Exhibit 10.1

 

Execution Version


 



 

STOCK PURCHASE AGREEMENT

 

between

 

Q-DANCE PARTNERS B.V.,

 

AMAZING HOLDING BV,

 

and,

 

solely with respect to Sections 5.1 through 5.4, 5.5 and 5.7,

 

JAN LOK

 

February 28, 2014


 



 











 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE 1 DEFINITIONS
    	
1
    
	
 
    	
 
    
	
ARTICLE 2 SALE AND PURCHASE   AND CLOSING
    	
18
    
	
2.1
    	
The Closing
    	
18
    
	
2.2
    	
Purchase and Sale of Purchased Shares
    	
18
    
	
2.3
    	
Deliveries
    	
19
    
	
2.4
    	
Post-Closing True-up Amount
    	
21
    
	
2.5
    	
Anticipated Dividend Adjustment
    	
24
    
	
2.6
    	
Acknowledgment Regarding Purchase Price
    	
24
    
	
2.7
    	
Treatment of Certain Payments
    	
25
    
	
 
    	
 
    	
 
    
	
ARTICLE 3 REPRESENTATIONS   AND WARRANTIES OF THE SELLER
    	
25
    
	
3.1
    	
Organization and Standing; Authority
    	
25
    
	
3.2
    	
Capitalization
    	
26
    
	
3.3
    	
Company Subsidiaries and Company Minority-held Entities
    	
27
    
	
3.4
    	
No Conflict; Required Filings and Consents
    	
28
    
	
3.5
    	
Financial Statements
    	
29
    
	
3.6
    	
Taxes
    	
30
    
	
3.7
    	
Title to Properties
    	
33
    
	
3.8
    	
Property
    	
33
    
	
3.9
    	
Compliance with Laws
    	
33
    
	
3.10
    	
Permits
    	
34
    
	
3.11
    	
Employees
    	
34
    
	
3.12
    	
Material Contracts
    	
35
    
	
3.13
    	
Legal Proceedings
    	
37
    
	
3.14
    	
Intellectual Property
    	
37
    
	
3.15
    	
Insurance
    	
39
    
	
3.16
    	
Labor
    	
39
    
	
3.17
    	
Environmental Matters
    	
40
    
	
3.18
    	
Conduct of Business in Ordinary Course
    	
41
    
	
3.19
    	
Material Suppliers
    	
41
    
	
3.20
    	
Affiliate Transactions
    	
42
    
	
3.21
    	
Bank Accounts
    	
42
    
	
3.22
    	
Accounts Receivable
    	
42
    
	
3.23
    	
No Brokers
    	
42
    
	
3.24
    	
Contracts with Governmental Authorities
    	
42
    
	
3.25
    	
Undisclosed Liabilities
    	
42
    
	
3.26
    	
Absence of Questionable Payments
    	
43
    
	
3.27
    	
Books and Records
    	
43
    
	
3.28
    	
Inventory
    	
43
    
	
3.29
    	
Solvency
    	
43
    
	
3.30
    	
Information Security and Data Privacy
    	
44
    
	
3.31
    	
Investment in SFX Shares
    	
44
    
	
 
    	
 
    	
 
    
	
ARTICLE 4 REPRESENTATIONS   AND WARRANTIES OF THE BUYER
    	
46
    


 

i











 

	
4.1
    	
Organization and Standing; Authority
    	
46
    
	
4.2
    	
Capitalization
    	
46
    
	
4.3
    	
No Conflict; Required Consents
    	
47
    
	
4.4
    	
Financial Statements
    	
47
    
	
4.5
    	
Compliance with Laws
    	
48
    
	
4.6
    	
Legal Proceedings
    	
48
    
	
4.7
    	
No Brokers
    	
48
    
	
4.8
    	
Valid Issuance of Shares
    	
48
    
	
 
    	
 
    	
 
    
	
ARTICLE 5 CERTAIN   OBLIGATIONS
    	
49
    
	
5.1
    	
Non-solicitation
    	
49
    
	
5.2
    	
Non-competition
    	
49
    
	
5.3
    	
Confidentiality
    	
49
    
	
5.4
    	
Non-Disparagement
    	
50
    
	
5.5
    	
Further Assurances
    	
50
    
	
5.6
    	
Employee Benefits
    	
51
    
	
5.7
    	
2013 Audited Financial Statements
    	
51
    
	
5.8
    	
Right of First Refusal
    	
51
    
	
5.9
    	
Registration
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE 6 TAX MATTERS
    	
52
    
	
6.1
    	
Tax Indemnification
    	
52
    
	
6.2
    	
Certain Taxes and Fees
    	
53
    
	
6.3
    	
Cooperation on Tax Matters
    	
53
    
	
6.4
    	
Tax Returns
    	
53
    
	
6.5
    	
Tax Proceedings
    	
54
    
	
 
    	
 
    	
 
    
	
ARTICLE 7 INDEMNIFICATION
    	
54
    
	
7.1
    	
Survival
    	
54
    
	
7.2
    	
Indemnification
    	
54
    
	
7.3
    	
Certain Limitations on Liability and Other Provisions
    	
55
    
	
7.4
    	
Direct Claims
    	
57
    
	
7.5
    	
Third-Party Claims
    	
58
    
	
7.6
    	
Payment
    	
60
    
	
7.7
    	
Indemnified Parties
    	
61
    
	
7.8
    	
Exclusive Remedy
    	
61
    
	
7.9
    	
Third-Party Beneficiary Status
    	
62
    
	
 
    	
 
    	
 
    
	
ARTICLE 8 MISCELLANEOUS
    	
62
    
	
8.1
    	
Notices
    	
62
    
	
8.2
    	
Expenses
    	
63
    
	
8.3
    	
Amendments; Waivers
    	
63
    
	
8.4
    	
Assignment
    	
64
    
	
8.5
    	
Arbitration
    	
64
    
	
8.6
    	
Governing Law; Language
    	
66
    
	
8.7
    	
Consent to Jurisdiction and Venue
    	
66
    
	
8.8
    	
Counterparts
    	
66
    
	
8.9
    	
No Third-Party Beneficiaries
    	
67
    
	
8.10
    	
Entire Agreement
    	
67
    


 

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8.11
    	
Captions
    	
67
    
	
8.12
    	
Severability
    	
67
    
	
8.13
    	
Interpretation; Construction
    	
67
    
	
8.14
    	
Equitable Relief
    	
69
    
	
8.15
    	
Business Days
    	
69
    
	
8.16
    	
Access to Counsel
    	
69
    
	
8.17
    	
Relationship
    	
69
    
	
8.18
    	
Waiver of Jury Trial
    	
70
    
	
8.19
    	
Disclosure Schedules
    	
70
    
	
8.20
    	
No Other Representations or Warranties
    	
70
    


 

Exhibits

 

	
Exhibit A
    	
 
    	
Amazing   Management Agreement Addendum
    
	
Exhibit B
    	
 
    	
Key   Employees
    
	
Exhibit C
    	
 
    	
Key   Employee Employment Agreement Addendum
    
	
Exhibit D
    	
 
    	
Lock-Up   Agreement
    
	
Exhibit E
    	
 
    	
Non-Business   Assets
    
	
Exhibit F
    	
 
    	
Notarial   Deed of Transfer
    
	
Exhibit G
    	
 
    	
Underwriters’   Lock-Up Agreement
    


 

Seller Disclosure Schedules

 

	
Schedule 3.2(a)(i)
    	
 
    	
Capitalization   — Part 1
    
	
Schedule 3.2(a)(ii)
    	
 
    	
Capitalization   — Part 2
    
	
Schedule 3.2(a)(iii)
    	
 
    	
Capitalization   — Part 3
    
	
Schedule 3.3(a)
    	
 
    	
Company   Subsidiaries
    
	
Schedule 3.3(b)(i)
    	
 
    	
Company   Subsidiary Capitalization — Part 1
    
	
Schedule 3.3(b)(ii)
    	
 
    	
Company   Subsidiary Capitalization — Part 2
    
	
Schedule 3.3(b)(iii)
    	
 
    	
Company   Subsidiary Capitalization — Part 3
    
	
Schedule 3.3(c)
    	
 
    	
Company   Minority-held Entities
    
	
Schedule   3.4(a)
    	
 
    	
No   Conflict — Exceptions
    
	
Schedule 3.4(b)
    	
 
    	
No   Consents — Exceptions
    
	
Schedule 3.5(a)
    	
 
    	
Company   Financial Statements
    
	
Schedule   3.5(c)
    	
 
    	
Company   Financial Statements — Exceptions
    
	
Schedule   3.6(g)
    	
 
    	
Contracts   with or Rulings by Tax Authorities
    
	
Schedule   3.6(o)
    	
 
    	
Tax   Chargeable to other Persons
    
	
Schedule   3.6(p)
    	
 
    	
Hired-in   Personnel - Exceptions
    
	
Schedule   3.6(t)
    	
 
    	
Tax   Elections, etc.
    
	
Schedule   3.6(v)
    	
 
    	
Taxes   of Other Persons
    
	
Schedule   3.8
    	
 
    	
Owned   Real Property and Leased Real Property
    
	
Schedule   3.9
    	
 
    	
Compliance   with Laws - Exceptions
    
	
Schedule   3.10
    	
 
    	
Permits
    
	
Schedule   3.11(a)
    	
 
    	
Employees
    


 

iii











 

	
Schedule 3.11(b)
    	
 
    	
Amounts   Owing to and from Employees
    
	
Schedule 3.11(c)
    	
 
    	
Employee   Transaction Payments; Redundancies
    
	
Schedule 3.11(d)
    	
 
    	
Severance   and Other Employee-benefit Obligations
    
	
Schedule 3.11(e)
    	
 
    	
Pension   Arrangements
    
	
Schedule 3.11(f)
    	
 
    	
Liabilities   for Breaches
    
	
Schedule   3.12
    	
 
    	
Material   Contracts
    
	
Schedule   3.13
    	
 
    	
Legal   Proceedings
    
	
Schedule   3.14(a)
    	
 
    	
Company   Intellectual Property
    
	
Schedule   3.14(b)
    	
 
    	
Licenses   Granted by Company Entities
    
	
Schedule 3.14(d)
    	
 
    	
Intellectual   Property Infringement Actions Against Company Entities
    
	
Schedule 3.14(e)
    	
 
    	
Intellectual   Property Infringement by Third Parties
    
	
Schedule   3.15
    	
 
    	
Insurance   Policies
    
	
Schedule   3.16(a)
    	
 
    	
Labor   Unions and Work Stoppages
    
	
Schedule 3.16(b)
    	
 
    	
Future   Changes in Employment Conditions
    
	
Schedule 3.16(d)
    	
 
    	
Employee   Representative Bodies and Workforce Contracts
    
	
Schedule   3.17
    	
 
    	
Environmental   Matters — Exceptions
    
	
Schedule   3.18
    	
 
    	
Conduct   of Business in Ordinary Course — Exceptions
    
	
Schedule   3.19
    	
 
    	
Material   Suppliers
    
	
Schedule   3.20
    	
 
    	
Affiliate   Transactions
    
	
Schedule   3.21
    	
 
    	
Bank   Accounts
    
	
Schedule   3.22(a)
    	
 
    	
Accounts   Receivable - Exceptions
    
	
Schedule   3.22(b)
    	
 
    	
Claims   Against Accounts Receivable
    
	
Schedule   3.22(c)
    	
 
    	
List   of Accounts Receivable
    
	
Schedule   3.25
    	
 
    	
Undisclosed   Liabilities — Exceptions
    
	
Schedule   3.27
    	
 
    	
Books   and Records — Exceptions
    
	
Schedule   3.29(b)
    	
 
    	
Insolvency   Transactions
    


 

iv











 

This STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of February 28, 2014 between Q-Dance Partners B.V., a company organized under the laws of the Netherlands (the “Buyer”), Amazing Holding BV, a company organized under the laws of the Netherlands (the “Seller”), and, solely with respect to Sections 5.1 through 5.4, 5.5 and 5.7, Jan Lok (“Lok” and, collectively with the Seller and the Buyer, the “Parties”).

 

A.                                    On December 16, 2013, the Seller and SFXE Netherlands Holdings B.V., a company organized under the laws of the Netherlands and an Affiliate of the Buyer (“SFXE”), entered into an Option Agreement (as amended from time to time, the “Option Agreement”).  Pursuant to the Option Agreement, the Seller granted SFXE and its Affiliates an option (the “Option”) to acquire 10,000 ordinary shares (such shares, the “Purchased Shares”) of B2S Holding BV, a company organized under the laws of the Netherlands (the “Company”).

 

B.                                    In accordance with the Option Agreement, on January 10, 2014, SFX Entertainment, Inc., a Delaware corporation and the indirect parent of the Buyer (the “Parent”)  issued to Lok (as the sole equityholder of the Seller) a warrant (the “Warrant”) exercisable, subject to the terms thereof, for 100,000 shares of Common Stock, par value $0.001, of the Parent (“Parent Common Stock”), at an exercise price of $10.00 per share.

 

C.                                    On December 18, 2013, SFXE delivered to the Seller notice of its intent to exercise the Option.

 

D.                                    By entering into this Agreement, and subject to the terms hereof, the Buyer (on behalf of SFXE) is exercising the Option in accordance with the terms of the Option Agreement, and, in consideration for the exercise of the Option, the Buyer shall pay to the Seller the Closing Cash Payment (as defined below), and the Parent shall issue to the Seller 400,000 shares of Parent Common Stock (the “SFX Shares”).

 

E.                                     Upon the consummation of the Transactions, the Buyer will own all of the issued and outstanding shares in the capital of the Company.

 

The Parties therefore hereby agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

“2013 Audited Financial Statements” has the meaning set forth in Section 5.7.

 

“2013 Financial Statements” has the meaning set forth in Section 3.5(a).

 

“2013 Retained Earnings Distribution” has the meaning set forth in Section 2.1.

 

“Accounts Receivable” has the meaning set forth in Section 3.22.

 

“Action” means any Suit, legal action, claim, investigation, hearing, arbitration, audit, assessment or proceeding (including any legal proceeding, administrative enforcement proceeding or arbitration proceeding before any Governmental Authority).

 











 

“Actual Company Transaction Expenses” has the meaning set forth in Section 2.4(a).

 

“Actual Dividend Amount” means the product of (a) fifty percent (50%) times (b) the aggregate amount of dividends and distributions that the Company receives, in the Company’s capacity as a direct holder of equity Securities in Bass Productions or Toffler during the Anticipated Dividend Period, calculated in a manner consistent with the past practices of the Business.

 

“Affiliate” means, with respect to any specified Person, (a) any Person controlling, controlled by, or under common control with such specified Person; (b) any partner, officer, Director, or employee of such specified Person or of any Person described in the immediately foregoing clause (a), or any Family Member of such specified Person; or (c) any liquidating trust, trustee, or other similar Person for such specified Person that, in the case of a Person that is not an Entity, has been established solely for the benefit of such Person or such Person’s Family Members.

 

“Agreed Claim Memorandum” has the meaning set forth in Section 7.4(b).

 

“Agreed Claims” has the meaning set forth in Section 7.6(b).

 

“Agreement” has the meaning set forth in the preamble.

 

“Amazing Management Agreement” means a management agreement (as might have been amended) that is in effect immediately prior to the Closing between the Seller and a Company Entity.

 

“Amazing Management Agreement Addendum” means an addendum to the Amazing Management Agreement, dated as of the date of this Agreement, between the Seller and the other parties thereto, in the form attached as Exhibit A.

 

“Ancillary Documents” means the Notarial Deed of Transfer, Amazing Management Agreement Addendum, each Key Employee Employment Agreement Addendum, the Lock-Up Agreement, the Underwriters’ Lock-Up Agreement, and the other documents signed by or Contracts entered into between any of the Parties or the Parent in connection with the Transactions.

 

“Anticipated Dividend Amount” means an amount equal to $44,377.43.

 

“Anticipated Dividend Period” means the period commencing on (and including) the day after the Closing Date and ending on (and including) August 1, 2014.

 

“Anticipated Dividend Excess” means an amount equal to the greater of (a) $0 and (b) the amount, if any, by which the Actual Dividend Amount exceeds the Anticipated Dividend Amount.

 

“Anticipated Dividend Shortfall” means an amount equal to the greater of (a) $0 and (b) the amount, if any, by which the Anticipated Dividend Amount exceeds the Actual Dividend Amount.

 

2











 

“Annual Financial Statements” has the meaning set forth in Section 3.5(a).

 

“Arbitrator” has the meaning set forth in Section 8.5(a).

 

“Bass Productions” means Bass Productions BVBA, a company organized under the laws of Belgium.

 

“B2S B.V.” means B2S B.V., a company organized under the laws of the the Netherlands.

 

“B2S Real Estate” means B2S Real Estate BV, a company organized under the laws of the Netherlands.

 

“Balance Sheet Date” has the meaning set forth in Section 3.5(a).

 

“Binding Arbitration” has the meaning set forth in Section 8.5(a).

 

“Board” means, with respect to an Entity, the board of directors, board of managers, or similar governing body of such Entity.

 

“Breach” means any inaccuracy in or breach of, or any failure to perform or comply with, a representation, warranty, obligation, or other provision of any Contract or other document.

 

“Business” means (a) all of the Company’s assets, businesses, and operations as of the date hereof (whether such interests are directly held by the Company or through one or more Entities in which the Company holds an interest) and (b) all of the assets, business, and operations primarily relating to the assets, business, and operations described in the immediately foregoing clause (a) that are held directly or indirectly by Lok or any Person directly or indirectly holding equity Securities in the Company as of the date hereof; except that the Business does not include the Non-Business Assets. Without limiting the generality of the immediately foregoing sentence, the “Business” includes: (i) all equity Securities and other interests that the Company holds, directly or indirectly, as of the date hereof (including in any Company Subsidiary); (ii) all of the Intellectual Property that the Company directly or indirectly holds as of the date hereof; and (iii) any other asset used, as of the date hereof, by the Company or any Subsidiary of the Company in the conduct of its business or any contractual right held, as of the date hereof, by the Company or any Subsidiary of the Company.

 

“Business Day” means any day that is not a Saturday, that is not a Sunday, and that is not another day on which banks in the State of New York or in Amsterdam, the Netherlands are required or authorized by Law to be closed.

 

“Buyer” has the meaning set forth in the preamble.

 

“Buyer Disclosure Schedules” means the Schedules referenced in Article 4.

 

“Buyer Indemnified Party” has the meaning set forth in Section 7.2(a).

 

3











 

“Buyer Parties” means the Parent and the Buyer, collectively.

 

“Buyer Return” means any Tax Return of the Buyer Parties or of any Affiliate of the Buyer Parties.

 

“Claim Notice” means a notice, in writing, that is a Direct Claim Notice or a Third-Party Notice, as applicable.

 

“Claims” means any charges, complaints, actions, suits, proceedings, hearings, investigations, claims, and demands.

 

“Closing” has the meaning set forth in Section 2.1.

 

“Closing Date Actual Net Working Capital” means the difference of Current Assets minus Current Liabilities as of 11:59 pm in the Netherlands on the Closing Date.  For the avoidance of doubt, the Current Assets and the Closing Date Actual Net Working Capital shall not include the cash corresponding to the 2013 Retained Earnings Distribution (as defined herein).

 

“Closing Date Target Net Working Capital” means -€250,000 (negative Two Hundred Fifty Thousand Euros).

 

“Closing Cash Payment” means the Exercise Price, plus the Actual Dividend Amount, minus the Company Transaction Expenses.

 

“Closing Date” has the meaning set forth in Section 2.1.

 

“Company” has the meaning set forth in the recitals.

 

“Company Entity” means the Company or any Company Subsidiary.

 

“Company Equity” has the meaning set forth in Section 3.2(a).

 

“Company Financial Statements” has the meaning set forth in Section 3.5(a).

 

“Company Intellectual Property” means all Intellectual Property owned, whether in whole or in part, by the Company or the Company Subsidiaries.

 

“Company Intellectual Property Agreements” means any and all Contracts concerning Intellectual Property to which the Company or any of the Company Subsidiaries is a party or beneficiary or by which the Company or any of the Company Subsidiaries or any of their respective properties or assets may be bound, including all (a) licenses of Intellectual Property by the Company or any of the Company Subsidiaries to any third party, (b) licenses of Intellectual Property by any third party to the Company or any of the Company Subsidiaries, (c) Contracts between the Company or any of the Company Subsidiaries and any third party relating to the design or development of software or other Intellectual Property, (d) all confidentiality agreements or non-disclosure agreements relating to Intellectual Property, and (e) consents, settlements or Orders governing the use, validity or enforceability of Intellectual Property.

 

4












 

“Company Minority-held Entity” means any Entity that is not a Company Subsidiary in which any Company Entity holds any equity Securities.

 

“Company Minority-held Entity Equity” has the meaning set forth in Section 3.3(c).

 

“Company Permits” has the meaning set forth in Section 3.10.

 

“Company Subsidiary” means any Entity that is a Subsidiary of the Company; except that, for purposes of this Agreement, none of B2S Real Estate, Platinum Agency or Toffler is a Company Subsidiary. The phrase “Subsidiary of the Company” or analogous phrase means “Company Subsidiary.”

 

“Company Subsidiary Equity” has the meaning set forth in Section 3.3(a).

 

“Company Transaction Expenses” means the Transaction Expenses incurred or accrued by Lok, the Seller or, prior to the Closing, the Company Entities, in the aggregate.

 

“Competing Business” means, as of a given time, any business or activity conducted by a Person that is or that could reasonably be considered to be competitive with the Business at such time; except that use of the Non-Business Assets, in and of itself, will not be deemed to be a Competing Business.

 

“Confidential Information” means any information (and any document, diagram, computer program, or other tangible embodiments thereof, whether or not marked “confidential” or “proprietary” and whether of a technical nature or otherwise) pertaining to any aspect of the Business or of the business of any Parent Entity or any Parent Entity’s customers, suppliers, or others with which any Parent Entity has a business relationship, in each case whether conveyed in written, graphic, oral, or physical form, including any Company Intellectual Property.

 

“Consent” means any consent, approval, authorization, waiver, filing, or registration required to be obtained from, filed with, or delivered to any Person in connection with the consummation of the Transactions, including any anti-trust or other regulatory approvals required from any Governmental Authority.

 

“Contracts” means any note, bond, mortgage, indenture, lease, license, contract, agreement, commitment, arrangement, or other consensual obligation, in each case whether written or oral.

 

“Control Notice” has the meaning set forth in Section 7.5(b).

 

“Copyrights” means all copyrights, whether in published or unpublished works, including literary works, and any other original works of authorship fixed in any tangible medium of expression; databases, data collections and rights therein, software, and web site content; rights to compilations, collective works, and derivative works of any of the foregoing; and registrations and applications for registration for any of the foregoing set forth in this definition and any renewals or extensions thereof.

 

“Core Representation” means any representation or warranty contained in Sections 3.1

 

5











 

(Organization and Standing; Authority), 3.2 (Capitalization), 3.3 (Company Subsidiaries and Company Minority-held Entities), 3.4 (No Conflict; Required Filings and Consents), 3.23 (No Brokers), 3.29 (Solvency), 3.31 (Investment in SFX Shares), 4.1 (Organization and Standing; Authority), 4.2(a) (Capitalization — SFX Shares), 4.3 (No Conflict; Required Consents), and 4.7 (No Brokers).

 

“Current Assets” means the current assets of the Company on a consolidated basis as determined in accordance with GAAP; provided that, notwithstanding anything to the contrary herein, Current Assets shall not include (a) dividend receivables, (b) note or loan receivables, or (c) income Tax-related assets.

 

“Current Liabilities” means the current liabilities of the Company on a consolidated basis as determined in accordance with GAAP; provided that, notwithstanding anything to the contrary herein, Current Liabilities shall not include (a) the current portion of Indebtedness, or (b) income Tax-related liabilities.

 

“Deductible” has the meaning set forth in Section 7.3(a)(i).

 

“Direct Claim Notice” has the meaning set forth in Section 7.4(a).

 

“Director” means, with respect to the Board of an Entity, a director or analogous member of such Board.

 

“Disclosure Schedules” means the Buyer Disclosure Schedules and the Seller Disclosure Schedules, collectively.

 

“Dispute” has the meaning set forth in Section 8.5(a).

