon as reasonably possible. Neither EFactor nor the Seller
Representative shall unreasonably withhold its agreement to the proposed terms
of appointment of the Expert.

30

 

 

8.2If EFactor and the Seller Representative fail to agree on an Expert and the
terms of his appointment within 30 days of a Resolution Notice being served,
then either EFactor or the Seller Representative shall be entitled to request
the President for the time being of the Institute of Chartered Accountants of
England and Wales to appoint the Expert and to agree his of terms of appointment
on behalf of the parties.

 

8.3Except for any procedural matters, or as otherwise expressly provided in this
Schedule, the Expert shall only be required to make a determination on the
matters in dispute regarding the calculation of the Revenue Growth Amount, the
Gross Profit Margin Amount, the Member Spend Growth Amount and the Membership
Growth Amount, and any adjustments, corrections or modifications (if any) that
should be made to the Earn-out Statement.

 

8.4The parties shall co-operate with the Expert and they shall provide (and in
the case of EFactor shall procure that EFactor.com, ELEQT and each of the
Subsidiaries provides) such assistance and access to such documents, personnel,
books and records as the Expert may reasonably require for the purpose of making
his determination.

 

8.5EFactor and the Seller Representative shall be entitled to make submissions
to the Expert, including oral submissions, and each party shall, with reasonable
promptness, supply the other party with such information and access to its
documentation, books and records as the other party may reasonably require in
order to make a submission to the Expert in accordance with this paragraph.

 

8.6To the extent not provided for in this paragraph 8, the Expert may, in his
reasonable discretion, determine such procedures to assist with the conduct of
his determination as he considers just or appropriate, including, to the extent
he considers necessary, instructing advisers to assist him in reaching his
determination.

 

8.7The Expert shall be required to make his determination in writing (including
the reasons for his determination) and to give notice of his determination
(including a copy) to each party as soon as reasonably practicable and in any
event within 30 days of his appointment.

 

8.8All matters under this Schedule shall be conducted, and the Expert's decision
shall be written, in the English language.

 

8.9The Expert shall act as an expert and not as an arbitrator. Save in the event
of manifest error or fraud the Expert's determination of any matters referred to
him in accordance with this Schedule shall be final and binding on the parties.

 

8.10If an appointed Expert dies or becomes unwilling or incapable of acting, or
does not deliver his determination within the period required by paragraph 8.7:

 

(a)the parties shall use all reasonable endeavours to agree the identity and
terms of appointment of a replacement Expert;

 

(b)if the parties fail to agree and appoint a replacement Expert within 30 days
of a replacement being proposed in writing by a party, then either party may
apply to the President for the time being of the Institute of Chartered
Accountants of England and Wales to discharge the appointed Expert and to
appoint a replacement Expert; and

 

(c)this paragraph 8.10 shall apply in relation to each and any replacement
Expert as if he were the first Expert appointed.

31

 

 

8.11Each party shall bear and pay its own costs incurred in connection with the
Expert's determination. The Expert's fees and any costs or expenses incurred by
the Expert in making his determination (including the fees and costs of any
advisers appointed by the Expert) shall be borne in such proportions as the
Expert may direct.

 

8.12Each party shall act reasonably and co-operate to give effect to the
provisions of this paragraph 8 and shall not otherwise do anything to hinder or
prevent the Expert from reaching his determination.

32

 

  

Schedule 5 Warranties

 

Part 1. General Warranties

 

1.Power to sell the Sale Shares

 

1.1Each Seller is the legal and beneficial owner of the number of Sale Shares
set out opposite its, his or her name in Part 1 of Schedule 1 and is entitled to
transfer the legal and beneficial title to such Sale Shares to EFactor free from
all Encumbrances, without the consent of any other person.

 

1.2None of the Sellers or the Warrantors has any claims or other rights against
ELEQT or any of the Subsidiaries, whether under any shareholders’ agreement or
otherwise.

 

1.3Each Seller has taken all necessary actions and has all requisite power and
authority to enter into and perform this agreement and the other documents
referred to in it (to which they are a party) in accordance with their
respective terms.

 

1.4This agreement constitutes a valid, legal and binding obligation on each
Seller in accordance with its terms.

 

1.5The execution and delivery by the Sellers of this agreement and the documents
referred to in it, and compliance with their respective terms shall not breach
or constitute a default:

 

(a)under any agreement or instrument to which any Seller is a party or by which
any Seller is bound; or

 

(b)of any order, judgment, decree or other restriction applicable to any Seller.

 

2.Shares in ELEQT and the Subsidiaries

 

2.1The Sale Shares constitute the whole of the allotted and issued share capital
of ELEQT and are fully paid or credited as fully paid.

 

2.2ELEQT is the sole legal and beneficial owner of the whole of the allotted and
issued share capital of each of the Subsidiaries.

 

2.3The issued shares of each Subsidiary are fully paid or credited as fully
paid.

 

2.4No person has any right to require, at any time, the transfer, creation,
issue or allotment of any share, loan capital or other securities (or any rights
or interest in them) of ELEQT or any of the Subsidiaries, and neither the
Sellers, ELEQT nor any of the Subsidiaries has agreed to confer any such rights,
and no person has claimed any such right.

 

2.5No Encumbrance has been granted to any person or otherwise exists affecting:

 

(a)the Sale Shares or any issued shares of the Subsidiaries; or

 

(b)any unissued shares, debentures or other unissued securities of ELEQT or any
of the Subsidiaries.

 

No commitment to create any such Encumbrance has been given, nor has any person
claimed any such rights.

 

2.6Neither ELEQT nor any of the Subsidiaries:

 

(a)holds or beneficially owns, or has agreed to acquire, any shares, loan
capital or any other securities in any company (other than the Subsidiaries); or

 

(b)has at any time had any subsidiaries or subsidiary undertakings, other than
the Subsidiaries; or

33

 

 

(c)is, or has agreed to become, a member of any partnership or other
unincorporated association, joint venture or consortium (other than recognised
trade associations); or

 

(d)controls or takes part in the management of any company or business
organisation (other than the Subsidiaries), nor has it agreed to do so; or

 

(e)has any branch or permanent establishment, outside its country of
incorporation.

 

2.7Neither ELEQT nor any of the Subsidiaries has at any time:

 

(a)purchased, redeemed, reduced, forfeited or repaid any of its own share
capital; or

 

(b)given any financial assistance in contravention of any applicable law or
regulation; or

 

(c)allotted or issued any securities that are convertible into shares.

 

2.8No shares in the capital of ELEQT or any of the Subsidiaries have been
issued, and no transfer of any such shares has been registered, except in
accordance with all applicable laws and the memorandum and articles of
association of ELEQT or the relevant Subsidiary (as the case may be) and all
such transfers have been duly stamped (where applicable).

 

3.Constitutional and corporate documents

 

3.1Copies of the memorandum and articles of association (or other constitutional
and corporate documents) of ELEQT and the Subsidiaries have been Disclosed. Such
documents:

 

(a)are true, accurate and complete in all respects;

 

(b)have attached to them copies of all resolutions and agreements required by
applicable law to be so attached; and

 

(c)fully set out all the rights and restrictions attaching to each class of
shares in the capital of ELEQT and the Subsidiaries.

 

3.2All statutory books and registers of ELEQT and the Subsidiaries have been
properly kept, are written up to date and contain a true, complete and accurate
record of all matters which should be contained in them. No notice or allegation
has been received that any such books or registers are incorrect or should be
rectified.

 

3.3All returns, particulars, resolutions and other documents that ELEQT or any
of the Subsidiaries is required by law to file with, or deliver to, any
authority in any jurisdiction (including, in particular, the Registrar of
Companies in England and Wales) have been correctly made up and duly filed or
delivered

 

3.4All dividends or distributions declared, made or paid by ELEQT or any of the
Subsidiaries have been declared, made or paid in accordance with its memorandum
and articles of association, all applicable laws and regulations and any
agreements or arrangements made with any third party regulating the payment of
dividends and distributions.

 

3.5All deeds and documents belonging to ELEQT or any of the Subsidiaries, or to
which any of them is a party, are in the possession of ELEQT or the relevant
Subsidiary (as the case may be).

 

4.Information

 

4.1The particulars of ELEQT and the Subsidiaries set out in Schedule 2 are true,
accurate, complete and not misleading.

34

 

  

5.Compliance with laws

 

5.1So far as the Warrantors are aware, each of ELEQT and the Subsidiaries has at
all times conducted its business in accordance with, and has acted in compliance
with all applicable laws and regulations of any relevant jurisdiction.

 

5.2Neither ELEQT nor any of the Subsidiaries, nor any of their respective
directors or employees (current or past), has been convicted of an offence in
relation to the business or affairs of ELEQT or any of the Subsidiaries.

 

6.Licences and consents

 

6.1ELEQT and each of the Subsidiaries holds all licences, consents, permits and
authorities necessary to carry on its business in the places and in the manner
in which it is carried on at the date of this agreement (Consents). Details of
the Consents and copies of all related documentation have been Disclosed.

 

6.2Each of the Consents is valid and subsisting, and neither ELEQT nor any of
the Subsidiaries is in breach of the terms or conditions of the Consents (or any
of them).

 

6.3There is no reason why any of the Consents may be revoked, suspended or
cancelled (in whole or in part), or may not be renewed on the same terms.

 

7.Insurance

 

7.1ELEQT and each of the Subsidiaries maintains, and has at all material times
maintained, adequate insurance cover against all losses and liabilities,
including business interruption, and all other risks that are normally insured
against by a person carrying on the same type of business as the Business.

 

7.2Complete and accurate details of all insurance policies maintained by or on
behalf of ELEQT or any of the Subsidiaries (Policies) have been Disclosed.

 

7.3The Policies are in full force and effect, all premiums due on them have been
paid and all other conditions of the Policies have been performed and observed.

 

7.4Neither ELEQT nor any of the Subsidiaries has done, or omitted to do,
anything that may result in an increase in the premium payable for any of the
Policies, or that may adversely affect the renewal of any of the Policies.

 

7.5None of the Policies:

 

(a)are subject to any special or unusual terms or restrictions, or to the
payment of any premium in excess of the normal rate; or

 

(b)are void or voidable and nothing has been done, or omitted to be done, which
could make any of them void or voidable; or

 

(c)are capable of being terminated, or will otherwise cease to be available to
ELEQT or any of the Subsidiaries as a result of Completion.

 

7.6The Disclosure Letter contains complete and accurate details of all insurance
claims made by ELEQT or any of the Subsidiaries during the period of 2 years
ending on the date of this agreement.

 

7.7There are no outstanding claims under, or in respect of the validity of, any
of the Policies and, so far as the Warrantors are aware, there are no
circumstances likely to give rise to a claim under any of the Policies.

 

8.Powers of attorney

 

8.1There are no powers of attorney granted by ELEQT or any of the Subsidiaries
which are currently in force.

35

 

 

8.2No person is entitled or authorised in any capacity to bind or commit ELEQT
or any of the Subsidiaries to any obligation outside the ordinary course of the
Business.

 

8.3The Disclosure Letter specifies those persons who have authority to bind
ELEQT and the Subsidiaries in the ordinary course of the Business.

 

9.Disputes and investigations

 

9.1Neither ELEQT nor any of the Subsidiaries, nor any of their respective
Directors, nor any person for whose acts ELEQT or any of the Subsidiaries may be
vicariously liable, is engaged or involved in, or otherwise subject to any of
the following matters (such matters being referred to in this paragraph 9 as
Proceedings):

 

(a)any litigation or administrative, mediation, arbitration or other
proceedings, or any claims, actions or hearings before any court, tribunal or
any governmental, regulatory or similar body, or any department, board or agency
(except for debt collection in the normal course of business); or

 

(b)any dispute with, or any investigation, inquiry or enforcement proceedings
by, any governmental, regulatory or similar body or agency in any jurisdiction.

 

9.2No Proceedings have been threatened or are pending by or against ELEQT, any
of the Subsidiaries, any Director or any person for whose acts ELEQT or any of
the Subsidiaries may be vicariously liable, and so far as there the Warrantors
are aware there are no circumstances likely to give rise to any such
Proceedings.

