Exhibit 10.26

 

DATED 22 SEPTEMBER 2016

 

 

 

MR ROBERT ELLIN

 

MR OLIVER BENGOUGH

 

KOKO (CAMDEN) LIMITED

 

OBAR CAMDEN LIMITED

 

OBAR CAMDEN HOLDINGS LIMITED

 

GLOBAL LOAN AGENCY SERVICES LIMITED

 

-and-

 

LOTON CORP.

 

 

 

SETTLEMENT AGREEMENT

 

 

 

Akin Gump LLP

Eighth Floor

Ten Bishops Square

London, E1 6EG

020 7012 9600

 

 

 

 

THIS AGREEMENT (“Agreement”) is made on 22 September 2016

 

BETWEEN:

 

(1)MR ROBERT ELLIN of c/o 269 South Beverly Drive, Suite #1450, Beverly Hills,
CA 90212, USA (“RE”)

 

(2)MR OLIVER BENGOUGH of Flat 3, Hans Place, Kensington, London SW1X 0LA (“OB”)

 

(3)KOKO (CAMDEN) LIMITED of 5th Floor, 89 New Bond Street, London W1S 1DA
(“KCL”)

 

(4)OBAR CAMDEN LIMITED of 191 Stonhouse Street, London SW4 6BB (“OCL”)

 

(5)OBAR CAMDEN HOLDINGS LIMITED of 191 Stonhouse Street, London SW4 6BB (“OCHL”)

 

(6)LOTON CORP. of 269 South Beverly Drive, Suite #1450, Beverly Hills, CA 90212,
USA (“Loton”)

 

(each a “Party” and together the “Parties”)

 

and

 

(7)GLOBAL LOAN AGENCY SERVICES LIMITED of 45 Ludgate Hill, London EC4M 7JU (the
“Escrow Agent”),

 

WHEREAS

 

(A)On 20 May 2016, OB issued a petition for relief before the English court
under, inter alia, section 994 of the Companies Act 2006 (Claim Number -
CR-2016-002756) raising a number of allegations and issues concerning the
Parties to this Agreement and pursuant to which OB sought an interim injunction
(the “Petition”).

 

(B)Pursuant to a promissory note dated 28 April 2014, OCHL and OCL are jointly
liable to Loton for the principal amount of US$494,749 and interest at 8%. This
liability is disputed by OB.

 

(C)The Parties to this Agreement have agreed to the following terms of
settlement in relation to all facts, matters and allegations raised by the
Petition as set out below and in relation to certain ancillary matters arising
from the past business dealings between RE and OB.

 

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These recitals are intended to be binding.

 

In consideration of the mutual agreements and promises set out below it is
agreed as follows:

 

1.DEFINITIONS AND INTERPRETATION

 

1.1In this Agreement, unless the context otherwise requires, the following words
and expressions have the following meanings:

 

“Business Day” means a day (other than a Saturday or a Sunday) on which banks
are open for general business in London.

 

“Claims” means any action, litigation, claim, potential claim, counterclaim,
potential counterclaim, right of set-off or potential right of set-off, right of
contribution, potential right of contribution, right to indemnity, cause of
action, potential cause of action or right or interest of any kind or nature
whatsoever, whether civil or criminal or regulatory or any other form of
dispute, whether in existence now or coming into existence at some time in the
future, whether known or unknown, suspected or unsuspected, however and whenever
arising, brought or initiated in any Court or other tribunal of competent
jurisdiction, whether or not within the contemplation of the Parties at the time
of this Agreement, including claims which as a matter of law did not at the date
of this Agreement exist and whose existence cannot currently be foreseen and any
claims or rights of action arising from a subsequent change or clarification of
the law, which the Parties have or could have against each other arising out of
or in connection with the Petition, the Shareholders’ Agreement, the operation
and management of OCHL or OCL, the Loton Note, OB’s directorship of Loton, or
any other transaction document entered into in connection with the Shareholders
Agreement, the Loton Note or the transactions contemplated thereby;