 

“Disputing Parties” has the meaning set forth in Section 8.5(a).

 

“Domain Names” means Internet electronic addresses, uniform resource locators and alphanumeric designations associated therewith registered with or assigned by any domain name registrar, domain name registry or other domain name registration authority as part of an electronic address on the Internet and all applications for any of the foregoing.

 

“Employees” means any employees of any of the Company Entities or with respect to which any of the Company Entities has any Liability.

 

“Entity” means a Person that is not an individual.

 

“Environment” means soil, surface water, groundwater, stream sediments, and ambient or indoor air.

 

“Environmental Action” means any Action, Order, written notice directive, letter or other written communication from any Governmental Authority or any third party involving a (a) violation of Environmental Law or (b) release, discharge, leak, migration, storage, or transportation of Hazardous Materials in, on, or from any real property currently or previously owned, leased, controlled, or occupied by any of the Company Entities.

 

6











 

“Environmental Law” means any Law (or any judicial or administrative interpretation thereof) concerning pollution or protection of human health or the Environment, including those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of Hazardous Materials.

 

“Environmental Permits” has the meaning set forth in Section 3.17(h).

 

“Estimated Closing Cash Payment” means the Exercise Price minus the Estimated Company Transaction Expenses.

 

“Estimated Company Transaction Expenses” has the meaning set forth in Section 2.1.  The Seller hereby states that the Estimated Company Transaction Expenses are $104,007.70.

 

“Event” means any festival, concert, or other similar event.

 

“Exercise Price” means an amount equal to $14,300,000.

 

“E&Y” means Ernst & Young LLP.

 

“Family Member” means, with respect to a Person, any parent, spouse, child, brother, sister, or other relative with a relationship (by blood, marriage, or adoption) not more remote than the first cousin of such Person.

 

“Finally Determined” means, with respect to an indemnification claim for Losses pursuant to Article 7 or other claims hereunder or with respect hereto, that the parties to such claim have mutually agreed upon a resolution thereof or, if disputed, that a final non-appealable Order has been entered with respect to such claim and the amount of such Losses.

 

“GAAP” means United States generally accepted accounting principles applied on a consistent basis.

 

“General Enforceability Exceptions” has the meaning set forth in Section 3.1(b).

 

“Governmental Authority” means any of the following: (a) the United States of America, the Netherlands, Belgium, or any other country; (b) any state, commonwealth, province, territory, or possession of any of the foregoing and any political subdivision thereof (including counties and municipalities); and (c) any agency, authority, or instrumentality of any of the foregoing, including any court, tribunal, department, bureau, commission, board, arbitrator, or panel of arbitrators.

 

“Hazardous Material” means (a) any material or substance that is listed or defined as a “hazardous substance,” “hazardous waste,” “toxic substance,” “hazardous material,” “pollutant,” “contaminant,” or any other term of similar import in, under, or otherwise regulated pursuant to any Environmental Law or any other term intended to list or define a material or substance by reason of such material’s or substance’s ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, “EP toxicity,” or adverse effect on human health or the Environment, (b) oil, petroleum, natural gas, natural gas liquids, synthetic gas, drilling fluids, and other wastes

 

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associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any explosives or any radioactive materials, (d) asbestos in any form, (e) polychlorinated biphenyls, (f) toxic mold, mycotoxins, or microbial matter (naturally occurring or otherwise), and (g) infectious waste.

 

“Income Taxes” means any Taxes imposed by any Taxing Authority (including national, federal, state, or local Taxes of such Taxing Authority) based on or measured by reference to (a) net income or gross receipts, or (b) multiple bases, one of which is net income or gross receipts, including, in each case with respect to any Taxes described in any of the immediately foregoing clauses (a) and (b), any interest, penalty, or addition thereto, whether disputed or not.

 

“Indebtedness” means, with respect to a Person, all obligations of such Person that in accordance with GAAP should be classified upon a balance sheet of such Person as liabilities of such Person, and in any event, regardless of how classified in accordance with GAAP, includes (a) all obligations of such Person for borrowed money or that have been incurred in connection with the acquisition of property or assets; (b) obligations secured by any Lien upon property or assets owned by such Person, even if such Person has not assumed or become liable for the payment of such obligations; (c) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person; (d) capitalized lease obligations; (e) obligations with respect to interest rate or currency swaps, collars, caps, and similar hedging obligations; (f) all guaranties, surety, or indemnity obligations by such Person; and (g) all obligations of such Person in regard to guaranties or sureties by others of such Person’s obligations, regardless of whether by payment or performance, or whether such guaranties are in the form of letters of credit, deposits, bonds, insurance, or other forms of security, indemnity, surety, or guaranty.

 

“Indemnified Party” means a Buyer Indemnified Party or a Seller Indemnified Party, as applicable.

 

“Indemnitor” means the Party from which indemnification is being sought under Article 7.

 

“Insurance Policies” has the meaning set forth in Section 3.15.

 

“Intellectual Property” means Copyrights, Domain Names, Patents, Trademarks and Trade Secrets, and all other intellectual property and proprietary rights, including the right to sue for past, present, and future infringement, misappropriation, or other violation thereof.

 

“Inventory” means all materials, inventory, and supplies, including goods in transit, raw materials, work-in-process, finished goods, packaging supplies, spare parts, and other items included in the inventory of the Business or otherwise owned by any Company Entity, whether in stock, in transit, or on order.

 

“JAMS” means JAMS, Inc.

 

“Key Parent Entity Contact” means: (a) any Director, manager, officer, executive, employee, consultant, customer, supplier, or creditor of any Parent Entity; (b) any Person with

 

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which any Parent Entity has a material business relationship; (c) any licensor of any material right to any Parent Entity; and (d) any licensee of any material right from any Parent Entity.

 

“Key Employees” means the individuals set forth in Exhibit B.

 

“Key Employee Employment Agreement” means an employment agreement (as might have been amended) that is in effect immediately prior to the signing of this Agreement between a Key Employee and a Company Entity.

 

“Key Employee Employment Agreement Addendum” means, with respect to a Key Employee, an addendum to the Key Employee Employment Agreement with respect to such Key Employee, the Company Entity that employed such Key Employee under such Key Employee Employment Agreement, the Parent, and B2S B.V. in the form attached as Exhibit C.

 

“Knowledge” means (a) with respect to the Seller, the actual knowledge of Lok, Ab Twigt, and each other Key Employee, and the knowledge that such individuals would reasonably be expected to possess as a result of such individual’s performance, exercising due care, of such individual’s duties to any Seller Entity; and (b) with respect to the Buyer, the actual knowledge of any of Robert F.X. Sillerman, Shelly Finkel, Mitch Slater, Rich Rosenstein, and Howard Tytel and the knowledge that such individuals would reasonably be expected to possess as a result of such individual’s performance, exercising due care, of such individual’s duties to the Parent or the Buyer.

 

“Law” means any statute, law, regulation, ordinance, executive order, Order, stipulation, injunction, administrative order, common law doctrine, or other regulation or rule of any Governmental Authority.

 

“Leased Real Property” has the meaning set forth in Section 3.8.

 

“Legal Requirement” means any constitution, ordinance, regulation, statute, code, rule or other Law, and any certification standard, accreditation standard, approval, license, order, or permit of any Governmental Authority (including national, federal, state, or local Taxes of such Governmental Authority).

 

“Liabilities” means any direct or indirect liability, Indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, whether accrued, absolute, contingent, mature, unmature or otherwise and whether known or unknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured.

 

“Liens” means any mortgage, lien, security interest, option, pledge, restriction, limitation, encumbrance, hypothecation, easement, charge, assessment, judgment, claim, voting restriction, subscription right, or other claim of third parties of any kind, including any Contract to give any of the foregoing.

 

“Listed Action” means, with respect to a Seller Entity, any of the following:

 

(a)                                 amending any of such Seller Entity’s Organizational Documents;

 

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(b)                                 issuing any Securities, or issuing, selling, or granting any option or right to acquire or otherwise dispose of any Securities;

 

(c)                                  declaring or paying any dividends or making any other distribution in cash or property in respect of such Seller Entity’s equity interests, other than (i) any lawful distributions of cash by the Company to the Company’s equityholders, on a pro-rata basis in accordance with each equityholder’s respective ownership interest in the Company, up to the lesser of (x) the amount of cash held by the Company as of the Closing Date, and (y) the amount of the Company’s retained earnings as of December 31, 2013, and (ii) any lawful distributions by a Company Entity or Company Minority-held Entity to another Company Entity;

 

(d)                                 repurchasing or redeeming any Securities of such Seller Entity;

 

(e)                                  except for current obligations and liabilities incurred in such Seller Entity’s Ordinary Course of Business (including repayments of Indebtedness as and when due), incurring, performing, paying, or otherwise discharging any Liability;

 

(f)                                   entering into any employment agreement with, or becoming liable for any bonus, profit-sharing, or incentive payment to, or materially increasing the compensation or benefits of, any of such Seller Entity’s officers, Directors, or employees;

 

(g)                                  selling, transferring, or purchasing any properties or assets, tangible or intangible, other than sales, transfers, and purchases in such Seller Entity’s Ordinary Course of Business;

 

(h)                                 making any material changes in such Seller Entity’s customary method of operations, including policies and practices relating to marketing, selling, pricing, and the maintenance of business premises, fixtures, furniture and equipment;

 

(i)                                     modifying, amending, or canceling any of such Seller Entity’s existing leases, or entering into any Contracts, or entering into any loan, credit, or similar Contracts, in each case other than in such Seller Entity’s Ordinary Course of Business;

 

(j)                                    making any investments in any third party;

 

(k)                                 creating or transferring a security interest in, or creating any Lien (other than Permitted Liens) with respect to, any of the assets relating to the Business outside such Seller Entity’s Ordinary Course of Business;

 

(l)                                     initiating, threatening, or settling any Suit (other than with respect to Suits in any Seller Entity’s Ordinary Course of Business to recover amounts owed to such Seller Entity);

 

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(m)                             waiving any material right, or cancelling of any material debt or claim;

 

(n)                                 making any material change in cash management practices (including the collection of receivables, payment of payables, maintenance of inventory control and sales, billing, pricing and credit practices, and other financial reporting systems);

 

(o)                                 making any capital expenditures in excess of $50,000;

 

(p)                                 failing to perform any obligation in any material respect under any Contract to which such Seller Entity is a party;

 

(q)                                 terminating or amending any material Contract to which such Seller Entity is a party, or failing to elect to renew any material Contract to which such Seller Entity was a party, other than in such Seller Entity’s Ordinary Course of Business;

 

(r)                                    changing any of such Seller Entity’s accounting methods or principles, except as required by applicable Law or generally accepted accounting principles historically applied by such Seller Entity;

 

(s)                                   cancelling or terminating any insurance policy that provides coverage in respect of any Company Entities; or

 

(t)                                    entering into any Contract to, directly or indirectly, do any of the things described in any of clauses (a) through (s) immediately above.

 

“Lock-Up Agreement” means the SFX Lock-Up Agreement by and between the Seller and the Parent in the form attached as Exhibit D.

 

“Lok” has the meaning set forth in the preamble.

 

“Losses” means all losses, Liabilities, actions, damages, diminution of value, and expenses, including attorneys’ fees and disbursements and whether or not involving a third party claim; except that “Losses” does not include incidental, indirect, consequential or punitive damages, or lost profits, except, in each case, to the extent payable to a third party pursuant to a Third-Party Claim.

 

“Material Adverse Effect” means any event, change, circumstance, or occurrence that, individually or together with any one or more other events, changes, circumstances, or occurrences, has had, or could reasonably be expected to have, a material adverse effect upon the assets, condition (financial or otherwise), results of operations or business of the Business or any of the Seller Entities, or on the ability of any Party to consummate the Transactions.

 

“Material Contracts” means any Contract that is listed or that is required to be listed in Schedule 3.12.

 

“Material Suppliers” has the meaning set forth in Section 3.19.

 

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“Neutral Accountant” means E&Y.

 

“Non-Business Assets” means the assets set forth in Exhibit E.

 

“Non-Solicitation Period” has the meaning set forth in Section 5.1.

 

“Notary” means Mr. A.J. Wiggers or another civil law notary (notaris) (or such notary’s substitute) of DLA Piper Nederland N.V. in Amsterdam.

 

“Notary Account” means the following trust account (kwaliteitsrekening) of the Notary:

 

IBAN:                       NL86 ING B 0020 031300

Attn:                         Derdengelden Notariaat DLA Piper

Address:                   Amstelveenseweg 638

Zipcode and place:    1081 JJ AMSTERDAM, THE NETHERLANDS

Bank:                       ING Bank

Address:                   De Entree 201

Zipcode and place:     1101 HG AMSTERDAM

BIC code:                  INGBNL2A

 

“Notarial Deed of Transfer” means a Notarial Deed of Transfer in the form attached as Exhibit F.

 

“Notice” has the meaning set forth in Section 8.1(a).

 

“Objected Claim” has the meaning set forth in Section 7.4(b).

 

“Option” has the meaning set forth in the recitals.

 

“Option Agreement” has the meaning set forth in the recitals.

 

“Order” means any award, injunction, judgment, decree, order, writ, determination, ruling, subpoena or verdict or other decision issued, promulgated or entered by any Governmental Authority of competent jurisdiction.

 

“Ordinary Course of Business” means with respect to any Person, the ordinary course of business of such Person, consistent with past practice.

 

“Organizational Documents” means, with respect to any Entity, such Entity’s certificate of incorporation, shareholders’ register, articles of incorporation, bylaws, articles of organization, constitution, partnership agreement, limited liability company agreement, formation agreement, trust agreement, and other similar organizational documents of such Entity.

 

“Owned Real Property” has the meaning set forth in Section 3.8.

 

“Parent” has the meaning set forth in the recitals.

 

“Parent Audited Financial Statements” has the meaning set forth in Section 4.4(a).

 

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“Parent Balance Sheet Date” has the meaning set forth in Section 4.4(a).

 

“Parent Common Stock” has the meaning set forth in the recitals.

 

“Parent Entity” means any of the following: (a) the Parent; (b) any Parent Subsidiary; and (c) any Company Entity.

 

“Parent Equity” means shares of capital stock or other equity interests in Parent.

 

“Parent Financial Statements” has the meaning set forth in Section 4.4(a).

 

“Parent Interim Financial Statements” has the meaning set forth in Section 4.4(a).

 

“Parent Subsidiary” means any Subsidiary of the Parent.

 

“Parties” has the meaning set forth in the preamble.

 

“Patents” means all patents, industrial and utility models, industrial designs, petty patents, patents of importation, patents of addition, certificates of invention, and any other indicia of invention ownership issued or granted by any Governmental Authority, including all provisional applications, priority and other applications, divisionals, continuations (in whole or in part), extensions, reissues, reexaminations or equivalents or counterparts of any of the foregoing.

 

“Platinum Agency” means Platinum Agency BV.

 

“Pension Arrangements” has the meaning set forth in Section 3.11(e).

 

“Permits” means any license, permit, authorization, certificate, qualification, registration, variance, exemption, consent, approval, or similar document or authority that has been issued or granted by any Governmental Authority.

 

“Permitted Court” has the meaning set forth in Section 8.7.

 

“Permitted Liens” means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings, provided an appropriate reserve is established therefor in accordance with GAAP; (b) mechanics’, workmen’s, repairmen’s, warehousemen’s, or carriers’ Liens arising or incurred in the Ordinary Course of Business or by operation of Law if the underlying obligations are not delinquent or being contested in good faith by appropriate proceedings; and (c) with respect to the Real Property (i) easements, encroachments, restrictions, rights-of-way, and any other non-monetary title defects, and (ii) zoning, building, and other similar restrictions that are not violated by the current use or occupancy of the Real Property; but only if, in the case of Liens described in the immediately foregoing clauses (b) or (c), such Liens do not, individually or in the aggregate, materially impair the continued use and operation of the property to which such Liens relate or the business of any of the Company Entities as presently conducted.

 

“Person” means any individual, trust, corporation, partnership, limited partnership,

 

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limited liability company or other business association or entity, or Governmental Authority.

 

“Post-Closing True-up Amount” means an amount (which might be a negative number) equal to the Estimated Company Transaction Expenses minus the Actual Company Transaction Expenses.

 

“Post-Closing True-up Dispute Notice” has the meaning set forth in Section 2.4(b)(i).

 

“Post-Closing True-up Dispute Notice Deadline” has the meaning set forth in Section 2.4(b)(i).

 

“Post-Closing True-up Resolution Period” has the meaning set forth in Section 2.4(b)(ii).

 

“Post-Closing True-up Settlement Deadline” has the meaning set forth in Section 2.4(c)(i).

 

“Pre-Closing Taxes” has the meaning set forth in Section 6.1.

 

“Previous Pension Arrangements” has the meaning set forth in Section 3.11(e).

 

“Promote” means to promote, market, produce, develop, originate, use, sell, exploit or operate (or any of the foregoing). “Promotion” has a meaning correlative to the foregoing.

 

“Proposed Sale” has the meaning set forth in Section 5.8(b).

 

“Proposed Sale Notice” has the meaning set forth in Section 5.8(b).

 

“Purchased Shares” has the meaning set forth in the recitals.

 

“Real Property” means all the Company Entities’ respective real (immovable) property and interest in real (immovable) property, real (immovable) property leaseholds and real (immovable) property subleaseholds, all improvements thereon and other real (immovable) property interests currently used in the Business.

 

“Real Property Leases” has the meaning set forth in Section 3.8.

 

“Regulation S” means Regulation S of the Securities Act.

 

“Release” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, disposing, or dumping of a Hazardous Material into the Environment.

 

“Representatives” means, with respect to a Party, such Party’s officers, Directors, managers, attorneys, advisors, investment bankers, consultants, and accountants.

 

“Right of First Refusal” has the meaning set forth in Section 5.8(a).

 

“ROFR Notice” has the meaning set forth in Section 5.8(b).

 

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“ROFR Period” has the meaning set forth in Section 5.8(b).

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the United States Securities Act of 1933.

 

“Security” means a “security,” as defined in Section 2(a)(1) of the Securities Act.

 

“Seller Disclosure Schedules” means the Schedules referenced in Article 3.

 

“Seller Entity” means the Seller or any Seller Subsidiary.

 

“Seller Indemnified Party” has the meaning set forth in Section 7.2(b).

 

“Seller Return” means any Tax Return of any of the following Persons: (a) the Seller, (b) any Affiliate of the Seller (including any Company Entity with respect to any Tax Return of such Company Entity filed prior to the Closing), (c) any Person that directly or indirectly holds any equity Securities in the Seller, and (d) any Family Member of any Person described in any of the foregoing clauses (a) through (c) (inclusive).

 

“Seller Subsidiary” means any of the following: (a) the Seller; (b) any Company Entity; or (c) any Entity that, as of the relevant time of determination, is or was a Subsidiary of the Seller; except that, for purposes of this Agreement, none of B2S Real Estate, Platinum Agency or Toffler is a Seller Subsidiary. The phrase “Subsidiary of the Seller” or analogous phrase means “Seller Subsidiary.”

 

“Seller Third Party” means any Person that (a) is not an Affiliate of the Seller and (b) is not an Affiliate of any Person that directly or indirectly holds any equity Security (or any Security that is convertible into, exchangeable for, or exercisable for any equity Security) that represents a direct or indirect interest in the Seller.

 

“SFX Shares” has the meaning set forth in the recitals.

 

“SFX Shares Instruction” has the meaning set forth in Section 2.2(b)(ii).

 

“SFXE” has the meaning set forth in the recitals.

 

“Specified Seller Indemnification Item” means:

 

(a)                                 any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any Contract or understanding alleged to have been made by any such Person with any Seller Entity (or any Person acting on their behalf) in connection with the Transactions;

 

(b)                                 to obtain, make, file, or provide (as applicable) any Consents relating to (i) any Events that were scheduled prior to the Closing or (ii) the use of any Intellectual Property used or held for use by any Seller Entity or used in connection with the operation of the Business;

 

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(c)                                  any claims by any Person (including any current or former Employee or their respective spouses, children, assigns or dependents, their dependents and/or the providers of the Pension Arrangements or Previous Pension Arrangements) arising from a claim that any such current or former Employee was eligible to participate in any Pension Arrangement or Previous Pension Arrangement;

 

(d)                                 any claim by any Person resulting from the failure of the Seller to cause a Company Entity to become the properly registered owner of all Domain Names listed on Schedule 3.14(a) by the date that is 30 days after the Closing Date; or

 

(e)                                  the amount, if any, by which the Closing Date Target Net Working Capital exceeds the Closing Date Actual Net Working Capital.

 

“Straddle Period” means a Taxable period beginning on or before and ending after the Closing Date.

 

“Straddle Period Taxes” means, with respect to any Tax for any Straddle Period, the portion of such Tax that is allocable to the portion of the Straddle Period ending on the Closing Date: (a) in the case of a Tax that is (i) based upon or related to income or receipts the amount which would be payable if the taxable year ended on end of the Closing Date, or (ii) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible), deemed equal to the amount which would be payable if the taxable year ended on the end of the Closing Date and (b) in the case of a Tax imposed on a periodic basis (i) with respect to the assets of any Seller Entity or the assets of the Business or otherwise measured by the level of any item, or (ii) with respect to the Employees, deemed to be the amount of such Tax for the entire Straddle Period (or, in the case of such a Tax determined on an arrears basis, the amount of such Tax for the immediately preceding period), multiplied by a fraction, the numerator of which is the number of calendar days in the period ending on the end of the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period.

 

“Subsidiary” means, with respect to any specified Person and at a given time, an Entity of which such specified Person owns at such time, directly or indirectly, 50% or more of the outstanding capital stock or other equity interests of such Entity, the holders of which are (a) generally entitled to vote for the election of the Directors of such Entity or (b) generally entitled to share in the profits or capital of such Entity.  Notwithstanding the foregoing, for purposes of this Agreement, none of B2S Real Estate, Platinum Agency or Toffler will be considered a Subsidiary of the Seller or any Seller Entity.

 

“Suit” means any claim (including any complaint, counterclaim, or cross-claim), suit, litigation, or other proceeding by or before or otherwise involving any court, in each case whether sounding in contract, tort, or otherwise.

 

“Tax” or “Taxes” means all forms of local and national taxes, duties, levies, social security contributions, health insurance contributions and reimbursements (including VAT) due on the basis of the Dutch Zorgverzekeringswet (inkomensafhankelijke bijdrage ingevolge de

 

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Zorgverzekeringswet) or other imposts or withholdings imposed by or payable to any Taxing Authority whether direct or indirect, chargeable or attributable directly or primarily to the Company or to any other Person and irrespective of any such taxes, duties, levies, social security contributions, or other imposts or withholdings being recoverable from any other Person and including penalties, additions, interest, costs, and expenses and any payment obligation by way of reimbursement, recharge, indemnity, or damages relating to such taxes, duties, levies, social security contributions, or other imposts or withholdings.

 

“Tax Proceedings” has the meaning set forth in Section 6.5(a).

 

“Tax Return” means any return, declaration, form, report, claim, informational return or statement filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority with respect to Taxes, including any schedule or attachment thereto or amendment thereof.

 

“Taxing Authority” means, with respect to any Tax or Tax Return, the Governmental Authority that imposes such Tax or requires a Person to file such Tax Return and the agency (if any) charged with the collection of such Tax or the administration of such Tax Return, in each case for such Governmental Authority.

 

“Third-Party Claim” has the meaning set forth in Section 7.5(a).

 

“Third-Party Claimant” has the meaning set forth in Section 7.4(c).

 

“Third-Party Notice” has the meaning set forth in Section 7.5(a).

 

“Toffler” means Toffler B.V., a company organized under the laws of the Netherlands.

 

“Total Consideration” means, collectively, (a) the Warrant, (b) the Closing Cash Payment, and (c) the SFX Shares.

 

“Trade Secrets” means anything that would constitute a “trade secret” under applicable Law, and all other inventions (whether patentable or not), industrial designs, discoveries, improvements, ideas, designs, models, patterns, data collections, drawings, devices, methods, techniques, processes, know-how, confidential information, proprietary information, customer lists, software, and technical information; and all rights in any of the foregoing.

