Document:

Exhibit 10.1

 

 

SHARE PURCHASE AGREEMENT

 

 

relating to the sale and purchase of fifty per cent. (50%) of the issued share capital of

 

ALDA HOLDING B.V.

 

DATED 24 November 2014

 

between

 

SFXE NETHERLANDS HOLDINGS B.V.

 

as Purchaser

 

and

 

LEWIS HOLDING B.V.

 

and

 

MOUNTAIN B.V.

 

as Sellers

 

and

 

SFX ENTERTAINMENT, INC.

 

as Parent

 

and

 

ALDA HOLDING B.V.

 

as the Company

 

1

 

INDEX

 

	
Clause
    	
 
    	
 
    	
Page
    
	
1
    	
DEFINITIONS   AND INTERPRETATION
    	
 
    	
5
    
	
2
    	
PURCHASE   AND SALE SHARES
    	
 
    	
6
    
	
3
    	
INITIAL   PURCHASE PRICE SHARES
    	
 
    	
6
    
	
4
    	
PREFERRED   PAYMENT
    	
 
    	
10
    
	
5
    	
DIVERSION   OF SFX TOURING BUSINESS
    	
 
    	
13
    
	
6
    	
SECURITY
    	
 
    	
13
    
	
7
    	
PURCHASE   AND SALE PUT CONSIDERATION SHARES
    	
 
    	
15
    
	
8
    	
CALL   OPTION: CONSIDERATION SHARES
    	
 
    	
16
    
	
9
    	
RIGHT   OF FIRST REFUSAL CONSIDERATION SHARES
    	
 
    	
17
    
	
10
    	
PURCHASE   AND SALE PUT SHARES
    	
 
    	
17
    
	
11
    	
LEAKAGE   AND ADDITIONAL LEAKAGE
    	
 
    	
18
    
	
12
    	
COMPLETION
    	
 
    	
20
    
	
13
    	
WARRANTIES
    	
 
    	
22
    
	
14
    	
BREACH
    	
 
    	
23
    
	
15
    	
LIMITATION   OF LIABILITY
    	
 
    	
24
    
	
16
    	
SPECIFIC   INDEMNITIES
    	
 
    	
27
    
	
17
    	
TAX   INDEMNITY
    	
 
    	
28
    
	
18
    	
DUE   DATE FOR PAYMENT
    	
 
    	
29
    
	
19
    	
PROCEDURES   FOR TAX CLAIMS
    	
 
    	
30
    
	
20
    	
LIABILITY
    	
 
    	
31
    
	
21
    	
POST   COMPLETION COVENANTS
    	
 
    	
31
    
	
22
    	
CONFIDENTIALITY
    	
 
    	
35
    
	
23
    	
ACKNOWLEDGEMENT   IN RELATION TO THE CONSIDERATION SHARES
    	
 
    	
36
    
	
24
    	
COSTS   AND EXPENSES
    	
 
    	
38
    
	
25
    	
PAYMENTS
    	
 
    	
39
    
	
26
    	
ASSIGNMENT
    	
 
    	
40
    
	
27
    	
ENTIRE   AGREEMENT
    	
 
    	
41
    
	
28
    	
AMENDMENTS
    	
 
    	
41
    
	
29
    	
WAIVER
    	
 
    	
41
    
	
30
    	
NO   THIRD PARTY BENEFICIARIES
    	
 
    	
41
    
	
31
    	
INVALIDITY
    	
 
    	
41
    
	
32
    	
NOTICES
    	
 
    	
41
    
	
33
    	
NOTARIAL   INDEPENDENCE
    	
 
    	
42
    
	
34
    	
NO   RIGHT TO RESCIND OR NULLIFY AGREEMENT
    	
 
    	
43
    
	
35
    	
GOVERNING   LAW AND DISPUTES
    	
 
    	
43
    
	
36
    	
COUNTERPARTS
    	
 
    	
43
    
	
37
    	
EXCHANGE   RATE
    	
 
    	
44
    

 

2

 

	
ANNEXES
    
	
 
    	
 
    	
 
    	
 
    
	
Annex 1.1
    	
 
    	
Definitions
    	
 
    
	
Annex 3.3.2
    	
 
    	
Estimated Balance Sheet
    	
 
    
	
Annex 6.2
    	
 
    	
Illustration of Share Dilution Mechanism
    	
 
    
	
Annex 10.1
    	
 
    	
Example of the determination of the 2019   EBITDA
    	
 
    
	
Annex 12.3
    	
 
    	
Deed of amendment of the Articles of   Association
    	
 
    
	
Annex 13.1
    	
 
    	
Sellers’ Warranties
    	
 
    
	
Annex 13.6
    	
 
    	
Purchaser’s Warranties
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
APPENDICES
    
	
 
    
	
Appendix 6.1
    	
 
    	
2013 Accounts and Interim Accounts
    	
 
    
	
Appendix 10.29
    	
 
    	
Capital Group Companies
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULES
    
	
 
    
	
Schedule 1.1(a)
    	
 
    	
Disclosure letter
    	
 
    
	
Schedule 1.1(b)
    	
 
    	
Data Room Index and Data Room DVD’s
    	
 
    
	
Schedule 1.1(c)
    	
 
    	
Deed of Transfer
    	
 
    
	
Schedule 12.3(h)
    	
 
    	
Management Agreement
    	
 
    
	
Schedule 12.3(m)
    	
 
    	
Shareholders’ Agreement
    	
 
    
	
Schedule 12.3(o)
    	
 
    	
Lock-Up Agreement
    	
 
    

 

3

 

THIS SHARE PURCHASE AGREEMENT is dated 24 November 2014 and made between:

 

(1)                                          SFXE NETHERLANDS HOLDINGS B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, having its official seat in Amsterdam, the Netherlands, and its office address at Prins Bernhardplein 200, 1097 JB Amsterdam, the Netherlands (the Purchaser);

 

(2)                                          LEWIS HOLDING B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, having its official seat in The Hague, the Netherlands, and its office address at Johannes Verhulststraat 126 2, 1071 NM Amsterdam, the Netherlands (Lewis);

 

(3)                                          MOUNTAIN B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, having its official seat in Rotterdam, the Netherlands, and its office address at Siciliëboulevard 214, 3059 XT Rotterdam, the Netherlands (Hardenberg);

 

(4)                                          SFX ENTERTAINMENT, INC., a Delaware corporation, incorporated under the laws of Delaware, having its office address at 430 Park Avenue, 6th floor, New York, New York, United States (the Parent); and

 

(5)                                          ALDA HOLDING B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) incorporated under the laws of the Netherlands, having its official seat in Amsterdam, the Netherlands, and its office address at Anthony Fokkerweg 61, 1059 CP Amsterdam, the Netherlands (the Company).

 

Parties (2) and (3) are also jointly referred to as the Sellers and individually as a Seller and Parties (1) through (5) are also jointly referred to as the Parties and individually as a Party.

 

WHEREAS:

 

(A)                                        The Sellers are the legal and beneficial owners of 880,000 (in words: eight hundred and eighty thousand) ordinary shares A (the Ordinary Shares A) and the legal and beneficial owners of 880,000 (in words: eight hundred and eighty thousand) ordinary shares B (the Ordinary Shares B) with a nominal value of EUR 0.01 (in words: one euro cent) each in the share capital of the Company;

 

(B)                                        The Sellers also are the legal and beneficial owners of: (ii) two (2) preference shares A with a nominal value of EUR 100 (in words: one hundred euro) (the Prefs A), and (iii) two (2) preference shares B with a nominal value of EUR 100 (in words: one hundred euro) (the Prefs B) in the share capital of the Company;

 

(C)                                        The Company and the Subsidiaries (the Group or the Group Companies) are engaged in the business of organizing music events (the Business);

 

(D)                                        The Parent Common Stock is listed on the Nasdaq stock exchange (the Stock Market) under the ticker symbol SFXE;

 

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(E)                                         The Purchaser, the Parent and their advisors have carried out a due diligence investigation into the Company, the Company’s Group and the Business as set out in the Agreement.

 

(F)                                          The Sellers and the Purchaser have complied with the provisions of the Socio- Economic Council Merger Regulations 2000 (SER-Fusiegedragsregels 2000), the Works Councils Act (Wet op de Ondernemingsraden) and any other similar laws and regulations in any relevant jurisdiction that are applicable to the Transaction;

 

(G)                                        In view of the annual turnover of the Group Companies, the Parties are of the view that notification of the Transaction to a competition authority is not required;

 

(H)                                       The Parties have obtained all necessary corporate approvals to enter into this Agreement and to complete the transaction contemplated hereby; and

 

(I)                                            The Sellers wish to sell and one hundred per cent. (100%) of the Ordinary Shares B to the Purchaser as set forth in Clause 2 and the Purchaser wishes to purchase and accept transfer of such shares from the Sellers on the terms and subject to the conditions of this Agreement.

 

IT IS AGREED as follows:

 

1                                                  DEFINITIONS AND INTERPRETATION

 

1.1                                        Definitions

 

Capitalised words and expressions used in this Agreement have the meanings set out in Annex 1.1, unless the context clearly requires otherwise.

 

1.2                                        Interpretation

 

In this Agreement:

 

(a)                       the singular includes the plural and vice versa except as specifically otherwise defined, and each gender includes the other genders;

 

(b)                       references to “writing” shall be to letters and facsimiles only;

 

(c)                        the words “include”, “including” and “includes” shall be deemed to be followed by the words “without limitation”;

 

(d)                       references to any time of day are to the time in the Netherlands;

 

(e)                        headings are inserted for convenience only and shall not affect the interpretation of this Agreement;

 

(f)                         reference to a statutory provision or law includes a reference to that statutory provision or law as amended, extended or applied by or under any other statute or law after Completion;

 

(g)                        references to Clauses, Annexes or Schedules are, unless otherwise indicated, references to clauses, annexes or schedules of this Agreement;

 

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(h)                       all Annexes and Schedules to this Agreement form an integral part of this Agreement and shall have the same force and effect as any other provisions of this Agreement;

 

(i)                           no provision of this Agreement shall be interpreted adversely against a Party solely because that Party was responsible for drafting that particular provision;

 

(j)                          a reference to a person includes any individual, company, government, state or agency of a state or any joint venture, association or partnership (whether or not having separate legal personality); and

 

(k)                       references to any Dutch legal term shall in respect of any jurisdiction other than the Netherlands be construed as a reference to the term or concept which most nearly corresponds to it in that jurisdiction.

 

2                                                  PURCHASE AND SALE SHARES

 

2.1                                        Purchase and Sale

 

2.1.1                              Subject to the terms and conditions of this Agreement, the Sellers hereby sell the Shares (as defined below) to the Purchaser and agree to transfer the Shares to the Purchaser on the Completion Date, free from any Encumbrances.

 

2.1.2                              The Shares shall comprise of:

 

(a)                                440,000 (in words: four hundred and forty thousand) Ordinary Shares B numbered B1 through B440,000 (Shares 1); and

 

(b)                                440,000 (in words: four hundred and forty thousand) Ordinary Shares B numbered B440,001 through B880,000 (Shares 2 and, together with Shares 1, the Shares).

 

2.1.3                              Subject to the terms and conditions of this Agreement, the Purchaser hereby purchases the Shares from the Sellers and agrees to accept transfer of the Shares from the Sellers on the Completion Date, free from any Encumbrances.

 

2.2                                        Benefit and risk

 

Subject to Completion and the terms and conditions of this Agreement, the Shares, as well as all rights and obligations in connection with the Shares, shall be for the benefit and risk of the Purchaser with effect as from the Effective Date, irrespectively of the fact that Completion takes place at a date other than the Effective Date. The foregoing implies that, except as set out herein, after the Effective Date no Leakage has occurred or shall occur or that the Purchaser shall be compensated for the Total Leakage Amount.

 

3                                                  INITIAL PURCHASE PRICE SHARES

 

3.1                                        Initial Purchase Price

 

In consideration for the sale and transfer of the Shares the Purchaser shall,

 

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(a)                       pay an amount of EUR 1,350,000 (in words: one million three hundred fifty thousand euro) (the Consideration Payment) in cash to the Sellers; and

 

(b)                       procure that the Parent shall issue to the Sellers a number of 2,000,000 (in words: two million) shares of common stock of the Parent (the Parent Common Stock), free from any Encumbrances (the Consideration Shares) to be held by such Seller as set out in Clause 3.2.

 

The Consideration Payment and the Consideration Shares hereinafter referred to as the Initial Purchase Price. The Initial Purchase Price shall be irrevocable and non-refundable, except as otherwise provided for in this Agreement. The Initial Purchase Price and the Preferred Payment hereinafter referred to as the Base Purchase Price.

 

The Sellers acknowledge and agree that the Consideration Shares will be subject to certain lock-up requirements all as further set out in the Lock-Up Agreement.

 

3.2                                        Entitlement to Initial Purchase Price

 

The Initial Purchase Price shall be paid to the Sellers in the following order:

 

(i)                           fifty per cent. (50%) of the Consideration Payment shall be paid to Lewis as payment in respect of the Shares 1;

 

(ii)                        fifty per cent. (50%) of the Consideration Payment shall be paid to Hardenberg as payment in respect of the Shares 2;

 

(iii)                     fifty per cent. (50%) of the Consideration Shares shall be issued to Lewis as payment in respect of the Shares 1;

 

(iv)                    fifty per cent. (50%) of the Consideration Shares shall be issued to Hardenberg as payment in respect of the Shares 2;

 

3.3                                        Adjustment of the Base Purchase Price

 

3.3.1                              The Parties acknowledge and agree that the Base Purchase Price has been determined on the basis that the Company shall have a Working Capital equal to an amount of EUR 0 (in words: nil euro) and that there is no Debt as at the Balance Sheet Date, other than the deferred purchase price amounting to EUR 825,000 in relation to the acquisition of Twisted Heads B.V. and the car lease amounting to EUR 36,000, all as further set out in Annex 3.3.2.

 

3.3.2                              On the basis of the unaudited balance sheet of the Company as at the Balance Sheet Date, prepared in accordance with the Accounting Principles as attached hereto as Annex 3.3.2 (the Estimated Balance Sheet), the Company has a Working Capital of an negative amount of EUR 2,566,000 (in words: two million five hundred and sixty six thousand euro) which includes the Dividend Payable as defined in Clause 4.3 (the Estimated Working Capital) and the Company has prepaid an amount of EUR 396,000 (in words: three hundred and ninety-six thousand euro)  in relation to the acquisition of Twisted Heads Holding B.V. Consequently, as further set out in Annex 

 

7

 

3.3.2, the Base Purchase Price shall be adjusted with an amount equal to EUR 1,085,000 (in words: one million and eighty-five thousand euro) (the Estimated Base Purchase Price Adjustment). An amount equal to the Estimated Base Purchase Price Adjustment shall be credited against the final Installment of the Preferred Payment, as mentioned under Clause 4.2(e).

 

3.3.3                              No later than one-hundred twenty (120) Business Days after Completion, the Sellers shall provide the Purchaser with the Interim Accounts consisting of the line items set out in the Estimated Balance Sheet and the working papers in connection therewith, setting forth the amount of Working Capital and Debt as at the Balance Sheet Date (collectively, the Interim Accounts). Purchaser, at its sole expense, has the right to assign a third party financial firm, which said firm to be mutually agreed upon by the Sellers and the Purchaser, to assist and oversee the Sellers in preparing the Interim Accounts.

 

3.3.4                              Within a period of ninety (90) Business Days after receipt by the Purchaser of the Interim Accounts, the Purchaser shall inform the Sellers in writing whether they agree to or disputes the Interim Accounts in whole or in part (the Interim Accounts Notice). If no Interim Accounts Notice is received by the Sellers within such ninety (90) Business Days term, the Interim Accounts shall be deemed to be agreed between and binding upon the Parties (the Final Interim Accounts). If the Interim Accounts are (partially) disputed by the Purchaser in the Interim Accounts Notice received by the Sellers within such ninety (90) Business Day period, the Parties shall, within a period of thirty (30) Business Days after the receipt of the Interim Accounts Notice by the Sellers, endeavour to agree on the Interim Accounts. If such agreement is reached the Interim Accounts shall become the Final Interim Accounts.

 

3.3.5                              If the Sellers and Purchaser fail so to agree within the said thirty (30) Business Days period, either the Sellers or the Purchaser may refer any dispute for resolution to a reputable “Big Four” international accounting firm (other than the existing auditors of the Sellers or the Purchaser) (the Expert) appointed (i) by the Sellers and the Purchaser or (ii) in default of agreement on such appointment within five (5) Business Days, by the chairman of the Netherlands Institute of Chartered Accountants (NBA, Nederlandse Beroepsorganisatie van Accountants). The Expert shall be instructed to render its opinion as soon as practicable and in any event within twenty (20) Business Days after the date of the engagement letter pursuant to which the Expert is formally instructed to render its opinion.

 

3.3.6                              In making its determination the Expert shall act as an expert and not as an arbitrator and the decision of the Expert shall (in the absence of manifest error) be final and binding on the Parties (bindend advies). The expenses of the Expert shall be shared equally unless allocated otherwise by the Expert. The Expert shall be entitled to determine the procedure applicable to its determination.

 

3.3.7                              The Interim Accounts shall be adjusted on the basis of the Expert’s resolution of such dispute and as so adjusted shall become the Final Interim Accounts.

 

3.3.8                              In the event the amount of Working Capital as at the Balance Sheet Date as appears 

 

8

 

from the Final Interim Accounts (the Actual Working Capital) deviates from the amount equal to the Estimated Working Capital, the Base Purchase Price shall be adjusted downward in the event the Actual Working Capital is less than the Estimated Working Capital and upward in the event the Actual Working Capital is more than the Estimated Working Capital by an amount equal to fifty per cent. (50%) of the amount by which the Actual Working Capital deviates from the Estimated Working Capital (the Working Capital Adjustment).

 

3.3.9                              In the event the amount of Debt of the Group Companies exceeds an amount EUR 0 (in words: nil euro) as at the Balance Sheet Date as appears from the Final Interim Accounts, the Base Purchase Price shall be adjusted by an amount equal to fifty per cent. (50%) of such excess (such excess the Debt Adjustment, and the Debt Adjustment and the Working Capital Adjustment together, the Difference). For the avoidance of doubt debt items taken into account in the Working Capital Adjustment will not be taken into account in the Debt Adjustment.

 

3.3.10                       An amount equal to the Difference (if any) shall be credited against the final Installment of the Preferred Payment, as mentioned under Clause 4.2(e). For the avoidance of doubt, such Difference (if any) shall be credited against the final Installment of the Preferred Payment in addition to the Estimated Base Purchase Price Adjustment.

 

3.3.11                       The provisions of this Clause 3.3 shall mutatis mutandis apply in the event the Sellers sell and transfer the Ordinary Shares held by them to the Purchaser in accordance with the provisions of Clause 10.

 

3.4                                        Negative Tax consequences

 

3.4.1                              Any and all Tax consequences as a result of the division of the Base Purchase Price and any adjustment thereof between the Sellers will be for the risk and account of the Sellers and the Sellers hereby indemnify and hold the Purchaser Indemnified Parties harmless for any such Tax consequences.

 

3.5                                        Parent undertaking

 

The Parent undertakes to issue to the Sellers the Consideration Shares at Completion subject to the terms and conditions of this Agreement.

 

9

 

4                                                  PREFERRED PAYMENT

 

4.1                                        The Parties acknowledge and agree that the Sellers shall be entitled to preferred payments from any dividends distributed by the Company in an aggregate amount equal to EUR 12,150,000 (in words: twelve million one hundred fifty thousand euro) (the Preferred Payment), on the terms and subject to the conditions of this Clause 4 and the provisions of clause 2.3 of the Shareholders’ Agreement.