 

9.3Neither ELEQT nor any of the Subsidiaries:

 

(a)is affected by any existing or pending judgment, order or other decision or
ruling of a court, tribunal, arbitrator, or any governmental, regulatory or
similar body or agency in any jurisdiction; or

 

(b)has given any undertaking to any court, tribunal, arbitrator, or any
governmental, regulatory or similar body or any other third party arising out
of, or in connection with, any Proceedings which remains in force.

 

10.Defective products and services

 

10.1Neither ELEQT nor any of the Subsidiaries has supplied any products or
supplied any products or services which were at the time they were supplied,
faulty or defective or did not comply with:

 

(a)any warranties or representations expressly or impliedly made by or on behalf
of ELEQT or any of the Subsidiaries in connection with such products or
services; or

 

(b)any laws, regulations, standards and requirements applicable to such products
or services.

 

10.2No proceedings have been started, are pending or have been threatened
against ELEQT or any of the Subsidiaries:

 

(a)in which it is claimed that any product supplied by ELEQT or any of the
Subsidiaries is defective, not appropriate for its intended use or has caused
bodily injury or material damage to any person or property when applied or used
as intended; or

 

(b)in respect of any services supplied by ELEQT or any of the Subsidiaries.

 

10.3There are no disputes between ELEQT or any of the Subsidiaries and any of
their respective customers, clients or any other third parties in connection
with any products or services supplied by ELEQT or any of the Subsidiaries.

36

 

 

 

 

 

 

11.Customers and suppliers

 

11.1The definition in this paragraph applies in this agreement.

 

Material Counterparty: any customer, client or supplier of ELEQT or any of the
Subsidiaries that represented at least 5% of the total purchases or supplies
made by or to ELEQT or any of the Subsidiaries during the period of 12 months
ending on the date of this agreement.

 

11.2In the period of 12 months ending on the date of this agreement:

 

(a)no Material Counterparty has ceased, or threatened to cease to do business
with, or reduced, or threatened to reduce in any material respect the extent to
which it does business with, ELEQT or any of the Subsidiaries;

 

(b)there has been no material adverse change in the basis or terms on which any
Material Counterparty does business with ELEQT or any of the Subsidiaries; and

 

(c)the Business has not been materially affected in an adverse manner as a
result of (either individually or in combination) the loss of, or reduction in
trading with, any customer, client or supplier of ELEQT or any of the
Subsidiaries, or a change in the terms on which any such customer, client or
supplier does business with ELEQT or any of the Subsidiaries.

 

11.3None of the matters referred to in paragraph 11.2 of Part 1 of this Schedule
is likely to occur.

 

11.4No customer, client or supplier accounted for more than 5% of the aggregate
sales or purchases (as applicable) made by ELEQT or any of the Subsidiaries
during the period of 12 months ending on the date of this agreement.

 

11.5The number of registered members (opt-in) on ELEQT’s platform as at
Completion is not less than [                ].

 

11.6Neither ELEQT nor any of the Subsidiaries made any sales to any customers
during the 2 year period ending on Completion where such sales were in any way
conditional on any factors.

 

12.Contracts

 

12.1The definition in this paragraph applies in this agreement.

 

Material Contract: any agreement, arrangement, understanding or commitment that
ELEQT or any of the Subsidiaries is a party to, or bound by, and which is of
material importance to the business, profits or assets of ELEQT or any of the
Subsidiaries.

 

12.2Except as Disclosed, neither ELEQT nor any of the Subsidiaries is a party
to, or otherwise subject to any agreement, arrangement, understanding or
commitment which:

 

(a)is a Material Contract; or

 

(b)is of an unusual or exceptional nature; or

 

(c)is not in the ordinary and usual course of the Business; or

 

(d)may be terminated as a result of a change of Control of ELEQT or any of the
Subsidiaries; or

 

(e)restricts the freedom of ELEQT or any of the Subsidiaries to carry on the
whole or any part of the Business in any part of the world in such manner as it
thinks fit; or

 

(f)involves agency or distributorship; or

 

37

 

  

(g)involves partnership, joint venture, consortium, joint development,
shareholder or similar arrangements; or

 

(h)involves the grant of any sole or exclusive rights by or to ELEQT or any of
the Subsidiaries; or

 

(i)is incapable of complete performance in accordance with its terms within six
months after the date on which it was entered into; or

 

(j)cannot be readily fulfilled or performed by ELEQT or the relevant Subsidiary
on time and without undue or unusual expenditure of money and effort; or

 

(k)involves or is likely to involve an aggregate consideration payable by or to
ELEQT or any of the Subsidiaries in excess of £[AMOUNT]; or

 

(l)requires ELEQT or any of the Subsidiaries to pay any commission, finders'
fee, royalty or the like; or

 

(m)is for the supply of goods and/or services by or to ELEQT or any of the
Subsidiaries on terms under which retrospective or future discounts, price
reductions or other financial incentives are given; or

 

(n)is not on arm's-length terms; or

 

(o)is a finance lease, hire purchase, rental or credit sale agreement or which
otherwise provides for the purchase or right to purchase any asset by instalment
payments; or

 

(p)involves obligations or liabilities that ought reasonably to be made known to
EFactor.

 

12.3There are no outstanding or ongoing negotiations of material importance to
business, profits or assets of ELEQT or any of the Subsidiaries, or any
outstanding quotations or tenders for a contract that, if accepted, would give
rise to a Material Contract, or a contract of any other type as referred to in
paragraph 12.2 of Part 1 of this Schedule.

 

12.4Each Material Contract is in full force and effect and binding on the
parties to it.

 

12.5Neither ELEQT nor any of the Subsidiaries, nor any other counterparty is (or
will, with the lapse of time, be) in default of:

 

(a)any Material Contract; or

 

(b)any other agreement, arrangement, undertaking or commitment a default of
which would be material having regard to the trading, profits or financial
position of ELEQT or any of the Subsidiaries.

 

No such default has been threatened, and there are no facts or circumstances
likely to give rise to any such default.

 

12.6No notice of termination of a Material Contract has been received or served
by ELEQT or any of the Subsidiaries, and there are no grounds for the
termination, rescission, avoidance, repudiation or a material change in the
terms of any such contract.

 

13.Transactions with the Sellers

 

13.1There is no outstanding indebtedness or other liability (actual or
contingent) and no outstanding contract, commitment or arrangement between ELEQT
or any of the Subsidiaries and any of the following:

 

(a)a Seller, or any person Connected with a Seller; or

 

(b)a Director, or any person Connected with a Director.

 

38

 

  

13.2None of the Sellers, nor any person Connected with a Seller, has a claim of
any nature against ELEQT or any of the Subsidiaries, or has assigned to any
person the benefit of any such claim.

 

14.Finance and guarantees

 

14.1The Disclosure Letter contains full particulars of:

 

(a)all money borrowed by ELEQT and each of the Subsidiaries; and

 

(b)all loans, overdrafts or other financial facilities currently outstanding or
available to ELEQT or any of the Subsidiaries (Financial Facilities), including
copies of all documents relating to such Financial Facilities.

 

14.2The total amount borrowed by ELEQT or any of the Subsidiaries (whether
pursuant to the Financial Facilities or otherwise) does not exceed any
limitations on the borrowing powers of ELEQT or the relevant Subsidiary
contained in:

 

(a)its articles of association; or

 

(b)any debenture or other deed or document binding on ELEQT or the relevant
Subsidiary.

 

14.3There are no circumstances or matters which could affect the continuance of
any of the Financial Facilities, or which may result in an amendment of their
terms.

 

14.4No indebtedness of ELEQT or any of the Subsidiaries is due and payable and
no Encumbrance over any of the assets of ELEQT or any of the Subsidiaries is now
enforceable, whether by virtue of the stated maturity date of the indebtedness
having been reached or otherwise.

 

14.5Neither ELEQT nor any of the Subsidiaries has received any notice (whose
terms have not been fully complied with or carried out) from any creditor
requiring any payment to be made in respect of any indebtedness (whether arising
pursuant to the Financial Facilities or otherwise), or intimating the
enforcement of any Encumbrance which it holds over the assets of ELEQT or any of
the Subsidiaries.

 

14.6No Encumbrance, guarantee, indemnity or other similar security arrangement
has been given or entered into by ELEQT, a Subsidiary or any third party in
respect of borrowings or other obligations of ELEQT or any of the Subsidiaries
(whether arising pursuant to the Financial Facilities or otherwise), nor has any
such person agreed to do so.

 

14.7Neither ELEQT nor any of the Subsidiaries has given or entered into, or
agreed to give or enter into, any Encumbrance, guarantee, indemnity or other
similar security arrangement in respect of the indebtedness of, or the default
in the performance of any obligation by, of any other person.

 

14.8Neither ELEQT nor any of the Subsidiaries has:

 

(a)factored or discounted any of its debts; or

 

(b)engaged in financing of a type which would not need to be shown or reflected
in the Accounts; or

 

(c)waived any right of set-off it may have against any third party.

 

14.9Neither ELEQT nor any of the Subsidiaries has any outstanding loan capital,
or has lent any money that has not been repaid, and there are no debts owing to
ELEQT or any of the Subsidiaries other than debts that have arisen in the normal
course of the Business.

 

39

 

  

14.10The debts owing to ELEQT or any of the Subsidiaries as reflected in the
Accounts, and all debts subsequently recorded in the books of ELEQT or any of
the Subsidiaries since the Accounts Date:

 

(a)have been realised, or will within three months after the date of this
agreement realise in cash their full amount as included in those Accounts or
books;

 

(b)have not been outstanding (in whole or in part) for more than two months from
its due date for payment; and

 

(c)are not subject to any right of set-off or counterclaim.

 

14.11Neither ELEQT nor any of the Subsidiaries is subject to any arrangement for
receipt or repayment of any grant, subsidy or financial assistance from any
government department or other body.

 

14.12Particulars of the balances of all the bank accounts of ELEQT and the
Subsidiaries, showing the position as at the day immediately preceding the date
of this agreement, have been Disclosed and neither ELEQT nor any of the
Subsidiaries has any other bank account. Since the date of those particulars,
there have been no payments out of those bank accounts other than routine
payments in the ordinary course of the Business.

 

15.Liabilities

 

15.1Neither ELEQT nor any of the Subsidiaries has any liabilities (including
contingent liabilities) other than as disclosed in the Accounts or incurred in
the ordinary and proper course of the Business since the Accounts Date.

 

15.2No sum is owing by ELEQT or any of the Subsidiaries to their auditors,
solicitors or other professional advisers, and no accrual ought properly be made
by it in respect of any such sum.

 

16.Effect of sale of Sale Shares

 

Neither the acquisition of the Sale Shares by EFactor, nor compliance with the
terms of this agreement will:

 

(a)cause ELEQT or any of the Subsidiaries to lose the benefit of any asset,
right or privilege it presently enjoys; or

 

(b)relieve any person of any obligation to ELEQT or any of the Subsidiaries
(whether contractual or otherwise), or enable any person to determine any such
obligation or any right or benefit enjoyed by ELEQT or any of the Subsidiaries,
or to exercise any other right in respect of ELEQT or any of the Subsidiaries;
or

 

(c)result in any customer, client or supplier being entitled to cease dealing
with ELEQT or any of the Subsidiaries, or reducing its level of business, or
changing the terms on which it deals, with ELEQT or any of the Subsidiaries; or

 

(d)result in the loss or impairment of, or any default under, any licence,
authorisation or consent required by ELEQT or any of the Subsidiaries for the
purposes of the Business; or

 

(e)so far as the Warrantors are aware, result in any officer or senior employee
leaving ELEQT or any of the Subsidiaries; or

 

(f)result in the creation, imposition, crystallisation or enforcement of any
Encumbrance on any of the assets of ELEQT or any of the Subsidiaries; or

 

40

 

  

(g)result in any present or future indebtedness of ELEQT or any of the
Subsidiaries becoming due and payable, or capable of being declared due and
payable prior to its stated maturity date, or cause any Financial Facility to be
terminated or withdrawn; or

 

(h)entitle any person to receive from ELEQT or any of the Subsidiaries any
finder’s fee, brokerage or other commission in connection with the Transaction;
or

 

(i)give rise to, or cause to become exercisable, any right of pre-emption over
the Sale Shares; or

 

(j)entitle any person to acquire, or affect the entitlement of any person to
acquire, shares in ELEQT.