 

“Trademarks” means trademarks, service marks, trade dress, fictional business names, trade names, commercial names, certification marks, collective marks, and other proprietary rights to any words, names, slogans, symbols, logos, devices, or combinations thereof used to identify, distinguish and indicate the source or origin of goods or services; registrations, renewals, applications for registration, equivalents and counterparts of the foregoing; and the goodwill of the business associated with each of the foregoing.

 

“Transaction Documents” means this Agreement and the Ancillary Documents, collectively.

 

“Transaction Expenses” means, with respect to a Person, any expenses that such Person

 

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incurs in connection with the preparation, negotiation, execution, and delivery of this Agreement and the completion of the Transactions, including all fees and expenses of such Person’s respective agents, Representatives, brokers, counsel (internal and outside), consultants, advisers, and accountants.

 

“Transactions” means the transactions contemplated hereby.

 

“Transfer Agent” means the transfer agent with respect to the Parent Common Stock.

 

“Transfer Taxes” has the meaning set forth in Section 6.1.

 

“U.S. Person” has the meaning given to such term under Regulation S.

 

“Underwriters’ Lock-Up Agreement” means the Lock-Up Agreement by and between the Seller and the Parent’s underwriters in the form attached as Exhibit G.

 

“VAT” means any Taxes levied by a Taxing Authority with respect to added value, sales or consumption, including value added Taxes (omzetbelasting) as stipulated in the respective domestic implementations of the Council Directive 2006/112/EC (the VAT Directive), including the Dutch 1968 Value Added Tax Act (Wet op de omzetbelasting 1968).

 

“Warrant” has the meaning set forth in the recitals.

 

“Warrant Shares” means any shares of Parent Common Stock issued as a result of Lok’s exercise of the Warrant.

 

ARTICLE 2
 SALE AND PURCHASE AND CLOSING

 

2.1                               The Closing. The closing of the Transactions (the “Closing”) will be deemed to have occurred upon the transfer of the Purchased Shares by the Seller to the Buyer by means of the execution of the Notarial Deed of Transfer by the Notary.  The date on which the Closing occurs is herein referred to as the “Closing Date”.  At least three Business Days prior to the Closing, the Seller shall deliver to the Buyer (a) its good faith estimate of the Company Transaction Expenses as of Closing (the “Estimated Company Transaction Expenses”), and (b) its good faith estimate of the balance sheet of the Company as of the Closing prepared on a consolidated basis in accordance with GAAP, and its good faith estimate of Closing Date Actual Net Working Capital.  On or prior to the Closing Date, the Company shall distribute to the Seller and the Buyer (on a pro-rata basis in accordance with each equityholder’s respective ownership interest in the Company prior to the consummation of the transactions contemplated hereby) an amount equal to €250,000 (the “2013 Retained Earnings Distribution”), i.e., Seller and Buyer shall each receive €125,000 of the 2013 Retained Earnings Distribution.  The 2013 Retained Earnings Distribution shall be deemed to have occurred prior to the Closing.

 

2.2                               Purchase and Sale of Purchased Shares.

 

(a)                                 In accordance with and subject to the terms hereof, (i) the Seller hereby sells and agrees to transfer to the Buyer at the Closing, and the Buyer purchases and

 

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agrees to accept transfer from the Seller at the Closing of, the Purchased Shares, free and clear of all Liens, and (ii) at the Closing, the Seller shall transfer to the Buyer, and the Buyer shall accept transfer from the Seller of, all of the Seller’s rights, title, and interest in and to the Purchased Shares, free and clear of all Liens.  For the avoidance of doubt, the Buyer will not have (and will not be deemed to have) any ownership interest in the Purchased Shares prior to Closing

 

(b)                                 (i)                                     The Seller acknowledges that, on February 25, 2014, the Parent transferred, on the Buyer’s behalf, $14,195,992.30 in cash (representing the Estimated Closing Cash Payment) to the Notary Account under the reference “Purchase Price B2S” to be held by the Notary in the Notary Account for the benefit of the Buyer until the Notarial Deed of Transfer has been duly executed by the Notary, after which the amount will be held on behalf of the Seller.

 

(ii)                                  No later than 5:00 p.m. New York City time on the Closing Date, the Parent shall instruct (such instruction, the “SFX Shares Instruction”) the Transfer Agent to issue to the Seller, free and clear of all Liens, the SFX Shares and to effect the transfer of record ownership of the SFX Shares to the Seller.

 

(iii)                               The Buyer and the Seller shall instruct the Notary to execute the Notarial Deed of Transfer upon the Parent’s delivery of the SFX Shares Instruction.  Immediately following such transfer, the Notary shall, and the Seller is hereby authorized to and shall instruct the Notary to, release the Estimated Closing Cash Payment to the Seller by wire transfer to an account designated by the Seller.

 

2.3                               Deliveries.

 

(a)                                 Seller Deliveries. On the Closing Date, the Seller shall deliver to the Buyer (or the other parties set forth below) the following:

 

(i)                                     all Organizational Documents of the Seller (including all amendments thereto);

 

(ii)                                  all Organizational Documents of the Company (including all amendments thereto);

 

(iii)                               a unanimous written consent, or minutes of the meeting, of the Seller’s Board and Lok, in Lok’s capacity as the Seller’s sole shareholder, authorizing the execution and delivery of this Agreement and the Ancillary Documents, and the performance of the transactions contemplated hereby and thereby, on behalf of the Seller;

 

(iv)                              a unanimous written consent, or minutes of the meeting, of the Company’s Board and the Seller, in the Seller’s capacity as the Company’s sole shareholder, authorizing the execution and delivery of this Agreement and the Ancillary Documents to which the Company is a party, and the performance of the transactions contemplated thereby, on behalf of the Company;

 

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(v)                                 with respect to each Company Entity that is party to any Ancillary Documents, a unanimous written consent, or minutes of the meeting, of such Company Entity’s Board authorizing the execution and delivery of such Ancillary Documents, and the performance of the transactions contemplated thereby, on behalf of such Company Entity;

 

(vi)                              a copy of the Amazing Management Agreement Addendum, each Key Employee Employment Agreement Addendum, the Lock-Up Agreement, and the Underwriters’ Lock-Up Agreement, in each case duly signed by the parties thereto, other than the Parent and B2S B.V.;

 

(vii)                           written resignations of each of the Directors of each Company Entity who is not continuing as a Director of such Company Entity as of immediately after the Closing from his, her, or its office as a member of the management board of such Company Entity, with effect as of immediately after the Closing, and a shareholders’ resolution of the Company shareholders accepting such resignation;

 

(viii)                        (A) duly adopted written shareholders’ resolutions of the Company appointing each of Jan Lok, Mitchell Slater, Sheldon Finkel, Joseph Rascoff, Richard Rosenstein and Duncan Stutterheim as Directors of the Company with effect as of immediately following the Closing, and (B) duly adopted written shareholders’ resolutions of each of the other Company Entities, with the exception of Bass Productions BVBA, appointing the Company as the sole Director of such Company Entity with effect as of immediately following the Closing;

 

(ix)                              waivers of participation signed by all current Employees and their spouses (if applicable) in which such persons acknowledge that they have waived their right of participation in the Pension Arrangements and Previous Pension Arrangements from the commencement of their employment or service with any of the Company Entities and until the Closing Date, in form and substance reasonably acceptable to Buyer;

 

(x)                                 copies of all Consents of Governmental Authorities and any other Person required to be obtained (pursuant to Law or one or more Contracts) with respect to the consummation of the Transaction that are specified in Schedule 3.4(a) or Schedule 3.4(b);

 

(xi)                              the original shareholders’ register of the Company, which evidences the Seller’s ownership of the Purchased Shares as of immediately prior to Closing; and

 

(xii)                           powers of attorney in favor of the Notary, duly executed on behalf of the Company and the Seller authorizing their respective representatives to attend to and execute the Notarial Deed of Transfer.

 

(b)                                 Buyer Deliveries. On the Closing Date:

 

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(i)                                     the Parent shall provide the SFX Shares Instruction in accordance with Section 2.2(b)(ii);

 

(ii)                                  the Buyer shall deliver to the Seller a counterpart signature page to each of the Amazing Management Agreement Addendum and each Key Employee Employment Agreement Addendum, duly executed by the Parent and B2S B.V.;

 

(iii)                               Parent shall, on the Buyer’s behalf, deliver the Estimated Closing Cash Payment by wire transfer of immediately available funds pursuant to Section 2.2(b); and

 

(iv)                              the Buyer shall deliver powers of attorney in favor of the Notary, duly executed on behalf of the Buyer, authorizing its representatives to attend to and execute the Notarial Deed of Transfer.

 

2.4                               Post-Closing True-up Amount.

 

(a)                                 Seller Calculation of Post-Closing True-up Amount. No later than 5 p.m. New York City time on the date that is 90 days following the Closing Date, the Seller shall deliver to the Buyer Parties a statement setting forth in reasonable detail the Seller’s computation of Company Transaction Expenses (the “Actual Company Transaction Expenses”) and the Post-Closing True-up Amount.  For purposes of this Agreement, the Actual Company Transaction Expenses and Post-Closing True-up Amount shall be converted to Dollars using the applicable conversion rate published in the Wall Street Journal on the Business Day immediately prior to the date of this Agreement.

 

(b)                                 Determination of Final Post-Closing True-up Amount.

 

(i)                                     If, with respect to Seller’s computation of Actual Company Transaction Expenses and the Post-Closing True-up Amount provided to the Buyer Parties pursuant to Section 2.4(a), the Buyer does not provide written notice (an “Post-Closing True-up Dispute Notice”) to the Seller on or before the date that is 30 days after the Buyer’s receipt of such computation (such date, the “Post-Closing True-up Dispute Notice Deadline”) that the Buyer objects to the computation of Actual Company Transaction Expenses or the Post-Closing True-up Amount set forth therein and that sets forth in reasonable detail the Buyer’s basis for such objection, then such computation will thereby be binding and conclusive on the Buyer and the Seller.

 

(ii)                                  If the Buyer provides the Seller with a Post-Closing True-up Dispute Notice on or prior to the Post-Closing True-up Dispute Notice Deadline, then, during the period (the “Post-Closing True-up Resolution Period”) commencing on the date on which the Buyer provides such Post-Closing True-up Dispute Notice and ending on (and including) the date that is 20 days thereafter, the Buyer and the Seller shall negotiate in good faith to resolve any such dispute. Any matter contained in the computation delivered pursuant to Section 2.4(a) that is not the subject of dispute as specified in such Post-Closing True-up Dispute

 

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Notice will be deemed final, binding, and conclusive on the Buyer and the Seller. Any written resolution during such Post-Closing True-up Resolution Period between the Buyer and the Seller with respect to the Actual Company Transaction Expenses and the Post-Closing True-up Amount will deemed to be final, binding, and conclusive on the Buyer and the Seller. If, at the conclusion of such Post-Closing True-up Resolution Period, the calculation of the Actual Company Transaction Expenses or the Post-Closing True-up Amount remains in dispute, then, no later than the date that is five Business Days after the last day of such Post-Closing True-up Resolution Period, the Buyer and the Seller shall submit the disputed items set forth in the Post-Closing True-up Dispute Notice for final binding resolution to the Neutral Accountant, and the Buyer and the Seller shall engage the Neutral Accountant pursuant to an engagement letter in which the Neutral Accountant agrees to comply with the procedures and timelines set forth in this Section 2.4(b).

 

(iii)                               If unresolved disputed items are submitted to the Neutral Accountant, then the Buyer and the Seller shall, and shall cause the Company to, provide to the Neutral Accountant such workpapers, schedules, and other documents and information relating to the unresolved and disputed items as the Neutral Accountant might reasonably request. The Neutral Accountant must resolve the disputed items based solely on the applicable definitions and other terms in this Agreement and the presentation and information provided by the Buyer and the Seller, and not by independent review, and such determination will be binding and conclusive on the Buyer and the Seller. The Buyer and the Seller shall cooperate fully in assisting the Neutral Accountant in calculating the disputed items and shall take such actions as are necessary to expedite and to cause the Neutral Accountant to expedite such calculation. The Buyer and the Seller shall request that the Neutral Accountant render the Neutral Accountant’s written decision within 30 days after submission of the dispute to the Neutral Accountant or as soon as practicable thereafter, and that the Neutral Accountant send copies of such decision to each of the Buyer and the Seller. The calculation of such disputed items as reflected in the Neutral Accountant’s decision will, absent manifest error, be final, binding, and conclusive on the Buyer and the Seller.

 

(iv)                              The Buyer and the Seller shall each pay fifty percent (50%) of all fees and costs incurred in connection with a dispute pursuant to this Section 2.4(b).

 

(v)                                 Notwithstanding anything to the contrary contained herein (including Section 8.5), any disputes regarding the calculation of Company Transaction Expenses and the Post-Closing True-up Amount are to be resolved as set forth in this Section 2.4(a).

 

(c)                                  Settlement by the Seller of Post-Closing True-up Amount.

 

(i)                                     Subject to Section 2.4(c)(ii), if the Post-Closing True-up Amount

 

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is less than $0, then, no later than 5 p.m. New York City time on the date (such date, the “Post-Closing True-up Settlement Deadline”) that is five Business Days after the final determination of the Post-Closing True-up Amount pursuant to Section 2.4(b), the Seller shall pay to the Buyer (or at the Buyer’s direction) an amount equal to the absolute value of the Post-Closing True-up Amount (or, if the Post-Closing True-up Amount is disputed, then the portion thereof that is not being disputed).

 

(ii)                                  If the Post-Closing True-up Amount is less than $0 and, no later than the Post-Closing True-up Settlement Deadline, the Seller notifies the Buyer in writing that the Seller is electing to have SFX Shares cancelled in accordance with this Section 2.4(c)(ii) in satisfaction of the entire Post-Closing True-Up Amount (or, if applicable, the entire undisputed portion thereof then payable), then the following number of SFX Shares will be deemed to be hereby cancelled (rounded up to the nearest SFX Share), to the extent that such SFX Shares are outstanding at such time: (A) the absolute value of the Post-Closing True-up Amount (or, if applicable, the undisputed portion thereof), divided by (B) the fair market value of Parent Common Stock as of the time of cancellation of such SFX Shares (which will be the volume weighted-average price per share of the Parent Common Stock, as determined in good faith by the Parent’s Board, for the preceding 20-day period ending on the date of such determination of fair market value). If the Seller holds less than all SFX Shares that are to be cancelled pursuant to this Section 2.4(c)(ii), then, to the extent of such deficit, the Seller shall designate which of such SFX Shares, as held by Persons other than the Seller (other than (x) the Parent or any of the Parent’s Affiliates, or (y) a Seller Third Party to whom SFX Shares have been transferred in accordance with the Lock-Up Agreement and the Underwriters’ Lock-Up Agreement), are to be cancelled. The Parties shall take such action as is necessary to evidence the cancellation of SFX Shares (if any) pursuant to this Section 2.4(c)(ii). Without limiting the generality of the immediately foregoing sentence, the Seller shall return to the Parent any share certificates evidencing SFX Shares that have been cancelled pursuant to this Section 2.4(c)(ii), and, if any SFX Shares represented by such returned share certificates have not been so cancelled, then the Parent shall provide the Seller a new certificate with respect to the SFX Shares that have not been so cancelled. The cancellation of SFX Shares pursuant to this Section 2.4(c)(ii) will operate to reduce the portion of the Post-Closing True-up Amount for which the Seller is obligated under this Section 2.4 to pay to the Buyer and, if any portion of the Post-Closing True-up Amount remains payable to the Buyer after the cancellation of SFX Shares pursuant to this Section 2.4(c)(ii), then the Seller shall promptly pay such portion to the Buyer by wire transfer of immediately available funds to an account specified by the Buyer. For the avoidance of doubt, nothing herein will limit the right of the Seller to sell or otherwise transfer the SFX Shares in accordance with the terms of the Lock-Up Agreement and the Underwriters’ Lock-Up Agreement entered into by the Seller, it being understood that any SFX Shares that have been transferred (other than (x) to the Parent or any of the Parent’s Affiliates, or (y) to a Seller Third Party in accordance with the Lock-Up Agreement and the Underwriters’ Lock-Up

 

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Agreement) will remain subject to cancellation pursuant to this Section 2.4(c)(ii) and that, as a condition to being so transferred, the transferee with respect to such SFX Shares must acknowledge (for the benefit of the Buyer) that such SFX Shares remain subject to cancellation pursuant to this Section 2.4(c)(ii) and must agree (for the benefit of the Buyer) to take such actions as are necessary to implement the cancellation of such SFX Shares pursuant to this Section 2.4(c)(ii).  For avoidance of doubt, any SFX Shares sold, assigned, or transferred to a Seller Third Party in accordance with Lock-Up Agreement and the Underwriters’ Lock-Up Agreement will not be subject to cancellation pursuant to this Section 2.4(c)(ii).

 

(d)                                 Settlement by Buyer of Post-Closing True-up Amount. If the Post-Closing True-up Amount is equal to or greater than $0, then the Buyer shall, no later the Post-Closing True-up Settlement Deadline, pay to the Seller an amount equal to the Post-Closing True-up Amount (or, if the Post-Closing True-up Amount is disputed, then the undisputed portion thereof).

 

(e)                                  Settlement of Post-Closing True-up Amount After Dispute. Promptly after the resolution of any dispute with respect to the Seller’s calculation of the Post-Closing True-up Amount, the Buyer or the Seller, as applicable, shall pay any remaining portion of the Post-Closing True-up Amount to the other (unless, in connection with any such resolution, the Parties determine that the SFX Shares will be cancelled in a manner consistent with Section 2.4(c)(ii) and in lieu of making all or a portion of such payment).

 

2.5                               Anticipated Dividend Adjustment.

 

(a)                                 If the Anticipated Dividend Shortfall is greater than $0, then the Seller shall, no later than 5 p.m. New York City time on the date that is five Business Days after the last day of the Anticipated Dividend Period, initiate a wire transfer of immediately available funds to an account specified by the Buyer to pay the Anticipated Dividend Shortfall to the Buyer.  If the Seller does not initiate this wire transfer within such time period, Buyer shall have the right to continue to seek to collect such amount from the Seller, or at any time to deem such amount to be an Agreed Claim for which the Indemnitor is the Seller pursuant to Section 7.6(b), and to immediately deem that a number of SFX Shares (as calculated pursuant to Section 7.6(d)) equal to the Anticipated Dividend Shortfall shall be cancelled.

 

(b)                                 If the Anticipated Dividend Excess is greater than $0, then the Buyer shall, no later 5 p.m. New York City time on the date that is than five Business Days after the last day of the Anticipated Dividend Period, initiate a wire transfer of immediately available funds to an account specified by the Seller to pay the Anticipated Dividend Excess to the Seller. If the Buyer does not initiate this wire transfer within such time period, Seller shall have the right to continue to seek to collect such amount from the Buyer, or at any time to deem such amount to be an Agreed Claim for which the Indemnitor is the Buyer pursuant to Section 7.6(b).

 

2.6                               Acknowledgment Regarding Purchase Price. The Parties acknowledge that the

 

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purchase price for the Purchased Shares is the Total Consideration, as might be adjusted pursuant hereto.

 

2.7                               Treatment of Certain Payments.

 

(a)                                 The Parties shall treat the Anticipated Dividend Shortfall or Anticipated Dividend Excess (as applicable) and any payment that the Seller or the Buyer is required to make pursuant to Sections 2.4 or 2.5 (including any cancellation of SFX Shares in respect of any such payment) as a “purchase price adjustment” of the Total Consideration for Tax purposes.

 

(b)                                 Except as otherwise required by the applicable Legal Requirements, the Parties shall treat any payment made pursuant to Section 7.2(a) (including the amount by which any Losses that the Seller is otherwise required to pay to a Buyer Indemnified Party under Article 7 are reduced because of the cancellation of any SFX Shares pursuant to Section 7.6(c)), any payment made by the Seller pursuant to Article 6, and any payment made by the Seller to any Buyer Indemnified Party with respect to any claims for any Breach of any representation, warranty, or obligation herein or otherwise arising out of the subject matter hereof as “purchase price adjustments” that reduce the Total Consideration for Tax purposes and the Parties shall not take any position inconsistent with such treatment.

 

(c)                                  Except as otherwise required by the applicable Legal Requirements, the Parties shall treat any payment made pursuant to Section 7.2(b), any payment made by any Buyer Party pursuant to Article 6, any payment made by the Buyer to any Seller Indemnified Party with respect to any claims for any Breach of any representation, warranty, or obligation herein or otherwise arising out of the subject matter hereof, as “purchase price adjustments” that increase the Total Consideration for Tax purposes.

 

(d)                                 The Parties shall not take any position inconsistent with the treatment as set forth in this Section 2.7 of the Anticipated Dividend Shortfall or Anticipated Dividend Excess (as applicable) and the other payments described in this Section 2.7.

 

ARTICLE 3
 REPRESENTATIONS AND WARRANTIES OF THE SELLER

 

The Seller represents and warrants to the Buyer as follows:

 

3.1                               Organization and Standing; Authority.

 

(a)                                 Each of the Company, the Company Subsidiaries and the Seller is duly organized or formed, validly existing and, to the extent applicable in an applicable jurisdiction, in good standing under the laws of its jurisdiction of formation. The Company and the Company Subsidiaries have all requisite power and authority to carry on their respective businesses and activities as they are currently being conducted and to own, lease or operate their respective properties and assets as they are currently owned, leased or operated. True and complete copies of all Organizational Documents of the Company, the Company Subsidiaries and the Seller, including all amendments thereto,

 

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have previously been made available to the Buyer. Each of the Company, the Company Subsidiaries and the Seller is duly qualified to do business and, to the extent applicable in an applicable jurisdiction, is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the conduct of its business requires it to be so qualified, except where the failure to be so qualified or to be in good standing would not reasonably be expected to have a Material Adverse Effect.

 

(b)                                 The Seller has the requisite power and authority to execute and deliver this Agreement. Each of the Company and the Seller has the requisite power and authority to execute and deliver all Ancillary Documents to be executed by the Company and the Seller in connection herewith, to perform the Company’s and the Seller’s obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to be executed by the Company and the Seller, and the consummation of the transactions contemplated by hereby and thereby, and the performance of the Company’s and the Seller’s obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate or other action on the part of the Company and the Seller. This Agreement has been duly and validly executed and delivered by the Seller and (assuming that this Agreement has been duly authorized, executed and delivered by the other Parties) constitutes the legal, valid and binding obligation of the Seller, enforceable against it in accordance with its terms, except as limited by (i) applicable bankruptcy, reorganization, insolvency, moratorium or other similar Laws affecting the enforcement of creditors’ rights generally from time to time in effect, or (ii) the availability of equitable remedies (regardless of whether enforceability is considered in a proceeding at Law or in equity) (collectively, the “General Enforceability Exceptions”). Each Ancillary Document that is being executed and delivered on the date hereof by the Company or the Seller is duly and validly executed and delivered by the Company and the Seller and (assuming that such Ancillary Document has been duly authorized, executed and delivered by the other parties thereto) constitutes the legal, valid and binding obligation of the Company and the Seller, respectively, enforceable against it in accordance with its terms, except as limited by the General Enforceability Exceptions.

 

(c)                                  Neither the Company nor any of the Company Subsidiaries carries on its business under any names other than its own respective registered corporate names.

 

3.2                               Capitalization.

 

(a)                                 Schedule 3.2(a)(i) sets forth a true and complete list (as of immediately prior to the Closing) of (i) the amount and type of the Company’s authorized share capital or other equity interests in the Company, and (ii) the amount, type and owner of the issued and outstanding shares of such share capital or other equity interests in the Company (the “Company Equity”). All of the Company Equity is owned free and clear of all Liens (other than restrictions on transfer under applicable securities Laws). All Company Equity has been duly authorized and validly issued pursuant to applicable Law and the Organizational Documents of the Company. Except as set forth on Schedule 3.2(a)(ii) or as contemplated by this Agreement, there are no (A) outstanding depository receipts (certificaten) issued by the Company with or without the cooperation of the

 

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Company or the Company Subsidiaries, (B)(I) issued and outstanding Company Equity, (II) outstanding debt interests in the Company, (III) securities convertible into, exchangeable for, or exercisable for (or any other rights that entitle a Person to acquire) any Company Equity or any debt interests in the Company, or (IV) securities convertible into, exchangeable for, or exercisable for (or any other rights that entitle a Person to acquire) any securities referred to in the immediately foregoing clause (III), or (C) options, warrants, rights, Contracts, subscriptions, convertible securities, exchangeable securities, or Company Equity that the Company is bound to issue, repurchase, transfer, return, redeem or otherwise acquire or retire. Except as set forth on Schedule 3.2(a)(iii) or as otherwise contemplated by this Agreement, there are no voting trusts, proxies, registration rights agreements or any other Contracts or understandings with respect to the voting, transfer, sale or disposition of the Company Equity.