 

4.2                                        The Preferred Payment will be paid to the Sellers in the following minimum installments (each, an Installment), unless the Purchaser, in its sole discretion, elects to accelerate the Preferred Payment in whole or in part:

 

(a)                       an amount of EUR 1,350,000 (in words: one million three hundred fifty thousand euro) within five (5) Business Days after the Annual Accounts in respect of the financial year 2015 have been adopted;

 

(b)                       an amount of EUR 2,700,000 (in words: two million seven hundred thousand euro) within five (5) Business Days after the Annual Accounts in respect of the financial year 2016 have been adopted;

 

(c)                        an amount of EUR 2,700,000 (in words: two million seven hundred thousand euro) within five (5) Business Days after the Annual Accounts in respect of the financial year 2017 have been adopted;

 

(d)                       an amount of EUR 2,700,000 (in words: two million seven hundred thousand euro) within five (5) Business Days after the Annual Accounts in respect of the financial year 2018 have been adopted;

 

(e)                        an initial amount of EUR 2,700,000 (in words: two million seven hundred thousand euro), which shall be reduced by an amount equal to the Estimated Base Purchase Price Adjustment, in accordance with the provisions of Clause 3.3.2, and adjusted by an amount equal to the Difference (if any), in accordance with the provisions of Clause 3.3.10, within five (5) Business Days after the Annual Accounts in respect of the financial year 2019 have been adopted.

 

The Parties hereby acknowledge and agree that the Preferred Payment and the Installments as set out in this Clause 4.2 shall, to the extent possible, be set off against the dividend distributions on the Prefs B, all as further set out in Clause 4.5(a).

 

4.3                                        The Preferred Payment will be paid to the Sellers, on the terms and subject to the conditions of this Clause 4, in the following order:

 

(i)                           fifty per cent. (50%) of the Preferred Payment shall be paid to Lewis and shall be considered to be a payment in respect of the Shares 1;

 

(ii)                        fifty per cent. (50%) of the Preferred Payment shall be paid to Hardenberg and shall be considered to be a payment in respect of the Shares 2.

 

4.4                                        Parties acknowledge that the Estimated Balance Sheet as at the Balance Sheet Date includes a EUR 1,564,000 (in words: one million and five hundred and sixty four

 

10

 

thousand euro) dividend payable to the Sellers (the Dividend Payable). In the event the Company has distributed dividends up to an amount equal to the Threshold (as defined in the SHA) to the Sellers, the Parties shall procure that the Company shall distribute 100 eurocents of every euro of declared dividend up to an amount of the Dividend Payable to the Sellers subject to (i) the Prefs A and B having been cancelled; (ii) the Company having sufficient funds available to pay the Dividend Payable to the Sellers as well as to pay its debts relating to the one year period after such distribution; and (iii) such distribution being permitted under the DCC and the Articles of Association. On the Completion Date the general meeting of shareholders of the Company shall resolve to distribute the Dividend Payable on a date after the date of payment of the final Installment of the Preferred Payment.

 

4.5                                        Each Installment shall be paid to the Sellers as follows:

 

(a)                       to the extent possible, the Parties shall procure that an Installment shall be paid in full through the distribution of dividends by the Company on the Prefs B in the corresponding financial year; and

 

(b)                       to the extent an Installment cannot be paid in full in accordance with the provisions of sub (a), the Sellers and the Purchaser shall inform each other and the Company thereof in writing by way of a notice stating the deficit (the Deficit, i.e. the remainder of the Installment that is still outstanding pursuant to the Installment not having been paid out in full pursuant to Clause 4.5(a)), (such notice, the Deficit Notice). Within ten (10) Business Days of receipt of the Deficit Notice the Purchaser and the Sellers shall inform each other in writing whether they agree or dispute the Deficit as set out in the Deficit Notice. In the event of a dispute of the Deficit as set out in the Deficit Notice, the provisions of Clause 3.3.4 up through and including Clause 3.3.7 shall apply mutatis mutandis. In the event the Sellers and the Purchaser agree to the Deficit as set out in the Deficit Notice or in the event of a dispute, immediately after the Deficit has been established in accordance with Clause 3.3.4 up through and including Clause 3.3.7, such Deficit shall subsequently be paid by the Purchaser to the Sellers in cash within ten (10) Business Days after respectively the Sellers and Purchaser have agreed on the Deficit or the Deficit has been established in accordance with Clause 3.3.4 up through and including Clause 3.3.7.

 

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4.6                                        Additionally, the Parties hereby acknowledge and agree that:

 

(a)                       if the aggregate amount of dividends distributed on the Prefs B in any given financial year exceeds the amount of the corresponding Installment for such financial year, the amount of the excess (the Excess Payment) shall, after distribution thereof on the Prefs B, be credited to future Installments in chronological order, unless such (part of an) Excess Payment is used to acquire any Deficit Shares in accordance with the provisions of Clause 4.7. For the avoidance of doubt, an Excess Payment in any given financial year shall act as a credit against future Deficits, so that any Deficit payments to be paid to the Sellers will be decreased by the Excess Payment; and

 

(b)                       they shall procure that, as soon as possible after the Preferred Payment has been paid in full in accordance with this Clause 4, but in any case within five (5) Business Days, the Prefs A and the Prefs B shall be cancelled without any further consideration due, all as further set out in the Shareholders’ Agreement.

 

4.7                                        Notwithstanding the provisions of Clause 4.6, to the extent that Deficit Shares have been issued and to the extent that there is an Excess Payment, the Purchaser shall (also) have the right to use such Excess Payment to procure that a certain number of Deficit Shares held by the Sellers will be repurchased by the Company against payment of such Excess Payment with the aim of restoring the Purchaser as holder of fifty per cent. (50%) of the Ordinary Shares. In the event the amount of the Excess Payment is equal to or exceeds the amount of the Deficit, as adjusted from time to time, plus any interest accrued thereon in accordance with Clause 4.9, the number of Deficit Shares to be repurchased by the Company from the Sellers (on a pro rata basis) shall be equal to such number of Ordinary Shares A that is required for the Purchaser to hold fifty per cent. (50%) of the Ordinary Shares. To the extent the Excess Payment exceeds the Deficit plus any interest accrued thereon in accordance with Clause 4.9, and thus all of the Deficit Shares outstanding are repurchased by the Company, such excess shall then be allocated in accordance with the provisions of Clause 4.6. In the event the Excess Payment does not exceed the amount of the Deficit, as adjusted from time to time, the number of Deficit Shares to be repurchased by the Company from the Sellers in accordance with this Clause 4.7 shall be determined in accordance with the following formula:

 

Deficit Shares to be repurchased by the Company = (Excess Payment /aggregate amount of Deficit) x total number of Deficit Shares issued

 

For example, in a certain financial year there was a Deficit of EUR 1,000,000, and 73,333 Deficit Shares have been issued to the Sellers in accordance with Clause 6. In the financial year following such year, there is an Excess Payment of EUR 500,000. The Company shall than repurchase (EUR 500,000 / EUR 1,000,000) x 73,333 = 36,666 Deficit Shares from the Sellers.

 

Each of the Parties hereby undertakes to provide all necessary cooperation for the repurchasing of Deficit Shares by the Company from the Sellers in accordance with the provisions of this Clause 4.7.

 

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4.8                                        In order to give full effect to this Clause 4, the Purchaser, each of the Sellers and the Company shall use its best efforts to procure that in each year, to the extent prudent and permitted by law, the Articles of Association, and any financing arrangements of the Company, the Company shall declare all of its distributable profits as dividend (i.e. the Purchaser and the Sellers shall so resolve in their capacity as shareholders of the Company and the Company shall cooperate to such distribution, all as set forth in clause 2.3 of the Shareholders’ Agreement), all in the manner as further set out in the Shareholders’ Agreement.

 

4.9                                        In the event the Purchaser defaults on a due and payable payment obligation in relation to a Deficit, the amount of such Deficit shall accrue interest, in accordance with Clause 25.2.

 

5                                                  DIVERSION OF SFX TOURING BUSINESS

 

5.1                                        The Purchaser and the Parent hereby agree, so long as the Purchaser or Parent holds at least twenty-five per cent. (25%) of the Ordinary Shares, to divert any future SFX Touring Business to the Company as a share premium contribution on the Ordinary Shares held by the Purchaser after Completion if and when the artist and/or tour manager/owner is willing to divert to the Company and the Company is willing to accept such SFX Touring Business.

 

6                                                  SECURITY

 

6.1                                        Subject to the provisions of this Clause 6, the Parent hereby guarantees the obligations of the Purchaser (i) to pay the Preferred Payment and (ii) to perform its obligations under Clauses 7 and/or 10.

 

6.2                                        In the event the Purchaser has not, or has not fully, complied with its obligations to pay the Deficit pursuant to Clause 4.5(b), the Sellers and the Purchaser shall inform each other, the Company and the Parent thereof in writing by way of a notice stating the Deficit (the Parent Deficit Notice). Upon receipt of the Parent Deficit Notice, the Parent shall be obliged to pay the Deficit to the Sellers within fifteen (15) Business Days thereafter. In the event the Parent defaults on its obligation to (fully) pay the Deficit, the Sellers shall be entitled to request the Company to issue to the Sellers on a pro rata basis a certain number of Ordinary Shares A, at a price per Ordinary Share A equal to the nominal value, which shall cause a dilution in the percentage of Ordinary Shares held by the Purchaser (the Deficit Shares). The percentage by which Purchaser’s Ordinary Shares are diluted (the Purchaser Dilution Percentage) shall represent the differential between Purchaser’s and Sellers’ new respective percentage ownership of Ordinary Shares. The Purchaser Dilution Percentage and the number of Deficit Shares to be issued to Sellers shall be determined in accordance with the formulae and examples as set out below and as further set out in Annex 6.2:

 

Purchaser Dilution Percentage = (Deficit / EUR 25,000,000) x 100%

 

For example, if the Deficit is equal to an amount of EUR 1,000,000, the Purchaser Dilution Percentage shall be: EUR 1,000,000 / EUR 25,000,000 x 100% = 4%. The Sellers shall be entitled to a number of Deficit Shares to increase their percentage Ordinary Shares to 52%, and

 

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Purchaser’s percentage of Ordinary Shares thus will be diluted to 48%, reflecting a 4% differential.

 

After having calculated the Purchaser Dilution Percentage, the number of Deficit Shares to be issued to the Sellers on a pro rata basis and the new number of Ordinary Shares outstanding shall be determined in accordance with the formulae as set out in Annex 6.2 and as explained in the below example:

 

For example, if the Purchaser Dilution Percentage is 4%, a number of Deficit Shares shall be issued to Sellers in order to dilute Purchaser’s percentage of Ordinary Shares down to 48%. Purchaser’s number of Ordinary Shares, i.e. 880,000, does not change, so the Company must issue a number of shares such that 880,000 Ordinary Shares will equate to 48% of the total number of outstanding Ordinary Shares, or 1,833,333 Ordinary Shares. From the new number of total Ordinary Shares (1,833,333), the Sellers’ new number of Ordinary Shares (953,333) and number of Deficit Shares to be issued (73,333) can be calculated.

 

The Sellers and the Purchaser hereby agree to use all their voting and other rights to procure that the Company shall issue to the Sellers the Deficit Shares as referred to in this Clause 6.2.

 

6.3                                        In the event Deficit Shares have been issued, such Deficit shall not accrue any interest except in the event such Deficit Shares are being repurchased by the Company pursuant to Clauses 4.7 and/or 6.4 in which event interest shall accrue in accordance with the provisions of Clauses 4.9.

 

6.4                                        Within a one (1) year period from the date of the issuance of any Deficit Shares, the Purchaser shall be entitled to procure that the Company shall repurchase a number of Ordinary Shares A from the Sellers (on a pro rata basis) without any consideration being due equal to such number of Ordinary Shares A that is required for the Purchaser to hold fifty per cent. (50%) of the Ordinary Shares against payment by the Purchaser to the Sellers of an amount equal to the amount of the Deficit in relation to which such Deficit Shares have been issued including any interest accrued thereon in accordance with Clause 4.9. For the avoidance of doubt, an Excess Payment in the subsequent year may be used to procure that the Company repurchases any Ordinary Shares A, all in accordance with Clause 4.7.

 

Each of the Parties hereby undertakes to provide all necessary cooperation for the repurchasing of Ordinary Shares A by the Company from the Sellers in accordance with the provisions of Clauses 4.7 and 6.4.

 

6.5                                        In the event the Purchaser is in default with its financial obligations pursuant to Clauses 7 and/or 10, the Sellers and the Purchaser shall inform each other and the Company thereof in writing by way of a notice stating the deficit (the Put Deficit, being an amount equal to the remainder of any amounts still outstanding as a result of the Purchaser not having complied in full with its obligations pursuant to Clauses 7 and/or 10). The procedure contained in Clauses 4.7, 6.2 and 6.4 shall apply mutatis mutandis to the Put Deficit.

 

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7                                                  PURCHASE AND SALE PUT CONSIDERATION SHARES

 

7.1.1                              CS Put Option

 

The Parties hereby agree that the Sellers shall have the right, but not the obligation, to oblige the Purchaser to acquire up to a certain number of Consideration Shares, which number shall be equal to 1,800,000 (one million eight hundred thousand) minus the number of CS Call Option Shares (if any), at the CS Put Option Price (the CS Put Option), subject to the terms and conditions as set out in this Clause 7.

 

7.1.2                              CS Put Option Period

 

7.1.2.1                    The Sellers may exercise the CS Put Option, subject to the terms and conditions as set out in this Clause 7, at any time in the period starting on the date that is twelve (12) months after Completion and ending on the date that is thirteen (13) months after Completion (the CS Put Option Period). For the avoidance of doubt, the CS Put Option terminates if not exercised by the date that is thirteen (13) months after Completion.

 

7.1.2.2                    The CS Put Option may be exercised by the Sellers, subject to the terms and conditions as set out in this Clause 7, by sending the Purchaser a notice within the CS Put Option Period confirming the exercise of the CS Put Option and stating the number of Consideration Shares it wishes the Purchaser to acquire (such number of shares the CS Put Option Shares, and such notice the CS Put Option Notice). The CS Put Option may be exercised only once.

 

7.1.3                              Price per Put Consideration Share

 

7.1.3.1                    Parties acknowledge and agree that the purchase price per CS Put Option Share shall be equal to an amount of USD 5.56 (in words: five United States Dollars and fifty six United States Dollar cents) per Consideration Share (the CS Put Option Price).

 

7.1.3.2                    In the event the Sellers exercise the CS Put Option and to the extent the Consideration Share Market Price is lower than USD 5.56 (in words: five United States Dollars and fifty six United States Dollar cents) the Purchaser shall be entitled to require the Sellers to sell the CS Put Option Shares on the Stock Market against a price at which the CS Put Option Shares are traded on the Stock Market on the date(s) of such sale (the Consideration Share Market Price). In such event, within forty-five (45) Business Days after receipt of the CS Put Option Notice, the Purchaser shall be obliged to pay to the Sellers the difference between the aggregate Consideration Share Market Price at which the CS Put Option Shares have been sold by the Sellers on the Stock Market, which aggregate Consideration Share Market Price actually received by the Sellers shall be sufficiently evidenced in writing by the Sellers to the Purchaser, and an amount equal to USD 5.56 (in words: five United States Dollars and fifty six United States Dollar cents) per Consideration Share multiplied by the number of CS Put Option Shares which were sold on the Stock Market in accordance with this Clause 7.1.3.2.

 

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7.1.4                              Put Option Mechanism

 

7.1.5                              In the event the Sellers exercise the CS Put Option and to the extent the CS Put Option Shares are not sold on the market in accordance with Clause 7.1.3.2, the Purchaser shall be obliged to purchase and accept from the Sellers and the Sellers shall be obliged to sell and transfer the CS Put Option Shares to the Purchaser at a price per Consideration Share equal to the CS Put Option Price within forty-five (45) Business Days after receipt of the CS Put Option Notice, subject to the terms and conditions of this Agreement.

 

8                                                  CALL OPTION: CONSIDERATION SHARES

 

8.1.1                              Call Option Consideration Shares

 

The Parties hereby agree that the Purchaser shall have the right, but not the obligation, to oblige the Sellers to sell to it up to 1,000,000 (one million) Consideration Shares against the CS Call Option Price (such call option, the CS Call Option), subject to the terms and conditions as set out in this Clause 8.

 

8.1.2                              CS Call Option Period

 

8.1.2.1                    The Purchaser may exercise the CS Call Option, subject to the terms and conditions as set out in this Clause 8, at any time in the period starting upon Completion and ending on the date that is six (6) months after Completion (the CS Call Option Period). For the avoidance of doubt, the CS Call Option terminates if not exercised by the date that is six (6) months after Completion.

 

8.1.2.2                    The CS Call Option may be exercised by the Purchaser, subject to the terms and conditions as set out in this Clause 8, by sending the Sellers a notice within the CS Call Option Period confirming the exercise of the CS Call Option and stating the number of Consideration Shares the Purchaser wishes to acquire (such number of shares the CS Call Option Shares, and such notice the CS Call Option Notice). The CS Call Option may be exercised only once.

 

8.1.3                              Price per CS Call Option Share

 

8.1.3.1                    Parties acknowledge and agree that the purchase price per CS Call Option Share shall be equal to an amount of USD 7.50 (in words: seven United States Dollars and fifty United States Dollar cents) per Consideration Share (the CS Call Option Price).

 

8.1.4                              CS Call Option Mechanism

 

8.1.4.1                    In the event the Purchaser exercises the CS Call Option, the Purchaser shall be obliged to purchase and accept from the Sellers and the Sellers shall be obliged to sell and transfer the CS Call Option Shares to the Purchaser at a price per Consideration Share equal to the CS Call Option Price within forty-five (45) Business Days after receipt of the CS Call Option Notice, subject to the terms and conditions of this Agreement.

 

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9                                                  RIGHT OF FIRST REFUSAL CONSIDERATION SHARES

 

9.1.1                              In the event the Sellers, subject to the provisions of Clause 23, wish to sell up to one hundred per cent. (100%) of the Consideration Shares held by them on the Stock Market, at any time in the period starting on the date that is six (6) months after Completion and ending on the date that is twelve (12) months after Completion (the CS Offer Period), the Sellers are obliged to give written notice to the Purchaser of such intention and the number of Consideration Shares they intend to sell (such number of Consideration Shares the, CS Offer Shares and such notice, the CS Offer Notice).

 

9.1.2                              The Parties hereby agree that the Purchaser upon receipt of the CS Offer Notice shall have the right, but not the obligation, to oblige the Sellers to sell the CS Offer Shares to the Purchaser against the CS Offer Price (such right , the CS ROFR), subject to the terms and conditions as set out in this Clause 9. For the avoidance of doubt, the CS ROFR terminates if not exercised within the CS Offer Period.

 

9.1.3                              The Purchaser shall have the right, but not the obligation, to acquire the CS Offer Shares from the Sellers, within ten (10) Business Days of receipt of the CS Offer Notice by giving written notice thereof to the Sellers, at a price per CS Offer Share equal to the volume weighted average share price at the closing of trade of the Parent Common Stock on the Stock Market on the date of the CS Offer Notice (the CS Offer Price). Within ten (10) Business Days upon receipt of such notice by the Sellers, the Purchaser shall be obliged to purchase and accept from the Sellers and the Sellers shall be obliged to sell and transfer the CS Offer Shares against the CS Offer Price.

 

10                                           PURCHASE AND SALE PUT SHARES

 

10.1                                 Put Option

 

10.1.1                       The Parties hereby agree that the Sellers shall have the right, but not the obligation, to oblige the Purchaser to acquire all the Put Shares against the Put Purchase Price as set out in Clause 10.2.1 (the Put Option).

 

10.1.2                       In the event the Sellers exercise the Put Option, the Purchaser shall be obliged to purchase and accept from the Sellers and the Sellers shall be obliged to sell and transfer the Put Shares to the Purchaser at the Put Purchase Price within forty-five (45) Business Days after receipt of the Put Notice, subject to the terms and conditions of this Agreement, including the Sellers’ Warranties as set out in Annex 13.1.