 

"Completion Payment Cut-Off Date" means the date falling 7 Business Days after
the date on which BTG Financial Consulting LLP sends by email its final
valuation report in respect of the value of the ordinary shares of OCHL (which
report will specify the Completion Payment) to OB, RE and the Escrow Agent;

 

“Deed of Charge” means the deed of charge over the shares in OCHL entered into
between KCL and OB on the date of this Agreement;

 

“Director’s Resignation Letter” has the meaning given to it in the Escrow
Agreement;

 

“Encumbrance” means any mortgage, claim, charge, pledge, lien, lease,
hypothecation, guarantee, right of set-off, trust, assignment, right of first
refusal, right of pre-emption, option, restriction, order, judgment, defect in
title, or other encumbrance or any legal or equitable third party right or
interest, including security of any kind or any type of preferential payment (or
any like agreement or arrangement creating any of the same or having similar
effect).

 

“Escrow Account” has the meaning given to it in the Escrow Agreement;

 

“Escrow Agreement” means the escrow agreement entered into between the Parties
and the Escrow Agent on the date of this Agreement;

 

“Intellectual Property” means: (i) the name KOKO, (ii) KOKO’s logo, and (iii)
any related branding.

 

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“Intellectual Property Rights” means all intellectual property rights belonging
to OCHL and OCL (individually and collectively) including but not limited to any
of the following: patents, copyright and related rights, moral rights,
trademarks (and service marks), business names and domain names, rights in
get-up (and trade dress), goodwill and 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 for any of the intellectual property rights mentioned above 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.

 

“KCL NM01” has the meaning given to it in the Escrow Agreement.

 

“KCL Written Resolution” has the meaning given to it in the Escrow Agreement.

 

“Loton Note” means the promissory note dated 28 April 2014 pursuant which OCHL
and OCL became jointly liable to Loton for the principal amount of US$494,749
and interest at 8%;

 

“NED Authority Letter” has the meaning given to it in the Escrow Agreement;

 

“NED Director’s Resignation Letter” has the meaning given to it in the Escrow
Agreement;

 

“OB Related Parties” means any companies or entities connected, owned or
controlled directly or indirectly, legally or beneficially by OB (including Mint
Group Holdings Ltd, its subsidiaries, directors, affiliates, employees and
shareholders) and any employees, representatives, agents, officers or directors
of any companies or entities owned or controlled directly or indirectly, legally
or beneficially by OB;

 

“OB Shareholding” means the 48,878 ordinary shares and the 2,750 deferred
ordinary shares in OCHL held by OB;

 

“OB Share Certificates” means the share certificates issued by OCHL in
connection with the OB Shareholding;

 

“OB Stock Transfer Forms” means the duly executed and irrevocable instrument of
transfer in relation to the OB Shareholding, but with the name of the transferee
and the date left blank;

 

“RE Related Parties” means any companies or entities connected, owned or
controlled directly or indirectly, legally or beneficially by RE and any
representatives, agents, officers or directors of any companies or entities
owned or controlled directly or indirectly, legally or beneficially by RE;

 

“RE Shareholding” means the 48,878 ordinary shares and the 2,750 deferred
ordinary shares in OCHL held by KCL;

 

“RE Share Certificates” means the share certificates issued by OCHL in
connection with the RE Shareholding;

 

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“RE Stock Transfer Forms” means the duly executed and irrevocable instrument of
transfer in relation to the RE Shareholding, but with the name of the transferee
and the date left blank;

 

“Related Parties” means a Party’s parent company, subsidiary company, assignee,
transferee, representative, legal representative, principal agent, family member
or any officer, director, employee, worker of a Party of any Party’s parent
company or subsidiary;

 

“Respondents” means OCHL, OCL, RE and Loton;

 

“Shareholders Agreement” means the agreement dated 12 February 2014 between OB,
RE, Loton and JJAT Corporation as later varied by the Variation Agreement dated
24 April 2014; and

 

“Tax” means any tax, levy, impost, duty or other charge, fee, deduction or
withholding of a similar nature in any jurisdiction, including national
insurance contributions, (including any penalty, surcharge or interest payable
in connection with the failure to pay, or delay in paying of these).