 

(b)                                 The Seller is (and since the Company was formed has always been) the legal and beneficial owner of the Purchased Shares and has full legal and beneficial title to and ownership of the Purchased Shares, free and clear of all Liens (other than transfer restrictions under federal or state securities Laws) and with no restriction on the voting rights and other incidents of record and beneficial ownership pertaining thereto.  The Purchased Shares are all of the equity interests in the Company that are outstanding and not otherwise issued to a Parent Entity.

 

(c)                                  Neither the Company, nor any Company Subsidiary, has any Indebtedness for borrowed money.

 

3.3                               Company Subsidiaries and Company Minority-held Entities.

 

(a)                                 Schedule 3.3(a) sets forth, as of immediately prior to the Closing, a true and complete list of (i) each Company Subsidiary, (ii) the jurisdiction of organization of each Company Subsidiary, (iii) the amount and type of each Company Subsidiary’s authorized share capital or other equity interests in such Company Subsidiary, and (iv) the amount, type and owner of each such Company Subsidiary’s issued and outstanding share capital or other equity interests in such Company Subsidiary (the “Company Subsidiary Equity”). All of the Company Subsidiary Equity is owned free and clear of all Liens (other than restrictions on transfer under applicable securities Laws). All Company Subsidiary Equity has been duly authorized, validly issued and fully paid up pursuant to applicable Law and the Organizational Documents of the applicable Company Subsidiary.

 

(b)                                 Except as set forth on Schedule 3.3(b)(i), there are no (A) outstanding depository receipts (certificaten) issued by any Company Subsidiary with or without the cooperation of the Company or the Company Subsidiaries, (B)(I) issued and outstanding Company Subsidiary Equity, (II) outstanding debt interests in any Company Subsidiary, (III) securities convertible into, exchangeable for, or exercisable for (or any other rights that entitle a Person to acquire) any Company Subsidiary Equity or any debt interests in any Company Subsidiary, or (IV) securities convertible into, exchangeable for, or exercisable for (or any other rights that entitle a Person to acquire) any securities referred to in the immediately foregoing clause (III), or (C) options, warrants, rights, Contracts,

 

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subscriptions, convertible securities, exchangeable securities, or Company Subsidiary Equity that any Company Subsidiary is bound to issue, repurchase, transfer, return, redeem or otherwise acquire or retire. Except as set forth on Schedule 3.3(b)(ii) as otherwise contemplated by this Agreement, there are no  voting trusts, proxies, registration rights agreements or any other Contracts or understandings with respect to the voting, transfer, sale or disposition of Company Subsidiary Equity. Except as set forth in Schedule 3.3(b)(iii), neither the Company nor the Company Subsidiaries (i) has any direct or indirect ownership interest in (or any right to acquire any direct or indirect ownership in) any Person (other than the Company Subsidiaries), including any joint venture, partnership or similar organization, (ii) has made any loan to, extended credit to, or owns debt of any Person, or (iii) has guaranteed the obligations of any Person or has had its obligations guaranteed by any Person.  All loans held by the Company or any Company Subsidiary (including loans among the Company and the Company Subsidiaries) are collectible in full and will be collected in full in accordance with their terms.

 

(c)                                  Schedule 3.3(c) sets forth, as of immediately prior to the Closing, a true and complete list of (i) each Company Minority-held Entity, (ii) the jurisdiction of organization of each Company Minority-held Entity, (iii) the amount and type of each Company Minority-held Entity’s authorized capital stock or other equity interests in such Company Minority-held Entity, and (iv) the amount, type and owner of issued and outstanding shares of capital stock or other equity interests in such each such Company Minority-held Entity that is owned by any Company Entity (the “Company Minority-held Entity Equity”). All of the Company Minority-held Entity Equity is owned free and clear of all Liens (other than restrictions on transfer under applicable securities Laws). All Company Minority-held Entity Equity has been duly authorized, validly issued and fully paid up pursuant to applicable Law and the Organizational Documents of the applicable Company Minority-held Entity.

 

3.4                               No Conflict; Required Filings and Consents.

 

(a)                                 Except as set forth on Schedule 3.4(a), neither the execution and delivery of this Agreement by the Seller (nor any Ancillary Document by the Company or any Company Subsidiary), the consummation by the Seller of the transactions contemplated by this Agreement or by any Ancillary Document to be executed by the Company, any Company Subsidiaries or the Seller, compliance the Company, any Company Subsidiaries or the Seller with any of the provisions hereof or thereof, nor the performance of the Company’s, such Company Subsidiary’s or the Seller’s obligations hereunder or thereunder will (with or without the giving of notice or the passage of time or both) (i) violate, conflict with, or constitute or result in a breach of any provisions of the Organizational Documents of the Company, any of the Company Subsidiaries or the Seller, (ii) violate, conflict with, or constitute or result in the breach of any term, condition or provision of, or constitute a default under, or give rise to any right of termination, cancellation or acceleration with respect to, or result in the creation or imposition of a Lien upon any property or assets of the Company, any Company Subsidiary or the Seller pursuant to, any Contract to which any of them is a party or to which any of them or their respective properties or assets may be subject, or (iii) violate

 

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any Permit, Order or Law applicable to the Company, any Company Subsidiary or the Seller or any of their respective properties or assets, other than (in the case of clause (ii)) such violations, breaches, conflicts or defaults that, individually or in the aggregate, would not reasonably be expected to be materially adverse to the Company, any Company Subsidiary or the Seller, or to any of their respective operations.

 

(b)                                 Other than as set forth on Schedule 3.4(b), no Consent is required to be obtained, no notice is required to be given, and no filing is required to be made, by the Company or any of the Company Subsidiaries or the Seller as a result of the consummation of the transactions contemplated by this Agreement or the performance of their respective obligations hereunder, other than such Consents or filings the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to be materially adverse to the Company, any Company Subsidiary or the Seller, or to any of their respective operations.

 

3.5                               Financial Statements.

 

(a)                                 Attached as Schedule 3.5(a) are complete and accurate copies of: (i) the unaudited consolidated balance sheets of the Company as of December 31, 2012 and December 31, 2011, and the related unaudited consolidated statements of operations and cash flows for the fiscal years then ended, together with the notes thereto (the “Annual Financial Statements”), and (ii) the unaudited consolidated balance sheet of the Company as of December 31, 2013 (the “Balance Sheet Date”), and the related unaudited consolidated statements of operations and cash flows for the fiscal year then ended (the “2013 Financial Statements,” and together with the Annual Financial Statements, the “Company Financial Statements”).

 

(b)                                 The Company Financial Statements have been prepared from the books and records of the Company in accordance with GAAP and fairly present the financial position, results of operations, shareholders’/members’ equity, and cash flows of the Company Entities, on a consolidated basis, as of the dates and for the periods indicated.

 

(c)                                  Except as set forth on Schedule 3.5(c), the Company Financial Statements (i) do not provide for any unusual or non-recurring items, (ii) contain provisions for adequate reserves to cover all Taxes (including deferred Taxes) and other Liabilities of the Seller Entities as of the date of the Company Financial Statements, (iii) have been duly and timely filed where required in accordance with applicable Law, and (iv) reflect that the value attributed to each asset of any Company Entity does not exceed its current market value as of the date of such Company Financial Statement.

 

(d)                                 The Seller has delivered, or caused to be delivered, to the Buyer a comprehensive unaudited statement of income (reflecting costs, expenses, revenue and financial performance) for each significant event or festival promoted by any of the Company Entities in 2010, 2011, 2012 and 2013.

 

(e)                                  No Company Entity has issued any guarantee for the benefit of, or is otherwise generally liable for obligations of, any Person.

 

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(f)                                   None of the Seller Entities, nor any of their respective Directors, officers or employees, is aware of, or has been notified of, any complaint, allegation or claim, whether written or oral, regarding the accounting or auditing practices, procedures or methods applied by any Company Entity that may materially affect any Company Entity.

 

(g)                                  Prior to the Closing Date, the Seller and Lok have caused the Company to use commercially reasonable efforts for the preparation by March 10, 2014 of an audited consolidated balance sheet of the Company as of December 31, 2013, and the related audited consolidated statements of operations and cash flows for the 2013 fiscal year in accordance with GAAP and in compliance with the applicable requirements of the SEC (the “2013 Audited Financial Statements”), including but not limited to the timely reporting of financial results and the closing of the Company’s financial books and records for the Company’s fourth fiscal quarter, and the Seller and Lok have fully cooperated with the accounting firm identified by the Buyer that is preparing the 2013 Audited Financial Statements

 

3.6                               Taxes.

 

(a)                                 Each Company Entity has been duly and timely registered for Tax purposes in its jurisdiction of formation.

 

(b)                                 All Tax Returns required to be filed by the Company Entities or with respect to the Business have been timely filed in accordance with all applicable Laws.  All such Tax Returns were true, correct, and complete in all material respects.  All Taxes owed by each Company Entity or with respect to the Business (whether or not shown on any Tax Return) have been timely paid in full, except for Taxes being contested in good faith and for which adequate reserves have been established and maintained in accordance with GAAP and reflected on the Company Financial Statements.

 

(c)                                  There are no Liens with respect to Taxes encumbering (and no Taxing Authority has threatened to encumber) the assets of any Company Entity or with respect to the Business except for Permitted Liens.  There are no Liens relating or attributable to Taxes encumbering (and no Taxing Authority has threatened to encumber) the Purchased Shares (or other equity interests) in any Company Entity.

 

(d)                                 Each Company Entity has deducted, withheld, and timely paid to the appropriate Taxing Authority all Taxes required to be deducted, withheld, or paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder or equityholder, or other third party, and each Company Entity has complied with all reporting and recordkeeping requirements.

 

(e)                                  There is no pending or threatened Action concerning any Tax Liability or Tax Return of any Company Entity or concerning Taxes with respect to the Business.  No Company Entity has received from any Taxing Authority any (i) written notice indicating an intent to open an audit or other review with respect to Taxes which audit or other review has not been completed, (ii) written request for information related to Tax matters, or (iii) written notice of deficiency or proposed adjustment for any amount of Tax.  The

 

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Company Entities have delivered to the Buyer accurate and complete copies of all Tax Returns, examination reports, and statements of deficiencies filed, assessed against, or agreed to by a Company Entity since January 1, 2010.

 

(f)                                   No Company Entity has waived any statute of limitations in respect of Taxes or any Tax Return or agreed to or is the beneficiary of, any extension of time with respect to a Tax assessment or deficiency or adjustment of a Tax item.

 

(g)                                  No Company Entity has executed any power of attorney with respect to any Tax or Tax Return, other than powers of attorney that are no longer in force.  Except as set forth in Schedule 3.6(g), no Contracts or rulings relating to Taxes or Tax Returns have been entered into or issued by any Taxing Authority with or in respect of any Company Entity.

 

(h)                                 No Company Entity is or has been required to make any adjustment by reason of any change in any accounting methods, or will be required to make such an adjustment as a result of the Transactions, and there is no application pending with any Taxing Authority requesting permission for any changes in any of its accounting methods for Tax purposes. No Taxing Authority has proposed any such adjustment or change in accounting method of any Company Entity.

 

(i)                                     No Company Entity will be required to include any amount in taxable income or exclude any item of deduction or loss from taxable income that economically accrues in a taxable period ending prior to the Closing Date for any taxable period (or portion thereof) ending after the Closing Date as a result of (i) any agreement with a Taxing Authority with respect to any Tax Liability of any Company Entity executed on or prior to the Closing Date, (ii) any installment sale or open transaction disposition made on or prior to the Closing Date, (iii) any prepaid amount received on or prior to the Closing Date, (iv) any change in Legal Requirements, or (v) otherwise; except in each case to the extent the Company Entity has established reserves in accordance with GAAP that are adequate to pay such Taxes.

 

(j)                                    Each Company Entity has established reserves in accordance with GAAP that are adequate for the payments of all Taxes not yet due and payable or that are being contested in good faith. Since the Balance Sheet Date, no Company Entity has incurred any Liability for Taxes other than in the Ordinary Course of Business.

 

(k)                                 All records that each Company Entity is required to keep for Tax purposes are duly kept, and are available for inspection, at the offices of such Company Entity.

 

(l)                                     In the preparation of its Tax Returns, no Company Entity is computing any amounts with respect to Taxes in a currency other than the lawful currency of its country of formation.

 

(m)                             Intentionally omitted.

 

(n)                                 No Company Entity has depreciated any receivables of any Affiliates (verbonden lichamen) within the meaning of Article 10a, paragraph 4 of the Dutch

 

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Corporate Income Tax Act 1969 against taxable income.

 

(o)                                 During the current financial year and for the five previous financial years preceding the date of this Agreement, no Company Entity has acted as a contractor or subcontractor as defined in article 35 (chain liability) of the Dutch Collection Act 1990 (Invorderingswet 1990) (or other comparable provisions of Law). Except as set forth in Schedule 3.6(o), no Company Entity is or will become liable for any Taxes chargeable primarily to any other Person, including social security payments for contractors or subcontractors.

 

(p)                                 Except as set forth in Schedule 3.6(p), during the current fiscal year and for the five previous fiscal years preceding the date of this Agreement, neither the Company nor any Company Subsidiary has used hired-in personnel, as defined in article 34 (recipients’ liability) of the Dutch Collection Act 1990 (Invorderingswet 1990), and the relevant associated order and directives. Except as set forth in Schedule 3.6(p), the Company and the Company Subsidiaries have taken all measures to avoid, to the greatest extent possible, a potential claim under article 34.

 

(q)                                 No Company Entity has ever contracted employees without a work permit based on the Foreign Nationals (Employment) Act (Wet arbeid vreemdelingen).

 

(r)                                    No cancellation or elimination of intercompany debt will result in any income, gain, deduction, or loss to any Company Entity.

 

(s)                                   No Company Entity has or has had taxable presence in any jurisdiction other than jurisdictions for which Tax Returns have been duly filed and Taxes have been duly and timely paid, and no claim has been made by a Taxing Authority in a jurisdiction where any of the Company Entities does not file Tax Returns and pay Taxes that any Company Entity is or may be subject to any Tax Return filing requirements or taxation by that jurisdiction.

 

(t)                                    Since December 31, 2012, except as set forth in Schedule 3.6(t), no Company Entity has made or rescinded any Tax election, changed any annual accounting period, filed any amended Tax Returns, signed or entered into any closing agreement or settlement, settled or compromised any claim or assessment of Tax Liability, surrendered any right to claim a refund, offset or other reduction in liability, consented to any extension or waiver of the limitations period applicable to any claim or assessment, in each case with respect to Taxes that are not Pre-Closing Taxes, or acted or omitted to act where such action or omission to act would reasonably be expected to have the effect of increasing any present or future Tax Liability or decreasing any present or future Tax benefit for any of the Company Entities.

 

(u)                                 No Company Entity is party to any Tax sharing agreements, Tax distribution agreement, or similar contractual obligations.

 

(v)                                 Except as set forth in Schedule 3.6(v), no Company Entity has any liability for the Taxes of any other Person as transferee or successor, by contract or otherwise other than by virtue of being joint and several liable for corporate Income Tax

 

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resulting from being part of a Dutch fiscal unity.

 

3.7                               Title to Properties.

 

Either the Company or a Company Subsidiary has good and valid title to (or the legal right to use) each of the properties and assets (whether real, personal, tangible or intangible) reflected in the balance sheet included in the Annual Financial Statements as being owned by the Company or the Company Subsidiaries (or that are included in the calculation of the items included in such balance sheet), or that the Company or any Company Subsidiary acquired after December 31, 2012, in each case free and clear of all Liens except for Permitted Liens, excluding properties and assets sold or disposed of by the Company or the Company Subsidiaries since the Balance Sheet Date in the Ordinary Course of Business. All of the material properties and assets owned or used by the Company or any of the Company Subsidiaries (i) are free of material defects, (ii) are in good operating condition, subject to ordinary wear and tear, and, (iii) subject to normal maintenance, are available for use. The Company and the Company Subsidiaries own, have a valid leasehold interest in, or have a valid license to use all of the material properties, assets and rights necessary to conduct their respective businesses and operations as currently conducted.

 

3.8                               Property.  Schedule 3.8 contains a complete and accurate list of (a) all of the Real Property owned by the Company or the Company Subsidiaries (the “Owned Real Property”), identifying the Company or a Company Subsidiary, as applicable, as the owner thereof, and (b) all of the Real Property leased by the Company or the Company Subsidiaries (the “Leased Real Property”), identifying the Company or a Company Subsidiary, as applicable, as the lessee thereof. Each of the Company and each Company Subsidiary has fee simple title to all Owned Real Property that it is listed in Schedule 3.8 as owning, free and clear of all Liens except for Permitted Liens. The Real Property listed on Schedule 3.8 comprises all Real Property used in the conduct of the business and operations of the Company and the Company Subsidiaries as currently conducted. All Leased Real Property is leased or subleased pursuant to leases or subleases (collectively, the “Real Property Leases”) that are (assuming each such instrument has been duly authorized, executed and delivered by the other parties thereto) valid, binding and enforceable against the Company or its Company Subsidiaries, as applicable, in accordance with their respective terms, subject to General Enforceability Exceptions. The Company and the Company Subsidiaries, as applicable, and to the Seller’s Knowledge, each of the other parties thereto, has performed in all material respects all obligations required to be performed by it under each such Real Property Lease. There are no leases, subleases, assignments, occupancy agreements or other agreements granting to any Person (other than the Seller and the Company Subsidiaries) the right of use or occupancy of the Leased Real Property and there is no Person (other than the Company and the Company Subsidiaries) in possession of the Leased Real Property.

 

3.9                               Compliance with Laws.  Except as set forth on Schedule 3.9, since December 31, 2012:

 

(a)                                 the Company and the Company Subsidiaries have been in material compliance with all material Laws and Orders applicable to their respective businesses; and

 

(b)                                 neither the Company nor any of its Company Subsidiaries has received

 

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written notification from any Governmental Authority (i) asserting that the Company or any Company Subsidiary is not in compliance with any Law or Order, or (ii) notifying the Company or any Company Subsidiary that any employee, group of employees or labor organization has asserted to any Government Authority that the Company or the Company Subsidiaries is not in compliance with any Law or collective bargaining agreement (or any similar agreement).

 

3.10                        Permits.  Schedule 3.10 contains a complete list of all Permits (other than customary building occupancy permits) issued to the Company or the Company Subsidiaries that are currently used by the Company or the Company Subsidiaries in connection with their respective businesses (the “Company Permits”). Each of the Company and the Company Subsidiaries is in compliance in all material respects with the Company Permits, all of which (to the Seller’s Knowledge) are in full force and effect. The Company Permits constitute all Permits necessary for the operation of the Company’s and the Company Subsidiaries’ respective businesses as currently conducted in all material respects. To the Seller’s Knowledge, no suspension, revocation, cancellation or amendment of any Company Permit is threatened, all Company Permits have been properly issued and fully paid for and all Company Permits will not be revoked, invalidated, violated or otherwise adversely affected by the transactions contemplated by this Agreement.

 

3.11                        Employees.

 

(a)                                 Schedule 3.11(a) contains a list of the names of all Employees of the Company and the Company Subsidiaries (including any Employees who have accepted offers of employment but whose employment with the Company or the Company Subsidiaries has yet to begin) and the particulars of such employment, including:

 

(i)                                     the positions held by such Employees; and

 

(ii)                                  the terms of their employment (including a summary of any emoluments, bonuses, material fringe benefits and descriptions of any provisions applicable in the case of termination, severance and any non-competition clauses).

 

(b)                                 Except as set forth on Schedule 3.11(b), (i) there are no outstanding loans, advances or guarantees by the Company or any of the Company Subsidiaries to or for the benefit of any Employee (or any member of an Employee’s immediate family), (ii) neither the Company nor any of the Company Subsidiaries has provided any financial assistance to any current, past or prospective Employee, and (iii) there are no amounts due to any Employee (or any member of an Employee’s immediate family) from the Company or any of the Company Subsidiaries, other than for accrued remuneration or reimbursement of reasonable business expenses incurred in the Ordinary Course of Business.

 

(c)                                  Except as set forth on Schedule 3.11(c), the transactions contemplated by this Agreement will not (i) result in any Employee (or other Person) being entitled to any change of control, severance or similar payment, or (ii) entitle any Employee to treat himself or herself redundant or otherwise dismissed or released from any obligation.

 

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(d)                                 Except as set forth on Schedule 3.11(d), neither the Company nor any of the Company Subsidiaries has any current obligations with respect to any severance, pension or retirement benefits, bonus, profit sharing, stock purchase or stock option plans, or company saving plans.

 

(e)                                  Schedule 3.11(e) contains a complete and accurate list of all pension, pre-pension and voluntary early retirement, death, disability, sickness and other similar arrangements that the Company or any of the Company Subsidiaries provides, or has committed to provide, to any of the Employees (collectively, “Pension Arrangements”). Except for the Pension Arrangements, neither the Company nor any of the Company Subsidiaries has any actual or proposed pension, pre-pension and voluntary early retirement, death or disability or similar arrangements, or made any commitments regarding any of the foregoing to any current or former Employee or their respective spouses, children, assigns or dependents, and there are no further obligations of the Company or any of the Company Subsidiaries arising from any Pension Arrangements that previously applied to any of the former Employees or their spouses/partners, children, assigns or dependents (“Previous Pension Arrangements”). All premiums concerning the Pension Arrangements and/or Previous Pension Arrangements (or any other similar arrangements) and all contributions with regard to health and medical insurance have been paid on and when due or are adequately reserved for in the Company Financial Statements.

 

(f)                                   Neither the Company nor any Company Subsidiary has received any written notice of resignation from any Key Employee, nor has any of the Company or any Company Subsidiary dismissed any Key Employee. Except as provided in Schedule 3.11(f), no liability that remains to be discharged has been incurred by the Company or any of the Company Subsidiaries for:

 

(i)                                     breach of any Contract of employment with any Key Employee; or

 

(ii)                                  breach of any statutory employment right.

 

3.12                        Material Contracts.  Set forth on Schedule 3.12 is a list of each of the following Contracts to which the Company or any of the Company Subsidiaries is a party or by which any of their respective properties or assets are bound:

 

(a)                                 Each partnership, joint venture or similar Contract;

 

(b)                                 Each Contract that (i) limits, or purports to limit, the ability of the Company or any of the Company Subsidiaries to compete with any Person or in any line of business or in any geographical area or during any period of time; (ii) contains any so-called “most favored nation” provisions or any similar provision requiring the Company or any Company Subsidiary to offer a third party terms or concessions (including levels of service or content offerings) at least as favorable as offered to one or more other parties; (iii) provides for “exclusivity,” preferred treatment or any similar requirement or under which the Company or any Company Subsidiary is restricted with respect to distribution, licensing, marketing, co-marketing or development; or (iv) prohibits for any

 

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period of time the Company or any Company Subsidiary from the soliciting or hiring of employees;

 

(c)                                  Each collective bargaining agreement with any labor union or any other Contract with any trade union or other organization representing Employees of the Company or any of the Company Subsidiaries, side letters, or tentative collective bargaining agreements;

 

(d)                                 Each Contract providing for the employment of any Person (including consultants and independent contractors) by the Company or any of the Company Subsidiaries that is not terminable at will by the Company or such Company Subsidiary, as applicable, and that provides for base compensation of more than $100,000 per annum, or providing any compensation or severance payment or benefit to such Person upon a change of control or upon a separation of employment;

 

(e)                                  Each Contract involving the acquisition or disposition of any Person, business enterprise or material assets, whether via share or asset purchase or otherwise, other than sales of assets in the Ordinary Course of Business;

 

(f)                                   Each Contract (or group of related Contracts) providing for capital expenditures or leasehold improvements with an outstanding amount of unpaid obligations and commitments in excess of $100,000;

 

(g)                                  Each Contract with respect to Indebtedness for borrowed money, including letters of credit, guaranties, indentures, swaps and similar agreements;

 

(h)                                 Each Contract entered into by the Company or any of the Company Subsidiaries with any Material Supplier;

 

(i)                                     Each Contract between the Company and any Company Subsidiary, on one hand, and any Director, manager, officer, equity holder or Affiliate of the Company or any Company Subsidiary, on the other hand;

 

(j)                                    Each Company Intellectual Property Agreement;

 

(k)                                 Each Contract pursuant to which the Company or any Company Subsidiary leases or subleases personal property to or from any Person providing for lease payments in excess of $100,000 per annum;

 

(l)                                     Each Contract with a promoter, ticketing agent/vendor or regarding an event site;

 

(m)                             Each Contract with any Governmental Authority;

 

(n)                                 Each Contract containing a power of attorney of the Company or any Company Subsidiary;

 

(o)                                 Each Contract relating to the cleanup, disposal, abatement or similar

 

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action with respect to any Hazardous Material, the remediation of any existing environmental condition, or the performance of any environmental audit or study;

 

(p)                                 Each Contract that (A) requires the Company or any of the Company Subsidiaries to make payments of more than $100,000 in any fiscal year, or (B) entitles the Company or any of the Company Subsidiaries to receive payments of more than $100,000 in any fiscal year, that in each case is not terminable upon less than sixty (60) days’ prior written notice by the Company or such Company Subsidiary, as applicable;

 

(q)                                 Each Real Property Lease; and

 

(r)                                    Each other Contract that is material to the operation of the business of the Company or any of the Company Subsidiaries not otherwise disclosed pursuant to Sections 3.12(a) through (q).