 

10.2                                 Period and formula

 

10.2.1                      The Sellers may exercise the Put Option (i) in the event of a change of Control in the Parent (for the avoidance of doubt, the Sellers are not entitled to exercise the Put Option in the event that Mr. R. Sillerman and/or any entities Controlled by him acquire Control over the Parent), subject to the terms and conditions of Clause 10.2.4, and (ii) at any time in the period which starts at the date that the 2019 Accounts have been adopted by the general meeting of shareholders of the Company and which ends one month thereafter (the Put Option Period).

 

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10.2.2                       In the event that the Sellers exercise the Put Option during the Put Option Period the Put Purchase Price shall be calculated as follows:

 

(6.2 * 2019 EBITDA) * x, whereby

 

x means Put Shares divided by Ordinary Shares

 

10.2.3                       In the event that the Sellers exercise the Put Option pursuant to a change of Control in the Parent, subject to the terms and conditions of Clause 10.2.4, (for the avoidance of doubt, the Sellers are not entitled to exercise the Put Option in the event that Mr. R. Sillerman and/or any entities Controlled by him acquire Control over the Parent), the purchase price for the Put Shares (the Put Purchase Price) shall unless otherwise agreed upon in writing between the Parties, be calculated as follows:(x * LTM EBITDA) * y, whereby:

 

x means the higher of 6.2 and the multiple used in calculating the purchase price in the context of the relevant change of Control in the Parent (for the avoidance of doubt, the Sellers are not entitled to exercise the Put Option in the event that Mr. R. Sillerman and/or any entities Controlled by him acquire Control over the Parent); and

 

y means Put Shares divided by Ordinary Shares

 

10.2.4                       In the event of an envisaged change of Control in the Parent the Purchaser shall give the Sellers at least twenty (20) Business Days prior written notice thereof. Within twenty (20) Business Days upon receipt of such written notice the Sellers may exercise the Put Option, subject to the change of Control in the Parent actually having occurred, by sending the Purchaser a written notice confirming the exercise of the Put Option (the Put Notice).

 

10.2.5                       In the event the Sellers wish to exercise the Put Option during the Put Option Period (other than in relation to a Change of Control in the Parent), the Sellers may exercise the Put Option by sending the Purchaser the Put Notice.

 

10.2.6                       The Put Option may be exercised only once and in full.

 

10.2.7                       For the avoidance of doubt, the provisions of this Clause 10, to the extent they relate to a change of Control in the Parent, shall survive in the event that Mr. R. Sillerman and/or any entities Controlled by him acquire Control over the Parent.

 

11                                           LEAKAGE AND ADDITIONAL LEAKAGE

 

11.1                                 Leakage

 

11.1.1                       The Sellers warrant and undertake to the Purchaser that since the Effective Date up to and including the Completion Date there neither has been nor will be any Leakage.

 

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11.1.2                       In the event of any breach of Clause 11.1.1 the Sellers shall compensate the Purchaser, on a euro for euro basis, the Total Leakage Amount in accordance with the provisions of Clause 25.3.

 

11.2                                 Leakage Notice

 

11.2.1                       The Sellers shall notify the Purchaser in writing (the Leakage Notice) of the Leakage Amount in relation to the period prior to Completion no later than 90 days after Completion.

 

11.3                                 Procedure for Additional Leakage

 

11.3.1                       If the Purchaser identifies any Additional Leakage within twelve (12) months after Completion, then the Purchaser shall at any time be entitled to deliver within this twelve (12) months period, a written notice to the Sellers, setting out any such Additional Leakage identified together with reasonable evidence thereof and, to the extent reasonably possible, a calculation of the Leakage Amount relating to such additional Leakage (the Additional Leakage Amount).

 

11.3.2                       If the Sellers and the Purchaser do not agree on the Additional Leakage Amount within twenty (20) Business Days of receipt of the written notice from the Purchaser by the Sellers, as referred to in Clause 11.3.1, then the Additional Leakage Amount shall be determined by the Expert and the Lawyer in accordance with the provisions of Clause 11.3.3 and 11.3.4.

 

11.3.3                       If the Sellers and Purchaser fail so to agree within the said twenty (20) Business Days period, either the Sellers or the Purchaser may refer any dispute for resolution to an Expert. The Expert shall be instructed to render its opinion as soon as practicable and in any event within twenty (20) Business Days after the date of the engagement letter pursuant to which the Expert is formally instructed to render its opinion. At the reasonable request of the Sellers and/or the Purchaser, the Expert shall appoint on behalf of the Parties a lawyer of a reputable Dutch law firm, or a similar person who has the legal background and experience (Lawyer) to decide on a dispute as referred herein, as an expert (bindend adviseur) to decide only on the following legal matters in connection with the determination of the Additional Leakage Amount in accordance with this Clause: (i) the explanation of the intention of the Parties when entering into this Agreement and/or (ii) the explanation of (certain provisions and/or definitions of) this Agreement. As from such appointment, the Expert and the Lawyer shall jointly render their decision, provided however that the Lawyer will only decide on the legal matters and the Expert will decide on the financial and accounting matters.

 

11.3.4                       In making its determination the Expert and the Lawyer, if appointed, shall act as an expert and not as an arbitrator and the decision of the Expert and the Lawyer, if appointed, shall (in the absence of manifest error) be final and binding on the Parties (bindend advies). The expenses of the Expert and the Lawyer, if appointed, shall be borne by one or more of the Sellers and Purchaser in such equitable proportions as the Expert shall direct, taking into account the amount in dispute, the character of the dispute and the prevailing party in the dispute.

 

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12                                           COMPLETION

 

12.1                                 Date and Place

 

Subject to the terms and conditions of this Agreement, completion of the actions as set out in this Clause 12 shall be referred to as Completion and shall take place on the Completion Date at the offices of Loyens & Loeff N.V. at Fred. Roeskestraat 100, 1076 ED Amsterdam, the Netherlands.

 

12.2                                 Payment of the Consideration Payment

 

The Purchaser shall procure that the Consideration Payment shall have been paid in cash, in immediately available funds and with value on the Completion Date, by or on behalf of the Purchaser by wire transfer to the Notary Account under the reference “Alda Consideration Payment 70096150” by no later than 10h00 on the Completion Date. Such amount shall be held by the Notary in the Notary Account for and on behalf of the Purchaser, until the Deed of Transfer has been duly executed, and for and on behalf of the Sellers immediately following such execution of the Deed of Transfer.

 

12.3                                 Completion Actions

 

On the Completion Date but after the payment of the Consideration Payment in accordance with Clause 12.2, the following actions will be taken, each such action being conditional upon all actions having occurred in the sequence set out below:

 

Prior to Completion:

 

(a)                       the Sellers shall deliver evidence that the capital structure of the Company has been amended, inter alia by amending the Articles of Association in the agreed form attached hereto as Annex 12.3;

 

(b)                       the Sellers shall deliver to SFX an estimated balance sheet as per the Completion Date;

 

(c)                        the Sellers shall deliver to the Notary the shareholders register of the Company which reflects the Sellers as the owner of the Shares without any Encumbrances;

 

(d)                       the Sellers shall deliver to the Purchaser the written resignation of the sole member of the management board of the Company from its office as a member of the management board, with effect as of immediately after Completion in acknowledging that it relinquishes any rights that it may have under any contract of employment with the Company or under any statutory provision including any right to damages for wrongful dismissal, redundancy payment or compensation for loss of office or unfair dismissal;

 

(e)                        the Sellers shall pass a written shareholders’ resolution of the Company (i) accepting the resignation of and giving full discharge (décharge) to the resigning management board member and (ii) appointing Mr A. Hardenberg and

 

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Mr D. Lewis as members of the management board of the Company all with effect as of immediately after Completion;

 

(f)                         the Sellers shall deliver to the Purchaser a written statement that, with effect as of Completion (i) all indebtedness owed to any of the Group Companies by either any of the Sellers or any Related Person of the Sellers, as applicable and (ii) all indebtedness owed by any of the Group Companies to either any of the Sellers or any Related Person of the Sellers, as applicable, has been fully paid, except with regard to any (x) indebtedness owed to or by David Lewis Production B.V. and/or its affiliates in the ordinary course of business, (y) indebtedness up to a total amount of EUR 25,000 (in words: twenty-five thousand euro) per Seller and / or (z) indebtedness as expressly provided otherwise in this Agreement;

 

(g)                        the Sellers shall deliver to the Notary powers of attorney duly executed on behalf of each of the Sellers and the Company, respectively, and the Purchaser shall deliver to the Notary a power of attorney duly executed on behalf of the Purchaser, authorized its representative to attend to and to execute the Deed of Transfer;

 

(h)                       the Sellers shall deliver to the Purchaser the executed copies of the Management Agreements;

 

(i)                           the Sellers shall deliver to the Purchaser the Disclosure Letter;

 

(j)                          the Sellers shall deliver to the Purchaser a written confirmation that Dennis de Bruin and Pierre Bonenkamp have entered into an addendum to their employment agreement after Completion, including proper intellectual property-, non-solicitation and relationship clauses;

 

(k)                       the Sellers shall provide the Purchaser with a draft budget for the financial year 2015; and

 

(l)                           the general meeting of shareholders of each of the Sellers has approved the Transaction;

 

At Completion:

 

(m)                   the Parties shall enter into the Shareholders’ Agreement;

 

(n)                       the Shares shall be transferred by the Sellers to the Purchaser by means of the execution of the Deed of Transfer;

 

(o)                       the Sellers and the Parent shall enter into the Lock-Up Agreement; and

 

(p)                       the Purchaser shall procure that the Parent shall issue the Consideration Shares to the Sellers and shall deliver to the Sellers one or more stock certificates representing the Consideration Shares;

 

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Immediately following Completion:

 

(q)                       the Notary shall hold the Consideration Payment for and on behalf of the Sellers and shall transfer the Consideration Payment to the Sellers’ Account in accordance with the instructions of the Sellers;

 

(r)                         the Purchaser and the Sellers shall pass a written shareholders’ resolution of the Company to grant the management board of the Company the authority to issue Deficit Shares in accordance with Clause 6.2;

 

(s)                         the Purchaser and the Sellers shall pass a written shareholders’ resolution of the Company to appoint Mr Willem Bosman, Mr Richard Rosenstein and Mr Ritty van Straalen as members of the supervisory board of the Company with effect as of immediately after Completion; and

 

(t)                         the Parties shall execute all other documents and instruments necessary to complete the Transaction.

 

Payment of the Consideration Payment in accordance with Clause 12.2 and issuance of the Consideration Shares in accordance with Clause 12.3(p) shall discharge the Purchaser in respect of the payment of the Initial Purchase Price.

 

13                                           WARRANTIES

 

13.1                                 Sellers’ Warranties

 

Each of the Sellers hereby represents and warrants to the Purchaser that, except as (i) Fairly Disclosed in the Disclosed Information, and/or (ii) specifically and unambiguously disclosed in the Disclosure Letter, each of the warranties included in Annex 13.1 (the Sellers’ Warranties) is true and not misleading on the Completion Date.

 

13.2                                 Sellers’ knowledge

 

Any statement in this Agreement which refers to the knowledge, information, belief or awareness of the Sellers — including the expressions ‘to the Sellers’ best knowledge’ and ‘known to the Sellers’ and/or any similar expression —, shall be deemed to comprise such knowledge, information or awareness that any of the Sellers and/or the board of managing directors (bestuur) of the Sellers, if any, actually (feitelijk) have, or are deemed to have after having made reasonable and detailed inquiries with the board of managing directors and the relevant Employees of the Group Companies and Sellers. For the avoidance of doubt: the actual or deemed knowledge of any of the Sellers is also attributed in full to the other Seller irrespective of whether the other Seller did have actual or deemed knowledge.

 

13.3                                 Each Sellers’ Warranty separate

 

Each of the Sellers’ Warranties shall be construed as a separate warranty and shall not be limited or restricted, whether expressly or by reference to or inference from the terms of any other Sellers’ Warranties or by any other provision of this Agreement and where a fact or circumstance would entitle the Purchaser to make a claim in respect of more than one Sellers’ Warranty or both a Sellers’ Warranty and an indemnity set out

 

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in Clause 16 or 17, it shall be the sole discretion of the Purchaser to determine the provisions under which it makes a claim.

 

13.4                                 Disclosure

 

Disclosures against any of the Sellers’ Warranties shall only be deemed disclosures against any other Sellers’ Warranty if the Purchaser should be reasonably aware that such disclosure also relates to such other Sellers’ Warranty.

 

13.5                                 Due Diligence Investigation

 

The Purchaser acknowledges and agrees that:

 

(a)                       it has performed, with the assistance of professional advisers, a due diligence investigation with respect to the financial, legal, operational, commercial, IP and tax aspects of the Company during the period 25 February 2014 until 12 March 2014 and from 7 July 2014 until 5 August 2014 on the basis of the information provided by the Sellers and certain of their advisers (the Due Diligence Investigation); and

 

(b)                       for the purposes of the Due Diligence Investigation the Purchaser has had (and its advisers have had) sufficient opportunity to review any and all information made available to the Purchaser and its advisers, by having had, amongst others, (i) access to the Data Room for the purposes of reviewing information about the financial, legal, operational, commercial, IP and tax aspects of the Company provided in the Data Room prepared by the Sellers, (ii) the opportunity to submit questions to and receive answers from the Sellers on any matter that it deemed proper and necessary and inter alia on the basis hereof the Purchaser has decided to enter into this Agreement.

 

13.6                                 Purchaser’s Warranties

 

The Purchaser hereby warrants to the Sellers that each of the statements included in Annex 13.6 is true and not misleading on the Completion Date (the Purchaser’s Warranties).

 

14                                           BREACH

 

14.1                                 Breach by any of the Sellers

 

14.1.1                       Subject to the provisions of Clause 15, in the event of a Warranty Breach, the Sellers shall be liable and compensate the relevant Group Company or, at the request of the Purchaser, the Purchaser for the Damages suffered by the Purchaser and/or any of its Affiliates (inclusive the Group Companies after Completion) resulting from in connection with, or attributable to such Warranty Breach. In the event of a breach of any of the Warranties referred to in Paragraph 4 (Shares; Subsidiary Shares) of Annex 13.1, the Purchaser shall be entitled to claim specific performance instead of compensation for Damages. Damages shall be paid by the Sellers to the Company save for in the event the Damages are suffered at the level of the Purchaser only in which event the Damages shall be paid to the Purchaser.

 

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14.2                                 Notification of claims

 

The Purchaser shall as soon as reasonable possible after being notified or becoming aware of any fact, circumstance or event which has led or may lead to a breach of any of the Seller’s Warranties (a Warranty Breach), inform the Sellers thereof in writing stating, to the extent reasonably possible, the facts, circumstances or events that have led or may lead to a Warranty Breach and a reasonable estimate of the Damages suffered or reasonably expected to be suffered. Such a notification given within such period shall be considered a notification within the meaning of article 7:23(1) DCC.

 

14.3                                 Third party claims

 

14.3.1                       Subject to Clause 19.1, the Purchaser or the Company shall give written notice to the Sellers of claims of any third party resulting in or relating to a Warranty Breach as soon as possible after becoming aware thereof. The Parties shall consult with each other on the course of action to be taken in respect of such claim. The Sellers and Purchaser shall procure that the Company shall take the action (or refrain from taking action) so agreed between the Parties. If the Parties do not agree on the course of action to be taken, the Purchaser shall, at its sole discretion, be entitled to take, or procure that the relevant Group Company takes, any action necessary to defend the third party claim, and to avoid, dispute, defend, appeal, compromise or settle the claim in any manner that the Purchaser deems appropriate. The Purchaser shall use reasonable endeavours to strike a fair balance between the interests of the Sellers, the Purchaser and the Group Companies.

 

14.3.2                       The Parties will cooperate with each other in dealing with any third party claim and will allow each other access to all relevant books and records during normal business hours and at the place where the same are normally kept, with full right to make copies thereof or take extracts there from. Such books and records shall be subject to a duty of confidentiality except for disclosure necessary for resolving such third party claim or otherwise required by Applicable Laws or stock exchange rules.

 

14.4                                 Claim related documents

 

Each of the Sellers shall maintain and shall procure that each of its Affiliates shall maintain, post Completion, in good order all relevant documents, data and information relating to (i) any Warranty Breach or possible Warranty Breach, and (ii) any of the indemnities set out in Clause 16 and 17.

 

15                                           LIMITATION OF LIABILITY

 

15.1                                 Maximum liability

 

15.1.1                       Except as provided for in Clause 15.3, the total liability of the Sellers in respect of a Warranty Breach shall not exceed an amount equal to EUR 10,000,000 (in words: ten million euros).

 

15.1.2                       Except as provided in Clause 10 and Clause 21 the overall liability of the Sellers under the Agreement shall in no event exceed an amount equal to the Consideration

 

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Payment plus the Preferred Payment and the value of the Consideration Shares calculated in accordance with Clause 25.4.1.

 

15.2                                 Minimum (aggregate) claims

 

Except as provided for in paragraph (b) below the Sellers shall not be liable in respect of a Warranty Breach:

 

(a)                       unless the amount of Damages with respect to any single claim or series of related claims exceeds EUR 75,000 (in words: seventy-five thousand euro); and

 

(b)                       unless the amount of Damages with respect to all claims payable as referred to in paragraph (a) above exceeds EUR 225,000 (in words: two hundred twenty-five thousand euro), in which case the full amount shall be payable and not merely the excess.

 

15.3                                 No limitation of Sellers’ liability

 

15.3.1                       The Parties agree that the limitations set out in Clause 15.1.1 and 15.2 shall not apply in respect of claims for Damages resulting from, in connection with or attributable to:

 

(a)                       a Warranty Breach in respect of paragraph 1 (General), paragraph 2 (Group Companies), paragraph 4 (Shares; Subsidiary Shares) and paragraph 10 (Taxes) contained in Annex 13.1;

 

(a)                       an indemnity under Clause 16 and/or 17;

 

(b)                       any breach in relation to Clause 11; and

 

(c)                        fraudulent conduct of any of the Sellers or any of their Representatives.

 

15.4                                 Time limitation

 

15.4.1                       The liability of the Sellers in respect of a Warranty Breach shall continue:

 

(a)                       until the lapse of the statutory time limit period applicable for giving notification with respect to the Sellers’ Warranties in paragraph 1 (General), paragraph 2 (Group Companies) and paragraph 4 (Shares; Subsidiary Shares) contained in Annex 13.1;

 

(b)                       until the date that is sixty (60) Business Days after the last day on which a Tax Authority can claim the underlying Tax from the Group Companies with respect to the Sellers’ Warranties in paragraph 10 (Taxes) contained in Annex 13.1; and

 

(c)                        until eighteen (18) months as of the Completion Date with respect to all other claims for a Warranty Breach.

 

The above shall apply instead of section 7:23(2) of the DCC.

 

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15.5                                 Reduction of liability

 

In calculating the liability of the Sellers in respect of any Warranty Breach, such liability shall be reduced by:

 

(a)                       any amount recovered or reasonably certain to be recovered from any third parties including insurers in respect of such claim or the event or circumstance giving rise to such claim;

 

(b)                       the amount of any provision in the Final Interim Accounts specifically allocated to the event or circumstance giving rise to the claim; or

 

(c)                        any amount of Tax saving or refund actually enjoyed or received or reasonably certain to be enjoyed or received by the Purchaser and/or any of the Group Companies related to the event or circumstance giving rise to such claim.

 

15.6                                 Exclusions

 

The Sellers shall not be liable in respect of a Warranty Breach if and to the extent that it arises from a liability or obligation on the part of the Company and/or any of the Group Companies:

 

(a)                       if there had been no Warranty Breach but for any change in applicable legislation coming into effect after the Completion Date;

 

(b)                       which would not have arisen but for a change after the Completion Date in the accounting bases on which the Company and/or any of the Group Companies values its Assets or a change in the tax structure or corporate structure of the Group, or a wilful change in the conduct of business;

 

(c)                        which arises as a result of any change after the Completion Date of the date to which the Group makes up its statutory accounts or in the bases, methods or policies of accounting of the Group other than a change which is reported by the auditors of the Group to be necessary in their opinion because such bases, methods or policies of accounting as at the Completion Date are not in accordance with any published accounting practice or principle then current;

 

(d)                       if the Purchaser is aware of the Warranty Breach at the Completion Date.