 

17.Insolvency

 

17.1Neither ELEQT nor any of the Subsidiaries:

 

(a)is insolvent or unable to pay its debts within the meaning of the Insolvency
Act 1986 or any other applicable insolvency legislation; or

 

(b)has stopped paying its debts as they fall due.

 

17.2No step has been taken in any applicable jurisdiction to initiate any
process by or under which:

 

(a)the ability of the creditors of ELEQT or any of the Subsidiaries to take any
action to enforce their debts is suspended, restricted or prevented; or

 

(b)some or all of the creditors of ELEQT or of any of the Subsidiaries accept,
by agreement or in pursuance of a court order, an amount less than the sums
owing to them in satisfaction of those sums with a view to preventing the
dissolution of ELEQT or any of the Subsidiaries; or

 

(c)a person is appointed to manage the affairs, business and assets of ELEQT or
any of the Subsidiaries on behalf of their creditors; or

 

(d)the holder of a charge over any of the assets of ELEQT or any of the
Subsidiaries is appointed to control the business and/or any assets of ELEQT or
any of the Subsidiaries.

 

17.3In relation to ELEQT and each of the Subsidiaries:

 

(a)no administrator has been appointed;

 

(b)no documents have been filed with the court for the appointment of an
administrator; and

 

(c)no notice of an intention to appoint an administrator has been given by the
relevant company, its Directors or by a qualifying floating charge holder (as
defined in paragraph 14 of Schedule B1 to the Insolvency Act 1986).

 

17.4No process has been initiated which could lead to ELEQT or any of the
Subsidiaries being dissolved and its assets being distributed among the relevant
company's creditors, shareholders or other contributors.

 

17.5No distress, execution or other process has been levied on an asset of ELEQT
or any of the Subsidiaries.

 

17.6None of the Warrantors has:

 

(a)had a bankruptcy petition presented against him or been declared bankrupt; or

 

41

 

  

(b)been served with a statutory demand, or is unable to pay any debts within the
meaning of the Insolvency Act 1986; or

 

(c)entered into, or has proposed to enter into, any composition or arrangement
with, or for, his creditors (including an individual voluntary arrangement); or

 

(d)been subject of any other event analogous to the foregoing in any
jurisdiction.

 

18.Accounts

 

18.1The Accounts have been properly prepared in accordance with US GAAP and in
accordance with the applicable law and regulations in the US.

 

18.2The Accounts:

 

(a)make proper and adequate provision for all bad and doubtful debts and for
depreciation on fixed assets;

 

(b)do not overstate the value of current or fixed assets; and

 

(c)do not understate any liabilities (whether actual or contingent).

 

18.3The Accounts give a true and fair view of the state of affairs of ELEQT and
the Subsidiaries (and, in relation to the consolidated accounts, of ELEQT and
the Subsidiaries, and of ELEQT's Group as a whole) as at the Accounts Date, and
of the profit or loss of ELEQT and the Subsidiaries, and of ELEQT's Group as a
whole, for the financial year ended on that date.

 

18.4The Accounts contain either provision adequate to cover, or full particulars
in notes of, all Taxation (including deferred Taxation) and other liabilities
(whether quantified, contingent, disputed or otherwise) of ELEQT and the
Subsidiaries as at the Accounts Date.

 

18.5The Accounts are not affected by any extraordinary, exceptional or
non-recurring items or any other factor that would make the financial position
and results shown by the Accounts unusual or misleading in any material respect.

 

18.6The Accounts have been filed in accordance with the requirements of all
applicable laws and regulations.

 

18.7The Accounts have been prepared on a basis consistent with the statutory
accounts of ELEQT or the Subsidiaries, or the consolidated accounts of ELEQT and
the Subsidiaries (as the case may be), for the two prior accounting periods
without any change in accounting policies used.

 

18.8The Management Accounts have been prepared on a basis consistent with that
employed in preparing the Accounts and fairly represent the assets and
liabilities and the income and expenditure of ELEQT and the Subsidiaries as at
and to the date for which they have been prepared.

 

19.Changes since Accounts Date

 

Since the Accounts Date:

 

(a)ELEQT and each of the Subsidiaries has conducted the Business in the normal
course and as a going concern;

 

(b)there has been no material adverse change in the turnover, financial position
or prospects of ELEQT or any of the Subsidiaries;

 

(c)neither ELEQT nor any of the Subsidiaries has issued or agreed to issue any
share or loan capital;

 

42

 

  

(d)no dividend or other distribution of profits or assets has been, or agreed to
be, declared, made or paid by ELEQT or any of the Subsidiaries;

 

(e)neither ELEQT nor any of the Subsidiaries has borrowed or raised any money or
given or taken any form of financial security;

 

(f)no capital expenditure has been incurred on any individual item by ELEQT or
any of the Subsidiaries in excess of £5,000 and neither ELEQT nor any of the
Subsidiaries has acquired, invested or disposed of (or agreed to acquire, invest
or dispose of) any individual item in excess of £5,000;

 

(g)no shareholder resolutions of ELEQT or any of the Subsidiaries have been
passed; and

 

(h)ELEQT and each of the Subsidiaries has paid its creditors within the
applicable periods agreed with the relevant creditor and there are no amounts
owing by ELEQT or any of the Subsidiaries which have been outstanding for more
than 60 days.

 

20.Financial and other records

 

20.1All financial and other records of ELEQT and of each of the Subsidiaries
(Records):

 

(a)have been properly prepared and maintained;

 

(b)constitute an accurate record of all matters required by law to appear in
them, and in the case of the accounting records, comply with the requirements of
section 386 and section 388 of the Companies Act 2006;

 

(c)do not contain any material inaccuracies or discrepancies; and

 

(d)are in the possession of ELEQT or the Subsidiary to which they relate.

 

20.2No notice has been received or allegation made that any of the Records are
incorrect or should be rectified.

 

20.3To the extent that any of the Records are maintained or stored
electronically:

 

(a)either ELEQT or a Subsidiary is the owner of any hardware and software
required to access, maintain, copy and use such Records, and such ownership is
not shared with any other person; and

 

(b)such Records are adequately backed-up.

 

21.Assets

 

21.1The assets included in the Accounts, together with any assets acquired since
the Accounts Date and all other assets used by ELEQT or any of the Subsidiaries
in connection with the Business (except for those disposed of since the Accounts
Date in the normal course of business) are:

 

(a)legally and beneficially owned by either ELEQT or a Subsidiary, and the
relevant owner has good and marketable title to such assets;

 

(b)not the subject of any lease, lease hire agreement, hire purchase agreement
or agreement for payment on deferred terms, or any licence or factoring
arrangement; and

 

(c)in the possession and control of ELEQT or a Subsidiary.

 

21.2None of the assets, undertaking or goodwill of ELEQT or any of the
Subsidiaries is subject to an Encumbrance or any agreement or commitment to
create an Encumbrance, and no person has claimed to be entitled to create such
an Encumbrance.

 

43

 

  

21.3The assets owned by ELEQT and the Subsidiaries comprise all the assets
necessary for the continuation of the Business as it is carried on at the date
of this agreement.

 

22.Plant and equipment

 

22.1The vehicles, office and other equipment used by ELEQT or any of the
Subsidiaries in connection with the Business are:

 

(a)in good working order and have been regularly and properly maintained;

 

(b)capable and will continue to be capable of doing the work for which they were
designed; and

 

(c)not surplus to the current or proposed requirements of ELEQT or any of the
Subsidiaries.

 

23.Intellectual property

 

23.1The definition in this paragraph applies in this agreement:

 

Intellectual Property Rights: patents, rights to inventions, copyright and
neighbouring and related rights, moral rights, trademarks and service marks,
business names and domain names, rights in get-up, goodwill and the right to sue
for passing off or unfair competition, rights in designs, rights in computer
software, database rights, rights to use, and protect the confidentiality of,
confidential information (including know-how and trade secrets), and all other
intellectual property rights, in each case whether registered or unregistered
and including all applications and rights to apply for and be granted, renewals
or extensions of, and rights to claim priority from, such rights and all similar
or equivalent rights or forms of protection which subsist or will subsist now or
in the future in any part of the world.

 

23.2Complete and accurate particulars are set out in Part 1 and Part 2 of
Schedule 7 respectively of all registered Intellectual Property Rights
(including applications for such rights) and material unregistered Intellectual
Property Rights owned, used or held for use by ELEQT or any of the Subsidiaries.

 

23.3Complete and accurate particulars are set out in Part 3 and Part 4 of
Schedule 7 respectively of all licences, agreements, authorisations and
permissions (in whatever form and whether express of implied) under which ELEQT
or any of the Subsidiaries:

 

(a)uses or exploits Intellectual Property Rights owned by any third party; or

   

(b)has licensed or agreed to license Intellectual Property Rights to, or
otherwise permitted the use of any Intellectual Property Rights by, any third
party.

 

23.4Except as set out in Part 3 and Part 4 of Schedule 7, ELEQT or the relevant
specified Subsidiary is the sole legal and beneficial owner of (or applicant
for) the Intellectual Property Rights set out in Part 1 and Part 2 of Schedule
7, free from all Encumbrances.

 

23.5ELEQT and the Subsidiaries do not require any Intellectual Property Rights
other than those set out in Part 1 and Part 2 of Schedule 7 in order to carry on
the Business as it is conducted at the date of this agreement.

 

23.6The Intellectual Property Rights set out in Part 1 and Part 2 of Schedule 7
are valid, subsisting and enforceable and nothing has been done, or not been
done, as a result of which any of them has ceased or might cease to be valid,
subsisting or enforceable. In particular:

 

(a)all application and renewal fees and other steps required for the maintenance
or protection of such rights have been paid on time or taken;

  

44

 

 

(b)all confidential information (including know-how and trade secrets) owned or
used by ELEQT or any of the Subsidiaries has been kept confidential and has not
been disclosed to third parties (other than parties who have signed written
confidentiality undertakings in respect of such information, details of which
are set out in the Disclosure Letter);

 

(c)no mark, trade name or domain name identical or similar to any such rights
has been registered, or is being used by any person in the same or a similar
business to that of ELEQT or any of the Subsidiaries, in any country in which
ELEQT or any of the Subsidiaries has registered or is using that mark, trade
name or domain name;

 

(d)so far as the Warrantors are aware, nothing has been done, or not been done,
which might render any registered trademark owned or used by ELEQT or any of the
Subsidiaries liable to be revoked or declared invalid; and

 

(e)so far as the Warrantors are aware, there are and have been no claims,
challenges disputes or proceedings, pending or threatened, in relation to the
ownership, validity or use of such rights.

 

23.7Nothing is due to be done within 30 days of the date of this agreement the
omission of which would jeopardise the maintenance or prosecution of any of the
Intellectual Property Rights owned or used by ELEQT or any of the Subsidiaries
which are registered or the subject of an application for registration

 

23.8So far as the Warrantors are aware, there has been no infringement by any
third party of any of the Intellectual Property Rights set out in Part 1 and
Part 2 of Schedule 7, nor any third party breach of confidence, passing off or
actionable act of unfair competition in relation to the business and assets of
ELEQT or any of the Subsidiaries, and no such infringement, breach of
confidence, passing off or actionable act of unfair competition is current or
anticipated.

 

23.9The agreements and licences set out in Part 3 and Part 4 of Schedule 7:

 

(a)are valid and binding;

 

(b)have not been the subject of any breach or default by any party or of any
event which, with the giving of notice or lapse of time, would constitute a
default;

 

(c)are not the subject of any claim, dispute or proceeding, pending or
threatened; and

 

(d)have, where required, been duly recorded or registered.

 

23.10A change of Control of ELEQT or any of the Subsidiaries will not result in
the termination of, or have a material effect on, any of the Intellectual
Property Rights set out in Schedule 7.

 

23.11The activities of ELEQT, each of the Subsidiaries and of any licensee of
Intellectual Property Rights granted by ELEQT or any of the Subsidiaries:

 

(a)have not infringed, do not infringe and are not likely to infringe the
Intellectual Property Rights of any third party;

 

(b)have not constituted, do not constitute and are not likely to constitute any
breach of confidence, passing off or actionable act of unfair competition; and

 

(c)have not given and do not give rise to any obligation to pay any royalty,
fee, compensation or any other sum whatsoever.

 

45

 

  

24.Information technology

 

24.1The definitions in this paragraph apply in this agreement.