 

True and complete copies of each Material Contract have previously been made available to the Buyer. Each of the Material Contracts is in full force and effect and (assuming each such agreement has been duly authorized, executed and delivered by the other parties thereto) is a legal, valid and binding agreement of the Company or such Company Subsidiary, as applicable, enforceable in accordance with its terms subject only to the General Enforceability Exceptions, and neither the Company or such Company Subsidiary, as applicable, nor, to the Seller’s Knowledge, any other party thereto is in material breach or default thereunder. Since December 31, 2012, no party with which the Company or the Company Subsidiary has entered into a Material Contract has given the Company or any Company Subsidiary written notice that such party intends to terminate or materially modify such Material Contract. Neither the entry into this Agreement, the consummation of the transactions contemplated hereby nor the performance by the Parties of any of their respective obligations hereunder, (x) causes or will cause any Material Contract with the Company or any of its Company Subsidiaries to be varied or terminated or give any supplier, customer or other business partner the right to vary or terminate any Material Contract or (y) affects or will not materially affect any right, claim or obligation of the Company or any of the Company Subsidiaries under any Material Contract.

 

3.13                        Legal Proceedings.  Except as set forth on Schedule 3.13, there are no Actions initiated by, pending or, to the Seller’s Knowledge, threatened against, the Company or any of the Company Subsidiaries or, to the Seller’s Knowledge, any of the Directors, officers, Employees or Affiliates of the Company or any of the Company Subsidiaries, in each case in their respective capacities as such. Neither the Company nor any of the Company Subsidiaries is subject to any unsatisfied Order that would prevent or otherwise interfere with the ability of the Parties to consummate the transactions contemplated by this Agreement.

 

3.14                        Intellectual Property.

 

(a)                                 Schedule 3.14(a) sets forth a list of the following Company Intellectual Property: (i) Patents (and all pending applications for Patents); (ii) registered Trademarks (and applications for Trademarks) and material unregistered Trademarks; (iii) registered Copyrights (and applications for Copyrights), and (iv) Domain Names, including (x) the owner and recorded owner of each item, (y) the jurisdiction in which the item has been

 

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registered or applied for, and (z) the applicable registration or application number. All registration, renewal and maintenance fees, currently due in connection with such Company Intellectual Property have been or will be paid by the due date. The Company or one of the Company Subsidiaries currently is properly recorded as the owner of each asset that is Company Intellectual Property and that is registered with any Governmental Authority. All material Company Intellectual Property is subsisting (or in the case of applications, applied for) and, to the Seller’s Knowledge, is valid.

 

(b)                                 Either the Company or the Company Subsidiaries has good and valid title to the Company Intellectual Property, free and clear of all Liens, other than Permitted Liens. Except as set forth on Schedule 3.14(b), neither the Company nor any Company Subsidiary has granted any Person (other than the Company and the Company Subsidiaries) a license to use any of the Company Intellectual Property, other than licenses that arise as a matter of Law as a result of sales of products and services by the Company and the Company Subsidiaries.

 

(c)                                  The Company Intellectual Property is not the subject of any Action, and to the Seller’s Knowledge, no Action is threatened against the Company or any of the Company Subsidiaries involving the Company Intellectual Property, including any interference, opposition, reissue, reexamination, or other proceeding in which the scope, validity, or enforceability of any Company Intellectual Property is being contested or challenged, except for office actions by the applicable Governmental Authorities in the normal course of prosecution efforts to register the Company Intellectual Property listed on Schedule 3.14(a).

 

(d)                                 Neither the Company nor any of the Company Subsidiaries is misusing any Company Intellectual Property or infringing, misappropriating, violating or otherwise adversely affecting the rights of any third party with regard to that third party’s Intellectual Property. Except as set forth on Schedule 3.14(d), (i) no Action for infringement, misappropriation or similar alleged violation is currently, or within the three-year period prior to the date of this Agreement was, pending against the Company or any of the Company Subsidiaries or against any other Person that may be entitled to be indemnified, defended, held harmless, or reimbursed by the Company or any of the Company Subsidiaries with respect to such Action; and (ii) neither the Company nor any of the Company Subsidiaries has received any written notice, or to the Seller’s Knowledge any other notice, threat or claim, within the three-year period prior to the date of this Agreement alleging that the Company Intellectual Property infringes, misappropriates, violates or otherwise conflicts with any Intellectual Property right of any other Person or that the Company or any of the Company Subsidiaries or any other Person who may be entitled to be indemnified, defended, held harmless, or reimbursed by the Company or any of the Company Subsidiaries, is so doing.

 

(e)                                  Except as set forth on Schedule 3.14(e), to the Seller’s Knowledge, no third party is infringing, misappropriating or otherwise violating any Company Intellectual Property or has, within the three-year period prior to the date of this Agreement, infringed, misappropriated, or otherwise violated any Company Intellectual Property.

 

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(f)                                   The Company and the Company Subsidiaries have each taken all necessary actions to maintain the confidentiality of and otherwise protect and enforce its Trade Secrets, except where the failure to take such steps would not reasonably be expected to have a Material Adverse Effect.

 

(g)                                  The Company or one of the Company Subsidiaries exclusively owns and possesses, free and clear of Liens (except Permitted Liens), all right, title and interest in and to, or has valid and enforceable licenses or other contractual rights to use, all Intellectual Property used or held for use by it or necessary for the operation of their respective businesses as currently conducted. The Company Intellectual Property and Company Intellectual Property Agreements include all material Intellectual Property used or held for use in connection with the operation of the Company’s and the Company Subsidiaries’ respective businesses as currently conducted.

 

3.15                        Insurance.  Schedule 3.15 sets forth a complete list of (a) all policies of insurance and bonds maintained or held by the Seller, the Company or the Company Subsidiaries and covering the Company, the Company Subsidiaries and their respective businesses and assets and (b) all policies covering any concerts, festivals or events relating to the business and operations of the Company or any of the Company Subsidiaries (regardless of whether the Company and the Company Subsidiaries are listed as named insureds on such policies) (collectively, the “Insurance Policies”). The Insurance Policies are in full force and effect, and neither the Company nor any of the Company Subsidiaries has received written notice of cancellation of any such Insurance Policies. There is no claim pending under any Insurance Policy as to which coverage has been questioned, denied or disputed by the underwriters of such Insurance Policy. The type and amount of insurance maintained by the Company and the Company Subsidiaries is customary and reasonable in scope for the respective businesses of the Company and the Company Subsidiaries as currently conducted.

 

3.16                        Labor.

 

(a)                                 Except as set forth on Schedule 3.16(a), (i) no labor union, work group, or other collective bargaining unit represents or claims to represent any of the Employees, and (ii) no Employee, group of Employees or union has threatened to or is planning to engage in a work stoppage.

 

(b)                                 Except as set forth on Schedule 3.16(b), none of the Seller, the Company, any of the Company Subsidiaries, or any equity holders of the Seller has made any promises or commitments to any of the Employees, any works council or any trade unions regarding any future changes to the employment conditions of the Employees, other than changes expected to occur in the Ordinary Course of Business.

 

(c)                                  Neither the Company nor any of the Company Subsidiaries has, within two (2) years of the date of this Agreement, initiated any collective dismissal or entered into any social plan.

 

(d)                                 Schedule 3.16(d) sets forth (i) a description of the constitution of any body representing the Employees and (ii) a list and summary of any collective or

 

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workforce agreement, dismissal procedures agreement, social plan or trade union membership agreement that currently applies to the Company, the Company Subsidiaries or their respective Employees. There are no collective negotiations in progress with the Employees of the Company or any of the Company Subsidiaries or with any Governmental Authority or private organization (whether a works council, trade union or otherwise) concerning the Employees, other than in the Ordinary Course of Business or in connection with the transactions contemplated by this Agreement, and there are no redundancy programs pending with respect to the Employees.

 

3.17                        Environmental Matters.  Except as set forth on Schedule 3.17:

 

(a)                                 the Company and the Company Subsidiaries are in material compliance with all Environmental Laws and have not received notice of any pending or, to the Seller’s Knowledge, threatened Environmental Action relating to the Seller, the Company, the Company Subsidiaries, or their respective operations or properties;

 

(b)                                 there has been no Release by the Seller, the Company or any of the Company Subsidiaries at the currently owned or leased Real Property or, to the Seller’s Knowledge, previously owned or leased Real Property, that requires cleanup or remediation by the Seller, the Company or the Company Subsidiaries pursuant to any Environmental Law and there are no Hazardous Materials in, on, under, emanating from, or migrating from or onto any portion of any property or structure currently owned, leased, or occupied by the Seller, the Company or the Company Subsidiaries;

 

(c)                                  there are no present or past environmental conditions relating to the Seller, the Company or any of the Company Subsidiaries or relating to any Real Property now or previously owned, used, leased or operated by them or improvements thereon or Real Property previously owned, used, leased or operated by the Seller, the Company or any of the Company Subsidiaries that could lead to any Liability of the Seller, the Company or any of the Company Subsidiaries under any Environmental Law and neither the Seller, the Company nor any of the Company Subsidiaries has (i) received written notice under the citizen suit provisions of any Environmental Law; (ii) received any written notice of violation, demand letter, or complaint or claim under any Environmental Law; or (iii) been subject to or, to the Seller’s Knowledge, threatened with any Action by any Governmental Authority or third-party Action with respect to any Environmental Law;

 

(d)                                 neither the Seller, the Company nor any of the Company Subsidiaries have generated, manufactured, sold, handled, treated, recycled, stored, transported, disposed of, arranged for the disposal of, released, or placed any Hazardous Material in a manner which could reasonably be expected to give rise to material Liabilities to the Seller, the Company or any of the Company Subsidiaries under any Environmental Laws;

 

(e)                                  no underground storage tanks are located at any Real Property now owned or leased by the Seller, the Company or any of the Company Subsidiaries, and all above-ground storage tanks located on any Real Property now owned or leased by the Seller, the Company or any of the Company Subsidiaries have been used and maintained in material compliance with all applicable Laws, and no leakage or spillage has occurred with

 

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respect to any such above-ground storage tank;

 

(f)                                   neither the Seller, the Company nor any of the Company Subsidiaries have agreed to assume any actual or potential Liability under any Environmental Laws of any other Person;

 

(g)                                  no Lien (other than Permitted Liens) has been filed against either the personal or Real Property of the Seller, the Company or any Company Subsidiary under any Environmental Law or any regulation promulgated thereunder or any Order issued with respect thereto; and

 

(h)                                 all material Permits required under any Environmental Law that are necessary for the Company’s and the Company Subsidiaries’ activities and operations at the Real Property (the “Environmental Permits”) are currently effective and the Company and each Company Subsidiary is each in material compliance with the Environmental Permits.

 

3.18                        Conduct of Business in Ordinary Course.

 

(a)                                 Except as set forth on Schedule 3.18, since December 31, 2012:

 

(i)                                     the Seller Entities have conducted their respective businesses and operations in the Ordinary Course of Business (other than entering into this Agreement and the agreements being entered into in connection herewith, and performing the transactions contemplated hereby and thereby);

 

(ii)                                  there has not been any Material Adverse Effect or any event, condition, change or effect that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

 

(iii)                               there has not been any material casualty loss to any Seller Entity’s tangible assets, whether or not covered by insurance, or any material destruction of the books and records of any Seller Entity; and

 

(iv)                              no Seller Entity has taken any Listed Action.

 

(b)                                 Since December 31, 2013, no Seller Entity has made any distributions of the Company’s retained earnings other than the 2013 Retained Earnings Distribution.

 

3.19                        Material Suppliers.  Schedule 3.19 sets forth the top twenty-five (25) suppliers of the Seller, the Company and the Company Subsidiaries (based on the dollar amount of purchases from such suppliers) for each of the years ended December 31, 2011 and December 31, 2012 (“Material Suppliers”) and the total amount that each such Material Supplier invoiced the Seller and the Company Subsidiaries during the applicable periods. Except as set forth on Schedule 3.19, since December 31, 2012 (a) no Material Supplier has terminated its relationship or materially reduced its business with the Seller, the Company or the Company Subsidiaries, nor has the Seller, the Company or any of the Company Subsidiaries received written notice from any Material Supplier that such Material Supplier intends to do so, and (b) none of the Seller, the

 

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Company nor any of the Company Subsidiaries is involved in any dispute with any Material Supplier.

 

3.20                        Affiliate Transactions.  Except as set forth on Schedule 3.20, there are no Contracts between any Seller Entity, on the one hand, and any other Seller Entity or any Affiliate of any Seller Entity, on the other hand and no Affiliate of any Seller Entity (other than any Company Entity) is competing with the business of the Seller or any Company Subsidiary.

 

3.21                        Bank Accounts.  Schedule 3.21 sets forth a true and complete list of (a) the name and address of each bank or financial institution with which any Seller Entity has an account, credit line or safe deposit box, (b) the name of each Person authorized to draw thereon or have access thereto and (c) the account number for each bank account of each Seller Entity.

 

3.22                        Accounts Receivable.  Except as set forth on Schedule 3.22(a), all accounts receivable of the Company and the Company Subsidiaries (collectively, the “Accounts Receivable”) represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business. Except as set forth in Schedule 3.22(b), there is no contest, claim, or right of set off under any Contract with any obligor of any Accounts Receivable relating to the amount or validity of such Accounts Receivable. Schedule 3.22(c) contains a complete and accurate list of all Accounts Receivable as of the Balance Sheet Date and as of March 31, 2013, which list sets forth the aging of such Accounts Receivable.

 

3.23                        No Brokers.  No broker, finder or similar agent has been employed by or on behalf of any Seller Entity or any equity holder of any Seller Entity, and no Person with which any Seller Entity or any equity holder of any Seller Entity has had any dealings or communications of any kind is entitled to any brokerage commission, finder’s fee or any similar compensation in connection with this Agreement or the transactions contemplated by this Agreement.

 

3.24                        Contracts with Governmental Authorities.

 

(a)                                 Each Seller Entity has complied in all material respects with the terms and conditions of all Contracts between one or more Seller Entities, on the one hand, and a Governmental Authority, on the other hand.

 

(b)                                 No Seller Entity nor any officer, Director, manager or employee of any Seller Entity has, within the past five (5) years, been the subject of a disbarment or suspension Action initiated by any Governmental Authority.

 

3.25                        Undisclosed Liabilities. Except as set forth on Schedule 3.25, no Seller Entity has any Liabilities of the type required to be reflected or reserved against in a balance sheet of the Seller Entities prepared in accordance with GAAP except for (a) Liabilities to the extent fully reflected or reserved against in the Company Financial Statements or any notes thereto, (b) Liabilities incurred in the Ordinary Course of Business since the Balance Sheet Date, or (c) Liabilities under this Agreement and the agreements being entered into in connection herewith and the consummation of the transactions contemplated hereby and thereby (including Liabilities for legal, accounting and other professional expenses incurred in connection with transactions contemplated hereby and thereby).

 

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3.26                        Absence of Questionable Payments.  To the Seller’s Knowledge, no Seller Entity, nor any of their respective Directors, officers, agents, employees or any other Persons acting on their behalves has, within any applicable statute of limitations period with regards thereto, directly or indirectly:

 

(a)                                 used any funds of any Seller Entity (i) to offer or make any political contribution or gift for any other purpose relating to any political activity that would be unlawful under applicable Law, (ii) to offer or make any payment or to provide anything of value to any official or employee of any Governmental Authority that would be unlawful under applicable Law, or (iii) to establish or maintain any unrecorded fund or account of any nature that would be unlawful under applicable Law or contrary to GAAP;

 

(b)                                 failed to maintain the books and records of any Seller Entity to accurately reflect the transactions, assets and Liabilities of the Seller Entities;

 

(c)                                  made any payoff, influence payment, bribe, rebate, kickback or payment to any Person that would be unlawful under applicable Law;

 

(d)                                 made any payment to any Person, or provided any favor or anything of value (whether in the form of property or services, or in any other form) to any Person, for the purpose of obtaining or paying for (i) favorable treatment in securing business in a manner in violation of applicable Law, or (ii) any other special concession in any case that is or was in violation of applicable Law; or

 

(e)                                  agreed, committed, offered or attempted to take any of the actions described in clauses (a) through (d) above.

 

3.27                        Books and Records.  Except as set forth in Schedule 3.27, the books of account, minute books and other material records of each Seller Entity have been maintained in accordance with applicable Law, sound business practices and are true, correct and complete in all material respects, except where the failure to have been so maintained or to be true, correct or complete would not reasonably be expected to have a Material Adverse Effect.

 

3.28                        Inventory. The Company Entities do not own any Inventory that is, individually or collectively, material to the Business.

 

3.29                        Solvency.

 

(a)                                 Each Seller Entity is commercially solvent and able to pay such Seller Entity’s debts as and when due in the Ordinary Course of Business. No Seller Entity has been dissolved or is in the process of liquidation. No Action or request is pending or threatened (whether by any Seller Entity or any other Person) to declare any Seller Entity insolvent, to adjudicate bankruptcy, to grant a moratorium or a suspension of payments, or to dissolve or liquidate any Seller Entity, and no facts or circumstances exits which would entitle any Person to commence any such Action in any jurisdiction.

 

(b)                                 Except as set forth on Schedule 3.29(b), no Seller Entity is a party to any transaction that is capable of being set aside, stayed, reversed, avoided or affected, in

 

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whole or in part, pursuant to any bankruptcy, insolvency, or similar proceeding under any Laws, whether as transactions at undervalue, in fraud of or against the interests of creditors, against the corporate interest (ultra vires), or by way of fraudulent conveyance (Pauliana) or similar concepts or legal principles under any Laws and no attachment on any of such Seller Entity’s assets has been levied.

 

3.30                        Information Security and Data Privacy.

 

(a)                                 The Seller Entities have taken reasonable steps to safeguard the information technology systems utilized in their operation, including the implementation of procedures to ensure that such information technology systems are free from any disabling codes or instructions, timer, copy protection device, clock, counter or other limiting design or routing and any “back door,” “time bomb,” “trojan horse,” “worm,” “drop dead devices,” “virus,” or other software routines or hardware components that in each case permit unauthorized access or the unauthorized disablement or unauthorized erasure of data or other software by a third party, and to date there have been no successful unauthorized intrusions or breaches of the security of the information technology systems. The Seller Entities have dedicated the technical, administrative, budgetary and human resources reasonably necessary for maintenance of safe information security practices and to ensure compliance with all Laws related to data security. The Seller Entities have appropriate safeguards in place to oversee any vendors helping to safeguard the information technology systems utilized in the operation of the Company and the Company Subsidiaries.

 

(b)                                 Each Seller Entity has complied with, and is presently in compliance with, all applicable Laws and such Seller Entity’s respective policies applicable to data privacy, data security or personal information. No Seller Entity has experienced any incident in which personal information or other sensitive data was or may have been stolen or improperly accessed, and, to the Seller’s Knowledge, there are no facts suggesting the likelihood of the foregoing, including any breach of security or receipt of any notices or complaints from any Person regarding personal information or other data. No notice, action or assertion has been received by any Seller Entity within the last three (3) years or has been filed, commenced or, to the Seller’s Knowledge, threatened against any Seller Entity alleging any violation of any Laws relating to data security.

 

3.31                        Investment in SFX Shares.

 

(a)                                 The Seller is acquiring the SFX Shares for investment purposes only, for the Seller’s own account, and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act.

 

(b)                                 The Seller has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the Seller’s investment in the SFX Shares.

 

(c)                                  The offer of the SFX Shares to the Seller was not made by any public or general means or pursuant to any public or general solicitation.

 

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(d)                                 The Seller is an “accredited investor” as defined in Rule 501(a) under the Securities Act.

 

(e)                                  The Seller:

 

(i)                                     is not a U.S. Person, was not formed under the Laws of any United States jurisdiction, and was not formed for the purpose of investing in securities not registered under the Securities Act;

 

(ii)                                  is not acquiring the SFX Shares for the account or on behalf of any U.S. Person;

 

(iii)                               was outside the United States at the time the offer to purchase the SFX Shares was received and as of the date hereof;

 

(iv)                              is not acquiring the SFX Shares for the purpose of sale or distribution in the United States in a manner that does not comply with the requirements of Regulation S;

 

(v)                                 acknowledges that the SFX Shares bear a restrictive legend to this effect that the Parent might, in order to approve removal of the restrictive legend from certificates evidencing the SFX Shares, require from the Seller (A) certain written representations to indicate that a sale of the SFX Shares was made in a transaction that complies with the provisions of Regulation S, pursuant to a registration of the SFX Shares under the Securities Act, or pursuant to an exemption from the registration requirements of the Securities Act and (B) a legal opinion that removal of the legend is appropriate;

 

(vi)                              acknowledges that the SFX Shares are not permitted to be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act;

 

(vii)                           has not made any pre-arrangement to transfer any of the SFX Shares to a U.S. Person or to return any of the SFX Shares to the United States securities markets (which includes short sales and hedging transactions in the United States within the periods restricted under Regulation S) and is not acquiring the SFX Shares as part of any plan or scheme to evade the registration requirements of the Securities Act;

 

(viii)                        has not engaged in any “directed selling efforts” (as defined in Regulation S) in the United States regarding any of the SFX Shares and has not engaged in any act intended to or that reasonably might have the effect of preconditioning the United States market for the resale of any of the SFX Shares;

 

(ix)                              is not a “distributor” (as defined in Regulation S) and is not an officer, Director, or “affiliate” (as that term is defined in Rule 405 under the Securities Act) of any of the Parent or an “underwriter” or “dealer” (as such terms

 

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are defined in the federal securities Laws of the United States); and

 

(x)                                 does not have a short position in, or other hedged position with respect to, any of the SFX Shares or any other Securities in the Parent.

 

(f)                                   As of the Closing, the Seller is entitled to acquire the SFX Shares under the Laws of all relevant jurisdictions that apply to the Seller and has fully observed such Laws and complied with all necessary formalities.

 

ARTICLE 4
 REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer represents and warrants to the Seller as follows:

 

4.1                               Organization and Standing; Authority.

 

(a)                                 Each of the Parent and the Buyer is duly organized or formed, validly existing and, to the extent applicable in an applicable jurisdiction, in good standing under the laws of their respective jurisdictions of formation. Each of the Parent and the Buyer has all requisite power and authority to carry on its businesses and activities as they are currently being conducted and to own, lease or operate its properties and assets as they are currently owned, leased or operated.