 

15.7                                 Mitigation

 

15.7.1                       Nothing in this Agreement shall be deemed to relieve the Purchaser from any duty under applicable law to mitigate any loss or damage incurred by it as a result of any Warranty Breach, after Completion.

 

15.7.2                       The Purchaser shall procure that all reasonable steps are taken and all reasonable assistance is given that is required to comply with Purchaser’s duty under applicable law to avoid or mitigate any loss or damage incurred by it as a result of any Warranty Breach, after Completion.

 

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15.8                                 No double recovery

 

15.8.1                       The Purchaser shall not be entitled to recover Damages from any Seller in relation to a Warranty Breach and / or specific indemnity more than once in respect of any one matter even if more than one Sellers’ Warranty and / or specific indemnity is breached.

 

15.8.2                       The Purchaser shall not be entitled to recover Damages from any Seller in relation to a Warranty Breach with respect to the Interim Accounts, as set out in clause 6.3 up through and including 6.6 of Annex 13, in the event and to the extent that such Damages have been taken into account in calculating the adjustment of the Base Purchase Price, in accordance with terms and conditions as set out in Clause 3.3.

 

16                                           SPECIFIC INDEMNITIES

 

16.1                                 Each of the Sellers shall indemnify (vrijwaren) and hold harmless the Purchaser, or at the direction of the Purchaser, the Affiliates of the Purchaser (which includes the Group Companies after Completion — the Purchaser and its Affiliates including the Group Companies after Completion herein collectively also referred to as the Purchaser Indemnified Parties) from, and shall compensate the Purchaser and the Purchaser Indemnified Parties for, any Damages incurred by any of the Purchaser Indemnified Parties as a result of, in connection with or attributable to:

 

(a)                       any claim regarding the employment or the employment relationship with Employees, directors or officers of the Group Companies relating to the period prior to Completion, to the extent the facts and circumstances on which such claim is based occurred prior to the Completion Date;

 

(b)                       any compensation claims raised by contracting parties to agreements of the Group Companies concluded prior to the Completion Date as a result or in connection with the termination of the respective agreements prior to or after the Completion Date;

 

(c)                        any claim as a result of or in connection with any environmental and zoning matters and the absence of the necessary permits/dispensations, to the extent the facts and circumstances on which such claim is based occurred prior to the Completion Date;

 

(d)                       any claim as a result of or in connection with the lease agreement regarding the object ‘De Piloot’ as entered into by and between Beleggingsmaatschappij Transvaal B.V. as lessor and ALDA Events B.V. and David Lewis Productions B.V. as lessees to the extent the facts and circumstances on which such claim is based occurred prior to the Completion Date;

 

(e)                        any claim as a result of or in connection with the lease agreement entered into by and between Jaarbeurs Utrecht B.V. as lessor and ALDA Events B.V. as lessee for the 2014 and 2015 editions of the event A State of Trance to the extent the facts and circumstances on which such claim is based occurred prior to the Completion Date;

 

(f)                         any and all costs and/or claims (both from a civil law and a tax perspective) either arising prior to Completion or post Completion in connection with or as a

 

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result of the Group Companies making use of the services of any self-employed services providers (ZZP-ers/opdrachtnemers) prior to Completion;

 

(g)                        any claims, costs and expenses as a result of or in connection with any non-fulfilled pension obligations;

 

(h)                       any claim in connection with or as a result of a mandatory participation in the pension scheme of an industry wide pension fund by the Group Companies; and

 

(i)                           any claim, other than a claim regarding the right to purchase the shares of Kingsland Festival B.V. against market value, from (Affiliates of) the other shareholders of Kingsland Festival B.V. as a result of or in connection with any rights they may have with respect to a change of control in relation to the Company;

 

None of the limitations of liability of the Sellers (whether in amount, in terms of claim period or by way of reduction of liability) as set out in Clause 15, except for Clause 15.1.2, 15.7 and 15.8 shall apply to liability of the Sellers pursuant to the indemnities set out in Clauses 16 and 17.

 

17                                           TAX INDEMNITY

 

17.1                                 Tax Indemnity

 

Each of the Sellers shall be responsible for, shall pay or cause to be paid, and shall, on a euro-for-euro basis without applying any multiplier, indemnify (vrijwaren) and hold harmless the Purchaser Indemnified Parties and their respective directors, officers, employees from, and shall compensate the Purchaser Indemnified Parties for, and will pay to the Purchaser Indemnified Parties, the amount of any Tax Liability arising directly or indirectly from or in connection with any of the Group Companies (or any of their predecessors) relating to:

 

(a)                       the period up to and including Completion;

 

(b)                       any Event occurring on or prior to Completion;

 

(c)                        any costs or expenses, including but not limited to (reasonable) advisor’s fees, incurred by the Purchaser or any Group Company in connection with:

 

(i)                           any Tax Liability relating to the period up to and including Completion or any Event occurring on or prior to Completion; or

 

(ii)                        any action taken in avoiding, resisting or settling any such Tax Liability or taking any action under this Agreement;

 

(d)                       any breach of the Sellers’ Warranties in paragraph 10 (Taxes) contained in Annex 13.1; and

 

(e)                        the consolidated, combined or unitary group of which any of the Group Companies (or any of their predecessors) is or was a member on or prior to

 

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Completion, including, for the avoidance of doubt: (i) any claims under the 1990 Dutch Tax Collection Act (Invorderingswet 1990), and (ii) other liabilities that would not have arisen but for the relationship of any of the Group Companies with the Sellers’ Group, on or at any time prior to Completion;

 

(f)                         any correction imposed by any Tax Authority to the transfer prices reported by any of the Group Companies;

 

(g)                        any and all Taxes due on the basis of section 34 (recipients’ liability) and section 35 (chain liability) of the Dutch Collection Act 1990 (Invorderingswet 1990) including any other levies, duties and other costs, which the Purchaser is obliged to pay to any Governmental Entity.

 

(h)                       all and any claims made by the collector of direct Taxes and indirect Taxes in the context of the chain and recipients’ liability, as well as any recovery claims based on such liabilities by subcontractors charged with (part of) the work; and

 

(i)                           all and any claims related to the Foreign Nationals (Employment) Act (Wet arbeid vreemdelingen) and the Dutch Placement of Personnel by Intermediaries Act (Wet allocatie arbeidskrachten door intermediairs).

 

(a payment due by the Sellers pursuant to this paragraph, a Tax Indemnity Payment).

 

17.2                                 Exclusions

 

A Tax Indemnity Payment shall not be considered due if and to the extent a provision for the Tax Liability giving rise to the Tax Indemnity Payment was (i) included in the Final Interim Accounts and/or (ii) made in the ordinary course of the Business between the Effective Date and the Completion Date.

 

17.3                                 No limitation for rights against other persons

 

The liability of the Sellers to make any payment pursuant to this Clause 17 shall not be affected by any right the Purchaser or any Group Company may have against any other person.

 

18                                           DUE DATE FOR PAYMENT

 

18.1                                 Due date

 

The ultimate due date for any payments by the Sellers under Clause 17 shall be:

 

(a)                       in case of actual payments of Tax (or any other amount giving rise to a Tax Indemnity Payment) as referred to in Clause 17.1: fifteen (15) Business Days prior to the latest date on which the actual payment of the relevant Tax or amount can be made without incurring interest and penalties in respect thereof; and

 

(b)                       in case of a loss of Relief as referred to in Clause 17.1: thirty (30) Business Days after the Parties agree upon the amount of the loss of Relief.

 

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19                                           PROCEDURES FOR TAX CLAIMS

 

19.1                                 Notification

 

The Parties shall forthwith after becoming aware of a Tax Claim or of any event that could lead to a Tax Claim inform the Purchaser or the Sellers, as the case may be, thereof in writing, setting forth any and all relevant details in respect of such Tax Claim or such event. Such a notification given within such period shall be considered a notification within the meaning of section 7:23(1) of the DCC. As soon as possible following the date of that notification the Parties shall consult each other on the course of action to be taken.

 

19.2                                 Conditions for Sellers’ co-ordination

 

The Parties agree that the Sellers shall co-ordinate all communication with the applicable Tax Authority under the following conditions:

 

(a)                       the Sellers shall keep the Purchaser informed of all developments and events relating to a Tax Claim;

 

(b)                       the Sellers shall prepare and file the requisite notifications and/or other documents (the Tax Documents) in co-operation with the Purchaser and the Group Companies;

 

(c)                        the Sellers shall not take any positions in the Tax Documents that could have an adverse effect on Tax position of the Purchaser and/or the Group Companies;

 

(d)                       before making any filings of Tax Documents with any Tax Authority, a draft of the relevant requisite Tax Document shall be submitted by the Sellers to the Purchaser (or such advisers as it shall nominate) at least fifteen (15) Business Days before its intended filing or submission;

 

(e)                        the Purchaser and its advisers shall in addition hereto be given access to all information necessary to determine its accuracy;

 

(f)                         if, within ten (10) Business Days of receiving any such draft, the Purchaser makes any comments, corrections or additions in respect of the draft Tax Document to the Sellers those comments, corrections and additions shall, to the extent that they are reasonable, be reflected in the relevant Tax Document before filing hereof;

 

(g)                        despite the fact that the Sellers co-ordinates communications with the Tax Authority, the Purchaser shall always be entitled, but not obliged, to participate in any proceedings, meetings or other communications that may have impact on the Tax Claim; and

 

(h)                       the Sellers shall not take positions which could have a negative effect on the pre-Completion Tax position of the Group Companies and shall not settle or otherwise compromise any Tax Claim relating to a pre-Completion period with

 

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respect to the Group Companies without first obtaining the written consent of the Purchaser, such consent not to be unreasonably withheld.

 

19.3                                 Purchaser to co-ordinate

 

If the Parties do not agree on the course of action to be taken in relation to a Tax Claim, the Purchaser shall, at its sole discretion, be entitled to take, or procure the relevant Company to take, any action necessary to defend the Tax Claim, and to avoid, dispute, deny, defend, resist, appeal, compromise, contest or settle the claim in any manner that the Purchaser deems appropriate. The Purchaser shall use reasonable endeavours to strike a fair balance between the interests of the Sellers in keeping the Tax Claim as low as possible and the interests of the Purchaser and the Group Companies to maintain good business relations with any Tax Authority.

 

19.4                                 Co-operation

 

The Parties will co-operate with each other in dealing with any Tax Claim and will allow each other access to all relevant books and records during normal business hours and at the place where the same are normally kept, with full right to make copies thereof or take extracts therefrom. Such books and records shall be subject to a duty of confidentiality except for disclosure necessary for resolving such Tax Claim or otherwise required by Applicable Laws or stock exchange rules.

 

19.5                                 Tax Audit

 

The above Clause 19.1 through 19.4 relating to a Tax Claim shall apply mutatis mutandis to any Tax Audit.

 

20                                           LIABILITY

 

20.1                                 Each of the Sellers and the Purchaser acknowledge and agree that any payments for Damages in relation to (i) the indemnities set out in Clause 16 and 17 and (ii) the Sellers’ Warranties set out Annex 13.1 and (iii) a Sellers’ Breach will be borne by the Sellers severally, on a 50/50 basis, and not jointly.

 

20.2                                 Each of the Sellers acknowledges and agrees that the Sellers costs and/or expenses related to or in connection with this Agreement will be borne by the Sellers on a 50 /50 basis.

 

20.3                                 Mr D. Lewis is severally and jointly liable (hoofdelijk aansprakelijk) for any and all obligations of Lewis and Mr A. Hardenberg is severally and jointly liable (hoofdelijk aansprakelijk) for any and all obligations of Hardenberg, if any, vis-à-vis the Purchaser under this Agreement.

 

21                                           POST COMPLETION COVENANTS

 

21.1                                 No compete and non-solicitation

 

21.1.1                       Each of the Sellers, Mr D. Lewis and Mr A. Hardenberg (together the Shareholders) covenants with the Purchaser and for the benefit of the Group Companies that it shall

 

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not, for its own account or jointly with another person, directly or indirectly, for or on behalf of any person, as principal, agent or otherwise:

 

(a)                       for a period of two (2) years after Completion, either alone or jointly with a person, directly or indirectly, be involved in any business, be engaged in, own, control or provide any advice or assistance to any person that is engaged in the developing and/or organizing of music events in the Territory; or

 

(b)                       for a period of two (2) years after Completion, either alone or jointly with a person, directly or indirectly, induce, attempt to or assist to induce in any manner, any customer, supplier or person otherwise doing business with any of the Group Companies to terminate his relationship with any of the Group Companies or take any action that may result in the impairment of such relationship or assist or cause or attempt to assist any competitor of any of the Group Companies in the developing and/or organizing of music events referred to in paragraph (a) of this Clause 21.1.1; or

 

(c)                        for a period of two (2) years after Completion induce or attempt to induce in any manner, any director or employee or any distributor or commercial agent of any of the Group Companies and in Territory to leave the employment of the Group Companies or of Purchaser, or employ or engage any such person within one (1) year of the effective termination of his relationship with any of the Group Companies, or take any action that may result in the impairment of the relationship between such director, employee or distributor or commercial agent and any of the Group Companies; or

 

(d)                       after Completion use or (insofar as it can reasonably do so) allow to be used (except by the Group Companies) any trade name used by the Group Companies at Completion or any other name intended or likely to be confused with such a trade name.

 

For the avoidance of doubt, the following activities are excluded from the limitations as set out in this Clause 21.1.1:

 

i.                               activities of the Shareholders for any of the Group Companies pursuant to the Management Agreements; and/or

 

ii                               the current involvement of Mr D. Lewis in the David Lewis Companies, provided however that Mr D. Lewis covenants with the Company for the benefit of the Group Companies that he in person shall not directly or indirectly perform and/or encourage to perform any of the activities and/or actions as set out in this Clause 21.1.1 for the David Lewis Companies;

 

it being understood that (i) other than the current involvement of Mr D. Lewis in the David Lewis Companies as set forth above, the David Lewis Companies do not fall under the scope of this Clause 21.1.1 and (ii) the Parties, Mr D. Lewis and Mr A. Hardenberg hereby acknowledge and agree that notwithstanding the above, neither the Shareholders nor any of their Affiliates or the David Lewis Companies shall use

 

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the assets (including any business functions (booking or touring)) of the Company for any of their own activities.

 

For the purposes of this Clause:

 

(a)                       a person is involved in a business if he acts as a principal or agent or if:

 

(i)                          he is a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the business or has a financial interest in such business; or

 

(ii)                       he has any direct or indirect financial interest (as shareholder or otherwise) in any person who carries on the business, except for an interest in stock-exchanged listed shares which does not exceed five per cent. (5%) of the issued share capital of such person or such an interest in a mutual fund with a bank which is held purely for investment purposes and which do not confer upon the Shareholders, directly or indirectly, any influence or management function, or any other right or opportunity to influence the operations of the undertaking in which such interest is held.

 

(b)                       reference to Group Companies include their successors in business.

 

21.1.2                       Each of the restrictions in each paragraph or subclause above shall be enforceable by the Purchaser independently of each of the other restrictions and its validity shall not be affected if any of the other restrictions proves to be invalid.

 

21.1.3                       Each of the Shareholders recognizes the importance of the covenants contained in this Clause 21.1 and acknowledges that, based on their experience as (indirect) owner and manager of any of the Group Companies, the restrictions imposed herein are (i) reasonable as to scope, time and area, (ii) necessary for the protection of the legitimate business interests of the Purchaser and the Group Companies, including trade secrets, goodwill, and its commercial relationships, (iii) not unduly restrictive of the Shareholders rights and (iv) supported by adequate consideration.

 

21.1.4                       Each of the Shareholders will forfeit to the Purchaser or, at the Purchaser’s direction, to the Group Company designated by the Purchaser, a penalty in the amount of EUR 100,000 (in words: one hundred thousand euro)] for each breach of any of their respective obligations under Clause 21.1 and, furthermore, a penalty in the amount of EUR 5,000 (in words: five thousand euro) for every day that such breach persists, commencing on the first day after notification by the Purchaser of the applicable breach. Penalties under this Clause 21.1.4 shall be forfeited in addition to and without prejudice to any other rights the Purchaser or the Company may have, including but not limited to the right to claim Damages in excess of the stated penalties or the right to claim specific performance (nakoming). In this regard the Parties acknowledge that the stated amount of the penalties represents an agreed reasonable pre-estimate of the Damages assumed to be suffered by the Purchaser or the Company.

 

21.1.5                      If any of the Shareholders or any of their Affiliates commits a breach or threatens to commit a breach of any of the provisions of this Clause 21.1, the Purchaser shall have

 

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the right and remedy, in addition to any others that may be available, to have the provisions of this Clause 21.1, specifically enforced, through injunctive or other relief.

 

21.2                                 Further assurances

 

21.2.1                       In the period after Completion, the Sellers shall do or procure to be done all such acts or things necessary or appropriate to procure that (to the extent not already done):

 

(a)                       as soon as possible but in any event within thirty (30) Business Days after Completion, all Employees except for such Employees which are not directly involved in organizing music events (i.e. administrative personnel) will have entered into an addendum to their employment agreement, including proper intellectual property-, non-solicitation and relationship clauses;

 

(b)                       as soon as possible but in any event within sixty (60) Business Days after Completion, each Group Company will have: (i) adopted and implemented adequate written anti-bribery policies, anti-money laundering policies and customer identification programs that comply with the relevant Applicable Laws, and (ii) devised and set up systems of internal control in relation thereto that comply with the Applicable Laws;

 

(c)                        the Management Board shall, as soon as possible (and in any event within thirty (30) Business Days after Completion), adopt a budget for the financial year 2015, which is reasonably acceptable to the Purchaser;

 

(d)                       as soon as possible but in any event within thirty (30) Business Days after Completion, the Parties shall consult with each other on if and how to approach the other shareholders of Kingsland Festival B.V. with respect to any rights they may have with respect to a change of control in relation to the Company;

 

(e)                        as soon as possible but in any event within thirty (30) Business Days after Completion, the Sellers shall deliver to the Purchaser written confirmation that Ms A. Jacobs, Ms J. Kendall, Ms D. Stokman and Ms E. den Uijl and their spouses (if applicable) acknowledge that they waive their right of participation in (i) pension arrangements and previous pension arrangements, and (ii) any collective labour agreement, from the commencement of their employment with any of the Group Companies, in form and substance reasonably acceptable by Purchaser,

 

the Purchaser shall provide all reasonable cooperation in order to facilitate the carrying out of the steps and actions contemplated by this Clause 21.2.1. The Company shall bear all costs associated with the carrying out of the steps and actions contemplated by this Clause 21.2.1.

 

21.2.2                       Prior to, on or after Completion each Party shall, at its own cost and expense, execute and do (or procure to be executed and done by any other Party within the power of influence of the relevant Party) all such deeds, documents, acts and things as the other Party may from time to time reasonably require in order to give full effect to this Agreement.

 

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21.2.3                       Each of the Sellers shall provide all cooperation reasonably requested by the Parent in connection with the Parent reporting the transaction subject to this Agreement in accordance with Applicable Laws.

 

21.2.4                       Each of the Sellers agrees that such party will not make any verbal or written statements that disparage, defame, malign or harm the business, professional or personal reputation of any other party, including, without limitation, the members, directors, officers, and employees of the Parent.

 

22                                           CONFIDENTIALITY

 

22.1                                 Subject to Clause 22.2, the Parties (i) shall treat as strictly confidential all non-public information whether in writing, oral or otherwise received or obtained in respect of the subject matter of this Agreement and all transactions contemplated hereby and (ii) shall not, and shall not permit their Affiliates to, make any announcement or circular in respect of the subject matter of this Agreement and all transactions contemplated hereby, without the prior written consent of the other Party not to be unreasonably withheld.