 

1.2A reference to shares or ordinary shares in this Agreement shall mean all
ordinary shares including any deferred ordinary shares.

 

2.AUTHORITY

 

2.1Each Party warrants and represents to the other that it has the right, power
and authority to enter into and perform this Settlement Agreement.

 

2.2The signatories warrant that they have full authority to enter into this
Settlement Agreement and bind the Party they represent.

 

3.EFFECT OF THIS AGREEMENT

 

The Parties hereby agree that upon the execution of this Agreement by all of
them, the terms of this Agreement shall be immediately, effectively and
irrevocably binding upon them.

 

4.SETTLEMENT OF THE PETITION AND RELEASES

 

4.1In consideration of the mutual obligations set out in this Agreement, the
Parties hereby agree the following. Forthwith upon execution of this Agreement,
OB shall withdraw the Petition with no order as to costs. OB and the Respondents
waive any rights they may have to costs or legal fees in connection with the
Petition and respectively agree not to seek or enforce any order for costs
against each other.

 

4.2RE and all RE Related Parties:

 

(a)agree that no sums are due and owing from OB or any of the OB Related Parties
to RE and RE Related Parties;

 

(b)fully release and forever discharge OB and all of the OB Related Parties from
all or any Claims; and

 

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(c)waive any future Claims.

 

4.3OB and all OB Related Parties:

 

(a)fully release and forever discharge RE and each of the RE Related Parties
from all or any Claims; and

 

(b)waive any future Claims.

 

(Collectively the “Released Claims”)

 

5.TERMS OF SETTLEMENT

 

5.1The provisions of clauses 4.2 and 4.3 above and clause 8 below are
conditional upon the provisions of this clause 5 being effectively implemented
and complied with.

 

5.2Upon the date of this Agreement, the following will occur:

 

(a)OB and RE will forthwith procure that BTG Financial Consulting LLP (“Begbies
Traynor”) is instructed to carry out an independent expert valuation of the
ordinary shares in OCHL on the terms set out in the draft engagement letter
appearing at Annex 1 to this Agreement. Begbies Traynor shall be instructed to
conduct the independent valuation as speedily as possible consistent with a fair
valuation on the following bases and assumptions:

 

(i)the business of OCHL shall continue as a going concern;

 

(ii)any sale of the RE Shareholding is to be on arm’s length terms between a
willing seller and a willing buyer; and

 

(iii)the RE Shareholding is to be sold free of any Encumbrance.

 

The costs of the valuation shall be borne by OCL (provided that such cost is not
be taken into account in the valuation itself);

 

(b)OB and RE shall act in good faith in the provision of any information and
documentation to, and in any dealings with, Begbies Traynor to enable the
valuation to be carried out. Any information and/or documentation that is
provided by OB and RE to Begbies Traynor shall be to the best of each Party’s
knowledge accurate and complete.

 

(c)OB shall within 5 Business Days credit the sum of £1,272,265 in cleared funds
(the “Escrow Amount”) to the Escrow Account on the terms set out in the Escrow
Agreement;

 

(d)OB shall provide security to and for the benefit of KCL over the OB
Shareholding to secure OB’s payment obligations to KCL on the terms set out in
the Deed of Charge;

 

(e)OB shall within 5 Business Days deliver the OB Share Certificates, the OB
Stock Transfer Forms, the NED Director’s Resignation Letter, the NED Authority
Letter and the Director’s Resignation Letter to the Escrow Agent on the terms
set out in the Escrow Agreement; and

 

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(f)RE shall (or RE shall procure that KCL will) within 5 Business Days deliver
the RE Share Certificates, the RE Stock Transfer Forms, the KCL Written
Resolution and the KCL NM01 to the Escrow Agent on the terms set out in the
Escrow Agreement.