 

(b)                                 The Buyer has the requisite power and authority to execute and deliver this Agreement. The Buyer and the Parent each have the requisite power and authority to execute and deliver all Ancillary Documents to be executed and delivered by each of them in connection herewith, to perform their respective obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to be executed by the Parent or the Buyer, the consummation of the transactions contemplated hereby and thereby, and the performance of the Parent’s and the Buyer’s respective obligations hereunder and thereunder have been duly and validly authorized by all necessary corporate or other action on the part of the Parent and the Buyer. This Agreement has been duly and validly executed and delivered by the Buyer and (assuming that this Agreement has been duly authorized, executed and delivered by the Seller) constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as limited by the General Enforceability Exceptions. Each Ancillary Document that is being executed and delivered on the date hereof by the Buyer or the Parent is duly and validly executed and delivered by the Buyer or the Parent and (assuming that such Ancillary Document has been duly authorized, executed and delivered by the other parties thereto) constitutes the legal, valid and binding obligation of the Buyer or the Parent, enforceable against the Buyer or the Parent in accordance with its terms, except as limited by the General Enforceability Exceptions.

 

4.2                               Capitalization.

 

(a)                                 The SFX Shares have been duly authorized and validly issued pursuant to applicable Law and the Parent’s Organizational Documents.

 

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(b)                                 All Parent Equity has been duly authorized and validly issued pursuant to applicable Law and the Parent’s Organizational Documents.

 

4.3                               No Conflict; Required Consents.

 

(a)                                 Neither the execution and delivery of this Agreement by the Buyer (nor any Ancillary Document by the Buyer or the Parent), the consummation by the Buyer and the Parent of the transactions contemplated by this Agreement or by any Ancillary Document to be executed by the Buyer or the Parent, compliance by the Parent or the Buyer with any of the provisions hereof or thereof, nor the performance of the Buyer’s or the Parent’s obligations hereunder or thereunder will (with or without the giving of notice or the passage of time or both) (i) violate, conflict with, or constitute or result in a breach of any provisions of the Organizational Documents of the Buyer or the Parent, (ii) violate, conflict with, constitute or result in the breach of any term, condition or provision of, or constitute a default under, or give rise to any right of termination, cancellation or acceleration with respect to, or result in the creation or imposition of a Lien upon any property or assets of the Buyer or the Parent pursuant to, any Contract to which the Buyer or the Parent is a party or to which the Buyer or the Parent or their respective properties or assets may be subject, or (iii) violate any Permit, Order or Law applicable to the Buyer or the Parent or their respective properties or assets, other than (in the case of clause (ii)) such violations, breaches, conflicts or defaults that, individually or in the aggregate, would not reasonably be materially adverse to the Buyer or the Parent, or to any of the Buyer’s or the Parent’s operations.

 

(b)                                 Except for the approval of the Boards of the Parent and the Buyer which have been obtained at or prior to Closing, no Consent is required to be obtained, no notice is required to be given, and no filing is required to be made, by the Parent or the Buyer as a result of the consummation of the transactions contemplated by this Agreement or the performance of their respective obligations hereunder, other than such Consents or filings the failure of which to be obtained or made, individually or in the aggregate, would not reasonably be expected to be materially adverse to the Parent or the Buyer, or any of their respective operations.

 

4.4                               Financial Statements.

 

(a)                                 The Buyer has made available to the Seller through public filing with the SEC: (i) the audited consolidated balance sheet of the Parent as of December 31, 2012 and December 31, 2011, and the related audited consolidated statements of operations and cash flows for the fiscal year ended December 31, 2012 and for the period from July 7, 2011 through December 31, 2011, respectively, together with the notes thereto (the “Parent Audited Financial Statements”), and (ii) the unaudited consolidated balance sheet of the Parent as of September 30, 2013 (the “Parent Balance Sheet Date”), and the related unaudited consolidated statements of operations for the nine-month period ended September 30, 2013, together with the notes thereto (the “Parent Interim Financial Statements” and, collectively with the Parent Audited Financial Statements, the “Parent Financial Statements”).

 

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(b)                                 Except as disclosed in the notes to the Parent Financial Statements as publicly filed with the SEC, the Parent Financial Statements (i) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby, except as may be indicated in the notes thereto and except, in the case of the Parent Interim Financial Statements, for the absence of footnotes and subject to normal year-end adjustments, and (ii) fairly present in all material respects the consolidated financial position, results of operations, and cash flows of the Parent and the Parent Subsidiaries as of the dates and for the periods indicated (subject, in the case of the Parent Interim Financial Statements, to the absence of footnotes and to normal year-end adjustments).

 

4.5                               Compliance with Laws. Except as may be disclosed in any of Parent’s public filings with the SEC required under the Securities Act of 1933, the Securities Exchange Act of 1934 or any other Law, since December 31, 2012:

 

(a)                                 the Parent and the Parent Subsidiaries have been in material compliance with all material Laws and Orders applicable to their respective businesses; and

 

(b)                                 neither the Parent nor any of the Parent Subsidiaries has received written notification from any Governmental Authority (i) asserting that the Parent or any Parent Subsidiary is not in compliance with any Law or Order, or (ii) notifying the Parent or any Parent Subsidiary that any employee, group of employees or labor organization has asserted to any Government Authority that the Parent or the Parent Subsidiaries is not in compliance with any Law or collective bargaining agreement (or any similar agreement).

 

4.6                               Legal Proceedings. There are no Actions initiated by, pending or, to the Parent’s knowledge, threatened against, the Parent or the Buyer. The Parent and the Buyer are not subject to any unsatisfied Order that would prevent or otherwise interfere with the ability of the Parties to consummate the transactions contemplated by this Agreement.

 

4.7                               No Brokers. No Person with which the Parent or the Buyer has had any dealings or communications of any kind is entitled to any brokerage commission, finder’s fee or any similar compensation in connection with this Agreement or the transactions contemplated by this Agreement.

 

4.8                               Valid Issuance of Shares. Any SFX Shares or Warrant Shares, if and when issued and delivered in accordance with the terms hereof, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement, any Ancillary Document, applicable state and federal securities laws, or Liens created by or imposed by the Seller. Assuming the accuracy of the representations of the Seller in Article 3, all SFX Shares and Warrant Shares, when issued, will be issued in compliance with all applicable federal and state securities laws. Warrant Shares have been duly reserved for issuance, and, upon issuance in accordance with the terms of the Warrant and the Parent’s Organizational Documents, will be validly issued, fully paid and nonassessable and free of restrictions on transfer other than restrictions on transfer under this Agreement, any Ancillary Document, applicable federal and state securities laws or Liens created by or imposed by the Seller.

 

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ARTICLE 5
 CERTAIN OBLIGATIONS

 

5.1                               Non-solicitation. For a period commencing on the date hereof and ending on (and including) the second anniversary thereof (such period, the “Non-Solicitation Period”), the Seller and Lok shall not (and shall cause their respective Affiliates (other than any such Affiliate that is a Company Entity) to not), directly or indirectly: (a) intentionally interfere with the relationship between any of the Parent Entities, on the one hand, and any Person that is at any time during the Non-Solicitation Period a Key Parent Entity Contact, on the other hand; (b) solicit, recruit, or hire (or attempt to solicit, recruit, or hire) any Person that is at any time during the Non-Solicitation Period an employee of any Parent Entity, except for those employees whose employment has been previously terminated by such Parent Entity and except for general solicitations for employment that are not targeted at any such employees; or (c) take any action that is intended to divert from any Parent Entity any business opportunity that is within the scope of the Business.

 

5.2                               Non-competition. During the period commencing on the date hereof and ending on (and including) the second anniversary thereof, the Seller and Lok shall not (and shall cause their respective Affiliates (other than any such Affiliate that is a Company Entity) to not), directly or indirectly (whether as principal, agent, officer, Director, partner, employee, independent contractor, equityholder, licensor, or otherwise, and whether separately or in concert with one or more other Persons), engage, participate, assist in, manage, or provide any services as a consultant or in any other capacity to, any Person or business that is or that was formed with a purpose of becoming (whether before or after the Closing) or engaging in (whether before or after the Closing) a Competing Business.

 

5.3                               Confidentiality.

 

(a)                                 Confidentiality Obligations. Subject to Section 5.3(b), the Seller and Lok shall not directly or indirectly (including through one or more Entities) use and shall not directly or indirectly (including through one or more Entities) disclose (whether orally or in writing) to any other Person any Confidential Information. The Seller and Lok acknowledge that the unauthorized use or disclosure of Confidential Information could destroy the value thereof and cause irreparable harm to any Parent Entity. The Seller and Lok shall use, and shall cause their respective Affiliates to use, at least the same level of care and protection of Confidential Information as the Seller and Lok use to prevent unauthorized use and unauthorized disclosure (whether orally or in writing) of their own confidential information (but in no event less than a reasonable standard of care).

 

(b)                                 Certain Limitations on Confidentiality Obligations.

 

(i)                                     Disclosure Required by Law, Etc. The Seller and Lok are permitted to disclose Confidential Information to the extent required by Law (as determined by the Seller’s outside legal counsel), but only if the Seller or Lok promptly notifies the Buyer of the specifics of such requirement, if permitted by Law, uses commercially reasonable efforts to limit such disclosure and to obtain confidential treatment or a protective order for such Confidential Information,

 

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and, if permitted by Law, allows the Buyer and its Affiliates to participate in such process undertaken to protect such Confidential Information. Each Party shall reasonably cooperate with the other Parties in connection with such process to protect such Confidential Information. In the absence of a protective order or other appropriate remedy, the Seller and Lok are permitted to disclose only that portion of such Confidential Information that is legally required (as determined by their outside legal counsel) to be disclosed.

 

(ii)                                  Other Exceptions. The restrictions on use and disclosure of Confidential Information set forth in Section 5.3(a) will not apply to information that:

 

(A)                               was generally available to the public at the time of its communication to the Seller or Lok; or

 

(B)                               becomes generally available to the public, through no breach by the Seller or Lok or their respective Affiliates or Representatives of any contractual or other obligation of confidentiality applicable to such Person in respect thereof (including this Section 5.3), after the communication of such Confidential Information to the Seller or Lok.

 

(iii)                               Term. The obligations provided for in Section 5.3(a) expire on the date that is the later of (a) the five-year anniversary of the Closing Date and (b) the two-year anniversary of the first date on which none of the Seller nor Lok nor any of their respective Affiliates holds any direct or indirect equity interests in the Company; except that the obligations provided for in Section 5.3(a) will survive forever with respect to any Confidential Information that is a Trade Secret.

 

5.4                               Non-Disparagement. Each Party shall not and shall use such Party’s commercially reasonable efforts to cause such Party’s Affiliates to not (whether directly or indirectly, whether separately or in concert with one or more other Persons, and whether in writing or orally) defame or disparage any Company Entity, any employee, officer, Director, or other key personnel of any Company Entity, or any products or services provided by any Company Entity; except that the restrictions set forth in this Section 5.4 will not prevent any Party from exercising (or from causing or permitting such Party’s Affiliates to exercise) any rights of such Party (or such Affiliate) under any Contract (including this Agreement), or to bring a Suit for such Party failing to receive performance of any such rights.

 

5.5                               Further Assurances. Each Party shall, without further consideration, prepare, execute, acknowledge, file, record, publish, and deliver such other instruments, documents, and statements, and take such other actions as might be required by Law or reasonably necessary to effectively carry out the purposes hereof. Without limiting the generality of the immediately foregoing sentence, the Seller shall, and shall cause the Seller’s Affiliates to, cooperate with the Company Entities in connection with obtaining, making, filing, or providing (as applicable) any Consents that are disclosed and any Consents that are required to be disclosed in Schedule 3.4(a)

 

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or Schedule 3.4(b).

 

5.6                               Employee Benefits.

 

(a)                                 Following the Closing, each Employee as of the Closing who remains employed by a Company Entity (i) will be eligible to participate in the Pension Arrangements and other employee benefit plans of such Company Entity, pursuant to the terms of such Pension Arrangements or other employee benefit plans, and (ii) will be eligible to participate in the equity-based incentive compensation plans of the Parent in which employees of the Parent are generally eligible to participate, pursuant to the terms of such plans.

 

(b)                                 Nothing contained in this Section 5.6, expressed or implied, is intended to confer upon any Employee any right to employment or continued employment with any Company Entity for any period or any right to receive equity-based compensation. In addition, the provisions of this Agreement, in particular this Section 5.6, are solely for the benefit of the parties to this Agreement, and no current or former employee, director, or independent contractor, or any other individual associated therewith, will be regarded for any purpose as a third-party beneficiary of this Agreement, and nothing herein will be construed as an amendment to any employee benefit plan of the Parties or any Company Entity for any purpose. Nothing in this Section 5.6 is to be construed to limit any rights that the Buyer Parties or the Company Entities might have under any plan or arrangement to amend, modify, terminate, or adjust any particular plan or arrangement.

 

5.7                               2013 Audited Financial Statements. Following the Closing Date, the Seller and Lok shall use their respective commercially reasonable efforts to facilitate the preparation by March 10, 2014 of the 2013 Audited Financial Statements, including but not limited to the timely reporting of financial results and the closing of the Company’s financial books and records for the Company’s fourth fiscal quarter, and the Seller and Lok shall fully cooperate with the accounting firm identified by the Buyer that is preparing the 2013 Audited Financial Statements.  Following the Closing Date, the Seller and Lok shall not take any action, or omit to take any action, that would be reasonably likely to adversely affect the preparation of 2013 Audited Financial Statements in accordance with GAAP and with the applicable requirements of the SEC.

 

5.8                               Right of First Refusal.

 

(a)                                 Subject to the terms of this Section 5.8, the Buyer hereby grants to the Seller a right of first refusal with respect to a Proposed Sale (as defined below) (the “Right of First Refusal”).

 

(b)                                 If, at any time prior to the third (3rd) anniversary of the Closing Date, the Buyer proposes to sell, assign, or otherwise transfer all (but not less than all) of the equity Securities of the Company to a Person that is not a Parent Entity and that has its principal office in Belgium, the Netherlands, Luxembourg or Germany (a “Proposed Sale”), the Buyer shall deliver a notice to the Seller describing the material terms and conditions of the Proposed Sale (the “Proposed Sale Notice”).  To exercise the Right of First Refusal,

 

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the Seller must deliver a notice of exercise (the “ROFR Notice”) to the Buyer within fifteen (15) days after delivery of the Proposed Sale Notice (the “ROFR Notice Period”).

 

(c)                                  Following the Buyer’s receipt of the ROFR Notice within the ROFR Notice Period, the Buyer and the Seller shall negotiate in good faith to execute definitive agreements relating to the sale to the Seller and to consummate such sale within sixty (60) days following the Buyer’s receipt of the ROFR Notice (provided that such time period shall be extended to the extent reasonably required to obtain any material third-party consents or approvals necessary to consummate such sale).

 

(d)                                 If the Seller does not deliver the ROFR Notice within the ROFR Notice Period, the Buyer shall have the right for a period of one hundred twenty (120) days following the expiration of the ROFR Notice Period to consummate the Proposed Sale upon terms not less favorable in the aggregate to the Buyer than the terms set forth in the Proposed Sale Notice.  If such Proposed Sale is not consummated within such one hundred twenty (120) day period, the Right of First Refusal shall again apply.

 

(e)                                  For the avoidance of doubt, the Right of First Refusal shall not apply to (i) the sale, assignment or other transfer of a portion (but not all) of the equity Securities of the Company, (ii) the sale, assignment or other transfer of the equity Securities of the Company to a Parent Entity, (iii) the sale, assignment or other transfer of the equity Securities of the Company to a Person that does not have its principal office in Belgium, the Netherlands, Luxembourg or Germany, or (iv) the sale, assignment or other transfer of the equity Securities of any Entity other than the Company.

 

5.9                               Registration.  The Buyer shall ensure that the Parent shall use commercially reasonable efforts to register the SFX Shares and the Warrant Shares for resale with the SEC in connection with other registrations of Parent Common Stock held by stockholders of Parent, so long as such SFX Shares and Warrant Shares cannot be sold under Rule 144 under the Securities Act.

 

ARTICLE 6
 TAX MATTERS

 

6.1                               Tax Indemnification. From and after the Closing Date, the Seller shall indemnify and hold harmless the Company Entities (on an after-tax basis) against and in respect to 100% of any and all Losses that result from, arise out of, or relate to, directly or indirectly (a) Taxes (or the non-payment thereof), other than Income Taxes, of the Seller Entities or with respect to the assets of the Business, in each case for all taxable periods ending on or before the Closing Date, (b) Income Taxes (or the non-payment thereof) of the Seller Entities or with respect to the assets of the Business, in each case for all taxable periods ending on or before the Closing Date, (c) Straddle Period Taxes, (d) any and all Taxes of any Person imposed on a Seller Entity as a transferee or successor, or pursuant to the application of article 34 or 35 of the Dutch Collection Act 1990 (Invorderingswet 1990), pursuant to a contractual obligation, requirements of Law, or otherwise, and relating to the period prior to the Closing (e) any Taxes attributable to the sale, distribution, transfer or other disposition prior to the Closing of real or personal property held by

 

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the Seller Entities, and (f) 100% of the transfer, documentary, sales, use, stamp, registration, and other such Taxes, and any conveyance fees or recording charges incurred in connection with the Transactions (other than Dutch Real Estate Transfer Tax) (“Transfer Taxes” and, collectively with the Taxes described in the foregoing clauses (a) through (d), the “Pre-Closing Taxes”).  The foregoing indemnification shall not be subject to the limitations set forth in Article 7.

 

6.2                               Certain Taxes and Fees. The Seller shall be responsible for and shall pay or cause to be paid when due any and all Transfer Taxes.  The Seller will file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes and, if required by applicable requirements of Law, each other Party shall (and shall cause their Affiliates to) join in the execution of any such Tax Returns and other documentation.

 

6.3                               Cooperation on Tax Matters.

 

(a)                                 The Parties shall (and shall cause the Company Entities to) cooperate fully, as and to the extent reasonably requested by the Buyer, the Company Entities, or the Seller, in connection with any Tax matters relating to the Company Entities (including by the provision of reasonably relevant records or information). The Seller agrees to allow the Buyer to take possession of all books and records with respect to Tax matters pertinent to the Company Entities.

 

(b)                                 The Parties shall, upon request, use their respective commercially reasonable efforts to obtain any certificate or other document from any Governmental Authority or any other Person as might be necessary to mitigate, reduce, or eliminate any Tax that could be imposed (including with respect to the Transactions).

 

(c)                                  Upon the request of the Buyer Parties, the Seller shall assist (and, as applicable, shall cause the Seller’s Affiliates to assist) the Buyer Parties and their Affiliates to timely file at the expense of the Buyer Parties, no later than 75 days after the Closing Date and to be effective on the Closing Date, entity classification elections on U.S. IRS Forms 8832 for each Company Entity to change or confirm each Company Entity’s classification for U.S. federal income tax purposes, as determined in the sole discretion of the Buyer Parties. The Buyer Parties shall prepare each such U.S. IRS Form 8832, wherever applicable, in consultation with the Seller’s U.S. tax counsel.

 

6.4                               Tax Returns.

 

(a)                                 The Buyer shall control the Company’s preparation and filing of all Tax Returns of the Company Entities that are filed after the Closing Date; except that the Buyer shall permit the Seller to review any such Tax Returns to the extent such Tax Returns relate to a period and item with respect to which the Seller might have an indemnification obligation hereunder, and the Buyer shall consider in good faith the Seller’s comments with respect to such item (but the Buyer will retain sole discretion with respect to such Tax Returns).

 

(b)                                 Except to the extent required by Law or Governmental Authority, the Seller shall not amend (or cause or allow to be amended) any Seller Return in a manner that could materially impact a Buyer Party, any Buyer Return, or any Tax Return of the

 

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Company Entities without the prior written consent of the Buyer Parties, which consent the Buyer Parties shall not unreasonably withhold or delay.

 

6.5                               Tax Proceedings.

 

(a)                                 The Parties shall promptly notify each other in writing of the commencement of any audit, examination or other Action with respect to Taxes or Tax Returns of any of the Company Entities or of any Tax that might become an obligation of any Company Entity or that might become subject to indemnification hereunder (“Tax Proceedings”).

 

(b)                                 The Buyer has the exclusive right to control any Tax Proceeding with respect to any of the Company Entities or with respect to any Tax that might become an obligation of any of the Company Entities; except that, if such Tax Proceeding relates to any Tax that might become subject to indemnification hereunder, then (i) the Buyer shall consult with Seller in good faith regarding the course of conduct of such Tax Proceedings, (ii) the Seller will have the right to attend as an observer any meetings with Governmental Authorities with respect thereto, and (iii) the Buyer will not settle any such Tax Proceeding without the Seller’s written consent, which consent the Seller shall not unreasonably withhold, delay, or condition.

 

ARTICLE 7
 INDEMNIFICATION

 

7.1                               Survival.

 

(a)                                 Survival of Representations and Warranties. Subject to Section 7.1(c), each representation and warranty set forth in Articles 3 and 4, in any Disclosure Schedule, or in any certificate delivered pursuant hereto survives the Closing, but only until (and including) the date that is 18 months following the Closing Date; except that each Core Representation survives forever.

 

(b)                                 Survival of Obligations. Each obligation hereunder survives forever (unless such obligation specifies a term, in which case, subject to Section 7.1(c), such obligation survives with respect to any claim made with respect thereto for such specified term).

 

(c)                                  Claim Procedure. In order make a valid claim under this Article 7, an Indemnified Party must deliver a Claim Notice in accordance with this Article 7 no later than 5:00 p.m., New York time, of the last day of the survival period (if any) with respect to such representation, warranty, or obligation, respectively, and, if such a Claim Notice is given, then the survival period of each such representation, warranty, or obligation, respectively, that is the subject of such Claim Notice will thereby be extended and will continue until the claim with respect thereto becomes an Agreed Claim. An indemnification claim can be made under Section 7.2(a)(iii) at any time in accordance with the terms of this Article 7.

 

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7.2                               Indemnification.

 

(a)                                 Subject to and in accordance with the provisions of this Article 7, the Seller shall indemnify, defend, and hold harmless each Buyer Party, each Buyer Party’s Affiliates, and the respective equity holders, Representatives, successors, and assigns of each of the foregoing (each Buyer Party and each of the foregoing, a “Buyer Indemnified Party”), from and against any Losses suffered, incurred, or paid, directly or indirectly, by any Buyer Indemnified Party, that are caused by, result from, relate to, or arise out of:

 

(i)                                     any Breach of any representation or warranty contained in Article 3 or in any certificate delivered by the Seller pursuant hereto;

 

(ii)                                  any Breach by the Seller of any of the Seller’s obligations hereunder; or

 

(iii)                               any Specified Seller Indemnification Item.

 

(b)                                 Subject to and in accordance with the provisions of this Article 7, the Buyer shall indemnify, defend, and hold harmless the Seller, the Seller’s Affiliates (excluding the Company and each Company Subsidiary and their respective officers, Directors and employees), and the respective equity holders, Representatives, successors, and assigns of each of the foregoing (each of the Seller and each of the foregoing, a “Seller Indemnified Party”), from and against any Losses suffered, incurred, or paid, directly or indirectly, by any Seller Indemnified Party, that are caused by, result from, relate to or arise out of:

 

(i)                                     any Breach of any representation or warranty contained in Article 4; or

 

(ii)                                  any Breach by the Buyer of any of the Buyer’s obligations hereunder.

 

7.3                               Certain Limitations on Liability and Other Provisions.

 

(a)                                 Deductible.

 

(i)                                     The Seller is not obligated to indemnify, defend, or hold harmless any Buyer Indemnified Party pursuant to Section 7.2(a)(i) unless and until the aggregate of all Losses for which the Seller would (but for this sentence) be liable hereunder exceeds (on a cumulative basis) $100,000 (such amount, the “Deductible”), whereupon, subject to the other limitations of this Article 7, the Seller shall indemnify, defend, and hold harmless the Buyer Indemnified Parties for all Losses (without taking into account and in excess of the Deductible) sustained or incurred by the Buyer Indemnified Parties; except that the limitations in this Section 7.3(a)(i) do not apply to (x) any indemnification claims brought pursuant to Section 7.2(a)(i) to the extent relating to a Breach of any Core Representation or (y) any claims arising from or relating to fraud.