 

22.2                                 Clause 22.1 shall not prohibit disclosure or use of any information if and to the extent:

 

(a)                       the disclosure or use is required or is deemed by counsel to be necessary or desirable by Applicable Laws or any recognized stock exchange on which the shares of any Party are listed;

 

(b)                       the disclosure or use is required for the purpose of any legal proceedings arising out of this Agreement or any other agreement entered into under or pursuant to this Agreement or the disclosure is made to a Tax Authority in connection with the Tax affairs of the disclosing Party;

 

(c)                        the disclosure is made to professional advisors of any Party on terms that such professional advisors undertake to comply with the provisions of Clause 22.1 in respect of such information as if they were a party to this Agreement; or

 

(d)                       the other Party has given prior written approval to the disclosure or use.

 

provided that prior to disclosure or use of any information pursuant to Clause 22.2(a) and 22.2(b) the Party concerned promptly notifies the other Party of such requirement with a view to providing the other Party with the opportunity to contest such disclosure or use or otherwise to agree the timing and content of such disclosure or use.

 

22.3                                 Each of the Sellers acknowledges that it is in possession of confidential information concerning the business of the Parent. Except as otherwise required by Applicable Laws, each of the Sellers, shall, and shall cause its respective Affiliates and Representatives to, (i) treat confidentially and not disclose all or any portion of such confidential information, or (ii) not use such confidential information for the benefit of themselves or any other person. Each of the Sellers acknowledges and agrees that such confidential information is proprietary and confidential in nature and part of the

 

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business of the Parent. If any of the Sellers, or any of its respective Affiliates or Representatives is requested or required to disclose (after such Sellers has used its commercially reasonable efforts to avoid such disclosure and after promptly advising and consulting with the Parent about such Seller’s intention to make, and the proposed contents of, such disclosure) any of the confidential information (whether by deposition, interrogatory, request for documents, subpoena, civil investigative demand or similar process by a Governmental Authority), such Sellers, shall, or shall cause its respective Affiliates or Representatives to, provide the Parent with prompt written notice of such request so that the Parent may, at its own expense, seek an appropriate protective order or other appropriate remedy. At any time that such protective order or remedy has not been obtained, a Seller or its respective Affiliate or Representative may disclose only that portion of the confidential information which such person is legally required to disclose or of which disclosure is required to avoid sanction for contempt or any similar sanction, and the relevant Seller shall exercise its reasonable efforts to obtain assurance that confidential treatment will be accorded to such confidential information so disclosed. Each of the Sellers further agrees that, from and after the Completion Date, such Sellers and its respective Affiliates and Representatives, upon the reasonable request of the Parent, promptly will deliver to the Parent all documents, or other tangible embodiments in its possession, constituting confidential information or other information with respect to the business of the Parent.

 

23                                           ACKNOWLEDGEMENT IN RELATION TO THE CONSIDERATION SHARES

 

23.1                                 Each of the Sellers understands that the Consideration Shares have not been registered under the Securities Act of 1933, as amended (the Securities Act), on the grounds that the sale thereof pursuant to this Agreement is exempt pursuant to Section 4(a)(2) of the Securities Act and/or Regulation S and the applicable state securities laws (the State Laws) and that the reliance of the Parent on such exemption is predicated in part on the representations, warranties, covenants and acknowledgments in this Clause 23.

 

23.2                                 Each of the Sellers (i) acknowledges that the Consideration Shares have not been registered under the Securities Act and the State Laws, and that the Consideration Shares must be held indefinitely by it unless it is subsequently registered under the Securities Act and the State Laws or an exemption from registration is available; (ii) is aware that any routine sales of the Consideration Shares made under Rule 144 of the Securities Act may be made only in limited amounts and in accordance with the terms and conditions of that Rule and that in such cases where Rule 144 is not applicable, compliance with some other registration exemption will be required; and (iii) is aware that Rule 144 is not presently available for use by the Parent for the offering of the Consideration Shares.

 

23.3                                 Each of the Sellers is an accredited investor as such term is defined in Rule 501(a) of Regulation D under the Securities Act.

 

23.4                                 Each of the Sellers can bear the economic risk of the investment, and has such knowledge and experience in financial and business matters that it is capable of

 

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evaluating the merits and risks of the investment in the Consideration Shares. Each of the Sellers has been afforded the opportunity to obtain information necessary to verify the accuracy of any representations or information and has had all of its inquiries to the Parent answered in full, and has been furnished all requested materials relating to the Parent, the offering of the Consideration Shares.

 

23.5                                 The Consideration Shares shall not be transferable for a period of six (6) months, as set out in the Lock-up Agreement, except upon the conditions specified in this Clause 23, which conditions are intended to insure compliance with the provisions of the Securities Act in respect of the transfer of the Consideration Shares. The Sellers will not transfer any of the Consideration Shares in violation of the provisions of any applicable U.S. federal or state or other Applicable Laws regarding securities.

 

23.6                                 Each of the Sellers acknowledges that the Consideration Shares are “restricted securities” (as such term is defined in Rule 144 under the Securities Act) and must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available.

 

23.7                                 Each of the Sellers acquires the Consideration Shares for investment purposes only, for its own account, and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act.

 

23.8                                 The offer of the Consideration Shares to the Sellers is not made by any public or general means or pursuant to any public or general solicitation.

 

23.9                                 Each of the Sellers:

 

(a)                       is not a “U.S. Person” (as defined in Regulation S, promulgated under the Securities Act), 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;

 

(b)                       does not acquire the Consideration Shares for the account or on behalf of any U.S. Person;

 

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

 

(d)                      does not acquire the Consideration 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;

 

(e)                        acknowledges that the Consideration 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 Consideration Shares, require from the Seller (i) certain written representations to indicate that a sale of the Consideration Shares was made in a transaction that complies with the provisions of Regulation S, pursuant to a registration of the Consideration Shares under the Securities Act, or pursuant to an exemption from the registration requirements

 

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of the Securities Act and (ii) a legal opinion that removal of the legend is appropriate;

 

(f)                         acknowledges that the Consideration 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;

 

(g)                        has not made any pre-arrangement to transfer any of the Consideration Shares to a U.S. Person or to return any of the Consideration 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 does not acquire the Consideration Shares as part of any plan or scheme to evade the registration requirements of the Securities Act;

 

(h)                       has not engaged in any “directed selling efforts” (as defined in Regulation S) in the United States regarding any of the Consideration 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 Consideration Shares;

 

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

 

(j)                          does not have a short position in, or other hedged position with respect to, any of the Consideration Shares or any other securities in the Parent.

 

23.10                          At the time that the Sellers acquire the Consideration Shares, each of the Sellers is entitled to acquire the Consideration Shares under the Applicable Laws of all relevant jurisdictions that apply to that Seller and has fully observed such Applicable Laws and complied with all necessary formalities.

 

23.11                          The Sellers shall hold the Consideration Shares free and clear of all Encumbrances.

 

23.12                         Parent confirms that although the Consideration Shares are unregistered, they become freely tradable by Sellers after the Lock up Period, subject to the terms of the Agreement and subject to Applicable Laws. The Sellers acknowledge that unregistered shares as the Consideration Shares are freely tradable, subject to Applicable Laws.

 

24                                           COSTS AND EXPENSES

 

24.1                                 Costs and expenses

 

Save as expressly otherwise provided in this Agreement, each Party shall bear its own costs and expenses, including the fees and expenses of its legal and other advisers, incurred in connection with the preparation, negotiation and signing of this Agreement, it being understood that such costs of the Sellers up to a maximum amount of EUR

 

38

 

200,000 (in words: two hundred thousand euro) in the aggregate ex VAT shall be reimbursed to the Sellers after the Sellers have delivered written evidence (for example, through submission of detailed invoices) of the costs so incurred to the Purchaser.

 

24.2                                 Notarial deed of transfer and issuance of Consideration Shares

 

The costs and expenses of (i) the notarial deed of transfer related to this Agreement and other notarial documentation required to give effect to the transfer of the Shares and (ii) the issuance of the Consideration Shares, shall be borne by the Purchaser.

 

25                                           PAYMENTS

 

25.1                                 Bank accounts

 

Unless expressly stated otherwise, all payments to be made under this Agreement shall be made in Euros:

 

(a)                       if to the Sellers, to the Sellers’ Account;

 

(b)                       if to the Purchaser, to the Purchaser’s Account; and

 

(c)                        if to the Notary, to the Notary Account.

 

25.2                                 Interest

 

Save as expressly otherwise provided in this Agreement, if a Party defaults in the payment when due of any sum payable under this Agreement (for the avoidance of doubt including any payment obligations of the Purchaser in relation to a Deficit), it shall pay interest at a rate equal to the cost of capital of the Parent from time to time on that sum from the date on which payment is due until the date of actual payment (for the avoidance of doubt including in relation to a repurchase of Deficit Shares) (as well after as before judgment), which interest shall accrue from day to day and be compounded quarterly.

 

25.3                                 No counterclaim or set-off

 

All payments made by the Sellers under this Agreement shall be made free of any counterclaim or set off and without deduction or withholding of any kind other than any deduction or withholding required by law, it being understood that without prejudice to any other remedies the Purchaser may have:

 

(a)                       each Seller shall be entitled, as a continued security for the due and punctual fulfilment by the Purchaser of its obligations and liabilities under this Agreement, to set off any liability of such Seller to the Purchaser under this Agreement (including any obligation to repay Leakage) with the obligation of the Purchaser to procure payment of the Preferred Payment as set out in Clause 4; and

 

(b)                       the Purchaser shall be entitled, as a continued security for the due and punctual fulfilment by the Sellers of their obligations and liabilities under this Agreement, to set off any liability of each of the Sellers to the Purchaser under this

 

39

 

Agreement (including any obligation to repay Leakage) with the obligation of the Purchaser to procure payment of the Preferred Payment as set out in Clause 4, by decreasing each Installment on a pro rata basis. The Parties acknowledge and agree that if the Total Leakage Amount exceeds the Preferred Payment such excess will be paid by the Sellers to the Purchaser.

 

25.4                                 Set-off Consideration Shares

 

25.4.1                       Notwithstanding the provision of Clause 25.3, in the event the liability of the Sellers towards to Purchaser under this Agreement exceeds an amount equal to the outstanding Preferred Payment and such liability of the Sellers towards the Purchaser has been fully set off with the outstanding Preferred Payment in accordance with Clause 25.3(b), and to the extent the Sellers still have possession of the Consideration Shares, the Sellers are entitled to request the Parent, subject to and in accordance with the provisions of Clause 23, to acquire a number of Consideration Shares against a price equal to an amount of USD 5.56 (in words: five United States Dollars and fifty six United States Dollar cents) per Consideration Share (the Consideration Shares Set-off Right).

 

25.4.2                       The Sellers may exercise the Consideration Shares Set-off Right, subject to the terms and conditions as set out in this Clause 25.4, by sending the Purchaser a written notice confirming the exercise of the Consideration Shares Set-off Right and stating the number of Consideration Shares it wishes the Parent to accept for cancellation (the Set-off Consideration Shares, and such notice the Set-off Notice).

 

25.4.3                       In the event the Sellers exercise the Consideration Shares Set-off Right, Parent shall be obliged to accept from the Sellers for cancellation and the Sellers shall be obliged to transfer the Set-off Consideration Shares to the Parent at a price equal to USD 5.56 (in words: five United States Dollars and fifty six United States Dollar cents) per Consideration Share within forty-five (45) Business Days after receipt of the Set-off Notice, subject to the terms and conditions of this Clause 25.4. For the avoidance of doubt, the consideration for the Consideration Set-off Shares shall be set-off against the relevant payment obligations of the Sellers vis-à-vis the Purchaser, as referred to in Clause 25.4.1.

 

26                                           ASSIGNMENT

 

26.1                                None of the Parties shall be entitled to assign (or cause to be transferred, whether by specific or general title) this Agreement or any of its rights hereunder, or transfer any of its duties or obligations under this Agreement, or create any Encumbrance on its rights hereunder, without the prior written consent of the Sellers (in case of assignment by the Purchaser) or the Purchaser (in case of assignment by any of the Sellers), provided that the Purchaser shall be entitled to assign this Agreement to any company directly or indirectly wholly owned by the Purchaser provided such company remains directly or indirectly wholly owned by the Purchaser.

 

26.2                                 Any purported assignment, transfer or Encumbrance in contravention of this Clause 26.1 shall be deemed to be null and void.

 

40

 

27                                           ENTIRE AGREEMENT

 

This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, oral or written between parties, with respect to the subject matter of this Agreement other than as referred to in this Agreement.

 

28                                           AMENDMENTS

 

This Agreement may not be amended, supplemented or terminated nor may any provisions thereof be waived except by a written instrument signed by the Parties.

 

29                                           WAIVER

 

Except as expressly stated otherwise in the Agreement, no omission or delay on the part of any Party in exercising any right, power, or remedy under this Agreement, shall prejudice or impair such right, power or remedy or be construed as a waiver thereof. Any single or partial exercise of such right, power or remedy shall not preclude any other or future exercise thereof or the exercise of any other right, power or remedy.

 

30                                           NO THIRD PARTY BENEFICIARIES

 

This Agreement is concluded for the benefit of the Parties and their respective Affiliates, successors and permitted assigns and nothing herein is intended to nor shall implicitly confer upon any other person any legal or equitable right, benefit or remedy of any nature whatsoever, except to the extent expressly stated otherwise in this Agreement.

 

31                                           INVALIDITY

 

If any of the provisions (or any part of a provision) of this Agreement, or the applicability thereof to any Party or circumstance, shall be found by a court, arbitrator or other Governmental Entity to be void or unenforceable or in conflict with the Applicable Laws of any state or jurisdiction it shall be deemed severed from this Agreement and it shall not affect or impair:

 

(a)                       the legality, validity or enforceability in that jurisdiction of any other provision (or the remaining part of the relevant provision) of this Agreement; or

 

(b)                       the legality, validity or enforceability under the Applicable Laws of any other relevant jurisdiction of that or any other provision of this Agreement.

 

The subject provision shall be replaced by a valid, legal and enforceable provision which, seen in the context of this Agreement as a whole, approximates as close as possible to the original intent of the Parties and of the subject provision.

 

32                                           NOTICES

 

32.1                                 Any Notice shall be in writing and sent to the address or facsimile number of such other Party set out below or at such other address as the Party to be given Notice may have notified to the other Parties from time to time:

 

41

 

	
If to the Sellers:
    
	
 
    	
 
    
	
Name:
    	
Lewis Holding B.V.
    
	
Attn:
    	
Mr D.F.M. Lewis
    
	
Address:
    	
Johannes Verhulststraat 126-2 1071 NM   Amsterdam, the Netherlands
    
	
 
    	
 
    
	
Name:
    	
Mountain B.V.
    
	
Attn:
    	
Mr A.J. Hardenberg
    
	
Address:
    	
Siciliëboulevard 214, 3059 XT Rotterdam, the   Netherlands
    
	
 
    	
 
    
	
If to Purchaser:
    
	
 
    	
 
    
	
Name:
    	
SFXE Netherlands Holdings B.V.
    
	
Attn:
    	
General Counsel
    
	
Address:
    	
Prins Bernhardplein 200, 1097 JB Amsterdam,   the Netherlands
    
	
 
    	
 
    
	
If   to the Parent:
    
	
 
    	
 
    
	
Name:
    	
SFX Entertainment, Inc.
    
	
Attn:
    	
General Counsel
    
	
Address:
    	
430 Park Avenue, 6th floor, New   York, New York 10022 USA
    
	
 
    	
 
    
	
If to the Company:
    
	
 
    	
 
    
	
Name:
    	
Alda Holding B.V.
    
	
Attn:
    	
Mr A.J. Hardenberg
    
	
Address:
    	
Anthony Fokkerweg 61, 1059 CP Amsterdam, the   Netherlands
    

 

32.2                                 Deemed delivery

 

Any Notice shall be delivered by hand or courier, or sent by registered post or facsimile, and shall be deemed to have been received or served upon receipt or refusal thereof.

 

32.3                                Formal service of documents

 

The provisions of Clause 32.1 and 32.2 shall not apply in relation to the formal service of documents for the purpose of litigation.

 

33                                           NOTARIAL INDEPENDENCE

 

The Parties acknowledge that the Notary works with Loyens & Loeff N.V., the firm that advises the Purchaser in the Transaction. With reference to the Code of Conduct (Verordening beroeps- en gedragsregels) established by the Royal Notarial Professional Organisation (Koninklijke Notariële Beroepsorganisatie), the Parties hereby expressly agree that:

 

(a)                       the Notary shall execute any notarial deeds related to this Agreement; and

 

42

 

(b)                       the Purchaser is assisted and represented by Loyens & Loeff N.V. in relation to this Agreement and any agreements that may be concluded, or disputes that may arise, in connection therewith.

 

34                                           NO RIGHT TO RESCIND OR NULLIFY AGREEMENT

 

Except as otherwise provided for in this Agreement, to the extent permitted by Applicable Laws, the Parties hereby waive their rights, if any, to annul, rescind or, after Completion, nullify, in whole or in part (gehele danwel partiële ontbinding en vernietiging), or to demand in legal proceedings the rescission (ontbinding) in whole or in part, or, after Completion, nullification (vernietiging) of, this Agreement, whether on the basis of error (dwaling) or otherwise, or to cancel or terminate (opzeggen) this Agreement.

 

35                                           GOVERNING LAW AND DISPUTES

 

35.1                                 Governing law

 

This Agreement shall be governed by and construed in accordance with the Applicable Laws of the Netherlands, without giving effect to the principles of conflict of laws thereof.

 

35.2                                 Disputes

 

Any dispute arising out of or in connection with this Agreement or any further agreement resulting from this Agreement, including questions in respect of the authority of the arbitrators or any injunctive relief or any other provisional measures, will be submitted to, resolved and finally and exclusively settled by arbitration in accordance with the rules of the Netherlands Arbitration Institute (Nederlands Arbitrage Instituut). The arbitral tribunal will be composed of three (3) arbitrators appointed in accordance with those rules. At least one (1) arbitrator will be qualified as an experienced senior commercial practicing lawyer (advocaat). The place of the arbitration will be Amsterdam, the Netherlands. The language of the arbitration will be English. The arbitrators will decide in accordance with the rules of the laws of the Netherlands (naar de regelen des rechts). The Netherlands Arbitration Institute may not have the arbitral judgment published. Consolidation of the arbitral proceedings with other arbitral proceedings pending in the Netherlands, as provided for in article 1046 of the Dutch Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering), is excluded.

 

36                                           COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall constitute an original. All the counterparts together shall constitute one and the same instrument and may be exchanged between the Parties by fax or by email as a PDF document.

 

43

 

37                                           EXCHANGE RATE

 

Where it is necessary to determine any monetary limit, threshold or amount for the purposes of this Agreement and the relevant monetary limit, threshold or amount is expressed in a currency other than Euros, the value of each limit, threshold or amount, as the case may be, shall be translated into Euros at the Exchange Rate on the date of occurrence of the event or circumstances bearing reference to the limit, threshold or amount to be so determined provided that should the event or circumstance relate to a period of more than one (1) day, then the applicable Exchange Rate shall be the average of the Exchange Rate over the duration of the event or circumstance.

 

IN WITNESS WHEREOF this Agreement has been entered into on the date stated at the beginning of this Agreement.