 

5.3Although headed 'Without prejudice save as to costs', 'Subject to contract'
and 'Confidential', on signature of this Settlement Agreement by all the parties
it shall (subject only to the provisions of this Settlement Agreement) become a
binding agreement between them in settlement of the Claims.

 

6.ESCROW ARRANGEMENTS

 

6.1The arrangements relating to the escrowing of the Escrow Amount, resignation
and authority letters, share certificates and/or stock transfer forms described
in paragraph 5.2(c)-(f) will be set out in the Escrow Agreement.

 

6.2The Escrow Agent is a party to this Agreement for information purposes only
and shall have no obligations under this Agreement.

 

6.3The Escrow Amount, resignation and authority letters, share certificates,
stock transfer forms which have been credited to the Escrow Account or delivered
to the Escrow Agent will be released from escrow in accordance with the terms of
the Escrow Agreement.

 

7.COMPLETION ARRANGEMENTS

 

7.1In accordance with the terms of its engagement, Begbies Traynor will be
required to send, forthwith upon completion of the independent valuation, its
final independent valuation report to OB, RE and the Escrow Agent and in that
report notify them of the “Completion Payment” which will be an amount equal to
(i) 50% of the value of the ordinary shares in OCHL less (ii) £37,000.

 

7.2By no later than the Completion Payment Cut-Off Date, OB shall ensure that
KCL is in receipt of cleared funds to the value of the Completion Payment,
subject to the following:

 

(a)if the Completion Payment is less than the Escrow Amount (namely £1,272,265),
an amount equal to the Completion Payment will be paid to KCL subject to and in
accordance with the terms of the Escrow Agreement to an account specified by RE
out of the funds standing to the credit of the Escrow Account; or

 

(b)if the Completion Payment is equal to or more than the Escrow Amount, the
full amount then standing to the credit of the Escrow Account will be paid to
KCL subject to and in accordance with the terms of the Escrow Agreement, and OB
shall (also within the same 7 Business Days' period) pay an amount equal to the
difference between the Completion Payment and the Escrow Amount to the Escrow
Account with such sum then to be paid by the Escrow Agent to an account
specified by RE,

 

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such that in either case KCL has received the Completion Payment in full by the
Completion Payment Cut-Off Date.

 

8.DISCHARGE OF THE LOTON NOTE

 

8.1Loton confirms and acknowledges that in consideration for the abandonment by
OB of any claim to costs in relation to the Petition as provided in clause 8.2
below, Loton shall treat any rights to payment by OB, OCL and OCHL under the
Loton Note as having been fully discharged and satisfied.

 

8.2OB confirms and acknowledges that in consideration for (a) the discharge of
the Loton Note provided for in clause 8.1 above; and (b) the deduction of
£37,000 as described in clause 7.1 above, he will abandon all and any claim for
costs incurred in relation to the Petition.

 

9.AGREEMENT NOT TO SUE

 

9.1Each Party agrees, on behalf of itself and on behalf of its Related Parties
not to sue, commence, voluntarily aid in any way, prosecute or cause to be
commenced or prosecuted against the other Party or its Related Parties in any
action, suit or other proceedings concerning the Released Claims, in this
jurisdiction or any other.

 

9.2Clauses 3 and 9.1 shall not apply to, and the Released Claims shall not
include, any claims in respect of any breach of this Agreement.

 

10.COSTS

 

Each Party shall bear its own costs incurred in connection with this Agreement.

 

11.WARRANTIES AND AUTHORITY

 

11.1Each Party warrants and represents that it has not sold, transferred,
assigned or otherwise disposed of its interests in the Released Claims.

 

11.2Each Party warrants and represents to the other that it or he has full
authority to execute, deliver and perform this Agreement and that each
respective signatory has taken all necessary steps to obtain authorization to
sign this Agreement on behalf of that Party.