 

(ii)                                  The Buyer is not obligated to indemnify, defend, or hold harmless

 

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any Seller Indemnified Party pursuant to Section 7.2(b)(i) unless and until the aggregate of all Losses for which the Buyer would (but for this sentence) be liable hereunder exceeds (on a cumulative basis) the Deductible, whereupon, subject to the other limitations of this Article 7, the Buyer shall indemnify, defend, and hold harmless the Seller Indemnified Parties for all Losses (without taking into account and in excess of the Deductible) sustained or incurred by the Seller Indemnified Parties; except that the limitations in this Section 7.3(a)(ii) do not apply to (x) any indemnification claims brought pursuant to Section 7.2(b)(i) to the extent relating to a Breach of any Core Representation or (y) any claims arising from or relating to fraud.

 

(b)                                 Cap.

 

(i)                                     In no event will the Buyer Indemnified Parties be entitled to indemnification hereunder for Losses in respect of indemnification claims under Section 7.2(a)(i) in excess of $5,490,000, in the aggregate; except that in no event will the Buyer Indemnified Parties be entitled to indemnification hereunder for Losses in respect of any indemnification claims under Section 7.2(a)(i) that claim an inaccuracy in any representation or warranty set forth in Article 3, other than Section 3.6 or 3.14, in excess of $2,745,000, in the aggregate. The limitations in the immediately prior sentence do not apply to (x) any indemnification claims brought pursuant to Section 7.2(a)(i) to the extent relating to a Breach of any Core Representation or (y) any claims arising from or relating to fraud.

 

(ii)                                  In no event will the Seller Indemnified Parties be entitled to indemnification hereunder for Losses in respect of indemnification claims under Section 7.2(b)(i) in excess of $2,745,000, in the aggregate. The limitation in the immediately prior sentence does not apply to (x) any indemnification claims brought pursuant to Section 7.2(b)(i) to the extent relating to a Breach of any Core Representation or (y) any claims arising from or relating to fraud.

 

(c)                                  In determining whether (x) there has been any Breach of any representation or warranty hereunder of any Party, (y) a Party has Breached any obligation hereunder, and (z) any Losses have been sustained or incurred, and in calculating the amount of such Losses, that are caused by, result from, relate to, arise out of, or are in the nature of any such Breach, the terms “material,” “Material Adverse Effect,” “Knowledge,” and words of similar import are to be disregarded and given no effect (for purposes of each of the foregoing clauses (x), (y) and (z)).

 

(d)                                 The rights and remedies provided under Section 7.2 are in no way to be limited by the fact that the act, omission, occurrence, or other state of facts upon which any claim under Section 7.2 is based might also be the subject matter of any other representation, warranty, or obligation as to which there is no misrepresentation, inaccuracy, or Breach.

 

(e)                                  No claim for indemnification hereunder made by a Buyer Indemnified Party or a Seller Indemnified Party in respect of a Loss pursuant to one or more

 

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paragraphs under Sections 7.2(a) or 7.2(b), respectively, will limit the ability of such (or another) Buyer Indemnified Party or Seller Indemnified Party to bring a claim hereunder in respect of such Loss pursuant to the same or one or more other paragraphs under Sections 7.2(a) or 7.2(b), respectively. For the avoidance of doubt, an Indemnified Party will be permitted to recover with respect to any particular Loss suffered by such Indemnified Party only one time as it is the Parties’ intent that once any particular Loss has been recovered by a particular Indemnified Party under one provision, such Loss no longer exists with respect to such Indemnified Party and, therefore, recovery by such particular Indemnified Party for such same Loss under another provision would constitute an unintended and prohibited “double” recovery.

 

(f)                                   Notwithstanding anything herein to the contrary, no Indemnitor will be liable under this Agreement for any Loss based upon or arising out of any inaccuracy in or breach of any of the representations or warranties in this Agreement if (i) in the case of a Buyer Indemnified Party, the Buyer had Knowledge of such inaccuracy or breach prior to the date hereof or (ii) in the case of a Seller Indemnified Party, the Seller had Knowledge of such inaccuracy or breach prior to the date hereof.  The waiver of any condition based on the accuracy of any such representation or warranty, or on the performance of or compliance with any such obligation, will not affect the right to indemnification or any other remedy based on such representation, warranty, or obligation.

 

7.4                               Direct Claims.

 

(a)                                 Except as otherwise provided herein, in order for an Indemnified Party to make a proper claim for indemnification hereunder, such Indemnified Party must, within the relevant limitation period provided for in Section 7.1(c) (if any), give to the Indemnitor a notice (any such notification, a “Direct Claim Notice”) describing in reasonable detail any claim for indemnification hereunder and the facts giving rise to such claim. The Indemnified Party shall include in such Claim Notice the amount or the method of computation of the amount of such claim (to the extent then known), and a reference to the provision or provisions hereof pursuant to which such claim is made, including, if applicable, the representation, warranty, or obligation with respect to which such claim is being made or other basis for such claim; except that the failure to specify such information in such Claim Notice will in no way limit the amount of Losses to which an Indemnified Party is entitled to indemnification hereunder in respect of such claim.

 

(b)                                 If, after receiving a Claim Notice, the Indemnitor objects to the indemnification of an Indemnified Party in respect of any claim specified therein (any such claim to which an Indemnitor objects, an “Objected Claim”), then, in order to validly object to any such Objected Claim, the Indemnitor must, within 15 days after receiving such Claim Notice, deliver to the Indemnified Party a written notice to such effect (specifying the Objected Claim and the basis for the Indemnitor’s objection to the Objected Claim), and the Indemnitor and the Indemnified Party shall, during the 30-day period beginning on the date of receipt by the Indemnified Party of such objection, attempt in good faith to agree upon the rights of the respective parties with respect to

 

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each such Objected Claim. If the Indemnified Party and the Indemnitor succeed in reaching agreement on their respective rights with respect to any of such Objected Claims, then the Indemnified Party and the Indemnitor shall promptly prepare and sign a memorandum setting forth such agreement (such memorandum, an “Agreed Claim Memorandum”). If the Indemnified Party and the Indemnitor are unable to agree as to any particular Objected Claim, then the Indemnified Party will thereby be permitted to submit such dispute to a court of competent jurisdiction (subject to Section 8.7). The party that receives a final judgment in such dispute will be indemnified and held harmless for all reasonable court costs, and attorneys’ and consultants’ fees or expenses, incurred by the other party.

 

(c)                                  Notwithstanding the foregoing provisions of this Section 7.4, this Section 7.4 does not apply with respect to a claim made by a Person that is not a Buyer Indemnified Party or a Seller Indemnified Party (any such Person, a “Third-Party Claimant”) against an Indemnified Party, which claims are governed by Section 7.5, and does not apply with respect to any claims to which Article 6 applies.

 

7.5                               Third-Party Claims.

 

(a)                                 If a Third-Party Claimant makes a claim against an Indemnified Party (a “Third-Party Claim”), then, except as otherwise provided herein, in order for an Indemnified Party to make a proper claim against an Indemnitor for indemnification with respect thereto in accordance with this Article 7, such Indemnified Party must promptly (after becoming aware thereof) notify such Indemnitor in writing (any such notification, a “Third-Party Notice”) of such Third-Party Claim, setting forth in reasonable detail such Third-Party Claim and the facts giving rise to such Third-Party Claim, and the basis for which such Indemnified Party seeks indemnification hereunder if such Third-Party Claim is successful (including references to the applicable representation, warranty, or obligation); except that any delay in providing a Third-Party Notice and any failure to specify such information will not affect such Indemnified Party’s rights with respect to indemnification hereunder unless, and then only to the extent that, such Indemnitor is materially prejudiced thereby.

 

(b)                                 An Indemnitor that receives a Third-Party Notice in accordance with Section 7.5(a) will have the right to defend the Indemnified Party that sent such Third-Party Notice against the Third-Party Claim with counsel of such Indemnitor’s choice, reasonably satisfactory to such Indemnified Party if (x) the Indemnitor notifies (such notice, a “Control Notice”) such Indemnified Party in writing within 30 days after such Indemnitor’s receipt of a Third-Party Notice that such Indemnitor will undertake the defense or settlement of such Third-Party Claim and, (y) the Indemnitor acknowledges in writing the Indemnitor’s indemnification obligation hereunder with respect to such Third-Party Claim and only for so long as (i) the Indemnitor provides such Indemnified Party with evidence reasonably acceptable to such Indemnified Party that the Indemnitor has the financial resources to defend against such Third-Party Claim (including any Losses caused by or in connection with such defense) and to fulfill its indemnification obligations hereunder with respect thereto and (ii) the Indemnitor conducts the defense or settlement of the Third-Party Claim actively and diligently at the Indemnitor’s own cost

 

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and expense; except that, unless the Indemnified Party otherwise consents in writing, the Indemnitor will not be entitled to assume control of such defense and shall pay the fees and expenses of counsel retained by the Indemnified Party if: (1) such Third-Party Claim is reasonably likely to give rise to Losses that are more than twice the amount indemnifiable by such Indemnitor pursuant to this Article 7; (2) the claim for indemnification relates to or arises in connection with any criminal proceeding, regulatory, civil enforcement, or similar claim, or any proceeding by a self-regulated organization against the Indemnified Party or any of the Indemnified Party’s Affiliates; (3) the claim for indemnification seeks an injunction or equitable relief against the Indemnified Party; (4) the Indemnified Party has been advised by counsel that there are one or more legal or equitable defenses available to the Indemnified Party that are different from or in addition to those available to the Indemnitor, and in the reasonable opinion of the Indemnified Party, counsel for the Indemnitor could not adequately represent the Indemnified Party’s interests because they conflict with those of the Indemnified Party; (5) the Indemnified Party reasonably believes that an adverse determination with respect to the Third-Party Claim giving rise to such claim for indemnification would materially and adversely affect any material matter beyond the scope of the indemnification obligation of the Indemnitor; or (6) the Indemnitor failed or is failing to vigorously prosecute or defend such claim for indemnification; except that in any such case, the Indemnitor will be permitted to retain its own counsel (with the fees and expenses of such counsel to be paid by the Indemnitor) and participate in the defense of such Third-Party Claim.

 

(c)                                  So long as the conditions in Section 7.5(b) are satisfied and remain satisfied, then (i) such Indemnitor is permitted, at such Indemnitor’s sole expense, to conduct the defense or settlement of such Third-Party Claim in accordance with Section 7.5(b), (ii) such Indemnified Party shall cooperate fully, at such Indemnitor’s request and sole expense, with such Indemnitor in connection therewith, and (iii) such Indemnified Party is permitted to participate in such defense or settlement through counsel chosen by such Indemnified Party and paid at such Indemnified Party’s own expense. If, with respect to a Third-Party Claim, (x) the Indemnitor does not provide a Control Notice in accordance with Section 7.5(b), (y) the Indemnitor notifies the Indemnified Party that the Indemnitor has elected not to undertake the settlement or defense thereof, or (z) the conditions in Section 7.5(b) are not satisfied or become unsatisfied, then (in each case) the Indemnified Party will have the right to undertake the settlement or defense of such Third-Party Claim, but will not be deemed to have thereby waived any right to indemnity from such Indemnitor therefor. The Person handling such defense or settlement shall pursue such defense or settlement with the customary care that a reasonably prudent Person would exercise under the circumstances.

 

(d)                                 If the Indemnitor conducts the defense or settlement of a Third-Party Claim, then such Indemnitor shall not pay or enter into any settlement of such Third-Party Claim or consent to the entry of any judgment with respect to such Third-Party Claim without the prior written consent of the Indemnified Party (which consent the Indemnified Party shall not unreasonably withhold, condition, or delay). Notwithstanding the immediately foregoing sentence, the Indemnitor shall not consent to the entry of any judgment with respect to any Third-Party Claim or enter into any settlement that in either

 

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case either imposes an injunction or other equitable relief upon the Indemnified Party or does not include a provision whereby the plaintiff or claimant in the matter releases the Indemnified Party from all liability with respect thereto.  If the Indemnified Party conducts the defense or settlement of a Third-Party Claim, then such Indemnified Party shall not pay or enter into any settlement of such Third-Party Claim or consent to the entry of any judgment with respect to such Third-Party Claim without the prior written consent of the Indemnitor (which consent the Indemnitor shall not unreasonably withhold, condition, or delay).

 

7.6                               Payment.

 

(a)                                 Notwithstanding anything to the contrary herein, if the Seller would, but for this sentence, be obligated to make indemnification payments pursuant to Section 7.2(a) for Losses for which a Buyer Indemnified Party has brought an indemnification claim under Section 7.5, then the amount of such Losses will be reduced by 50% solely for the purpose of such indemnification obligation. For the avoidance of doubt, the reduction in Losses as described in the immediately foregoing sentence will not apply with respect to amounts that the Seller is otherwise required to pay hereunder or in connection with or relating to the Transactions (including any claims arising from fraud, criminal activity, willful misconduct, or intentional misrepresentation).

 

(b)                                 Subject to the adjustment set forth in Section 7.6(a) herein, Claims for Losses specified in any Claim Notice to which an Indemnitor does not object in accordance with Section 7.4(b), claims for Losses covered by an Agreed Claim Memorandum, claims for Losses the validity and amount of which have been the subject of a final judicial determination as described in Section 7.4(b), and claims for Losses the validity and amount of which have been Finally Determined are, collectively, “Agreed Claims.”

 

(c)                                  Subject to Section 7.6(d), no later than on the date that is 10 days after the date on which there has been a determination of the amount of any Agreed Claims, the Indemnitor shall pay to the Indemnified Party an amount equal to such Agreed Claims by wire transfer in immediately available funds to the bank account or accounts designated by the Indemnified Party in a notice to the Indemnitor not less than two Business Days prior to such payment.

 

(d)                                 If the Indemnitor is the Seller with respect to an Agreed Claim, and if the Indemnitor does not pay an Agreed Claim in full within the time period set forth in Section 7.6(c) herein, then the following number of SFX Shares will deemed to be hereby cancelled (rounded down to the nearest SFX Share), to the extent that such SFX Shares are outstanding at such time: (i) the amount of Losses that are subject to indemnification with respect to such Agreed Claim, as Finally Determined, divided by (ii) the fair market value of Parent Common Stock as of the time of cancellation of such SFX Shares (which will be the volume weighted-average price per share of the Parent Common Stock, as determined in good faith by the Parent’s Board, for the preceding 20-day period ending on the date of determination of such fair market value).  If the Seller holds less than all SFX Shares that are to be cancelled pursuant to this Section 7.6(d),

 

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then, to the extent of such deficit, the Seller shall designate which of such SFX Shares, as held by Persons other than the Seller (other than (x) the Parent or any of the Parent’s Affiliates or (y) a Seller Third Party to which such SFX Shares were transferred in accordance with the Lock-Up Agreement and the Underwriters’ Lock-Up Agreement), are to be cancelled. The Parties shall take such action as is necessary to evidence the cancellation of SFX Shares (if any) pursuant to this Section 7.6(d). Without limiting the generality of the immediately foregoing sentence, the Seller shall return to the Parent any share certificates evidencing SFX Shares that have been cancelled pursuant to this Section 7.6(d), and, if any SFX Shares represented by such returned share certificates have not been so cancelled, then the Parent shall provide the Seller a new certificate with respect to the SFX Shares that have not been so cancelled. The cancellation of SFX Shares pursuant to the immediately foregoing sentence will operate to reduce the amount of Losses for which the Seller is obligated hereunder to indemnify the applicable Buyer Indemnified Party pursuant to the applicable Agreed Claim and the Seller will be obligated to satisfy such indemnification obligation in accordance with Section 7.6(c) with respect to the remainder of Losses (if any) that have not been so satisfied pursuant to this Section 7.6(d). For the avoidance of doubt, nothing herein will limit the right of the Seller to sell or otherwise transfer the SFX Shares in accordance with the terms of Lock-Up Agreement and the Underwriters’ Lock-Up Agreement entered into by the Seller, it being understood that any SFX Shares that have been transferred (other than (x) to the Parent or any of the Parent’s Affiliates or (y) to a Seller Third Party in accordance with the Lock-Up Agreement and the Underwriters’ Lock-Up Agreement) will remain subject to cancellation pursuant to this Section 7.6(d) and that, as a condition to being so transferred, the transferee with respect to such SFX Shares must acknowledge (for the benefit of the Parent) that such SFX Shares remain subject to cancellation pursuant to this Section 7.6(d), and must agree (for the benefit of the Parent) to take such actions as are necessary to implement the cancellation of such SFX Shares pursuant to this Section 7.6(d).  For avoidance of doubt, any SFX Shares sold, assigned, or transferred to a Seller Third Party in accordance with the Lock-Up Agreement and the Underwriters’ Lock-Up Agreement will not be subject to cancellation pursuant to this Section 7.6(d).

 

7.7                               Indemnified Parties. Each of the Seller and each Buyer Party is entitled to bring an indemnification claim hereunder on behalf of any Seller Indemnified Party or any Buyer Indemnified Party, respectively, incurring or sustaining a Loss that is subject to indemnification hereunder.

 

7.8                               Exclusive Remedy. Subject to the next sentence, and except as provided in Article 6 and Sections 8.5 and 8.14, the Parties acknowledge that the indemnification provided for in this Article 7 is the sole and exclusive monetary remedy with respect to any claims (other than claims arising from fraud, criminal activity, willful misconduct, or intentional misrepresentation) for any Breach of any representation, warranty, or obligation herein or otherwise arising out of the subject matter hereof. Nothing contained in this Section 7.8 will operate to limit an Indemnitor’s or an Indemnified Party’s right (although it will not have any obligation) to pursue recovery under such Indemnitor’s or Indemnified Party’s own insurance policies. Notwithstanding anything to the contrary herein, no indemnification right or other remedy available to any Party (or other Liability that any Party is required to bear), whether hereunder (including Article 6) or otherwise, will limit the extent to which such Indemnified

 

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Party is otherwise entitled to indemnification under this Article 7.

 

7.9                               Third-Party Beneficiary Status. Each Indemnified Party that is not a Party is hereby made a third-party beneficiary of the rights under this Article 7 (subject to the procedures, conditions, and obligations of this Article 7) as if such Indemnified Party were an original signatory hereto for such purposes.

 

ARTICLE 8
 MISCELLANEOUS

 

8.1                               Notices.

 

(a)                                 To be valid for purposes hereof, any notice, request, demand, waiver, consent, approval, or other communication (any of the foregoing, a “Notice”) that is given pursuant hereto:

 

(i)                                     must be in writing and will be deemed given only as follows: (1) on the date established by the sender as having been delivered personally; (2) on the date delivered to the recipient Party by a private, internationally recognized, overnight courier as established by the sender by evidence obtained from the courier; (3) if sent by facsimile to the recipient Party, then upon confirmation of transmission thereof and (A) if such transmission is received during normal business hours of the recipient, then on the date of such transmission as indicated in such confirmation, and (B) if such transmission is not received during normal business hours of the recipient, then on the next Business Day after the date of such transmission as indicated in such confirmation; (4) on the third Business Day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid or (5) if delivered by email of a Notice in portable document format (.pdf), or other email attachment format, as an attachment to an email addressed to a recipient Party, then at the time at which the confirmation of receipt is generated by the recipient Party opening the email message (and creating a record of receipt of the transmission) or receipt of such email message is otherwise acknowledged by the recipient Party; and

 

(ii)                                  if sent to any Buyer Party, then to the following address, facsimile, or email, as applicable:

 

SFX Entertainment, Inc.

430 Park Avenue

New York, NY 10022

Attn: Howard Tytel, Esq.

Facsimile: (646) 561-6700

Email: howard@sfxii.com

 

with a required copy (the delivery of which will not constitute notice to such Buyer Party) to:

 

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Reed Smith LLP

599 Lexington Avenue

New York, NY 10022

Attn: Aron Izower, Esq.

Facsimile: (212) 521-5450

Email: aizower@reedsmith.com

 

If to the Seller or Lok, then to the following address, facsimile, or email as applicable:

 

Amazing Holding BV

Theodoor Colenbrandehof 3

3059 LS Rotterdam

Holland

Attn: Ab Twigt

Facsimile: +31 10 415 03 30

Email: ab@b2s.nl

 

with a required copy (the delivery of which will not constitute notice to the Seller) to:

 

DLA Piper LLP (US)

1251 Avenue of the Americas

New York, New York 10020-1104

Attention: Jonathan Klein

Facsimile: 212.884.8502

Email: jonathan.klein@dlapiper.com

 

(b)                                 Notwithstanding the foregoing contact information set forth in Section 8.1(a), a Party is permitted to validly deliver a Notice pursuant hereto to such other address, facsimile, or email or to the attention of such Person or Persons as the recipient Party has specified by prior Notice (in accordance with Section 8.1) to the sending Party (or, in the case of counsel, to such other readily, ascertainable business address as such counsel might hereafter maintain). If more than one method for sending Notice as set forth in Section 8.1(a) is used, then the earliest notice date established as set forth in Section 8.1(a) will control for purposes of determining when such Notice is deemed to have been given.

 

8.2                               Expenses. Except as otherwise expressly provided herein and except to the extent accounted for in Section 2.4, each Party will be responsible for bearing the Transaction Expenses that such Party incurs (and the Seller will be responsible for bearing the Company’s expenses); except that the Buyer shall pay the cost of preparing the 2013 Audited Financial Statements.

 

8.3                               Amendments; Waivers.

 

(a)                                 This Agreement can be amended if, and only if, such amendment is in writing and is signed by each Party.

 

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(b)                                 No waiver by any Party of such Party’s rights, powers, or privileges hereunder will be binding against any other Party. No such waiver by a Party will be enforceable against such Party unless such waiver was given in a written instrument signed by such Party. The waiver by any Party of any of such Party’s rights, powers, or privileges hereunder arising because of any claimed breach, default, or misrepresentation under or with respect to a provision hereof, whether intentional or not, will not thereby extend (and will not be deemed to thereby extend) to any prior separate or subsequent breach, default, or misrepresentation, respectively, by such Party or by another Party and will not affect in any way any rights, powers, or privileges arising by virtue of any such prior separate or subsequent occurrence. No failure or delay by any Party in exercising any of such Party’s rights, powers, or privileges hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege hereunder or otherwise.

 

(c)                                  Emails, including emails that bear an electronic “signature block” identifying the sender, do not constitute signed writings for purposes of this Section 8.3.

 

8.4                               Assignment. Each Party shall not, and shall not purport to, assign any of such Party’s rights hereunder, delegate any of such Party’s obligations hereunder, or delegate such Party’s performance in satisfaction of any conditions to any obligations of any other Party hereunder (and shall not enter into any Contract that requires any such assignment or delegation) without the prior written consent of each other Party, and any such purported assignment or delegation without obtaining such written consent will be void.

 

8.5                               Arbitration.

 

(a)                                 If any dispute arises between or among any of the Parties (the “Disputing Parties”) under this Agreement, then the Disputing Parties shall attempt to resolve such dispute through direct negotiation with each other. If such dispute (“Dispute”) is not resolved within 20 days after a demand for direct negotiation, then any Disputing Party is permitted to then submit such Dispute to JAMS for resolution pursuant to binding arbitration (“Binding Arbitration”) in accordance with the then existing rules of JAMS, as supplemented by the further requirements of this Section 8.5. Such arbitration is to be conducted by three arbitrators (each, an “Arbitrator”), one designated by each Disputing Party and the third designated by the first two appointed Arbitrators, in each case who agree to comply with the terms and procedures of this Section 8.5. If, within 10 days after such Dispute is submitted to Binding Arbitration, a Disputing Party has not designated an Arbitrator, then the other Disputing Party is permitted to so designate such Arbitrator.

 

(b)                                 Within 20 days after submitting a Dispute to Binding Arbitration, each Disputing Party shall provide the other Disputing Party and the Arbitrators with a statement explaining the specific facts such first Disputing Party contends support such first Disputing Party’s claims or basis in such Dispute, including acts or omissions by the other Disputing Party that such first Disputing Party believes constitute a Breach of this Agreement, all of the terms and provisions of this Agreement that such first Disputing

 

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Party believes have been Breached, the names and addresses of each Person that such first Disputing Party believes has knowledge supporting such Disputing Party’s claim, and a concise statement of damages, including the means by which the claimed damages were calculated and the facts upon which the calculations were based. Each Disputing Party shall provide the other Disputing Party and the Arbitrators with such statement and a copy of all documents in such first Disputing Party’s possession or control that such first Disputing Party contends support such first Disputing Party’s claim. The requirements of this Section 8.5 are intended to supplement, and therefore are in addition to, the Rules and procedural requirements of JAMS. In particular, the exchanges of documents and information required by such paragraphs are to be in addition to any discovery that is permitted under the rules of JAMS or that the Arbitrators might otherwise authorize in the arbitration.