 

ANNEXES, SCHEDULES AND SIGNATURE PAGE(S) TO FOLLOW

 

44

 

ANNEX 1.1 — DEFINITIONS

 

	
2013 Accounts
    	
means the Company’s reviewed consolidated   annual accounts in respect of the period of 1 January 2013 up to and   including 31 December 2013 consisting of a balance sheet, a cash flow   statement and a profit and loss account together with explanatory notes   thereto and a director’s report of the Company’s board of managing directors   accompanied by a compilation statement (samenstellingsverklaring),   all prepared in accordance with Dutch GAAP and adopted by the general meeting   of shareholders of the Company;
    
	
 
    	
 
    
	
2019 EBITDA
    	
means the EBITDA of the Group Companies in   respect of the period starting on 1 January 2019 up to and including 31   December 2019;
    
	
 
    	
 
    
	
Accounting Principles 
    	
means the accounting policies, practices,   principles and treatments of the Group Companies as consistently applied   prior to the Completion Date in accordance with Dutch GAAP;
    
	
 
    	
 
    
	
Accounts
    	
means the 2013 Accounts and the Interim   Accounts;
    
	
 
    	
 
    
	
Actual Working Capital  
    	
has the meaning ascribed thereto in Clause   3.3.8;
    
	
 
    	
 
    
	
Additional Leakage
    	
means any Leakage, except for the Leakage   Amount that has been notified by the Seller to the Purchaser pursuant to the   Leakage Notice;
    
	
 
    	
 
    
	
Additional Leakage Amount
    	
has the meaning ascribed thereto in Clause 11.3.1;
    
	
 
    	
 
    
	
Affiliate
    	
means: (i) in relation to any person other   than an individual, any person which is Controlled by, Controls or is under   common Control with, such person; and (ii) in relation to an individual, his   close relatives. For the purposes of this definition, close relatives means,   in relation to any individual (i) his spouse and children (including step   children), (ii) the trustees, acting in their capacity as such trustees, of   any trust of which he is a beneficiary and/or his spouse and/or children   (including step children), or in the case of a discretionary trust, is a   discretionary object; and (iii) any person of which he and/or his spouse   and/or children (including step children) has Control;
    
	
 
    	
 
    
	
Agreement
    	
means this agreement and all of its Annexes,   appendices, Schedules and Recitals, as it may be supplemented or amended from   time to time by the Parties in accordance with the terms hereof;
    

 

45

 

	
Annex
    	
means the annexes attached to this Agreement;
    
	
 
    	
 
    
	
Annual Accounts
    	
means the Company’s audited consolidated   annual accounts in respect of any period starting on 1 January of a certain   year up to and including 31 December of that year consisting of a balance   sheet, a cash flow statement and a profit and loss account together with   explanatory notes thereto and a director’s report of the Company’s board of   managing directors accompanied by a compilation statement (samenstellingsverklaring), all prepared in accordance with   Dutch GAAP and adopted by the general meeting of shareholders of the Company;
    
	
 
    	
 
    
	
Applicable Laws
    	
means with respect to the relevant subject   matter or person, any and all governmental (whether national, supranational,   state, provincial, local or any other level), quasi-governmental, or   self-regulatory body’s laws, regulations, ordinances, rules and any other   provisions that are mandatory;
    
	
 
    	
 
    
	
Articles of Association  
    	
means the articles of association of the   Company, substantially in the form attached hereto as Annex 12.3;
    
	
 
    	
 
    
	
Assets
    	
means all assets of the Company which are   reflected in the 2013 Accounts;
    
	
 
    	
 
    
	
Balance Sheet Date
    	
means 31 Augustus 2014;
    
	
 
    	
 
    
	
Base Purchase Price
    	
has the meaning ascribed thereto in Clause   3.1;
    
	
 
    	
 
    
	
Best Knowledge
    	
has the meaning ascribed thereto in Clause   13.2;
    
	
 
    	
 
    
	
Business
    	
has the meaning ascribed thereto in Recital (C)   to this Agreement;
    
	
 
    	
 
    
	
Business Day
    	
means a day (other than a Saturday or a   Sunday or a public holiday) on which banks are open for business in Amsterdam   (the Netherlands) and New York (United States of America);
    
	
 
    	
 
    
	
Cash
    	
means all cash in hand or cash deposited in   bank accounts or cash equivalents held in the name of the Group Companies,   less restricted cash;
    
	
 
    	
 
    
	
Clause
    	
means a clause of this Agreement;
    
	
 
    	
 
    
	
Company
    	
has the meaning ascribed thereto in the   introduction of this Agreement;
    

 

46

 

	
Completion
    	
means the transfer of the Shares and the   payment of the Initial Purchase Price under the terms and conditions of this   Agreement;
    
	
 
    	
 
    
	
Completion Date 
    	
means 24 November 2014;
    
	
 
    	
 
    
	
Consideration Payment
    	
has the meaning ascribed thereto in Clause   3.1(a);
    
	
 
    	
 
    
	
Consideration Shares
    	
has the meaning ascribed thereto in Clause   3.1(b);
    
	
 
    	
 
    
	
Consideration Share Market   Price
    	
has the meaning ascribed thereto in Clause   7.1.3.2;
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Consideration Shares Set-off   Right  
    	
has the meaning ascribed thereto in Clause   25.4.1;
    
	
 
    	
 
    
	
Control
    	
means: (i) the ownership or control (directly   or indirectly) of more than 50% of the ownership interests of the relevant   person; or (ii) the right to appoint or remove (or the ability (whether in   law or fact) to direct the appointment or removal of) the members of the   governing body of the relevant person holding a majority of the voting rights   at meetings of the governing body on all, or substantially all, matters;
    
	
 
    	
 
    
	
CS Call Option
    	
has the meaning ascribed thereto in Clause   8.1.1;
    
	
 
    	
 
    
	
CS Call Option Notice
    	
has the meaning ascribed thereto in Clause   8.1.2.2;
    
	
 
    	
 
    
	
CS Call Option Period
    	
has the meaning ascribed thereto in Clause   8.1.2;
    
	
 
    	
 
    
	
CS Call Option Price
    	
has the meaning ascribed thereto in Clause   8.1.3.1;
    
	
 
    	
 
    
	
CS Call Option Shares
    	
has the meaning ascribed thereto in Clause   8.1.2.2;
    
	
 
    	
 
    
	
CS Offer Notice
    	
has the meaning ascribed thereto in Clause   9.1.1;
    
	
 
    	
 
    
	
CS Offer Period
    	
has the meaning ascribed thereto in Clause   9.1.1;
    
	
 
    	
 
    
	
CS Offer Price
    	
has the meaning ascribed thereto in Clause   9.1.3;
    
	
 
    	
 
    
	
CS Offer Shares
    	
has the meaning ascribed thereto in Clause   9.1.1;
    
	
 
    	
 
    
	
CS Put Option
    	
has the meaning ascribed thereto in Clause   7.1.1;
    
	
 
    	
 
    
	
CS Put Option Notice
    	
has the meaning ascribed thereto in Clause   7.1.2.2;
    

 

47

 

	
CS Put Option Period
    	
has the meaning ascribed thereto in Clause   7.1.2.1;
    
	
 
    	
 
    
	
CS Put Option Price  
    	
has the meaning ascribed thereto in Clause   7.1.3.1;
    
	
 
    	
 
    
	
CS Put Option Shares
    	
has the meaning ascribed thereto in Clause   7.1.2.2;
    
	
 
    	
 
    
	
CS ROFR
    	
has the meaning ascribed thereto in Clause   9.1.2;
    
	
 
    	
 
    
	
Current Assets
    	
means, as of any date, the current assets of   the Group Companies calculated as of such date in accordance with Dutch GAAP   consistently applied and as historically presented in the Accounts;
    
	
 
    	
 
    
	
Current Liabilities  
    	
means, as of any date, the current   liabilities of the Group Companies calculated as of such date in accordance   with Dutch GAAP consistently applied and as historically presented in the   Accounts;
    
	
 
    	
 
    
	
Damages 
    	
means the aggregate of all payments necessary   for the Purchaser Indemnified Parties to be brought in the financial position   it would have been in, if the Warranty Breach had not occurred, inclusive all   reasonable costs and expenses made and incurred by the Purchaser Indemnified   Parties in connection therewith (inclusive the reasonable fees of outside   advisors and legal counsel) all in accordance with section 6:96 et seq. of   the DCC on a euro-for-euro basis without applying any multipliers;
    
	
 
    	
 
    
	
Data Room
    	
the data room prepared by the Sellers for the   purpose of facilitating the Due Diligence Investigation and enabling the   Purchaser, its Affiliates and their Representatives and advisers to evaluate   the Shares and the Business, the Data Room index and DVD’s of which are   attached as Schedule 1.1(b);
    
	
 
    	
 
    
	
David Lewis Companies
    	
means David Lewis Productions B.V., Armada   Holding B.V. and Cloud 9 Holding B.V.;
    
	
 
    	
 
    
	
DCC
    	
means the Dutch Civil Code;
    
	
 
    	
 
    
	
Debt Adjustment
    	
has the meaning ascribed thereto in Clause   3.3.9;
    
	
 
    	
 
    
	
Debt
    	
means all (i) intra-group debt (unless   otherwise agreed in writing by the Parties) and (ii) all interest bearing   external debt including short term and] long-term interest bearing debts of   any kind, financing payables, payables resulting from the acquisition of   fixed assets, financial lease obligations, 
    

 

48

 

	
 
    	
shareholder loans including accrued interest,   promissory notes recourse or non-recourse factoring, liabilities on bill   accepted and drawn, guaranteed indebtedness, prepayment penalties, contingent   liabilities, accrued interest, hedging losses, corporate income tax   obligations, all liabilities to the shareholders of the Business (including   any declared but unpaid dividends and other distributions), loans payable to   lessors, costs in connection with the Transaction and non-accrued incentive   payments for the management of any of the Group Companies. For the avoidance   of doubt, (i) Debt shall also include all items that are considered debt in   the Accounts in accordance with Dutch GAAP and (ii) debt items taken into   account in the determination of the Working Capital will not be taken into   account in the determination of the Debt.;
    
	
 
    	
 
    
	
Deed of Transfer
    	
means a notarial instrument for the transfer   of the Shares, in the agreed form attached hereto as Schedule 1.1(c);
    
	
 
    	
 
    
	
Deficit  
    	
has the meaning given in Clause 4.5(b);
    
	
 
    	
 
    
	
Deficit Notice
    	
has the meaning ascribed thereto in Clause   4.5(b);
    
	
 
    	
 
    
	
Deficit Shares
    	
has the meaning ascribed thereto in Clause   6.2;
    
	
 
    	
 
    
	
Difference
    	
has the meaning ascribed thereto in Clause   3.3.9;
    
	
 
    	
 
    
	
Disclosed Information
    	
(i) all information in the Data Room, (ii)   any other information made available to the Purchaser and its advisers in   writing, (iii) all information included in the Disclosure Letter, all under   (i), (ii) and (iii) as electronically stored on DVD’s attached as Schedule   1.1(b), and (iv) all information of the Group Companies available in the   trade register of the Chamber of Commerce;
    
	
 
    	
 
    
	
Disclosure Letter
    	
means the letter from the Sellers to the   Purchaser in the agreed form attached hereto as Schedule 1.1(a);
    
	
 
    	
 
    
	
Dividend Payable
    	
has the meaning ascribed thereto in Clause   4.3;
    
	
 
    	
 
    
	
Due Diligence Investigation
    	
has the meaning ascribed thereto in Clause   13.5(a);
    
	
 
    	
 
    
	
EBITDA
    	
means the EBITDA of the Group Companies as   calculated on the basis as set forth in Annex 10.1;
    
	
 
    	
 
    
	
Effective Date 
    	
means 1 September 2014, 0h01 hours;
    
	
 
    	
 
    
	
Employee
    	
means an employee of the Company or one of   its subsidiaries, 
    

 

49

 

	
 
    	
that has an employment agreement with one of   the Group Companies;
    
	
 
    	
 
    
	
Encumbrance
    	
means a mortgage, charge, pledge, lien or any   other security interest of any kind (zakelijk zekerheidsrecht);
    
	
 
    	
 
    
	
Event
    	
means any transaction, event, act or omission   and any transaction, event, action or omission deemed to occur for Tax   purposes;
    
	
 
    	
 
    
	
Estimated Balance Sheet
    	
has the meaning ascribed thereto in Clause   3.3.2;
    
	
 
    	
 
    
	
Estimated Base Purchase Price   Adjustment  
    	
has the meaning ascribed thereto in Clause   3.3.2;
    
	
 
    	
 
    
	
Estimated Working Capital
    	
has the meaning ascribed thereto in Clause   3.3.2;
    
	
 
    	
 
    
	
Exchange Rate
    	
means, in relation to any currency to be   converted into or from Euros for the purposes of this Agreement, the spot   rate of exchange (closing mid-point) for that currency into or, as the case   may be, from Euros, as published in the London edition of the Financial Times   published on the Business Day immediately prior to the relevant date or,   where no such rate of exchange is published in respect of that date, at the   rate quoted on the appropriate page of the Reuters screen as at the close of   business in Amsterdam on the Business Day immediately prior to the relevant   date;
    
	
 
    	
 
    
	
Exceptional Items
    	
means all items arising not in the ordinary   course of the Business, including (without prejudice to the generality of the   foregoing):

 

(a)                                 losses or proceeds on the disposal of tangible fixed   assets;

 

(b)                                 release of credits resulting from overpayment by   clients or failure to invoice suppliers;

 

(c)                                  proceeds received in connection with litigation (if   and to the extent only in excess of the associated litigation costs) and   excluding litigation regarding the collection of receivables; for the   avoidance of doubt, any punitive or other special damages received therein   shall be deemed an “Exceptional Item”;

 

(d)                                 losses incurred in connection with a litigation, if   and to the extent such losses are the result of the payment of punitive or   other special 
    

 

50

 

	
 
    	
damages;

 

(e)                                  proceeds received under any other insurance policy   if and to the extent only in excess of the replacement costs of the relevant   insured asset;

 

(f)                                   insured losses, if and to the extent such insured   losses exceed the insurance proceeds;

 

(g)                                  bona fide gifts or grants or awards, not in lieu of   other consideration;

 

(h)                                 any foreign currency translation gains or losses;

 

(i)                                     any one-time nonoperational income or expenses;

 

(j)                                    release of any prior accruals;

 

(k)                                 any sums received by the Group Companies otherwise   than as a result of normal trading activities or being an exceptional loss   nor otherwise provided for herein;

 

(l)                                     interest (including in respect of any loans to the   Purchaser at rates from time to time agreed) received by the Purchaser or any   other member of the Group Companies, except for interest accrued on cash   amounts required to carry out the Business in the ordinary course;

 

(m)                             cost associated with this Transaction;

 

(n)                                 any costs or charges relating to (i) reporting   duties of the Group Companies, (ii) overhead or (iii) any services, between   (an Affiliate of) the Parent and the Company, that are not consistent with   past practice; and

 

(o)                                 depreciation and loss on the sale of financial   assets,

 

for the avoidance of doubt, any losses or   gains arising from bad debts are considered as arising in the ordinary course   of Business;
    

 

51

 

	
Excess Payment
    	
has the meaning ascribed thereto in Clause   4.6(a);
    
	
 
    	
 
    
	
Expert
    	
has the meaning ascribed thereto in Clause   3.3.5;
    
	
 
    	
 
    
	
Fairly Disclosed
    	
means disclosed in such way that a reasonably   experienced purchaser reading the relevant document(s) would understand   the nature and scope of such document(s) and the likely impact thereof   on the Group Companies, whereby a mere reference to information or a document   that is not in fact included in the Disclosed Information does not result in   the document or information in it, to be Fairly Disclosed;
    
	
 
    	
 
    
	
Final Interim Accounts
    	
has the meaning ascribed thereto in Clause   3.3.4;
    
	
 
    	
 
    
	
Foreign Country
    	
has the meaning ascribed thereto in clause   10.2 of Annex 13.1;
    
	
 
    	
 
    
	
Governmental Entity
    	
means any international, European Union,   national, provincial or local governmental body, regulatory body or authority   exercising an executive, legislative, judicial, regulatory, administrative or   other governmental function with jurisdiction in respect of the relevant   matter;
    
	
 
    	
 
    
	
Group or Group Companies
    	
has the meaning ascribed thereto in Recital (C) to   this Agreement;
    
	
 
    	
 
    
	
Hardenberg
    	
has the meaning ascribed thereto in the   introduction of this Agreement;
    
	
 
    	
 
    
	
Installment
    	
has the meaning given in Clause 4.2;
    
	
 
    	
 
    
	
Initial Purchase Price
    	
has the meaning ascribed thereto in Clause   3.1;
    
	
 
    	
 
    
	
Intellectual Property Rights
    	
means all the intellectual property rights as   disclosed in the Disclosed Information;
    
	
 
    	
 
    
	
Interim Accounts
    	
means the Company’s consolidated annual   accounts in respect of the period of 1 January 2014 up to and including   31 August 2014 consisting of a balance sheet, a profit and loss account   and a cash flow statement together with explanatory notes thereto, all   prepared in accordance with Dutch GAAP;
    
	
 
    	
 
    
	
Interim Accounts Date
    	
means 31 August 2014;
    
	
 
    	
 
    
	
Interim Accounts Notice
    	
has the meaning ascribed thereto in Clause   3.3.4;
    
	
 
    	
 
    
	
Key Employees
    	
means Mr D. Lewis and Mr A. Hardenberg;
    

 

52

 

	
Lawyer
    	
has the meaning ascribed thereto in Clause   11.3.3;
    
	
 
    	
 
    
	
Leakage
    	
means, unless constituting Permitted Leakage,   any of the following items occurring or having occurred in the period as of   the Effective Date and up to and including the Completion Date:

 

(a)                                 any dividends or other distributions, whether by way   of share redemption, share capital reduction or otherwise, and any other   payment in respect of any share capital of any Group Company, in each case   whether in cash or in kind, paid or made by any Group Company to or for the   benefit of the Sellers and/or any of their respective Affiliates (excluding   the Group Companies);

 

(b)                                 any payments (including interest or management fees,   but excluding any payments made in the ordinary course of business) made or   benefits or assets conferred by any Group Company to the Sellers and/or any   of their respective Affiliates (excluding the Group Companies);

 

(c)                                  any waiver or forgiveness of any indebtedness or   liability owed by or otherwise for the benefit of the Sellers and/or any of   their respective Affiliates (excluding the Group Companies) to any Group   Company, or any indebtedness or liability incurred by any of the Group   Companies for no consideration or a consideration which is not at arm’s   length to or otherwise for the benefit of the Seller and/or any of their   respective Affiliates (excluding the Group Companies);

 

(d)                                 any bonus (in cash or in kind) paid or payable to   any shareholder, director, employee, advisor or consultant of the Seller   and/or any of their respective Affiliates or any of the Group Companies   incurred or reimbursed by, or charged to, any of the Group Companies, as an   incentive to complete, or triggered by, the Transaction;

 

(e)                                  any payments made, or costs, expenses or liabilities   incurred, in relation to (the effectuation of) the Transaction (except to the   extent such payments, costs, expenses or liabilities are for the Purchaser’s   account or the Group’s account pursuant to the 
    

 

53

 

	
 
    	
terms of this Agreement);

 

(f)                                   any liability pursuant to guarantees,   indemnifications or securities granted by any Group Company and any liability   incurred, assumed or indemnified for the benefit of any of the Sellers and/or   their respective Affiliates;

 

(g)                                  any agreement or undertaking by any Group Company to   do any of the items referred to in a. up to and including f. above; and

 

(h)                                 any Tax Liability in respect of any of the items   referred to in a. up to and including g. above and / or minus any actual Tax   benefits in respect of any of the items referred to in a. up to and including   g. above;
    
	
Leakage Amount
    	
means any amount of Leakage;
    
	
 
    	
 
    
	
Leakage Notice
    	
has the meaning ascribed thereto in Clause 11.2.1;
    
	
 
    	
 
    
	
Leases
    	
means all leases the Group Companies have   entered into, as disclosed in the Disclosed Information;
    
	
 
    	
 
    
	
Lewis
    	
has the meaning ascribed thereto in the   introduction of this Agreement;
    
	
 
    	
 
    
	
Lock-Up Agreement
    	
means the lock-up agreement to be entered   into by and between the Parent and each of the Sellers in the agreed form   attached hereto as Schedule 12.3(o);
    
	
 
    	
 
    
	
LTM Accounts
    	
means the consolidated management accounts in   respect of any twelve (12) months period consisting of a balance sheet, a   cash flow statement and a profit and loss account all prepared in accordance   with Dutch GAAP;
    
	
 