 

IT Contracts: all written and oral arrangements and agreements (including those
currently being negotiated) under which any third party (including, without
limitation, any source code deposit agents) provides or will provide any element
of, or services relating to, the IT System, including leasing, hire purchase,
licensing, maintenance, website hosting, outsourcing, security, back-up,
disaster recovery, insurance and services agreements.

 

IT System: all computer hardware (including network and telecommunications
equipment), databases (Databases) and software (including associated user
manuals, object code and source code and other materials sufficient to enable a
reasonably skilled programmer to maintain and modify the software (Source Code))
(Software) owned, used, leased or licensed by or to ELEQT or any of the
Subsidiaries.

 

Virus: any program which contains malicious code or infiltrates or damages a
computer system without the owner's informed consent or is designed to do so or
which is hostile, intrusive or annoying to the owner or user and has no
legitimate purpose.

 

24.2Complete and accurate particulars of the IT System and all IT Contracts are
set out in Part 1 and Part 2 of Schedule 8 and the Warrantors have no reason to
believe that any of the IT Contracts are not adequate for the purposes of the
Business.

 

24.3Except to the extent provided in the IT Contracts, ELEQT and the
Subsidiaries are the owners of and in possession of the IT System free from
Encumbrances. ELEQT and the Subsidiaries have obtained all necessary rights from
third parties to enable them post-Completion to make exclusive and unrestricted
use of the IT System for the purposes of the Business.

 

24.4The IT Contracts are valid and binding and no act or omission has occurred
which would, if necessary with the giving of notice or lapse of time, constitute
a breach of any such contract.

 

24.5There are and have been no claims, disputes or proceedings arising or
threatened under any of the IT Contracts.

 

24.6None of the IT Contracts is liable to be terminated or otherwise materially
affected by a change of Control of ELEQT or any of the Subsidiaries, and the
Warrantors have no reason to believe that any of the IT Contracts will not be
renewed on the same or substantially the same terms when they expire..

 

24.7ELEQT and the Subsidiaries have either:

 

(a)possession or control of the Source Code of all Software, and there has been
no disclosure of such Source Code; or

 

(b)the right to gain access to the Source Code of all Software under the terms
of source code deposit agreements with the owners of the rights in the relevant
Software and reputable deposit agents (particulars of which are set out in Part
2 of Schedule 8).

   

24.8The elements of the IT System:

 

(a)are functioning properly and in accordance with all applicable specifications
and with the service levels set out in the IT Contracts, and are fit for the
purposes of the Business;

 

(b)are not defective in any respect and have not been materially defective or
materially failed to function during the last 3 years;

  

46

 

 

(c)do not contain any Virus and have not within the last 12 months been infected
by any Virus or accessed by any unauthorised person;

 

(d)have sufficient capacity, scalability and performance to meet the current and
foreseeable peak volume requirements of the Business;

 

(e)include sufficient user information to enable reasonably skilled personnel in
the field to use and operate the IT System without the need for further
assistance; and

 

(f)have been satisfactorily and regularly maintained, all versions of the
Software used by the Business are currently supported by the respective owners
of the Software and the IT System has the benefit of appropriate maintenance and
support agreements, complete and accurate particulars of which are set out in
Part 2 of Schedule 8.

 

24.9There has not been included or used any open-source software (as defined at
http://opensource.org/docs/osd) or any libraries or code licensed from time to
time under the General Public Licence (as set out at
http://www.gnu.org/licenses/gpl.html) or any similar licence in, or in the
development of, the IT System, nor does any element of the IT System operate in
such a way that it is compiled with or linked to any of the foregoing.

 

24.10ELEQT and the Subsidiaries have implemented appropriate procedures in
accordance with best industry practice (including in relation to off-site
working where applicable) for ensuring the security of the IT System and the
confidentiality and integrity of all data stored in it.

 

24.11ELEQT and the Subsidiaries have in place a disaster recovery plan which is
fully documented and would enable the Business to continue if there were
significant damage to or destruction of some or all of the IT System and a data
security breach plan, each of which was made in accordance with best industry
practice. A copy of each plan is attached to the Disclosure Letter.

 

24.12The performance and functionality of the IT System (and any other equipment
and systems owned or used by ELEQT or any of the Subsidiaries or their
respective suppliers or customers which depend on date-programmed control
devices) has not been affected, and will be unaffected, by any changes in dates
(past, present or future). In particular:

 

(a)no value for a current date has caused or will cause any interruption in
operation;

 

(b)date-based functionality has behaved and will behave consistently for all
dates;

 

(c)in all interfaces and data storage, the century in any date is and will be
specified either explicitly or by unambiguous algorithms or inferencing rules;
and

 

(d)all leap years will be recognised as such.

 

24.13The IT System is capable of:

 

(a)performing its functions in multiple currencies, including the euro;

 

(b)satisfying all applicable legal requirements relating to the euro, including
the conversion and rounding rules in EC Regulation 1103/97;

 

(c)displaying and printing the generally accepted symbols for the euro and any
other currency; and

 

47

 

  

(d)processing the generally accepted codes for the euro and any other currency.

 

24.14All Databases are complete and accurate and none has suffered any loss or
corruption.

 

24.15The processing of any personal data comprised in the Databases by ELEQT or
any of the Subsidiaries post-Completion will be in compliance with all
applicable privacy and data protection laws.

 

25.Data protection

 

25.1Neither ELEQT nor any of the Subsidiaries has transferred any personal data
outside the European Economic Area.

 

25.2ELEQT and each of the Subsidiaries has:

 

(a)complied in all respects with all applicable laws and regulations relating to
the protection of personal data (Data Protection Laws); and

 

(b)established the procedures necessary to ensure continued compliance with Data
Protection Laws.

 

25.3Neither ELEQT nor any of the Subsidiaries has received any:

 

(a)notice or complaint under any Data Protection Laws alleging non-compliance
with; or

 

(b)claim for compensation for loss or unauthorised disclosure of data; or

 

(c)notification of an application for rectification or erasure of personal data,

 

and there are no circumstances which may give rise to the giving of any such
notice or the making of any such notification.

 

25.4ELEQT and each of the Subsidiaries has complied with its obligations under
the Privacy and Electronic Communications (EC Directive) Regulations 2003 in
respect of the use of electronic communications (including e-mail, text
messaging, fax machines, automated calling systems and non-automated telephone
calls) for direct marketing purposes.

 

26.Employment

 

26.1The definitions in this paragraph apply in this agreement.

 

Employment Legislation: legislation applying in the relevant jurisdiction
affecting contractual or other relations between employers and their employees
or workers including (but not limited to) any legislation (and any amendment,
extension or re-enactment of such legislation) and any claim arising under
European treaty provisions or directives enforceable against ELEQT or any of the
Subsidiaries by any Employee or Worker.

 

Employee: any person employed by ELEQT or any of the Subsidiaries under a
contract of employment.

 

Worker: any person who personally performs work for ELEQT or any of the
Subsidiaries but who is not in business on their own account or in a
client/customer relationship.

 

26.2The name of each Director is set out in Schedule 2.

 

26.3The Disclosure Letter includes anonymised particulars of each Employee and
Worker and the principal terms of their contract including:

 

(a)ELEQT which employs or engages them;

 

48

 

  

(b)their current remuneration (including any benefits and privileges that ELEQT
or the relevant Subsidiary provides or is bound to provide to them or their
dependants, whether now or in the future);

 

(c)the commencement date of each contract and, if an Employee, the date on which
their continuous service began;

 

(d)the length of notice necessary to terminate each contract or, if a fixed
term, the expiry date of the fixed term and details of any previous renewals;

 

(e)the type of contract (whether full or part-time or other);

 

(f)their date of birth;

 

(g)any country in which the Employee or Worker works or performs services and/or
is paid; and

 

(h)the law governing the contract.

 

26.4The Disclosure Letter includes anonymised details of all persons who are
Workers and who are providing services to ELEQT or any of the Subsidiaries under
an agreement which is not a contract of employment with ELEQT or the relevant
Subsidiary (including, in particular, where the individual acts as a consultant
or is on secondment from an employer which is not a member of ELEQT's Group) and
the particulars of the terms on which the individual provides services,
including:

 

(a)the company which engages them;

 

(b)the remuneration of each individual (including any benefits and privileges
that ELEQT or any of the Subsidiaries provides or is bound to provide to them or
their dependants, whether now or in the future);

 

(c)the length of notice necessary to terminate each agreement or, if a fixed
term, the expiry date of the fixed term and details of any previous renewals;

 

(d)any country in which the individual provides services; and

 

(e)the law governing the agreement.

 

26.5The Disclosure Letter includes anonymised details of all Employees and
Workers who are on secondment, maternity, paternity, adoption or other leave or
who are absent due to ill-health or for any other reason.

 

26.6No notice to terminate the contract of employment of any Employee or Worker
(whether given by the relevant employer or by the Employee or Worker) is
pending, outstanding or threatened and no dispute under any Employment
Legislation or otherwise is outstanding between ELEQT or any of the Subsidiaries
and any current or former:

 

(a)Employee relating to their employment, its termination or any reference given
by ELEQT or any of the Subsidiaries regarding such Employee; or

 

(b)Worker relating to their contract, its termination or any reference given by
ELEQT or any of the Subsidiaries regarding such Worker.

 

26.7Every Employee or Worker who requires permission to work in the relevant
country has current and appropriate permission to work in that country.

 

26.8No offer of employment or engagement has been made by ELEQT or any of the
Subsidiaries that has not yet been accepted, or which has been accepted but
where the employment or engagement has not yet started.

 

26.9The acquisition of the Sale Shares by EFactor and compliance with the terms
of this agreement will not entitle any Directors, officers or Employees of ELEQT
or any of the Subsidiaries to terminate their employment or receive any payment
or other benefit.

 

49

 

  

26.10All contracts between ELEQT or any of the Subsidiaries and its Employees
and Workers are terminable at any time on not more than three months' notice
without compensation (other than for unfair dismissal or a statutory redundancy
payment) or any liability on the part of ELEQT or any of the Subsidiaries other
than wages, commission or pension.

 

26.11Neither ELEQT nor any of the Subsidiaries is a party to, bound by or
proposing to introduce in respect of any Director or Employee any redundancy
payment scheme in addition to statutory redundancy pay, nor is there any agreed
procedure for redundancy selection.

 

26.12Neither ELEQT nor any of the Subsidiaries (nor any predecessor or owner of
any part of their respective businesses) has been a party to a relevant transfer
for the purposes of the Acquired Rights Directive (or equivalent in any
jurisdiction) affecting any of the Employees or any other persons engaged in the
business of ELEQT or any of the Subsidiaries.

 

26.13Neither ELEQT, nor any of the Subsidiaries is a party to, bound by or
proposing to introduce for the benefit of any current or former director of
ELEQT or any of the Subsidiaries, or any Employee or Worker (or any of their
respective associates or nominees), any incentive scheme or arrangement
(including, without limitation, any share option or share award plan, and any
commission, profit sharing or bonus scheme).

 

26.14There are no incentive schemes or other incentive arrangements (including,
without limitation, any share option or share award plan, and any commission,
profit sharing or bonus scheme) established by any member of ELEQT's Group or
any other person, in which any current or former director of ELEQT or any of the
Subsidiaries, or any Employee or Worker (or any of their respective associates
or nominees) participates or has participated.

 

26.15Neither ELEQT nor any of the Subsidiaries has incurred any actual or
contingent liability in connection with the termination of the employment of any
of its Employees (including redundancy payments) or for a failure to comply with
any order for the reinstatement or re-engagement of any Employee.

 

26.16Neither ELEQT nor any of the Subsidiaries has incurred any liability for a
failure to provide information or to consult with its Employees under any
Employment Legislation.

 

26.17Neither ELEQT nor any of the Subsidiaries has made or agreed to make a
payment or provided or agreed to provide a benefit to any current or former
director, officer, Employee or Worker or to their dependants in connection with
the actual or proposed termination or suspension of employment or variation of
an employment contract.

 

(a)Neither ELEQT nor any of the Subsidiaries has offered, promised or agreed to
any future variation in the terms of employment or engagement of any Employee or
Worker.