 

(c)                                  The Arbitrators are to be required to render a reasoned written opinion in support of their final decision, setting forth findings of fact, legal analysis, and, subject to the limitations set forth herein, the award. The decision rendered by the Arbitrators will be final and binding upon the Parties. Judgment upon the decision and any award made by the Arbitrators is permitted to be entered in any court of competent jurisdiction. The non-prevailing Disputing Party in any Binding Arbitration (as determined by the Arbitrators) shall pay the reasonable fees and expenses (including reasonable attorneys’ fees and costs) of the prevailing Disputing Party. The Disputing Parties will otherwise be responsible for their own expenses in connection with such Binding Arbitration.

 

(d)                                 To the extent permitted by applicable Law, the Parties shall keep the arbitration proceeding confidential and the arbitration panel must issue appropriate protective orders to safeguard such confidentiality. The Parties agree to keep confidential any documents exchanged between them pursuant to the arbitration and the content of any testimony or written documents submitted pursuant to the arbitration. Each Party shall not make (or instruct the arbitration panel to make) any public announcement with respect to the proceedings or decision of the arbitration panel without prior written consent of each other Party. The Parties and the arbitration panel shall keep the existence of any Dispute submitted to arbitration and the award in confidence, except as required in connection with the enforcement of such award or as otherwise required by applicable Law.

 

(e)                                  Any arbitration proceedings described in this Section 8.5 are to be conducted in the English language and are to take place in the Borough of Manhattan, the City of New York.

 

(f)                                   The Parties acknowledge that the procedures set forth in this Section 8.5 are the exclusive means by which any Dispute can be resolved. Notwithstanding the immediately foregoing sentence, neither the existence of a Dispute, the pending settlement of a Dispute, nor the resolution procedures set forth in this Section 8.5 will operate to limit or relieve any Party from such Party’s ongoing duties and obligations hereunder or limit or extinguish any right that any Party might otherwise have hereunder (including Article 7 and the procedures thereunder, Section 2.4 and the procedures thereunder, Section 2.5 and the procedures thereunder, and Section 8.14), in law or in

 

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equity. Neither the existence of a Dispute nor the pendency of resolution of a Dispute will operate to terminate this Agreement.

 

8.6                               Governing Law; Language.

 

(a)                                 This Agreement is governed by, and is to be interpreted and enforced in accordance with, the internal Laws of the Netherlands applicable to contracts entered into and performed entirely within the Netherlands, without giving effect to any choice of law or conflict of laws rules or provisions (whether of the Netherlands or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the Netherlands. The Parties acknowledge that (i) this Agreement was negotiated by or on behalf of the Parties, in whole or in part, in the Netherlands, (ii) the Parties are delivering this Agreement in the Netherlands, and (iii) the Netherlands has a substantial relationship to Parties and to the Transactions.

 

(b)                                 The Parties agree that the original of this Agreement will be written in the English language, and each Party waives any rights it may have under the laws of its country of residence to have such Agreement written in its local language. If a local language version is provided, it is for convenience only and the English language version shall be the binding document.

 

8.7                               Consent to Jurisdiction and Venue. Subject to Section 8.5, each Party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of, and venue in, any state or federal court located within the City of New York in the State of New York (any such court, a “Permitted Court”) for the purposes of any Suit arising out of this Agreement or any of the Transactions, and in each case the appropriate appellate courts therefrom, and each Party shall not commence any such Suit in a court other than any Permitted Court. Service of any process, summons, notice, or document by personal delivery or by U.S. registered mail to a Party’s address set forth in Section 8.1 (or such other address if changed in accordance with Section 8.1) will be effective service of process for any such Suit. Each Party (a) hereby irrevocably and unconditionally waives any objection to the laying of venue of any Suit arising out of this Agreement or any Transaction in any Permitted Court, and (b) hereby irrevocably and unconditionally waives any objection that such Party might now or in the future have, and shall not plead or claim, that any such Suit brought in any Permitted Court has been brought in an inconvenient forum. A judgment in any Suit is permitted to be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. A Party’s submission to jurisdiction and venue set forth in this Section 8.7 does not constitute a general submission by such Party to service of process in the City of New York or the State of New York for any purpose other than as provided in this Section 8.7 and does not confer, and will not be deemed to confer, rights on any Person other than the Parties.

 

8.8                               Counterparts. Each Party is permitted to execute this Agreement in multiple counterparts, each of which will be deemed an original and all of which taken together will constitute one and the same instrument. Each Party is permitted to deliver this Agreement to the other Parties by means of delivery of one or more counterpart signature pages via facsimile or as an attachment in portable document format (.pdf) or other email attachment format to an email addressed to the recipient Party. Any photographic copy, photocopy, or similar reproduction of

 

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this Agreement, any electronic file of this Agreement in portable document format (.pdf) (or other email attachment format), or any copy of this Agreement delivered by facsimile, in each case with all signatures reproduced on one or more sets of signature pages, will be considered as if it were manually executed.

 

8.9                               No Third-Party Beneficiaries. The Parties hereby acknowledge and agree that the Parent is an intended third-party beneficiary of the Buyer’s rights under this Agreement, and shall have the right to directly enforce such rights against the Seller and Lok.  Except as provided in Section 7.9 or in the immediately preceding sentence, no provision hereof is intended to confer, no provision hereof will confer, and no provision hereof will be deemed to confer benefits, rights, or remedies upon any Person other than upon the Parties, their respective successors, and their respective permitted assigns.

 

8.10                        Entire Agreement. This Agreement and the Ancillary Documents (a) are a final, complete, and exclusive statement of the agreement and understanding of the Parties with respect of the subject matter hereof and the Transactions, (b) collectively constitute the entire agreement of the Parties with respect to the subject matter hereof and the Transactions contemplated hereby, and (c) supersede, merge, and integrate herein any prior and contemporaneous negotiations, discussions, representations, understandings, and agreements between any of the Parties (including the Option Agreement), whether oral or written, with respect to the subject matter hereof and the Transactions.

 

8.11                        Captions. Titles, captions, and headings included herein are for convenience of reference only and are not to affect the meaning, construction, or interpretation hereof or of any provision hereof.

 

8.12                        Severability. If any portion or provision hereof is to any extent determined to be illegal, invalid, or unenforceable by a court of competent jurisdiction, then the remainder hereof, and the application of such portion or provision in circumstances other than those as to which it is so determined to be illegal, invalid, or unenforceable, as applicable, will not be affected thereby. Without limiting the generality of the immediately foregoing sentence, if any portion or provision hereof is determined by any court of competent jurisdiction to be unenforceable by reason of excessive scope as to geographic, temporal, or functional coverage, then such provision will be deemed to extend only over the maximum geographic, temporal, and functional scope as to which such court determines it is permitted to be enforceable.

 

8.13                        Interpretation; Construction.

 

(a)                                 Except as otherwise expressly provided herein: (i) in instances in which a word or phrase is defined herein, each of the other grammatical forms of such word or phrase, respectively, has a correlative meaning; (ii) the terms “hereof,” “herein,” “hereunder,” “hereby,” “hereto,” “herewith,” and words of import similar to any of the foregoing are to be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement; (iii) a reference herein to an “Article,” “Section,” “paragraph,” “Exhibit,” “Schedule,” preamble, or recital is a reference to an article, section, paragraph, exhibit, schedule, preamble, or recital, respectively, of or to this Agreement; (iv) the words “include,” “includes,” and “including” as used herein are

 

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deemed to be followed by the words “without limitation” and the canon of construction ejusdem generis is not to be applied with respect to the construction thereof; (v) the term “Dollars” and the symbol “$” mean United States dollars; and (vi) all accounting terms used herein and not defined herein have the respective meanings given to them under GAAP.

 

(b)                                 Unless otherwise expressly provided herein: (i) any reference to a Contract (including this Agreement) and all other contractual instruments is a reference to such Contract or instrument (including all exhibits, schedules, annexes, indices, appendices, and other attachments thereto) as the same might be amended or otherwise modified in accordance with the terms thereof; except that the rule of construction set forth in this clause (i) does not apply to Contracts that are listed or that are required to be listed in any Disclosure Schedule; and (ii) any reference to a Law is a reference to all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting such Law.

 

(c)                                  If a Person has an obligation hereunder to not permit or to not cause an Entity from taking a specified action, then: (i) to the extent that such Person is capable of exercising control of such Entity with respect to such specified action or with respect to the actions of such Entity generally, such Person is deemed to have a concurrent obligation to cause such Entity to cease taking such specified action (if applicable) and to refrain from taking such specified action; and (ii) to the extent that such Person is not capable of exercising control of such Entity with respect to such specified action, such Person is deemed to have an obligation not to vote or consent to an action that is inconsistent with such obligation (as if such Person were capable of exercising control of such Entity with respect to such specified action). If a Person has an obligation hereunder to cause an Entity to take a specified action, then, to the extent that such Person is not capable of exercising control of such Entity with respect to such specified action, such Person is deemed to have an obligation not to vote or consent to an action that is inconsistent with such obligation (as if such Person were capable of exercising control of such Entity with respect to such specified action).

 

(d)                                 The term “control,” as used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting Securities, by Contract, or otherwise.

 

(e)                                  Except as otherwise provided herein, if a Party is expressly or impliedly entitled to exercise discretion hereunder or any rights hereunder, then such Party is permitted to exercise such discretion and rights in such Party’s sole discretion, without considering the interests of any other Person.

 

(f)                                   The Parties have participated jointly in the negotiation and drafting hereof, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any Party by virtue of the authorship hereof is not to affect the construction and interpretation hereof.

 

(g)                                  Each Party acknowledges that the recitals are included for informational

 

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purposes and do not constitute part of the agreement between the Parties (other than with respect to setting forth certain definitions). Without limiting the generality of the immediately foregoing sentence, the inclusion of the recitals do not constitute representations or acknowledgments by any Party that any of the circumstances described in the recitals exists, existed, or will exist or that any of the events in the recitals has occurred or will occur. The foregoing sentences set forth in this Section 8.13(g) will not limit or modify any representation or acknowledgment that any Party is making hereunder.

 

(h)                                 With respect to each Contract to which any Company Entity is a party (or by which any assets of any Company Entity are bound) for which payments are not or are not required to be paid in Dollars, such payments or required payments are to be calculated in a manner consistent with GAAP. For purposes of determining the applicability of the Dollar thresholds set forth in Section 7.3, the amount of Losses incurred other than in Dollars are to be calculated in a manner consistent with the manner in which such Losses would be recorded on the consolidated balance sheet of the Indemnified Party with respect to such Loss if prepared in accordance with GAAP, consistent with past practices.

 

8.14                        Equitable Relief. Each Party acknowledges that the rights of each other Party hereunder and with respect hereto are special, unique, and of extraordinary character and that, if a Party breaches or threatens to breach any of such Party’s obligations hereunder, then each other Party (a) might experience irreparable harm as a result thereof and might be without an adequate remedy at law with respect thereto and (b) is permitted (except to the extent the satisfaction of such obligation has been waived by such non-breaching Party in accordance with the terms hereof), in addition to any remedies for damages or other relief, to institute and prosecute an action in any court of competent jurisdiction (subject to Sections 8.5 and 8.7) for equitable relief (including specific performance, a temporary restraining order, and an injunction), without the requirement to post a bond.

 

8.15                        Business Days. If any date by which an action is to be taken, or by which a notice is to be provided, hereunder falls on a date that is not a Business Day, then such date will be deemed to refer to the first Business Day after such date.

 

8.16                        Access to Counsel. Each Party acknowledges that such Party has had an adequate opportunity to consult with and to engage such Party’s own legal counsel in connection with the drafting, negotiation, execution, and delivery of the Transaction Documents, discussions regarding the Transaction Documents and the Transactions, and otherwise with respect to the Transactions.

 

8.17                        Relationship. Nothing herein creates or implies (and will not create or imply): (a) a partnership, joint venture, or other commercial relationship between the Parties; (b) the authority for any Party to act as the agent or representative of any other Party; (c) an agreement or commitment by any Party to sell, license, purchase, acquire, develop, or use the products or services of any other Party; or (d) an encouragement to any Party to expend funds or other resources in the development of products or services.

 

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8.18                        Waiver of Jury Trial. To the extent permitted by Law, each Party irrevocably and unconditionally waives any right that such Party might have to a trial by jury in any Suit arising out of or relating to this Agreement or the Transactions. Each Party acknowledges that: (a) such Party has considered the implications of the waiver in this Section 8.18; (b) such Party will continue to rely upon the waiver in this Section 8.18 in such Party’s future dealings arising out of or relating to this Agreement and the Transactions; and (c) this provision is a material inducement for such Party to enter into this Agreement and to consummate the Transactions.

 

8.19                        Disclosure Schedules. The disclosure of any fact or item in a particular section of the Disclosure Schedules will be deemed to be disclosed in another section of the Disclosure Schedule only if the relevance of such disclosure in such other section of the Disclosure Schedule is reasonably apparent on its face. The inclusion of an item in a Disclosure Schedules will not be deemed an admission by the disclosing party that such item is material or represents a material fact, event, or circumstance, would or is likely to result in a Material Adverse Effect, exceeds specified monetary thresholds or creates a measure for, or further defines the meaning of, materiality or Material Adverse Effect and their correlative terms for purposes of this Agreement. No disclosure in any section of a Disclosure Schedules relating to a possible breach or violation of any contract or Law is to be construed as an indication that a breach or violation exists or has actually occurred.

 

8.20                        No Other Representations or Warranties.

 

(a)                                 Except for the representations and warranties contained in Article 3 and in the Seller Disclosure Schedule, the Seller is not making any representations or warranties in connection with this Agreement or the Transactions and expressly disclaims any representations or warranties of any kind or nature, express or implied, as to the condition, value, or quality of the Business or any assets comprising the Business, and the Seller specifically disclaims any representation or warranty of merchantability, usage, suitability of fitness for any particular purpose with respect to the assets of any Company Entity, or any part thereof, or as to the workmanship thereof, or the absence of any defects therein, whether latent or patent.

 

(b)                                 Except for the representations and warranties contained in Article 4 and in the Buyer Disclosure Schedule, the Buyer is not making any representations or warranties in connection with this Agreement or the Transactions and the Buyer expressly disclaims any representations or warranties of any kind or nature, express or implied, as to the condition, value, or quality of the business of the Buyer or any assets comprising such business, and the Buyer specifically disclaims any representation or warranty of merchantability, usage, suitability of fitness for any particular purpose with respect to the assets of the Buyer, or any part thereof, or as to the workmanship thereof, or the absence of any defects therein, whether latent or patent.

 

[Signature page follows]

 

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The Parties are signing this Agreement as of the date first set forth above.

 

	
 
    	
BUYER:
    
	
 
    	
 
    
	
 
    	
Q-DANCE   PARTNERS B.V.
    
	
 
    	
 
    
	
 
    	
By:   ID&T Management B.V., its Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joseph Rascoff
    
	
 
    	
 
    	
Name:   Joseph Rascoff
    
	
 
    	
 
    	
Title:   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Richard Rosenstein
    
	
 
    	
 
    	
Name:   Richard Rosenstein
    
	
 
    	
 
    	
Title:   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SELLER:
    
	
 
    	
 
    
	
 
    	
AMAZING   HOLDING BV
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jan Lok
    
	
 
    	
 
    	
Name:   Jan Lok
    
	
 
    	
 
    	
Title:   Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LOK:
    
	
 
    	
 
    
	
 
    	
Solely   with respect to Sections 5.1   through 5.4, 5.5   and 5.7:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Jan Lok
    
	
 
    	
JAN   LOK
    


 

Signature Page to Stock Purchase Agreement

 











 

Exhibit A

 

Amazing Management Agreement Addendum

 

(See attached)

 











 

Exhibit B

 

Key Employees

 

	
Name
    	
 
    	
Date of
   Employment
    	
 
    	
DOB
    	
 
    	
Male/Female
    	
 
    	
Position
    	
 
    	
Address
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
V. van der Heijden
    	
 
    	
1/8/2005
    	
 
    	
5-14-1975
    	
 
    	
M
    	
 
    	
Creation
    	
 
    	
Steenstraat 31, 2282 BS Rijswijk
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
C. Panayotopolous
    	
 
    	
3/9/2006
    	
 
    	
12/1/1986
    	
 
    	
F
    	
 
    	
Brand Manager
    	
 
    	
Rosestraat 185, 3071 AJ Rotterdam
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
A. Twigt
    	
 
    	
1/2/2007
    	
 
    	
4-16-1970
    	
 
    	
M
    	
 
    	
Financial
    	
 
    	
Nieuwe Wetering 81, 3194 TB Hoogvliet
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
M. Berrier
    	
 
    	
1/12/2010
    	
 
    	
6-14-1972
    	
 
    	
M
    	
 
    	
Design
    	
 
    	
Boterstraat 23, 3111 NA Schiedam
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
J. van Straten
    	
 
    	
1/2/2009
    	
 
    	
7-27-1978
    	
 
    	
M
    	
 
    	
Production
    	
 
    	
Papaverstraat 18 3551 EW Utrecht
    


 

Employees with management fee

 

	
Name
    	
 
    	
Date of
   Employment
    	
 
    	
DOB
    	
 
    	
Male/Female
    	
 
    	
Position
    	
 
    	
Address
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
J. Lok
    	
 
    	
1/3/2001
    	
 
    	
9-27-1972
    	
 
    	
M
    	
 
    	
Director
    	
 
    	
G Voorenkade 12, 3059 VE Rotterdam
    


 












 

Exhibit C

 

Key Employee Employment Agreement Addendum

 

(See attached)

 











 

Exhibit D

 

Lock-Up Agreement

 

(See attached)

 











 

Exhibit E

 

Non-Business Assets

 

Seller

 

·                  Ownership of 50% in B2S Real Estate BV (the B2S-office in Rotterdam). This office is rented to the Company.

 

·                  Ownership of 25% in Platinum Agency BV.

 

·                  Toffler B.V.

 











 

Exhibit F

 

Form of Notarial Deed of Transfer

 

TRANSFER OF SHARES

B2S HOLDING B.V.

 

Today, the [*] day of February two thousand and fourteen, appeared before me, Alexander Joannes Wiggers, civil-law notary in Amsterdam, the Netherlands:

[*],

 

acting in this matter pursuant to a written power of attorney granted by:

 

1.                  Amazing Holding B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) with corporate seat in Rotterdam, the Netherlands, and office address at 
 Theodoor Colenbranderhof 3, 3059 LS Rotterdam, the Netherlands, registered with the Trade Register under number 24336830,

hereinafter referred to as: the “Seller”;

 

2.                  Q-Dance Partners B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) with corporate seat in Amsterdam, 
 the Netherlands, and office address at Noordeinde 128H, 1121 AL Landsmeer, the Netherlands, 
 registered with the Trade Register under number 34171121,

hereinafter referred to as: the “Purchaser”;

 

3.                  B2S Holding B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid), with corporate seat in Rotterdam, the Netherlands, and office address at 
 Theodoor Colenbranderhof 3, 3059 LS Rotterdam, 
 the Netherlands, registered with the Trade Register under number 24355289,

hereinafter referred to as: the “Company”.

 

Acting in said capacity, the person appearing declared the following:

 

IT IS AGREED AS FOLLOWS:

 

PURCHASE AGREEMENT AND SHARES

 

By written purchase agreement, dated the twenty-eighth day of February two thousand and fourteen, hereinafter referred to as: the “Purchase Agreement”, the Seller sold to the Purchaser and the Purchaser purchased from the Seller ten thousand (10,000) shares in the capital of the Company, each share having a nominal value of one euro (EUR 1), numbered 10,001 through 20,000, hereinafter referred to as: the “Shares”.



A copy of the Purchase Agreement, without annexes, is appended to this deed.

 

PREVIOUS ACQUISITION OF SHARES

 

The Seller acquired the Shares by the Company’s issue and placement to the Seller by the deed of incorporation of the Company executed before Michel Dick van Waateringe, civil-law notary in Amsterdam, on the first day of December two thousand and three.

 











 

TRANSFER

 

Pursuant to the execution of the Purchase Agreement the Seller hereby transfers the Shares to the Purchaser, who hereby accepts this transfer.

 

PAYMENT OF PURCHASE PRICE

 

The amount of the purchase price for the shares and the payment method are described in Article 2.2 of the Purchase Agreement. Pursuant to the Purchase Agreement the Purchaser has paid or caused to pay an amount of fourteen million one hundred ninety-five thousand nine hundred ninety-two United States Dollar and thirty dollar cent (USD 14,195,992.30) (the “Estimated Closing Cash Payment”) by transfer thereof to the account of the civil-law notaries of DLA Piper Nederland N.V. at the ING Bank with account number 67.26.44.428. The undersigned civil-law notary is hereby irrevocably authorised to transfer the Estimated Closing Cash Payment on the first business day following the execution of this deed to an account in the name of the Seller with account number: NL85ABNA 0487 5477 05. In view thereof, the Seller hereby grants the Purchaser discharge in respect of (any and all obligations relating to) the payment of the Estimated Closing Cash Payment.

 

TRANSFER RESTRICTIONS

 

The transfer restriction clause included in the articles of association of the Company, encompassing a right of first refusal, has been duly observed with regard to the transfer of the Shares per this deed, as all shareholders of the Company are party to this deed and hereby mutually waive their rights pursuant to the transfer restriction clause.

 

ADDITIONAL PROVISIONS

 

Article 1

 

The Shares including all rights and obligations attached thereto, will be for the account and risk of the Purchaser as of the date of this deed.

 

Article 2

 

Each of the parties waives any and all rights to terminate the Purchase Agreement and the agreement laid down in this deed (including but not limited to the transfer as included in this deed) pursuant to the provisions of Article 6:265 Dutch Civil Code or to demand in legal proceedings the rescission (ontbinding) of the Purchase Agreement and the agreement laid down in this deed (including but not limited to the transfer as included in this deed).

 

Article 3

 

Inasmuch as this deed does not expressly deviate from the Purchase Agreement, the Seller and the Purchaser shall be bound by the provisions of the Purchase  Agreement, on the understanding that they are no longer able to invoke any and all possible conditions subsequent regarding the purchase, sale and transfer of the Shares, and that any and all conditions precedent regarding the purchase, sale and transfer of the Shares have been fulfilled or waived by the party for the  benefit of whom these are made.

 

ACKNOWLEDGEMENT

 

The Company declares to have taken due notice of the transfer of the Shares in this deed and to acknowledge said transfer. The Company shall record this transfer without any delay in its shareholders’ register.

 











 

INTERDISCIPLINARY COOPERATION

ADVISOR SELLER

 

With respect to the Rules of Professional Conduct (Verordening beroeps- en gedragsregels) of the Royal Dutch Organisation of Civil Law Notaries (Koninklijke Notariële Beroepsorganisatie) all parties expressly state to agree that:

 

a.                  the undersigned civil-law notary executes this deed, though being a civil-law notary affiliated with DLA Piper Nederland N.V.;

b.                  DLA Piper Nederland N.V. acts as advisor of the Seller in relation to this deed or agreements pursuant hereto; and

c.                   DLA Piper Nederland N.V. possibly acts as advisor of the Seller in the event that any disputes arise from this deed or agreements pursuant hereto.

 

POWER OF ATTORNEY

 

The person appearing has been authorised by three (3) written powers of attorney (of which copies are) annexed to this deed.

 

END

 

The person appearing is known to me, civil-law notary.

 

This deed was executed in Amsterdam, the Netherlands on the date stated at the beginning of this deed.

 

The summarised contents of this deed were stated and explained to the person appearing. All parties were informed of the consequences of the contents of this deed. The person appearing declared to dispense with a full reading of the deed, to have taken due note of the content of the deed well before its execution and to agree with its content.

 

Immediately following the limited reading, this deed was signed by the person appearing and by me, civil-law notary.

 











 

Exhibit G

 

Underwriters’ Lock-Up Agreement

 

(See attached)