 

11.3KCL and RE each warrants and represents that the shares comprising the RE
Shareholding are sold with full title guarantee free from all Encumbrances
together with all rights attached thereto.

 

12.INDEMNITIES

 

Each Party hereby indemnifies, and shall keep indemnified, the other Party
against all costs and damages (including the entire legal expenses of the
Parties) incurred in any and all future actions, claims and proceedings in
respect of any of the Released Claims which it or its Related Parties or any of
them may bring against the other Party or its Related Parties or any of them or
arising from any breach of this agreement.

 

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13.NO ADMISSION

 

This Agreement is entered into as a commercial compromise amongst the Parties
and nothing in this Agreement or negotiations leading up to it shall in any way
be construed as an admission of liability or wrongdoing by any Party.

 

14.INTELLECTUAL PROPERTY RIGHTS

 

14.1RE or any RE Related Parties will not use for his or their own purpose or
benefit or for the benefit of any third party, or disclose or make available in
whole or in part to any third party (and shall use all reasonable endeavors to
prevent any disclosure of) any Intellectual Property and Intellectual Property
Rights.

 

14.2RE or any RE Related Parties will take no action whatsoever which could
adversely impact upon the protection of the Intellectual Property and/or which
could create any Encumbrance in respect of the Intellectual Property.

 

14.3OB or any OB Related Parties will not bring or issue any legal proceedings
against RE or any RE Related Parties in respect of RE or RE Related Parties’
alleged historic use of the Intellectual Property.

 

14.4Each of RE and KCL shall procure that no resolution of the shareholders of
KCL is proposed or passed to change the name of KCL (other than in accordance
with the KCL Written Resolution) until the earlier to occur of:

 

(a)the Completion Payment Cut-Off Date has passed and the Completion Payment has
not been made; and

 

(b)the date that the Registrar of Companies has issued a Certificate of
Incorporation Upon Change of Name changing the name of KCL to "LiveXLive
International Limited" following the delivery by OB of the KCL NM01 and the KCL
Written Resolution to the Registrar of Companies.

 

14.5KCL authorises OB to date the KCL Written Resolution and the KCL NM01 and
submit the same to the Registrar of Companies on behalf of KCL.

 

15.CONFIDENTIALITY

 

15.1The terms of this Agreement, and the substance of all negotiations in
connection with it, are confidential to the Parties and their advisers, who
shall not disclose them to, or otherwise communicate them to, any third party
other than:

 

(a)to the Parties’ respective auditors, insurers and lawyers on terms which
preserve confidentiality;

 

(b)pursuant to an order of a court of competent jurisdiction, or pursuant to any
proper order or demand made by any competent authority or body where they are
under a legal obligation to make such a disclosure;

 

(c)where required by law or by a regulatory authority; and

 

(d)as far as necessary to implement and enforce any of the terms of this
Agreement.

 

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15.2The Parties undertake not to directly or indirectly make or publish any
statement, release or announcement of any kind or otherwise directly or
indirectly release publicly to any third party any information concerning the
Released Claims and this Agreement save as required by law.

 

15.3The Parties shall not distribute, publicise, comment upon or otherwise
convey or disseminate in any way, directly or indirectly (whether orally or in
writing, by social media, online or through others acting on their behalf) any
material or allegations which relate to or concern any of the Released Claims or
any allegations set out in the Claims or the matters referred to in the contents
of this Agreement save as required by law.

 

The Parties are entitled to confirm the fact of, but not the terms of,
settlement of this dispute.

 

16.TAX

 

Each Party shall be responsible for any Tax arising in connection with its
performance of this Agreement.

 

17.ALTERNATIVE DISPUTE RESOLUTION

 

17.1If any claim or dispute arises under or in connection with this Settlement
Agreement or any other issue arises between the Parties (or any of them), the
Parties agree to attempt to settle such claim, dispute or issue by negotiation.

 

17.2The Parties (and each of them) agree to give the other Party or Parties
written notice (copied to their respective solicitors) of any such claim,
dispute or issue providing a reasonable explanation of the claim, dispute or
issue and the steps required to remedy it.