    	
 
    
	
LTM EBITDA
    	
means the last twelve (12) months EBITDA in   any twelve (12) months period;
    
	
 
    	
 
    
	
Management Agreement
    	
means the management agreement to be entered   into by and between the Company and each of the Sellers in the agreed form   attached hereto as Schedule 12.3(h);
    
	
 
    	
 
    
	
Material Agreements
    	
means all the agreements the Group Companies   have entered into, as disclosed in the Disclosed Information;
    
	
 
    	
 
    
	
Net Income
    	
means   the net income of the Company for any period starting 
    

 

54

 

	
 
    	
on   1 January of a certain year up to and including 31 December of that   year as derived from the relevant Annual Accounts;
    
	
 
    	
 
    
	
Notary
    	
means Mr P.G. van Druten or another civil law   notary (notaris) (or such   notary’s substitute) of Loyens & Loeff N.V. in Amsterdam;
    
	
 
    	
 
    
	
Notary Account
    	
means the trust account (kwaliteitsrekening) of the Notary   (account number: 55.72.97.133 in the name of Loyens & Loeff   Amsterdam Derdengelden Notariaat, Postbus 2888, 3000 CW Rotterdam at ABN AMRO   Bank; Swift/BIC ABNANL2A; IBAN: NL 62 ABNA0557 2971 33;
    
	
 
    	
 
    
	
Notice
    	
means a notice to be given by a Party to   another Party under this Agreement;
    
	
 
    	
 
    
	
Ordinary Shares A
    	
has the meaning ascribed thereto in Recital   (A);
    
	
 
    	
 
    
	
Ordinary Shares B
    	
has the meaning ascribed thereto in Recital   (A);
    
	
 
    	
 
    
	
Ordinary Shares
    	
means all issues and outstanding Ordinary   Shares A and Ordinary Shares B, as adjusted from time to time;
    
	
 
    	
 
    
	
Parent
    	
has the meaning ascribed thereto in the   introduction of this Agreement;
    
	
 
    	
 
    
	
Parent Common Stock
    	
has the meaning ascribed thereto in Clause 3.1(b);
    
	
 
    	
 
    
	
Parent Deficit Notice
    	
has the meaning ascribed thereto in Clause   6.2;
    
	
 
    	
 
    
	
Party or Parties
    	
has the meaning ascribed thereto in the   introduction of this Agreement;
    
	
 
    	
 
    
	
Permits
    	
has the meaning ascribed thereto in clause   16.1 of Annex 13.1;
    
	
 
    	
 
    
	
Permitted Leakage
    	
means any management fees or salaries payable   during the period as of the Effective Date and up to and including the   Completion Date pursuant to management agreements and/or employment   agreements as disclosed in the Disclosure Letter entered into by and between   the Company and the shareholders of the Seller or any of their respective   Affiliates;
    
	
 
    	
 
    
	
Preferred Payment
    	
has the meaning ascribed thereto in Clause   4.1;
    
	
 
    	
 
    
	
Prefs A
    	
has the meaning ascribed thereto in Recital   (B);
    

 

55

 

	
Prefs B
    	
has the meaning ascribed thereto in Recital   (B);
    
	
 
    	
 
    
	
Purchaser
    	
has the meaning ascribed thereto in the   introduction of this Agreement;
    
	
 
    	
 
    
	
Purchaser’s Account
    	
means the bank account of the Purchaser as   specified by the Purchaser to the Notary, or the Sellers, as applicable, from   time to time;
    
	
 
    	
 
    
	
Purchaser Dilution Percentage
    	
has the meaning ascribed thereto in Clause   6.2;
    
	
 
    	
 
    
	
Purchaser Indemnified Parties
    	
has the meaning ascribed thereto in Clause   16.1;
    
	
 
    	
 
    
	
Purchaser’s Warranties
    	
has the meaning ascribed thereto in Clause 13.6;
    
	
 
    	
 
    
	
Put Deficit
    	
has the meaning ascribed thereto in Clause   6.5;
    
	
 
    	
 
    
	
Put Notice
    	
has the meaning ascribed thereto in Clause   10.2.4;
    
	
 
    	
 
    
	
Put Option
    	
has the meaning ascribed thereto in Clause   10.1.1;
    
	
 
    	
 
    
	
Put Option Period
    	
has the meaning ascribed thereto in Clause   10.2.1;
    
	
 
    	
 
    
	
Put Purchase Price
    	
has the meaning ascribed thereto in Clause   10.2.1;
    
	
 
    	
 
    
	
Put Shares
    	
means all Ordinary Shares held by the   Sellers;
    
	
 
    	
 
    
	
Related Person
    	
means any Affiliate and any other person or   legal entity forming part of the group (as meant in section 2:24c DCC) of   which the legal entity concerned forms part;
    
	
 
    	
 
    
	
Relief
    	
means any relief, allowance (including   without limitation authorized or depreciation), credit, deduction, exemption   or set-off in respect of any Tax or relevant to the computation of any   income, profits or gains for the purposes of any Tax, or any right to   repayment of or savings of Tax;
    
	
 
    	
 
    
	
Representatives
    	
means any and all persons authorized to   represent the entity concerned, whether or not the authority is subject to   limitations, as well as any of the professional advisors or other   representatives (however named) of such entity;
    
	
 
    	
 
    
	
Schedules
    	
means the schedules attached to this   Agreement;
    

 

56

 

	
Securities Act
    	
has the meaning ascribed thereto in Clause   23.1;
    
	
 
    	
 
    
	
Sellers
    	
has the meaning ascribed thereto in the   introduction of this Agreement;
    
	
 
    	
 
    
	
Sellers’ Account
    	
means the bank account of the Sellers as   specified by the Sellers to the Notary, or the Purchaser, as applicable, from   time to time;
    
	
 
    	
 
    
	
Sellers’ Breach
    	
means any breach by any of the Sellers under   or in connection with this Agreement;
    
	
 
    	
 
    
	
Sellers’ Group
    	
means the Sellers and their Affiliates (other   than the Group Companies) at any time before Completion;
    
	
 
    	
 
    
	
Sellers’ Warranties
    	
means the warranties included in Annex 13.1;
    
	
 
    	
 
    
	
Set-off Consideration Shares
    	
has the meaning ascribed thereto in Clause   25.4.2;
    
	
 
    	
 
    
	
Set-off Notice
    	
has the meaning ascribed thereto in Clause   25.4.2;
    
	
 
    	
 
    
	
SFX Touring Business
    	
means any single-artist or single act   centered international tour with eight (8) or more dates in a given   twelve (12) month period and with all dates held under the same name and/or   concept, which are owned by the Parent or in respect to which tour the   Purchaser has a right to exploit such tour as of the date hereof or in the   future. For the avoidance of doubt, this shall not include tours that do not   focus on an artist, including but not limited to Sensation or Life in Color;
    
	
 
    	
 
    
	
Shareholders
    	
has the meaning ascribed thereto in Clause   21.1.1;
    
	
 
    	
 
    
	
Shareholders’ Agreement
    	
means the Shareholders’ Agreement to be   entered into by the Sellers, the Purchaser and the Company in the agreed form   attached hereto as Schedule 12.3(m);
    
	
 
    	
 
    
	
Shares
    	
has the meaning ascribed thereto in Clause   2.1.2(b);
    
	
 
    	
 
    
	
Shares 1
    	
has the meaning ascribed thereto in Clause   2.1.2(a);
    
	
 
    	
 
    
	
Shares 2
    	
has the meaning ascribed thereto in Clause   2.1.2(b);
    
	
 
    	
 
    
	
State Laws
    	
has the meaning ascribed thereto in Clause   23.1;
    
	
 
    	
 
    
	
Stock Market
    	
has the meaning ascribed thereto in Recital   (D);
    

 

57

 

	
Subsidiaries
    	
means Mylocker B.V., Twisted Heads B.V., Alda   Events B.V., Amsterdam Music Festival B.V., Kingsland Festival B.V., Alda   Events North America Inc., A Day at the Park B.V., Electronic Family B.V. and   Twisted Heads Events B.V.;
    
	
 
    	
 
    
	
Subsidiary Shares
    	
means the issued and outstanding shares in   the share capital of the Subsidiaries;
    
	
 
    	
 
    
	
Tax
    	
means all forms of tax, levy, duty, impost,   social security charges and contributions, health security contributions, any   other contributions, any other obligations comparable to tax related   ancillary obligations, withholdings of any nature whatsoever as well as special   charges of any kind and other monetary obligations, together with all   interest, penalties, additions, damage, fines, thereto, relating to any of   them, whether disputed or not and regardless of whether these items are   chargeable directly or primarily against or attributable directly or   primarily to any other person and of whether any amount in respect of any of   them is recoverable from any other person;
    
	
 
    	
 
    
	
Tax Audit
    	
an investigation by any Tax Authority in   connection with Tax relating to or affecting any of the Group Companies;
    
	
 
    	
 
    
	
Tax Authority
    	
means any Governmental Entity, taxing   authority or other authority competent to impose or collect any Tax;
    
	
 
    	
 
    
	
Tax Claim
    	
means the issue of any notice, letter or   other document by or on behalf of any Tax Authority (or the taking of any   other action by or on behalf of any Tax Authority) from which notice, letter,   document or action it appears that a Tax Liability is to be, or may come to   be, imposed on or collected from any of the Group Companies;
    
	
 
    	
 
    
	
Tax Documents
    	
has the meaning ascribed thereto in Clause   19.2(b);
    
	
 
    	
 
    
	
Tax Indemnity Payment
    	
has the meaning ascribed thereto in Clause   17.1;
    
	
 
    	
 
    
	
Tax Liability
    	
means (i) any liability to make actual   payments of Tax (or amounts in respect of Tax), regardless of whether any   such liability shall have been discharged in whole or in part on or before   Completion, and (ii) the loss of any Relief, including a loss as a   result of the setting off of any Relief against income, profits or gains or   against any Tax otherwise chargeable;
    
	
 
    	
 
    
	
Tax Return
    	
means any return, (including any information   return), report, statement, declaration, schedule, notice, form, or other 
    

 

58

 

	
 
    	
document or information filed with or   submitted to, or required to be filed with or submitted to, any Tax Authority   in connection with the determination, assessment, collection, or payment of   any Tax or in connection with the administration, implementation, or   enforcement of or compliance with any requirement relating to Tax;
    
	
 
    	
 
    
	
Territory
    	
means the world;
    
	
 
    	
 
    
	
Total Leakage Amount
    	
means the Leakage Amount together with the   Additional Leakage Amount;
    
	
 
    	
 
    
	
Transaction
    	
means the sale and purchase of the Shares, on   the terms and subject to the conditions of this Agreement;
    
	
 
    	
 
    
	
Warranty Breach
    	
has the meaning ascribed thereto in Clause   14.2;
    
	
 
    	
 
    
	
Working Capital
    	
means, as at any date, the working capital of   the Group Companies comprising the items referred to in Annex 3.3.2   and unless otherwise noted means the Current Assets minus Current   Liabilities; and
    
	
 
    	
 
    
	
Working Capital Adjustment
    	
has the meaning ascribed thereto in Clause   3.3.8.
    

 

59

 

 

ANNEX 13.1 — SELLERS’ WARRANTIES

 

1                                                  General

 

1.1                                        Each of the Sellers is a company duly incorporated and validly existing under the laws of the Netherlands.

 

1.2                                        Each of the Sellers has full corporate power and authority to enter into and perform its rights and obligations pursuant to this Agreement and each document to be executed at or before Completion to which the relevant shareholder of such Sellers is expressed to be a party.

 

1.3                                        Each of the Sellers has full power and authority to enter into and perform its rights and obligations pursuant to this Agreement and each document to be executed at or before Completion to which the relevant shareholder of such Sellers is expressed to be a party.

 

1.4                                        The entering into and performance of this Agreement (and each document to be executed at or before Completion to which the Sellers are expressed to be Parties) by the Sellers have been duly authorised by all required corporate action.

 

1.5                                        This Agreement and all other documents to be entered into by the Sellers in connection with this Agreement will, when executed, constitute legally valid and binding obligations on the Sellers, enforceable in accordance with their respective terms.

 

1.6                                        The entering into and performance of this Agreement by the Sellers does not and will not:

 

(a)                       conflict with, or constitute a breach of or a default under, any provision of:

 

(i)                          any of the articles of association or other constitutional and corporate documents of the Sellers or any Group Company;

 

(ii)                       to the Best Knowledge of the Sellers any agreement or instrument by which any of the Sellers is bound;

 

(iii)                    any law, order, judgement, decree or regulation (whether issued by any court, arbitration panel, or Governmental Entity) by which any of the Sellers or any Group Company is bound;

 

(b)                       to the Best Knowledge of the Sellers relieve any other party to an agreement with any Group Company of its obligations or to the Best Knowledge of the Sellers enable that party to vary or terminate its rights or obligations under that agreement, except as set out in the Disclosed Information;

 

(c)                        result in the creation or imposition of any right or any Encumbrance on any of the Lease, or Assets, rights or securities of any Group Company or the repayment of any indebtedness of any Group Company;

 

60

 

(d)                       require any consent, approval, authorisation of, or registration, designation, declaration or filing with, any Governmental Entity under any Applicable Laws.

 

1.7                                        Each of the Sellers is commercially solvent, meaning that they are able to pay their debts as and when they fall due in the ordinary course of business. The Sellers have not been dissolved nor is in the process of liquidation. No action or request is pending or to the Best Knowledge of the Sellers threatened (whether made by the Sellers or by any other person) to declare the Sellers insolvent, to adjudicate bankruptcy, to grant a moratorium or a suspension of payments, or to dissolve or liquidate the Sellers and no facts or circumstances exist which would entitle any person to commence any of those proceedings in any jurisdiction against the Sellers.

 

1.8                                        To the Best Knowledge of the Sellers none of the Sellers is party to any transaction which is capable of being set aside, stayed, reversed, avoided or affected in whole or in part by any bankruptcy or insolvency proceedings under any Applicable 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 Applicable Laws and no attachment on any of the Assets has been levied.

 

2                                                  Group Companies

 

2.1                                        Each of the Group Companies is a company duly incorporated and validly existing under the laws of the Netherlands.

 

2.2                                        Each of the Group Companies has full corporate power and authority to own its Assets and to carry on its business as conducted at present in each jurisdiction in which it conducts its Business.

 

2.3                                        Each of the Group Companies is commercially solvent, meaning that (i) it is able to pay its debts as and when they fall due in the ordinary course of business, (ii) it is not to be expected that it becomes unable to pay its debts when due and (iii) it is not over indebted. None of the Group Companies has been dissolved or is in the process of liquidation. No action or request is pending or to the Best Knowledge of the Sellers threatened (whether by any of the Group Companies or by any other person) to declare any of the Group Companies insolvent, to adjudicate bankruptcy, to grant a moratorium or a suspension of payments, or to dissolve or liquidate any of the Group Companies and to the Best Knowledge of the Sellers no facts or circumstances exist which would entitle any person to commence any of those proceedings in any jurisdiction against any of the Group Companies.

 

2.4                                        To the Best Knowledge of the Sellers none of the Group Companies is party to any transaction which is capable of being set aside, stayed, reversed, avoided or affected in whole or in part by any bankruptcy or insolvency proceedings under any Applicable 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 Applicable Laws and no attachment on any of the Assets has been levied.

 

61

 

2.5                                        None of the Group Companies is party to a merger, split off or demerger within the meaning of Title 7 of Book 2 DCC or any other Applicable Laws.

 

2.6                                        Each of the Group Companies is registered in the trade register of the Chamber of Commerce or with any Governmental Entity or other authority or agency under the laws of its country of incorporation and in conformity with the extracts made available to the Purchaser. The information shown on the respective extracts is true, accurate, and not misleading. No notice has been received or allegation has been made that a registration is incorrect or should be rectified.

 

2.7                                        No Group Company:

 

(i)                          has any activities that do not relate directly or indirectly to the Business;

 

(ii)                       has any branch office or permanent establishment outside its principle place of business;

 

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

 

2.8                                        The Group Companies do not carry on Business under names other than their own respective registered corporate names.

 

2.9                                        No current or former officer, director, shareholder or Affiliate of any Group Company is now, or has been during the last three (3) fiscal years, (i) a party to any transaction or agreement with any Group Company having a value greater than EUR 50,000 (in words: fifty thousand euro), or (ii) indebted to any Group Company in an amount greater than EUR 50,000 (in words: fifty thousand euro) or (iii) the direct or indirect owner of an interest in any person which is a present competitor, supplier or customer of any Group Company, nor does any such person receive income from any source other than the Group Companies which should properly accrue to the Group Companies. No current or former Affiliate of any Group Company or any associate thereof is a guarantor or otherwise liable for any liability of any Group Company.

 

3                                                  Constitutional and corporate documents

 

3.1                                        The copies of the constitutional and corporate documents of the Group Companies, as referred to in the Disclosure Letter, are true, accurate and complete in all respects. No action has been taken to amend any of the constitutional and corporate documents.

 

3.2                                       All statutory books and registers of the Group Companies have been properly kept and no notice or allegation that any of them is incorrect or should be rectified has been received.

 

3.3                                        All resolutions and other documents which any of the Group Companies or any of its directors, officers, agents or Employees are required by law to file or register or deliver to the Chamber of Commerce or with any other relevant Governmental Entity have been correctly made up, duly filed, registered and delivered.

 

62

 

4                                                  Shares; Subsidiary Shares

 

4.1                                        The authorised share capital of the Company amounts to EUR 90,000 (in words: ninety thousand euro), divided into nine hundred (900) shares with a nominal value of EUR 100 (in words: hundred euro) each.

 

4.2                                        The Sellers have full legal and beneficial title to and ownership of the Shares, free and clear of any Encumbrances and with full right and capacity to sell and transfer the Shares.

 

4.3                                        The Company has full legal and beneficial title to and ownership of all of those Subsidiary Shares, free and clear of any Encumbrance as per the Completion Date.

 

4.4                                        The Shares and the Subsidiary Shares are duly authorised, validly issued, fully paid up and are not repaid (openly or hidden) and no obligations exist for the holder of those shares to further contribute to the share capital (whether by subscription for further shares, by payment of share premium or otherwise), to provide loan financing to any Group Company, or to issue any guarantees of any kind on behalf of any of the Group Companies and there have been no hidden distribution of profits or hidden contribution in kind related to any of the Group Companies.

 

4.5                                        Prior to Completion there is no outstanding option, warrant, put, call, subscription, convertible or exchangeable security, right, bond, commitment or agreement of any character to which any of the Sellers or any Group Company is a party or by which the any of the Sellers or any Group Company is bound, obligating any of the Sellers or any Group Company to issue, exchange, transfer, sell, repurchase, redeem or otherwise acquire any shares or other securities in or relating to the capital of any of the Group Companies or to create any Encumbrance, or obligating any of the Sellers or any Group Company to grant, extend, accelerate the vesting of, or enter into, any such option, warrant, put, call, subscription, convertible or exchangeable security, right, bond, commitment or agreement or to create any Encumbrance. There is no commitment to create any of the foregoing and no person has claimed to be entitled to any of the foregoing.

 

4.6                                        There are no outstanding depository receipts (certificaten) issued by any of the Group Companies with or without the cooperation of such Group Companies.

 

5                                                  Conduct of business

 

5.1                                        Since the Effective Date:

 

(a)                       there has been no deterioration in the turnover, financial or trading position or the prospects of any of the Group Companies;

 

(b)                       there has been no deterioration in the values of any of the Assets or properties as a consequence of which the market value of any Asset or property is lower than the book value attributed to it in the 2013 Accounts;

 

63

 

(c)                        no fixed asset of any Group Company has been revalued and none of the Assets have otherwise been revalued in accordance with Dutch GAAP as it was applicable at the Balance Sheet Date;

 

(d)                       there has been no Leakage;

 

(e)                        no Key Employee of any of the Group Companies has resigned nor is there any indication that one or more Key Employees intend to resign.