 

26.18Neither ELEQT nor any of the Subsidiaries has transferred or agreed to
transfer any Employee or Worker from working for ELEQT or any of the
Subsidiaries, or induced any Employee or Worker to resign their employment with
ELEQT or any of the Subsidiaries.

 

26.19There are no sums owing to any current or former Employee or Worker other
than reimbursement of expenses, wages for the current salary period and holiday
pay for the current holiday year.

 

26.20There are no loans or notional loans to any current or former director of
ELEQT of any or the Subsidiaries, or any Employee or Worker (or any of their
respective nominees or associates) made or arranged by ELEQT or any of the
Subsidiaries.

 

50

 

  

26.21The Disclosure Letter includes:

 

(a)copies of all contracts, handbooks, policies and other documents which apply
to any Employee or Worker; and

 

(b)details of any unwritten agreements or arrangements which may affect any
Employee or Worker.

 

26.22In respect of each Employee and Worker, ELEQT and the Subsidiaries have:

 

(a)performed all obligations and duties they are required to perform (and
settled all outstanding claims); and

 

(b)maintained adequate, suitable and up-to-date records.

 

26.23No Employee is subject to a current disciplinary warning or procedure.

 

26.24No securities, options over securities or interests in securities have been
issued, granted or transferred to any current or former director of ELEQT or any
of the Subsidiaries, or any Employee or Worker (or any of their respective
nominees or associates), which may give rise to a liability of ELEQT or any of
the Subsidiaries to account for PAYE income tax or national insurance
contributions (or equivalent liabilities in another jurisdiction).

 

26.25There are no employee benefit trusts, family benefit trusts or similar
arrangements established by ELEQT or any of the Subsidiaries under which any
current or former director of ELEQT or any of the Subsidiaries, or any Employee
or Worker (or any of their respective nominees or associates) may benefit in any
form.

 

27.Retirement benefits

 

27.1All arrangements under which ELEQT or any of the Subsidiaries has or may
have any obligation (whether or not legally binding) to provide or contribute
towards pension, lump-sum, death, ill-health, disability or accident benefits in
respect of its past or present officers and employees are Disclosed. No proposal
or announcement has been made to any employee or officer of ELEQT or of any of
the Subsidiaries as to the introduction, continuance, increase or improvement
of, or the payment of a contribution towards, any other pension, lump-sum,
death, ill-health, disability or accident benefit.

 

28.Property

 

28.1The definitions in this paragraph apply in this agreement.

 

Lease: the lease under which each Property is held.

 

Previously-owned Property: any land and buildings that have, at any time before
the date of this agreement, been owned (under whatever tenure) and/or occupied
and/or used by ELEQT or any of the Subsidiaries, but which are either no longer
owned, occupied or used by ELEQT or any of the Subsidiaries, or are owned,
occupied or used by one of them but pursuant to a different lease, licence,
transfer or conveyance.

 

28.2The particulars of the Properties set out in Schedule 9 are true, complete
and accurate.

 

28.3The Properties are the only land and buildings owned, used or occupied by
ELEQT and the Subsidiaries.

 

28.4Neither ELEQT nor any of the Subsidiaries has any right of ownership, right
of use, option, right of first refusal or contractual obligation to purchase, or
any other legal or equitable right, estate or interest in, or affecting, any
land or buildings other than the Properties.

 

51

 

  

28.5Neither ELEQT nor any of the Subsidiaries (nor any other company that has at
any time been a subsidiary of ELEQT) has any actual or contingent liability in
respect of Previously-owned Property.

 

28.6Neither ELEQT nor any of the Subsidiaries (nor any other company that has at
any time been a subsidiary of ELEQT) has given any guarantee or indemnity for
any liability relating to any of the Properties, any Previously-owned Property
or any other land or buildings.

 

28.7ELEQT, or the Subsidiary identified as the proprietor in Schedule 9 is in
possession and actual occupation of the whole of each of the Properties on an
exclusive basis, and no right of occupation or enjoyment has been acquired or is
in the course of being acquired by any third party, and neither ELEQT nor any of
the Subsidiaries has granted, or agreed to grant, any right of occupation or
enjoyment in respect of the Properties to any third party.

 

28.8The Warrantors have Disclosed:

 

(a)in relation to each Lease:

 

(i)evidence of the reversioner's title to the Lease;

 

(ii)all consents required under the Lease;

 

(iii)copies of all assignments of the Lease; and

 

(iv)evidence of the current annual rent payable under the Lease.

 

28.9The unexpired residue of the term granted by each Lease is vested in ELEQT
or the Subsidiaries and is valid and subsisting against all persons, including
any person in whom any superior estate or interest is vested.

 

28.10In relation to each Lease, the landlord and each lessee, tenant, licensee
or occupier has observed and performed in all material respects all covenants,
restrictions, stipulations and other encumbrances and there has not been
(expressly or impliedly) any waiver of or acquiescence to any breach of them.

 

28.11In relation to each Lease, all principal rent and additional rent and all
other sums payable by each lessee, tenant, licensee or occupier under each Lease
(Lease Sums) have been paid as and when they became due and no Lease Sums have
been:

 

(a)set off or withheld; or

 

(b)commuted, waived or paid in advance of the due date for payment.

 

28.12The Properties are not subject to the payment of any outgoings other than
non-domestic local business rates and water and sewerage charges, principal
rent, insurance premiums and service charges, and all outgoings have been paid
when due and none is disputed.

 

28.13All covenants, restrictions, stipulations and other encumbrances affecting
the Properties have been fully observed and performed and no notice of any
alleged breach has been received by ELEQT (or its predecessors in title) or the
Subsidiaries (or their predecessors in title).

 

28.14There are no circumstances which (with or without taking other action)
would entitle any third party to exercise a right of entry to, or take
possession of all or any part of the Properties, or which would in any other way
affect or restrict the continued possession, enjoyment or use of any of the
Properties.

 

28.15All of the Properties are actively used by ELEQT or the Subsidiaries in
connection with the Business.

 

52

 

  

28.16ELEQT and the Subsidiaries have complied with all applicable statutory and
bye-law requirements, and all regulations, rules and delegated legislation,
relating to the Properties.

 

28.17Each of the Properties is in a good state of repair and condition.

 

28.18There are no development works, redevelopment works or fitting-out works
outstanding in respect of any of the Properties.

 

28.19No notices, complaints or requirements have been issued or made (whether
formally or informally) by any competent authority or undertaking exercising
statutory or delegated powers in relation to any of the Properties, and so far
as the Warrantors are aware there is no matter or circumstance which could lead
to any such notice, complaint or requirement being issued or made.

 

29.Anti-corruption

 

29.1The definition in this paragraph applies in this agreement.

 

Associated Person: means in relation to a company, a person (including an
employee, agent or subsidiary) who performs or has performed services for or on
behalf of that company.

 

29.2Neither ELEQT nor any of the Subsidiaries is or has at any time engaged in
any activity, practice or conduct which would constitute an offence under the
Bribery Act 2010.

 

29.3No Associated Person of ELEQT or any of the Subsidiaries has bribed another
person (within the meaning given in section 7(3) of the Bribery Act 2010)
intending to obtain or retain business or an advantage in the conduct of
business for ELEQT and/or any of the Subsidiaries, and ELEQT and each of the
Subsidiaries has in place adequate procedures in line with the guidance
published by the Secretary of State under section 9 of the Bribery Act 2010
designed to prevent their Associated Persons from undertaking any such conduct.

 

29.4Neither ELEQT nor any of the Subsidiaries nor any of their Associated
Persons is or has been the subject of any investigation, inquiry or enforcement
proceedings by any governmental, administrative or regulatory body or any
customer regarding any offence or alleged offence under the Bribery Act 2010 (or
equivalent in any other jurisdiction), and no such investigation, inquiry or
proceedings have been threatened or are pending and there are no circumstances
likely to give rise to any such investigation, inquiry or proceedings.

 

30.Competition

 

30.1The definition in this paragraph applies in this agreement.

 

Competition Law: the national and directly effective legislation of any
jurisdiction which governs the conduct of companies or individuals in relation
to restrictive or other anti-competitive agreements or practices (including, but
not limited to, cartels, pricing, resale pricing, market sharing, bid rigging,
terms of trading, purchase or supply and joint ventures), dominant or monopoly
market positions (whether held individually or collectively) and the control of
acquisitions or mergers.

 

30.2Neither ELEQT nor any of the Subsidiaries is engaged in any agreement,
arrangement, practice or conduct which amounts to an infringement of the
Competition Law of any jurisdiction in which ELEQT or the Subsidiaries conduct
business and none of their respective directors, officers or employees is or has
been engaged in any activity which would be an offence or infringement under any
such Competition Law.

 

53

 

  

30.3Neither ELEQT nor any of the Subsidiaries, nor any of their respective
directors, officers or employees, is the subject of any investigation, inquiry
or proceedings by any relevant government body, agency, authority or court in
connection with any actual or alleged infringement of the Competition Law of any
jurisdiction in which ELEQT or any of the Subsidiaries conducts business.

 

30.4No such investigation, inquiry or proceedings as referred to in paragraph
30.3 of Part 1 of this Schedule have been threatened or are pending and there
are no circumstances likely to give rise to any such investigation, inquiry or
proceedings.

 

30.5Neither ELEQT nor any of the Subsidiaries is affected by any existing or
pending decisions, judgments, orders or rulings of any relevant government body,
agency, authority or court responsible for enforcing the Competition Law of any
jurisdiction, nor have they given any undertakings or commitments to such bodies
which affect the conduct of the Business.

 

Part 2. Tax Warranties

 

1.General

 

1.1All notices, returns (including any land transaction returns), reports,
accounts, computations, statements, assessments, claims, disclaimers, elections
and registrations and any other necessary information which have, or should
have, been submitted by ELEQT or any Subsidiary to any Taxation Authority for
the purposes of Taxation have been made on a proper basis, were submitted within
applicable time limits and were accurate and complete in all material respects.
None of the above is, or is likely to be, the subject of any material dispute
with any Taxation Authority.

 

1.2All Taxation (whether of the UK or elsewhere), for which ELEQT or any
Subsidiary has been liable or is liable to account, has been duly paid (insofar
as such Taxation ought to have been paid) by the due dates and no penalties,
fines, surcharges or interest have been incurred.

 

1.3ELEQT and each Subsidiary maintains complete and accurate records, invoices
and other information in relation to Taxation, that meet all legal requirements
and enable the tax liabilities of ELEQT and any Subsidiary to be calculated
accurately in all material respects.

 

The Disclosure Letter Discloses whether or not ELEQT or any Subsidiary is a
large company within the meaning of regulation 3 of the Corporation Tax
(Instalment Payment) Regulations 1998 and, if applicable, gives details of
instalments of corporation tax paid in respect of any current or preceding
accounting periods.

 

1.4The disclosure letter contains details of any payments or loans made to, any
assets made available or transferred to, or any assets earmarked, however
informally, for the benefit of, any Employee or former Employee (or any
associate of such Employee or former Employee) of ELEQT or any Subsidiary by an
employee benefit trust or another third party, and details of any trust or
arrangement capable of conferring such a benefit.

 

1.5The Disclosure Letter contains details of all concessions, agreements and
arrangements that ELEQT or any Subsidiary has entered into with any Tax
Authority.

 

1.6Neither ELEQT nor any Subsidiary is, or will become, liable to make to any
person (including any Taxation Authority) any payment in respect of any
liability to Taxation which is primarily or directly chargeable against, or
attributable to, any other person (other than ELEQT or any Subsidiary).

 

1.7The Accounts make full provision or reserve within generally accepted
accounting principles for all Taxation for which ELEQT or the relevant
Subsidiary is accountable at that date. Proper provision has been made and shown
in the Accounts for deferred Taxation in accordance with US GAAP.

 

54

 

  

2.Chargeable gains

 

2.1The gross book value shown in, or adopted for the purposes of, the Accounts
as the value of each of the assets of ELEQT or any Subsidiary, on the disposal
of which a chargeable gain or allowable loss could arise, does not exceed the
amount which on a disposal of such asset at the date of this agreement would be
deductible, in each case, disregarding any statutory right to claim any
allowance or relief other than amounts deductible under section 38 of TCGA 1992.

 

3.Capital Losses

 

3.1Details of all capital losses available for carry-forward by ELEQT or any
Subsidiary are set out in the Disclosure Letter.