 

17.3If any such claim, dispute or issue cannot be settled by negotiation within
21 days after such written notice the Parties shall, before resorting to court
or regulatory proceedings, attempt to resolve the claim, dispute or issue by
mediation in England in accordance with the Centre for Dispute Resolution (CEDR)
model mediation procedure or otherwise as agreed between the Parties.

 

18.INVALIDITY

 

If any or any part of any provision of this Agreement shall be or become
illegal, invalid or unenforceable then that provision shall be deemed to be
deleted from this Agreement and the remaining provisions of this Agreement shall
continue in full force and effect and the Parties shall use their respective
reasonable endeavors to procure that any such provision is replaced by a
provision which is legal, valid and enforceable, and which gives effect to the
spirit and intent of this Agreement.

 

19.AMENDMENTS

 

No amendments or variations of the terms of this Agreement shall be effective
unless it is made or confirmed in a written document signed by the Parties.

 

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20.ENTIRE AGREEMENT

 

20.1This Agreement constitutes the entire agreement between the Parties in
relation to the settlement of the matters set out herein and supersedes and
extinguishes all previous agreements, promises, assurances, warranties,
representations and understandings between them, whether written or oral,
relating to its subject matter.

 

20.2Each Party agrees that is shall have no remedies in respect of any
statement, representation, assurance or warranty (whether made innocently or
negligently) that is not set out in this Agreement. Each Party agrees that is
shall have no claims (save for those arising in fraud) based on any statement
signed in this Agreement.

 

21.THIRD PARTY RIGHTS

 

A person or entity 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.

 

22.COUNTERPARTS

 

22.1This Agreement may be executed in any number of counterparts, each of which
when executed and delivered shall constitute a duplicate original, but all the
counterparts shall together constitute the one agreement.

 

22.2Transmission of an executed counterpart of this Agreement by e-mail shall
take effect as delivery of an executed counterpart of this Agreement. If
delivery by email is adopted, without prejudice to the validity of the Agreement
thus made, each Party shall provide the other with the original of such
counterpart as soon as reasonably practicable after execution.

 

22.3No counterpart shall be effective until each Party has executed and
delivered at least one counterpart.

 

23.FURTHER ACTIONS

 

At any time after the date of this Agreement the Parties shall execute such
documents and do any such other acts and things as may be required for the
purposes of giving full effect to the provisions of this Agreement.

 

24.GOVERNING LAW AND JURISDICTION

 

This Agreement and any non-contractual obligations arising out of or in
connection with it or the subject matter of this Agreement shall be governed by
and construed in accordance with the law of England and Wales. Subject to clause
17 above, the Parties irrevocably submit to the exclusive jurisdiction of the
Courts of England and Wales as regards any claims, disputes or matters arising
out or relating to this Agreement including (without limitation) questions of
validity, implementation or effect.

 

IN WITNESS WHEREOF this Agreement has been entered into on the day and year
first above written.

 

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Signatories

 

MR ROBERT ELLIN       /s/ Robert Ellin       KOKO (CAMDEN) LIMITED         By:
/s/ Robert Ellin         Name: Robert Ellin         Title: Director        
LOTON, CORP.         By: /s/ Robert Ellin         Name: Robert Ellin        
Title: Executive Chairman and President  

 

Signature page to the Settlement Agreement

 

 

 

 

MR OLIVER BENGOUGH       /s/ Oliver Bengough       OBAR CAMDEN LIMITED        
By: /s/ Oliver Bengough         Name: Oliver Bengough         Title: Director  
      OBAR CAMDEN HOLDINGS LIMITED         By: /s/ Oliver Bengough         Name:
Oliver Bengough         Title: Director         GLOBAL LOAN AGENCY SERVICES
LIMITED         By: /s/ Iva Bardhi         Name: Iva Bardhi         Title:
Transaction Manager  

 

Signature page to the Settlement Agreement