 

4.Distributions and other payments

 

4.1No distribution or deemed distribution, within the meaning of section 1000 or
sections 1022-1027 of CTA 2010, has been made (or will be deemed to have been
made) by ELEQT or any Subsidiary, except dividends shown in their statutory
accounts, and neither ELEQT nor any Subsidiary is bound to make any such
distribution.

 

5.Loan relationships

 

5.1All financing costs, including interest, discounts and premiums payable by
ELEQT or any Subsidiary in respect of its loan relationships within the meaning
of Chapter 8 of Part 5 of CTA 2009 are eligible to be brought into account by
ELEQT or the Subsidiaries as a debit for the purposes of Part 5 of CTA 2009 at
the time, and to the extent that such debits are recognised in the statutory
accounts of ELEQT or the Subsidiaries.

 

6.Close companies

 

6.1Any loans or advances made, or agreed to be made, by ELEQT or any Subsidiary
within sections 455, 459 and 460 of CTA 2010 have been disclosed in the
Disclosure Letter. Neither ELEQT nor any Subsidiary has released or written off,
or agreed to release or write off, the whole or any part of any such loans or
advances.

 

7.Group relief

 

7.1Except as provided in the Accounts, neither ELEQT nor any Subsidiary is, or
will be, obliged to make or be entitled to receive any payment for the surrender
of group relief (within the meaning of Part 5 of CTA 2010) to or by ELEQT or any
Subsidiary in respect of any period ending on or before Completion, or any
payment for the surrender of the benefit of an amount of advance corporation tax
or any repayment of such a payment.

 

8.Groups of companies

 

8.1Neither ELEQT nor any Subsidiary has entered into, or agreed to enter into,
an election pursuant to sections 171A or 179A of TCGA 1992, paragraph 16 of
Schedule 26 to the Finance Act 2008, or section 792 of CTA 2009 (or paragraph 66
of Schedule 29 to the Finance Act 2002).

 

8.2Neither the execution nor completion of this agreement, nor any other event
since the Accounts Date, will result in any chargeable asset being deemed to
have been disposed of and re-acquired by ELEQT or any Subsidiary for Taxation
purposes or to the claw-back of any relief previously given.

 

8.3Neither ELEQT nor any Subsidiary has ever been party to any arrangements
pursuant to sections 59F-G of TMA 1970 (group payment arrangements).

 

55

 

  

9.Intangible assets

 

For the purposes of this paragraph 9, references to intangible fixed assets mean
intangible fixed assets and goodwill within the meaning of Part 8 of CTA 2009.

 

9.1The Disclosure Letter sets out the amount of expenditure, as reduced by any
claim under section 791 of CTA 2009, on each of the intangible fixed assets,
within the meaning of Part 8 of CTA 2009, of ELEQT and the Subsidiaries and
provides the basis on which any debit relating to that expenditure has been
taken into account in the Accounts or, in relation to expenditure incurred since
the Accounts Date, will be available to ELEQT or any Subsidiary. No
circumstances have arisen since the Accounts Date by reason of which that basis
might change.

 

9.2Neither ELEQT nor any Subsidiary holds or has held any right to which Part 8A
of CTA 2010 applies or an exclusive licence in respect of such right within
section 357BA of CTA 2010.

 

10.Company residence and overseas interests

 

10.1ELEQT and the Subsidiaries have, throughout the past seven years, been
resident in their country of incorporation for all Taxation purposes and have
not, at any time in the past seven years, been treated as resident in any other
jurisdiction for the purposes of any double taxation arrangements or for any
other tax purposes.

 

10.2Neither ELEQT nor any Subsidiary holds, or within the last seven years has
held, shares in a company (other than a Subsidiary) which is not resident in the
UK, a material interest in an offshore fund, or a permanent establishment
outside the UK.

 

11.Transfer pricing

 

11.1All transactions or arrangements made by ELEQT or any Subsidiary have been
made on arm's length terms and the processes by which prices and terms have been
arrived at have, in each case, been fully documented. No notice, enquiry or
adjustment has been made by any Taxation Authority in connection with any such
transactions or arrangements.

 

12.Anti-avoidance

 

12.1Neither ELEQT nor any Subsidiary has been involved in any transaction or
series of transactions the main purpose, or one of the main purposes of which
was the avoidance of tax or any transaction that produced a tax loss with no
corresponding commercial loss.

 

13.Value Added Tax

 

Each of ELEQT and the Subsidiaries are taxable persons and are each registered
for the purposes of VAT with quarterly prescribed accounting periods.

 

13.1Neither ELEQT, nor any Subsidiary, is or has been in the period of six years
ending with the date of Completion, a member of a group of companies for the
purposes of section 43 VATA 1994.

 

13.2All supplies made by ELEQT or any Subsidiary are taxable supplies. Neither
ELEQT nor any Subsidiary has been, or will be, denied full credit for all input
tax paid or suffered by it.

 

13.3Neither ELEQT nor any Subsidiary owns any assets which are capital items
subject to the capital goods scheme under Part XV of the VAT Regulations 1995,
nor has exercised any option to tax under Part 1 of Schedule 10 to the VATA
1994.

 

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Schedule 6     Tax Covenant

 

1.Interpretation

 

1.1The definitions and rules of interpretation in this paragraph apply in this
Tax Covenant.

 

Accounts Relief: any Relief that has been taken into account in computing (and
so reducing or eliminating) any provision for deferred Tax in the Accounts.

 

Dispute: any dispute, appeal, negotiations or other proceedings in connection
with a Tax Claim.

 

Event: includes (without limitation), the expiry of a period of time, ELEQT or
any Subsidiary becoming or ceasing to be associated with any other person for
any Tax purpose or ceasing to be or becoming resident in any country for any Tax
purpose, the death or the winding up or dissolution of any person, the earning,
receipt or accrual for any Tax purpose of any income, profit or gains, the
incurring of any loss or expenditure, and any transaction (including the
execution and completion of all provisions of this agreement), event, act or
omission whatsoever, and any reference to an Event occurring on or before a
particular date shall include Events which, for Tax purposes, are deemed to
have, or are treated or regarded as having, occurred on or before that date.

 

Liability for Taxation:

 

(a)any liability of ELEQT or any Subsidiary to make a payment of or in respect
of Tax, whether or not the same is primarily payable by ELEQT or the relevant
Subsidiary and whether or not ELEQT or the relevant Subsidiary has or may have
any right of reimbursement against any other person or persons, in which case
the amount of the Liability for Taxation shall be the amount of the actual
payment; and

 

(b)the Loss of any Accounts Relief in which case the amount of the Liability for
Taxation will be the amount of Tax which would (on the basis of Tax rates
current at the date of such Loss) have been saved but for such Loss, assuming
for this purpose that ELEQT or the relevant Subsidiary had sufficient profits or
was otherwise in a position to use the Relief or where the Relief is the right
to repayment of Tax, the amount of the repayment.

 

Loss: any reduction, modification, loss, counteraction, nullification,
utilisation, disallowance or claw-back for whatever reason.

 

Relief: includes any loss, relief, allowance, credit, exemption or set off in
respect of Tax or any deduction in computing income, profits or gains for the
purposes of Tax and any right to a repayment of Tax.

 

Saving: the reduction or elimination of any liability of ELEQT or a Subsidiary
to make an actual payment of corporation tax in respect of which the Sellers
would not have been liable under paragraph 2, by the use of any Relief arising
wholly as a result of a Liability for Taxation in respect of which the Sellers
have made a payment under paragraph 2.

 

Tax or Taxation: all forms of taxation and statutory, governmental, state,
federal, provincial, local, government or municipal charges, duties, imposts,
contributions, levies, withholdings or liabilities wherever chargeable and
whether of the UK or any other jurisdiction (including, for the avoidance of
doubt, National Insurance contributions in the UK and corresponding obligations
elsewhere) and any penalty, fine, surcharge, interest, charges or costs relating
thereto (including interest and penalties arising from the failure of ELEQT or
any Subsidiary to make adequate instalment payments under the Corporation Tax
(Instalments Payments) Regulations 1998 (SI 1998/3175) in any period ending on
or before Completion).

 

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Tax Claim: any assessment, notice, demand, letter or other document issued or
action taken by or on behalf of any Taxation Authority, self-assessment or other
occurrence from which it appears that ELEQT or a Subsidiary is or may be subject
to a Liability for Taxation or other liability in respect of which the Sellers
or Warrantors are or may be liable under this Tax Covenant.

 

Taxation Authority: any government, state or municipality or any local, state,
federal or other fiscal, revenue, customs or excise authority, body or official
competent to impose, administer, levy, assess or collect Tax in the UK or
elsewhere.

 

Taxation Statute: any directive, statute, enactment, law or regulation
wheresoever enacted or issued, coming into force or entered into providing for
or imposing any Tax and shall include orders, regulations, instruments, by-laws
or other subordinate legislation made under the relevant statute or statutory
provision and any directive, statute, enactment, law, order, regulation or
provision which amends, extends, consolidates or replaces the same or which has
been amended, extended, consolidated or replaced by the same.

 

1.2References to gross receipts, income, profits or gains earned, accrued or
received shall include any gross receipts, income, profits or gains deemed under
the relevant Taxation Statute to have been or treated or regarded as earned,
accrued or received.

 

1.3References to a repayment of Tax shall include any repayment supplement or
interest in respect of it.

 

1.4Any reference to something occurring in the ordinary course of business shall
not include:

 

(a)anything that involves, or leads directly or indirectly to, any liability of
ELEQT or the relevant Subsidiary to Tax that is, or but for an election would
have been, the primary liability of, or properly attributable to, or due from
another person (other than EFactor);

 

(b)anything that relates to or involves the acquisition or disposal of an asset
or the supply of services (including the lending of money, or the hiring or
licensing of tangible or intangible property) in a transaction which is not
entered into on arm's length terms;

 

(c)anything that relates to or involves the making of a distribution for Tax
purposes, the creation, cancellation or re-organisation of share or loan
capital, the creation, cancellation or repayment of any connected-party debt or
ELEQT or any Subsidiary becoming or ceasing to be or being treated as ceasing to
be a member of a group of companies or becoming or ceasing to be associated or
connected with any other company for any Tax purposes;

 

(d)anything which relates to any scheme, transaction or arrangement designed
partly or wholly or containing steps or stages partly or wholly for the purpose
of avoiding or reducing or deferring a Liability for Taxation;

 

(e)anything that gives rise to a Liability for Taxation on deemed (as opposed to
actual) profits or to the extent that it gives rise to a Liability for Taxation
on an amount of profits greater than the difference between the sale proceeds of
an asset and the amount attributable to that asset in the Accounts or, in the
case of an asset acquired since the Accounts Date, the cost of that asset; or

 

(f)anything that involves, or leads directly or indirectly to, a change of
residence of ELEQT or any Subsidiary for Tax purposes.

 

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1.5Unless the contrary intention appears, words and expressions defined in this
agreement have the same meaning in this Tax Covenant and any provisions in this
agreement concerning matters of construction or interpretation also apply in
this Tax Covenant.

 

1.6Any stamp duty which is charged on any document, or in the case of a document
which is outside the UK, any stamp duty which would be charged on the document
if it were brought into the UK, which is necessary to establish the title of
ELEQT or any Subsidiary to any asset, and any interest fine or penalty relating
to such stamp duty, shall be deemed to be a liability of ELEQT or the relevant
Subsidiary to make an actual payment of Taxation in consequence of an Event
arising on the last day on which it would have been necessary to pay such stamp
duty in order to avoid any liability to interest or penalties arising on it.

 

2.Covenant

 

2.1The Warrantors covenant with EFactor that, subject to the provisions of this
Tax Covenant, the Warrantors shall be jointly and severally liable to pay to
ELEQT or the relevant Subsidiary an amount equal to any:

 

(a)Liability for Taxation resulting from or by reference to any Event occurring
on or before Completion or in respect of any gross receipts, income, profits or
gains earned, accrued or received by ELEQT or a Subsidiary on or before
Completion, whether or not such liability has been discharged on or before
Completion;

 

(b)Liability for Taxation, including liability for payments in respect of
Taxation, which arises solely as a result of the relationship for Tax purposes
of ELEQT or any Subsidiary with any person other than EFactor, whenever arising;

 

(c)Liability for Taxation which arises as a result of any Event which occurs
after Completion pursuant to a legally binding obligation (whether or not
conditional) entered into by ELEQT on or before Completion otherwise than in the
ordinary course of business;

 

(d)Liability for Taxation which arises at any time (being a liability for ELEQT
to account for income tax or National Insurance contributions) in respect of the
grant, exercise, surrender, exchange or other disposal of an option or other
right to acquire securities or in respect of any acquisition, holding or
disposal of employment-related securities (as defined for the purposes of Part 7
of the Income Tax (Employment and Pensions) Act 2003) where the acquisition of
the security or the grant of the option or other right to acquire the security
occurred on or before Completion;

 

(e)Liability for Taxation that arises at any time under Part 7A of ITEPA 2003,
including any liability arising as a consequence of any payments or loans made
to, any assets made available or transferred to, or any assets earmarked,
however informally, for the benefit of, any employee or former employee of ELEQT
or any Subsidiary, or for the benefit of any relevant person, by an employee
benefit trust or another third party where the arrangement giving rise to the
charge was entered into at a time when the third party was acting on the
instructions of, or for the benefit of, the Sellers or an associate of any of
the Sellers;

 

(f)Liability for Taxation being a liability for inheritance tax which:

 

(i)is a liability of ELEQT or any Subsidiary and arises as a result of a
transfer of value occurring or being deemed to occur on or before Completion
(whether or not in conjunction with the death of any person whensoever
occurring);

 

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(ii)has given rise at Completion to a charge on any of the Sale Shares or assets
of ELEQT or any Subsidiary; or

 

(iii)gives rise after Completion to a charge on any of the Sale Shares in or
assets of ELEQT or any Subsidiary as a result of the death of any person within
seven years of a transfer of value which occurred before Completion;

 

(g)costs and expenses (including legal costs on a full indemnity basis),
properly and reasonably incurred by ELEQT or any Subsidiary in connection with
any Liability for Taxation or other liability in respect of which the Sellers
are liable under this Schedule, any Tax Claim or taking or defending any action
under this Schedule.

 

2.2For the purposes of this Tax Covenant, in determining whether a charge on the
shares in or assets of ELEQT or any Subsidiary arises at any time or whether
there is a liability for inheritance tax, the fact that any Tax may be paid in
instalments shall be disregarded and such Tax shall be treated for the purposes
of this Tax Covenant as becoming due or to have become due and a charge as
arising or having arisen on the date of the transfer of value or other date or
Event on or in respect of which it becomes payable or arises.

 

2.3The provisions of section 213 of IHTA 1984 (refund by instalments) shall be
deemed not to apply to any liability for inheritance tax within this paragraph
2.

 

3.Payment date and interest

 

3.1Payment by the Warrantors in respect of any liability under this Schedule
must be made in cleared and immediately available funds on the following days:

 

(a)in the case of a Liability for Taxation that involves an actual payment of or
in respect of Tax, the later of 5 Business Days before the due date for payment
and 5 Business Days after the date on which EFactor serves notice on the
Managers requesting payment;

 

(b)in a case that involves the loss of a Relief (other than a right to repayment
of Tax), the last date on which the Tax is or would have been required to be
paid to the relevant Taxation Authority in respect of the earlier of:

 

(i)the period in which the Loss of the Relief gives rise to an actual liability
to pay tax; or

 

(ii)the period in which the Loss of the Relief occurs (assuming for this purpose
that ELEQT had sufficient profits or was otherwise in a position to use the
Relief); or

 

(c)in a case that falls within paragraph of the definition of Liability for
Taxation, the date on which the Tax saved by ELEQT or the relevant Subsidiary is
or would have been required to be paid to the relevant Taxation Authority.

 

3.2Any dispute as to the amount specified in any notice served under paragraphs
1.1(a) to 3.1(c) shall be determined by the accountants of ELEQT or the relevant
Subsidiary for the time being, acting as experts and not as arbitrators (the
costs of that determination being shared equally by the Warrantors and ELEQT).

 

3.3If any sums required to be paid by the Warrantors under this Tax Covenant are
not paid on the date specified in paragraph 3.1, then, except to the extent that
the Warrantors' liability under paragraph 2 compensates ELEQT or the relevant
Subsidiary for the late payment by virtue of it extending to interest and
penalties, such sums shall bear interest (which shall accrue from day to day
after as well as before any judgment for the same) at the rate of 2% per annum
over the base rate from time to time of HSBC or (in the absence thereof) at such
similar rate as EFactor shall select from the day following the due date up to
and including the day of actual payment of such sums, such interest to be
compounded quarterly.

 

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4.Exclusions

 

4.1The covenant contained in paragraph 2 above shall not cover any Liability for
Taxation to the extent that:

 

(a)it arises or is increased as a result only of any change in the law of Tax
(other than a change targeted specifically at countering a tax avoidance scheme)
announced and coming into force after Completion (whether relating to rates of
Tax or otherwise) or the withdrawal of any extra-statutory concession previously
made by a Taxation Authority (whether or not the change purports to be effective
retrospectively in whole or in part);

 

(b)it would not have arisen but for a change after Completion in the accounting
bases on which ELEQT or any Subsidiary values its assets (other than a change
made to comply with US GAAP);

 

(c)EFactor, ELEQT or a Subsidiary is compensated for any such matter under any
other provision of this agreement;

 

(d)there is available to ELEQT or any Subsidiary a Relief; or

 

(e)it would not have arisen but for a voluntary act, transaction or omission of
ELEQT or any Subsidiary or EFactor outside the ordinary course of business after
Completion and which EFactor was aware or ought reasonably to have been aware
would give rise to the Liability for Taxation or other liability in question.

 

4.2For the purposes of paragraph 4.1(e), an act will not be regarded as
voluntary if undertaken pursuant to a legally binding obligation entered into by
ELEQT on or before Completion or imposed on ELEQT by any legislation whether
coming into force before, on or after Completion or for the purpose of avoiding
or mitigating a penalty imposable by such legislation, or if carried out at the
written request of the Warrantors.

 

5.Limitations

 

5.1The liability of the Warrantors under paragraph 2 will terminate on:

 

(a)the seventh anniversary of Completion, in respect of any claim for a
liability arising from a loss of tax brought about fraudulently or deliberately
by ELEQT or any related person; or

 

(b)the seventh anniversary of Completion, in any other case,

 

except in respect of any claim under paragraph 2 of which notice in writing is
given to the Warrantors before that relevant date containing, to the extent
reasonably practicable, a description of such claim and the estimated total
amount of the claim.

 

5.2Subject to paragraphs 5.3 and 1.1, the aggregate liability of the Warrantors
under paragraph 2 and for all Substantiated Claims, when taken together, shall
not exceed $500,000

 

5.3The amount of the aggregate liability of the Warrantors set out in paragraph
5.2 will be increased by any amount received by the Warrantors by way of payment
or set off under paragraph 6 (Savings).

 

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6.Savings

 

If (at the Warrantors' request and expense) the auditors for the time being of
ELEQT or any Subsidiary determine that ELEQT or the relevant Subsidiary has
obtained a Saving, EFactor shall as soon as reasonably practicable thereafter
repay, or procure repayment, to the Warrantors, after deduction of any amounts
then due by the Sellers, the lesser of:

 

(a)the amount of the Saving (as determined by the auditors) less any costs
incurred by ELEQT or the relevant Subsidiary; and

 

(b)the amount paid by the Warrantors under paragraph 2 in respect of the
Liability for Taxation which gave rise to the Saving less any part of that
amount previously repaid to the Warrantors under any provision of this Tax
Covenant or otherwise.

 

7.Corporation tax returns

 

7.1Subject to this paragraph 7, EFactor will have exclusive conduct of all
Taxation affairs of ELEQT and the Subsidiaries after Completion.

 

7.2EFactor will procure that ELEQT keeps the Warrantors fully informed of its
Taxation affairs in respect of any accounting period ended on or prior to
Completion for which final agreement with the relevant Taxation Authority of the
amount of Taxation due from ELEQT or any Subsidiary has not been reached.
EFactor will not submit any substantive correspondence or submit or agree any
return or computation for any such period to any Taxation Authority without
giving the Warrantors a reasonable opportunity to comment and taking account of
the Warrantor’s reasonable representations.

 

7.3EFactor will procure that ELEQT and any Subsidiary does not amend or withdraw
any return or computation or any claim, election, surrender or consent made by
it in respect of its accounting periods ended on or before Completion without
giving the Warrantors a reasonable opportunity to comment and taking account of
the Warrantors' reasonable representations.

 

7.4For the avoidance of doubt:

 

(a)where any matter relating to Tax gives rise to a Tax Claim, the provisions of
paragraph 8 shall take precedence over the provisions of this paragraph 7; and

 

(b)the provisions of this paragraph 7 shall not prejudice the rights of EFactor
to make a Tax Claim under this Tax Covenant in respect of any Liability for
Taxation.

 

8.Conduct of Tax Claims

 

8.1Subject to paragraph 8.2, if EFactor, ELEQT or a Subsidiary becomes aware of
a Tax Claim, EFactor shall give or procure that notice in writing is given to
the Warrantors as soon as is reasonably practicable, provided always that the
giving of such notice shall not be a condition precedent to the Warrantors'
liability under this Tax Covenant.

 

8.2If the Warrantors become aware of a Tax Claim, they shall notify EFactor in
writing as soon as reasonably practicable, and, on receipt of such notice,
EFactor shall be deemed to have given the Warrantors notice of the Tax Claim in
accordance with the provisions of paragraph 8.1.

 

8.3Subject to paragraph 8.4, provided the Warrantors indemnify EFactor and ELEQT
or the relevant Subsidiary to EFactor's reasonable satisfaction against all
liabilities, costs, damages or expenses which may be incurred thereby including
any additional Liability for Taxation, EFactor shall take and shall procure that
ELEQT or the relevant Subsidiary shall take such action as the Warrantors may
reasonably request by notice in writing given to EFactor to avoid, dispute,
defend, resist, appeal, request an internal HM Revenue & Customs review or
compromise any Tax Claim.

 

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8.4Neither EFactor, ELEQT nor any Subsidiary shall be obliged to appeal or
procure an appeal against any assessment to Tax if EFactor, having given the
Warrantors written notice of such assessment, does not receive written
instructions from the Warrantors within 10 Business Days to do so.

 

8.5If:

 

(a)the Warrantors do not request EFactor to take any action under paragraph 8.3
or if the Warrantors fail to indemnify EFactor, ELEQT or the relevant Subsidiary
to EFactor's reasonable satisfaction within a period of time (commencing with
the date of the notice given to the Warrantors) that is reasonable, having
regard to the nature of the Tax Claim and the existence of any time limit in
relation to avoiding, disputing, defending, resisting, appealing, requesting a
review or compromising such Tax Claim, and which period shall not in any event
exceed a period of 14 days;

 

(b)any of the Warrantors (or ELEQT before Completion) has been involved in a
case involving fraudulent conduct or deliberate default in respect of the
Liability for Taxation which is the subject matter of the Dispute; or

 

(c)the Dispute involves an appeal against a determination by the Tax Chamber of
the First-tier Tribunal (or, for appeals lodged before 1 April 2009, a
determination by the Tax Chamber of the First-tier Tribunal or Higher Tribunal),
unless the Warrantors have obtained the opinion of Tax counsel of at least 5
years' standing that there is a reasonable prospect that the appeal will
succeed,

 

EFactor, ELEQT or the relevant Subsidiary shall have the conduct of the Dispute
absolutely (without prejudice to its rights under this Tax Covenant) and shall
be free to pay or settle the Tax Claim on such terms as EFactor, ELEQT or the
relevant Subsidiary may in its absolute discretion consider fit.

 

8.6Neither EFactor, ELEQT nor the relevant Subsidiary shall be subject to any
claim by or liability to any of the Warrantors for non-compliance with any of
the foregoing provisions of this paragraph 8 if EFactor, ELEQT or the relevant
Subsidiary has bona fide acted in accordance with the instructions of any one or
more of the Warrantors.

 

9.Grossing up

 

9.1All sums payable by the Warrantors to EFactor, ELEQT or any Subsidiary
(Payee) under this Tax Covenant shall be paid free and clear of all deductions
or withholdings whatsoever unless the deduction or withholding is required by
law. If any deductions or withholdings are required by law to be made from any
of the sums payable under this Tax Covenant, the Warrantors shall pay to the
relevant Payee such sum as will, after the deduction or withholding has been
made, leave that Payee with the same amount as it would have been entitled to
receive in the absence of any such requirement to make a deduction or
withholding.

 

9.2If a Payee incurs a taxation liability which results from, or is calculated
by reference to, any sum paid under this Tax Covenant, the amount so payable
shall be increased by such amount as will ensure that, after payment of the
taxation liability, that Payee is left with a net sum equal to the sum it would
have received had no such taxation liability arisen.

 

10.General

 

All payments made by the Warrantors to a Payee or by a Payee to the Warrantors
in accordance with this Tax Covenant will be treated, to the extent possible, as
an adjustment to the consideration for the Sale Shares.

 

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Schedule 7 Intellectual Property Rights

 

Part 1. Registered Intellectual Property Rights

Mark  Registry   Classes   Registration
Number   Registration Date   Owner  ELEQT   Benelux    35, 38, 41,45  
 0913376    10.04.2012    Elysiants N.V.  Elysiants   Benelux    35, 38, 41  
 855666    21.11.2008    Elysiants N.V. 

 

Part 2. Material unregistered Intellectual Property Rights

 

[tex10-1pg68.jpg]

 

Part 3. Intellectual Property Rights licensed from third parties

 

Trade Mark Licence between Quintessentially Worldwide Limited and Eleqt Limited
dated 27 January 2012.

 

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Schedule 8      Information technology

 

Part 1. Particulars of IT System

 

Amazon web services

 

Account Number 3517-3943-7450

 

Amazon Web Services serves hundreds of thousands of customers in more than 190
countries.

 

Amazon is steadily expanding global infrastructure to help our end users achieve
lower latency and higher throughput, and to ensure that their data resides only
in the Region they specify. As ELEQT grows, AWS will continue to provide
infrastructure that meet our global requirements.

 

Live

EC2 (backup server)

M1 Standard Small (m1.small) Linux/UNIX instance-hour (or partial hour) read
replica

 

RDS (database)

M1 Standard Medium (m1.medium) Linux/UNIX instance-hour (or partial hour) master

 

EC2 (Live web server)

High Memory Two Extra Large (m2.2xlarge) Linux/UNIX instance-hour (or partial
hour)

 

S3 + CLOUDFRONT (Live web server)

Global distribution of frontend website

 

Development and staging

 

Cloudfront global content distribution

All static content is being served from a global network of edge locations,
located near your end users in the United States, Europe, Asia, and South
America and Australia.

 

EC2 (live web server)

C1 Standard Linux/UNIX instance-hour (or partial hour)

 

EC2 (admin web server)

C1 Standard Linux/UNIX instance-hour (or partial hour)

 

RDS server(s) (database)

C1 Standard Linux/UNIX instance-hour (or partial hour) master

M1 Standard Small (m1.small) Linux/UNIX instance-hour (or partial hour) read
replica

M1 Standard Small (m1.small) Linux/UNIX instance-hour (or partial hour) read
replica

 

65

 

  

Office Network Curacao

3x WIFI router

20x UTP cable

2x Gigabit switch

1x black network printer HP 2030n

 

Part 2. 1x NAS (central file storage) Particulars of IT Contracts

 

1.godaddy.com

domain + end date

 

 

elysiants.mobi eleqt.co.uk 12/27/2014 1/20/2016     elysiants.nl elisiant.com
12/27/2014 5/19/2016     elysiants.info elisiants.com 7/27/2015 5/19/2016    
elysiants.org elysiant.com 7/27/2015 5/19/2016     eleqt.us eleqt.com 7/28/2015
7/29/2016     eleqt.info elysiants.com 7/29/2015 1/9/2018     eleqt.mobi SSL
Wildcard Certificate *.eleqt.com 7/29/2015 expire date: 7/29/2016     eleqt.net
  7/29/2015       eleqt.org   7/29/2015  

 

2.GOOGLE ADMIN ACCOUNT

monthly contract

for all google hosting plans

https://admin.google.com/eleqt.com

 

- website Analytics

- Email

 

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- Documents

 

3.ISP Curacao

yearly contract | 02-2015

Scarlet N.V.

IP:190.2.138.154 SUB:255.255.255.252 GATEWAY:190.2.138.153 DNS1: 208.33.12.5 / 8

 

4.Telephone company Curacao

yearly contract | 07-2016

Digicel N.V.

10x mobile phone nr’s

 

5.Skype

fee transaction based

Phone service

5x phone nrs (sales)

 

6.EMAIL ELEQT Ltd.

yearly contract | 08-2015

Triplinq B.V.

Email exchange hosting services

30x email account

 

7.Istockphoto account

fee transaction based

Service for images Content-team

 

8.MAILChimp

fee transaction based

Elysiantschimp

Credits 76,899

Email service for newsletters

 

9.SOHO Account for CRM

monthly contract

ronald@elysiants.com

10x CRM sales

 

10.PAYPAL Account for mobile payments

fee transaction based

ruud@elysiants.com

Service for online credit card payments

 

11.Credit card payment provider

fee transaction based

Payvision

CRM:01452918

API Service for online credit card payments

 

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Schedule 9      The Properties

 

Description of the Property Curacao Office, Brakkeput Ariba 160, Curacao
Description of Lease (lease, underlease, licence, date and parties)  Michel
Bogaerts and Elysiants NV, start 26-8-2013, 6 months rolling contract,
termination with 3 months notice on either side, Owner  Michel Bogaerts
Registered/unregistered  N/A Title number (if registered)  N/A Contractual date
of termination of lease  6 months rolling contract, termination with 3 months
notice on either side, Occupier  Elysiants NV

 

Description of the Property Amsterdam Office, Saxen-Weimarlaan 58hs, Amsterdam,
Netherlands Description of Lease (lease, underlease, licence, date and parties)
 Usage agreement including furniture,  Elysiants International BV and Ruud
Smeets, start 11-10-2011,  6 months rolling contract, termination with 3 months
notice on either side Owner  Ruud Smeets Registered/unregistered  N/A Title
number (if registered)  N/A Contractual date of termination of lease  6 months
rolling contract, termination with 3 months notice on either side, Occupier
 Elysiants International BV

 

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Schedule 10      The Seller Representative

 

1Each of the Sellers hereby:

 

appoints Ruud Smeets as its representative (Seller Representative);

 

authorises and empowers the Seller Representative to make or give any approval,
waiver, request, consent, instruction or other communication on behalf of each
of the Sellers as each such Seller could do for itself under this agreement or
any other document entered into pursuant to or in connection with this agreement
(Transaction Documents);

 

authorises and empowers the Seller Representative to receive all demands,
notices or other communications directed to such Seller under any Transaction
Document; and

 

authorises and empowers the Seller Representative to (1) take any action (or to
determine to refrain from taking any action) with respect thereto as the Seller
Representative may deem appropriate as effectively as if such Seller could act
for itself (including, without limitation, the settlement or compromise of any
dispute or controversy), which action will be binding on all the Sellers and (2)
execute and deliver all instruments and documents of every kind incidental to
the foregoing with the same effect as if such Seller had executed and delivered
such instruments and documents personally.

 

2Any demands, notices, claims or other communications directed to any Seller
hereunder shall be deemed effective if given to the Seller Representative. Each
of the Sellers agrees to be bound by all actions and failures to act of the
Seller Representative in accordance with the provisions of any Transaction
Document, including in connection with any settlement or compromise entered into
by the Seller Representative on behalf of one or more of the Sellers.

 

3Upon the death, resignation or incapacity of the Seller Representative, or at
any time or from time to time, a successor may be appointed by Sellers which
between them hold more than 50% of the Sale Shares, as determined from Schedule
1 (Seller Majority), but such appointment will not be effective until such
successor shall agree in writing to accept such appointment and written notice
of the selection of such successor Seller Representative is provided to EFactor,
signed by a Seller Majority.

 

4If a successor Seller Representative is not appointed pursuant to paragraph 3
within 21 days of such event, the Seller Representative shall be the individual
Seller who had the largest holding of Shares before Completion (not being the
retiring Seller Representative) and who agrees in writing to accept such
appointment.

 

5Each of the Sellers and the Seller Representative agree as follows:

 

(i)no provisions of this agreement shall require the Seller Representative to
expend or risk his own funds or incur any liability (other than in his capacity
as a Seller);

 

the Seller Representative may act through his attorneys, advisers and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care;

 

the Seller Representative shall not be liable for any action he takes or omits
to take in good faith that he believes to be authorised or within the rights or
powers conferred upon him by this agreement and the other Transaction Documents;

 

69

 

  

the Sellers shall reimburse the Seller Representative promptly on request for
all reasonable disbursements, advances and expenses incurred or made by him in
acting as Seller Representative. Such expenses shall include the reasonable
compensation disbursements and expenses of the Seller Representative's
attorneys, advisers and agents, and the Seller Representative may pay such
attorneys, advisers and agents out of Consideration before distribution of the
balance to the Sellers, provided such payments are for work done and advice
given in relation to the Transaction Documents and the matters contemplated
thereby; and

 

the Sellers shall indemnify the Seller Representative against any and all losses
liabilities or expenses incurred by him arising out of or in connection with
acting as Seller Representative under this agreement and the other Transaction
Documents.

 

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Schedule 11 Provisions relating to EFactor Shares

 

The provisions of this Schedule shall apply in respect of the EFactor Shares
issued or issuable to the Sellers pursuant to this agreement.

 

1All EFactor Shares shall, when issued, will be restricted stock under rule 144.

 

2EFactor Group Corp. will enter into an agreement with an investment banking
firm as soon as possible to uplift its Common Stock to a national exchange. As
part of the public offering (i.e. S1), ELEQT shareholders will be included,
meaning the restriction on the shares will be lifted.

 

Such shares shall be EFactor’s common stock and issued to ELEQT shareholders
based on the following list:

 

Seller  Number of
EFactor
Shares   Seller
Proportions   Address    4,361,293    14.07%      728,970    2.35%      
 2,449,939    7.90%        378,263    1.22%        398,303    1.28%      
 430,869    1.39%        603,717    1.95%        754,020    2.43%      
 355,717    1.15%        162,828    0.53%        298,101    0.96%      
 172,848    0.56%        142,788    0.46%        80,162    0.26%      
 210,424    0.68%        315,636    1.02%        147,798    0.48%      
 964,444    3.11%        450,909    1.45%        142,788    0.46%      
 1,756,040    5.66%        200,404    0.65%        10,020    0.03%      
 10,020    0.03%        90,182    0.29%        37,576    0.12%        202,909  
 0.65%        177,859    0.57%        691,394    2.23%        12,465,131  
 40.21%        350,707    1.13%        759,030    2.45%        145,293    0.47% 
      145,293    0.47%        97,697    0.32%        75,152    0.24%      
 100,202    0.32%        10,020    0.03%        75,152    0.24%        50,101  
 0.16%    Total   31,000,000    100%   

 

71

 

  

THE FOLLOWING EXECUTION BLOCK IS TO BE USED BY EACH SELLER THAT IS A COMPANY:

 

Executed as a deed, but not delivered until the date first specified on page 1,
by

 

acting by its duly authorised director or other officer in the presence of the
witness named below:

  ))

  )

  )

Signature  

 

          Name:           Office held:

 

Witness
signature               Witness
name       (block
capitals)               Witness
address                                      

 

THE FOLLOWING EXECUTION BLOCK IS TO BE USED BY EACH SELLER THAT IS AN INDIVIDUAL
AND BY EACH MANAGER:

  

Executed as a deed, but not delivered until the date first specified on page 1,
in the presence of the witness named below:

 )

 )

 )

 )

        Signature                 Name:

 

Witness
signature               Witness name       (block capitals)              
Witness address                                      

 

72

 

 

Executed as a deed, but not delivered until the date first specified on page 1,
by EFactor Group Corp, acting by a director in the presence of the witness named
below:

 ))

 )

 )

Signature  /s/ Adriaan Reinders                Name: Adriaan Reinders          
    Office held:  CEO         Witness
signature  /s/ Marion Freijsen             Witness name MARION FREIJSEN    
(block capitals)               Witness address                                  
   

 

73