 

5.2                                        Since the Effective Date, other than in the ordinary course of business none of the Group Companies:

 

(a)                       has terminated or otherwise lost the services of its directors, officers and Key Employees, and its business relationships with customers, suppliers and others having business dealings with each Group Company;

 

(b)                       has created, extended, granted, issued, allowed, or have agreed to create, extend, grant, issue or allow any Encumbrances over any of its Assets;

 

(c)                        has disposed of or grant any option or right of pre-emption (voorkeursrecht) in respect of any material part of its Assets;

 

(d)                       has created, issued, increased, acquired, reduced, repaid, redeemed or disposed of, or have agreed to create, issue, increase, acquire, reduce, repay, redeem or dispose of any shares or equity interests or securities convertible into shares or equity interests or loans;

 

(e)                        has given or transferred, or has agreed to give or transfer, any option in respect of any shares or loans;

 

(f)                         has incurred any liability with a value more than EUR 25,000 (in words: twenty-five thousand euro);

 

(g)                        has entered into any capital commitment that (i) individually exceeds EUR 10,000 (in words: ten thousand euro) or (ii) together with all other capital commitments entered into after the date of this Agreement exceeds EUR 30,000 (in words: thirty thousand euro);

 

(h)                      has increased, or agreed to increase the remuneration (including fringe, retirement, death or disability benefits) of any of its directors, officers or Employees, has declared any bonuses for any of its directors, officers or Employees or has made any material change in the provisions of employment of any of its directors officers or Employees or employ;

 

(i)                          has permitted any of their policies of insurance to lapse or to the Best Knowledge of the Sellers has done anything which would make any policy of insurance void or voidable or otherwise modified, cancelled or terminated any of their policies of insurance;

 

64

 

(j)                          has entered into or have ended any agreement, including any lease, hire purchase, instalment sale, insurance or license agreement;

 

(k)                       has incurred any indebtedness or assumed, guaranteed or otherwise became responsible for the obligations of, or made any loans or advances to, any other person, or made any payments out of or drawings on their respective bank accounts (except routine payments, consistent with past practice);

 

(l)                           has modified, amended, altered, revoked, rescinded, terminated or acted, or omitted to act, in any way which affects, or could affect, the provisions, validity or enforceability of any of their contracts, commitments, licences or agreements;

 

(m)                   has entered into any agreement or arrangement with the Seller or any of its Affiliates or have made any payment to the Seller or any of its Affiliates, except on arm’s length terms;

 

(n)                       has declared, paid or agreed to pay or declare any dividend or have made or agreed to make any distribution in kind, whether from capital or reserves, including the acquisition of own shares and the reduction of share capital or otherwise paid or agreed or to make any payments to the shareholders of the relevant Group Company;

 

(o)                       has changed or agreed to change the principal amount or otherwise amend the terms of any debt of the Group Companies;

 

(p)                       have made any change to its policy concerning the payment of creditors;

 

(q)                       has disclosed any confidential information to any third party;

 

(r)                          has done or have omit to do or have caused to allow to be done or to be omitted to be done any act or thing that is inconsistent with the provisions of this Agreement or the consummation of the Transaction;

 

(s)                         has paid, discharged or satisfied any claims (whether or not such claims are already the subject matter of judicial or arbitration proceedings), liabilities or obligations (whether absolute, accrued, contingent or otherwise qualified), nor have they cancelled any debt;

 

(t)                          has changed Accounting Principles;

 

(u)                       has amended their articles of association, bylaws, or any other comparable constitutional document or adopted a plan of complete or partial liquidation, or authorised, approved or effected any dissolution, merger, consolidation, restructuring, recapitalisation or reorganisation;

 

(v)                       has entered into or been made subject to any collective bargaining agreement or amendment thereto;

 

(w)                     has made or has changed any material Tax election, has amended any Tax return or has taken any Tax position on any Tax return, in case it would

 

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reasonably be expected to have the effect of materially increasing the Tax liability of any Group Company; and

 

(x)                       to the Best Knowledge of the Sellers has entered into any commitment or allowed any situation to be maintained which could result in any of the above.

 

5.3                                        The Sellers have notified the Purchaser of any prospective judicial or arbitration proceedings directly or indirectly relating to the Group Companies and have kept the Purchaser informed of all developments after the first notification.

 

5.4                                        There exists no actual or, to the Best Knowledge of the Sellers threatened termination, cancellation or limitation of, or any adverse modification or change in the business relationship of, any Group Company with any supplier, customer or other business relationships or any group of suppliers, customers or business relationships whose purchases or services provided to any Group Company are individually or in the aggregate material to the condition of such Group Company, and there exists no present condition or state of facts or circumstances that would prevent the Group Companies from conducting such business relationships with any such supplier or customer or group of suppliers or customers in the same manner as heretofore conducted by the Group Companies.

 

6                                                  The Accounts

 

6.1                                        The 2013 Accounts are attached hereto as Appendix 6.1. The 2013 Accounts have been prepared in accordance with and comply with all Applicable Laws and the Accounting Principles. The 2013 Accounts are not affected by any unusual or non-recurring items. The 2013 Accounts present a true, accurate and fair view of the financial position of each of the Group Companies as at the end of and the results of each of the Group Companies for the calendar year ending on 31 December 2013 contain no omissions and truly, accurately and fairly represent:

 

(a)                       each of the items separately specified in the balance sheet and profit and loss statements;

 

(b)                       the consolidated financial position of each of the Group Companies as per the Balance Sheet Date; and

 

(c)                        the consolidated results of operations of each of the Group Companies during the financial period to which they relate.

 

6.2                                        The 2013 Accounts are not affected by any unusual or non-recurring items and contain either provisions adequate to cover, or full particulars in the notes to the Accounts of, all Tax (including deferred Tax) and other liabilities (whether qualified, contingent or otherwise) of the Group Companies at the Balance Sheet Date, except as set out in the Disclosed Information.

 

6.3                                        The 2013 Accounts and the Interim Accounts have been prepared on a basis consistent with the basis employed in the Group Companies’ annual accounts for each of the three (3) preceding financial periods without any change in the accounting policies used.

 

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6.4                                        The Interim Accounts are attached hereto as Appendix 6.1. The Interim Accounts have been prepared in accordance with and comply with all Applicable Laws and the Accounting Principles. The Interim Accounts are not affected by any unusual or non-recurring items. The Interim Accounts present a true, accurate and fair view of the financial position of each of the Group Companies as at the end of and the results of each of the Group Companies for the calendar year ending on 31 August 2014 contain no omissions and truly, accurately and fairly represent:

 

(a)                       each of the items separately specified in the balance sheet and profit and loss statements;

 

(b)                       the consolidated financial position of each of the Group Companies as per the Interim Accounts Date; and

 

(c)                        the consolidated results of operations of each of the Group Companies during the financial period to which they relate.

 

6.5                                        The Interim Accounts are not affected by any unusual or non-recurring items and contain either provisions adequate to cover, or full particulars in the notes to the Accounts of, all Tax (including deferred Tax) and other liabilities (whether qualified, contingent or otherwise) of the Group Companies at the Interim Accounts Date, except as set out in the Disclosed Information

 

6.6                                        All financial and accounting records of the Group Companies have been properly maintained, duly and timely filed and constitute a true and complete record of all matters which ought to appear in them. All other records of the Group Companies have been properly and adequately maintained and duly and timely filed whenever legally required. These books and records of account are true and complete and truly and fairly reflect all of the assets, rights, liabilities and transactions of any and each of the Group Companies.

 

6.7                                        No Group Company has issued general guarantees for the benefit of, or is otherwise generally liable for obligations of third parties (including for the avoidance of doubt any member of the Sellers’ Group).

 

6.8                                        Each of the Group Companies has complied in all material respects with all applicable legal requirements concerning the publication and filing of its annual accounts.

 

7                                                  Indebtedness, loans and bank accounts

 

7.1                                        None of the Group Companies has outstanding any loan capital or any money borrowed or raised from any person or entity not being another Group Company, including money raised by promissory note or debt factoring or any liability (whether present or future) in respect of any guarantee or indemnity.

 

7.2                                        None of the Group Companies has lent any money to any person or entity, not being another Group Company, which has not been repaid to any of them nor does any of them own the benefit of any debt (whether present of future) other than debts accrued to it in the ordinary course of its Business.

 

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8                                                  Assets

 

8.1                                        The Group Companies have full legal and beneficial title to the Assets, except for such part of the Assets as has been sold by the Group Companies in the ordinary course of business since the date of the 2013 Accounts. The Assets are free and clear of any Encumbrance. The title to the Assets has only been retained by third parties to the extent that any reservation of title (eigendomsvoorbehoud) has been agreed upon between the Group Companies and the relevant suppliers in the ordinary course of business.

 

8.2                                        No Group Company holds assets under any agreement for lease, hire, hire purchase, retention of title or sale on conditional or deferred terms.

 

8.3                                        None of the Group Companies has been a party to a transaction pursuant to or as a result of which an Asset owned, purportedly owned or otherwise held by any of them is liable to be transferred or re-transferred to another person.

 

8.4                                        The stock is, in the ordinary course of business of the Group Companies, in good and marketable condition, except to the extent that a provision for obsolete or slow moving stock is made.

 

8.5                                        The property rights and Assets owned, leased or otherwise used by the Group Companies are in good repair and condition, comprise all the assets necessary for the conduct of the Business of the Group Companies.

 

9                                                  Lease

 

9.1                                        The Group Companies do not own any real estate (onroerend goed) nor have owned any real estate in the last ten (10) years.

 

9.2                                        All leases the Group Companies have entered into are listed in the Disclosed Information. All the rights and obligations of the Group Companies with regard to the Leases are limitative included in the Leases.

 

9.3                                        Each Lease complies with all Applicable Laws and regulations and whenever capable of registration has been registered, is in full force and effect and the relevant Group Company has fully complied with its obligations under it.

 

9.4                                        On termination of any Lease no Group Company will be under any obligation to restore the premises held under that lease to the state of the premises at the start of the lease.

 

9.5                                       No Group Company has made any renovation or alteration of any premises held under any Lease other than on the basis of and in accordance with the prior permission or consent of the relevant landlords and/or - to the extent applicable - the relevant Governmental Entity or quasi-Governmental Entity.

 

9.6                                        No Group Company has sublet any premises held under any Lease other than on the basis of and in accordance with the prior permission or consent of the relevant

 

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landlords and/or - to the extent applicable - the relevant Governmental Entity or quasi-Governmental Entity.

 

9.7                                        No Group Companies has received any order or instruction with respect to carry out improvements or repairs of any premises held under any Lease which remains outstanding.

 

9.8                                        The Leases comprises all the (real) property necessary for the Group Companies to carry on their Business in a manner in which it is presently conducted.

 

9.9                                        There is no covenant, restriction, burden, stipulation or cost affecting any premises held under any Lease, which is of an onerous or unusual nature or which conflicts with its present use or materially affects its value.

 

9.10                                 In relation to each Lease, the (ground) rent, service costs, taxes and other costs have been paid and all obligations have been fulfilled up to date and the securities have been furnished.

 

9.11                                 The Group Companies are not in breach under the Leases.

 

10                                           Taxes

 

Tax liability

 

10.1                                 The Group Companies have been duly and timely registered for Tax purposes in their country of incorporation.

 

10.2                                 None of the Group Companies is, or has ever been liable to Tax in the past ten (10) years preceding the date of this Agreement in a country, other than the country of its incorporation (a Foreign Country), as a result of:

 

(a)                      it being considered a resident for any Tax purpose in a Foreign Country; or

 

(b)                      it having a branch, agency or permanent establishment in a Foreign Country; or

 

(c)                       it being considered to be a branch, agency or permanent establishment of a company in a Foreign Country; or

 

(d)                      it owning shares in a subsidiary in a Foreign Country.

 

10.3                                 The Group Companies and the Sellers (in case of a consolidated Tax Return that includes a Group Company) have duly and timely paid all Taxes due in relation to each Group Company and all Taxes for which such Group Company is liable, and, to the extent that any Taxes are due or liable but not yet fully paid on the Completion Date, the difference is fully and specifically provided for in the 2013 Accounts.

 

10.4                                 No penalties or interest charges are or will become due, except to the extent the relevant amount of such penalties or interest charges is fully and specifically provided for in the 2013 Accounts.

 

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10.5                                 None of the Group Companies is liable for Taxes imposed on or due by any third party, except to the extent the relevant amount of such Taxes is fully and specifically provided for in the 2013 Accounts.

 

10.6                                 The Group Companies have made all deductions in respect, or in account of, any Tax from any payments made by it which it is obliged or entitled to make and has accounted in full to the appropriate authority for all amounts so deducted.

 

Compliance

 

10.7                                 The Group Companies and the Sellers (in case of a consolidated Tax Return that includes a Group Company) have each duly and timely filed all Tax Returns and all such Tax Returns have been true, correct, and complete and filed in the proper form.

 

10.8                                 All details concerning any requested and/or granted extensions in time for the filing of any Tax Returns in relation to the Group Companies are set out in the Disclosed Information.

 

10.9                                 All records which the Group Companies are required to keep for Tax purposes, are duly kept, and are available for inspection, at each of the Group Companies’ premises.

 

10.10                          The Group Companies do not have any intention or commitment to conclude, in the period up to the Completion Date, with any Tax Authority any agreement, ruling or compromise in connection with Tax.

 

10.11                          Neither any of the Group Companies nor any of the Sellers (in case of a consolidated Tax Return that includes a Group Company) is computing its taxable amount in a currency other than the lawful currency of its country of incorporation.

 

10.12                          Neither any of the Group Companies nor any of the Sellers (in case of a consolidated Tax Return that includes a Group Company) is or has been involved nor is it likely that it will be involved, in any dispute, disagreement, legal proceeding or appeal with any Tax Authority or any other person concerning any matter likely to affect any Tax liability of a Group Company and no investigation, visit or audit by any Tax Authority is currently announced, threatening to occur or pending.

 

Fiscal unity

 

10.13                          The Disclosed Information sets out full particulars of all Tax regimes that each of the Group Companies is subjected to and results either in the filing of Tax Returns on a consolidated basis or a transfer of profits or losses to other entities within the Sellers’ Group prior to the Completion Date.

 

10.14                          No Group Company has been involved in any “tainted transaction” within the meaning of article 15ai Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated) in the current financial year and the six (6) previous financial years preceding the date of this Agreement.

 

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Participation exemption

 

10.15                          None of the shareholdings owned by the Group Companies qualify as a low taxed passive participation within the meaning of article 13(9) of the Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated).

 

10.16                          Neither any of the Sellers nor any of the Group Companies qualifies or has qualified in the past as an investment institution (beleggingsinstelling) within the meaning of article 28 or (previously) article 28b of the Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated).

 

10.17                          None of the Group Companies has depreciated receivables on affiliated entities (within the meaning of article 10a, paragraph 4, of the Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated)) against taxable income.

 

10.18                          None of the Group Companies has depreciated for Tax purposes a shareholding to which the Dutch participation exemption (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated) applies.

 

10.19                          None of the Group Companies qualifies or has qualified in the past as a group financing company within the meaning of (previously) article 15b of the Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated).

 

No recaptures

 

10.20                          The entering into this Agreement and the execution thereof will have no impact on the Tax position of the Group Companies, including any agreement, ruling, or compromise with any Tax Authority and the application of favourable Tax regimes.

 

10.21                          During the current financial year and the five (5) previous financial years preceding the date of this Agreement, none of the Group Companies has claimed or has been granted exemptions from Taxes in connection with reorganisations or mergers, and there are no reorganisations or mergers which have come into effect on or before the date of this Agreement, which will or may give rise to the assessment or payment of Taxes after the date of this Agreement.

 

10.22                          None of the Group Companies has debt outstanding on which interest would not be deductible, including as a result of articles 10, 10a, 10b or 13l and/or 15ad of the Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969).

 

10.23                          Neither the Group Companies nor any of the Group Companies’ directors in their position as director of any of the Group Companies have ever been the subject of a criminal investigation, accused or found guilty of fraud, relating to or involving Tax.

 

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10.24                          During the current financial year and the five (5) previous financial years preceding the date of this Agreement, none of the Group Companies has acted as contractor or subcontractor as defined in the Chain Liability Act (Wet Ketenaansprakelijkheid) of the Dutch Collection Act 1990 (Invorderingswet) or other comparable provisions of Applicable Laws in other countries where a Group Company was incorporated. Consequently, none of the Group Companies is or will become liable to Tax chargeable primarily on any other person, body of persons, entity or company, including, without limitation, social security payments for subcontractors. The Sellers and each of the Group Companies have taken all measures to avoid, to the greatest extent possible, a potential claim under article 35 of the Dutch Collection Act 1990.

 

10.25                          During the current fiscal year and for the five previous fiscal years preceding the date of this Agreement, neither the Sellers nor any of the Group Companies has used hired-in personnel, as defined in article 34 (recipients’ liability) of the Dutch Collection Act 1990 (Invorderingswet) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated), and the relevant associated order and directives. Each of the Sellers and each of the Group Companies have taken all measures to avoid, to the greatest extent possible, a potential claim under article 34 of the Dutch Collection Act 1990 (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated).

 

10.26                          Neither the Sellers nor the Group Companies have ever contracted employees without a work permit based on the Foreign Nationals (Employment) Act (Wet arbeid vreemdelingen) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated).

 

10.27                          Each of the Sellers and each of the Group Companies have taken all measures to avoid, to the greatest extent possible, a potential claim under the Dutch Placement of Personnel by Intermediaries Act (Wet allocatie arbeidskrachten door intermediairs) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated).

 

10.28                          None of the Group Companies has ever acted as the liquidator (vereffenaar) of any entity in the sense of the Dutch General Tax Act (Algemene wet inzake rijksbelastingen) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated). None of the Group Companies has ever acted as a managing director of any entity in the sense of the Dutch General Tax Act (Lichaam in de zin van de Algemene wet inzake rijksbelastingen) or the Dutch Collection Act 1990 (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated). None of the Group Companies has ever acted as an executor of a will (executeur-testamentair).

 

10.29                          The capital of the Group Companies is equal to the amounts stated in Appendix 10.29, and is capital recognised for Tax purposes within the meaning of article 3a of the Dutch Dividend Tax Act 1965 and comparable provisions of Applicable Laws, regulations and orders in other countries where the Group Companies are resident.

 

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10.30                          None of the Group Companies will lose its right to carry forward losses, fully or partially, as a result of the entering into this Agreement or the implementation thereof.

 

10.31                          On the assumption that disposals are made for a consideration equal to the book value shown in or adopted for the purposes of the 2013 Accounts, no charge to Tax would arise on the disposal by the Group Companies of any of its or their assets.

 

10.32                          No claim has been made for the depreciation of any asset of any of the Group Companies for Tax purposes in circumstances in which the claim is likely to be disallowed.

 

10.33                          The Disclosed Information sets out full particulars of all claims and elections made (or assumed in the 2013 Accounts, to be made) insofar as they could affect the taxable gain or allowable loss which would arise in the event of a disposal after the Completion Date by the Group Companies of any of its or their assets.

 

10.34                          None of the Group Companies is under any obligation to pay nor has it since the Completion Date paid or agreed to pay any compensation for loss of office or for any gratuitous payment not deductible in computing its income for Tax purposes.

 

IP Regimes

 

10.35                          The Disclosed Information sets out full particulars of all Tax regimes that each of the Group Companies is subjected to relating to intellectual property (immaterieel activum) within the meaning of article 12b of the Dutch Corporation Tax Act 1969 (Wet op de vennootschapsbelasting 1969) or other comparable provisions of Applicable Laws in other relevant jurisdictions.

 

Transfer pricing

 

10.36                          All transactions or arrangements between the Group Companies and the Sellers’ Group are and were effected on arm’s length terms and no such transactions or arrangements involving the Group Companies have taken place or are in existence that are such that any provision relating to transfer pricing might be invoked by any Tax Authority, affecting the Tax position of the Group Companies.

 

10.37                          Each of the Group Companies has all relevant information available to demonstrate and defend its transfer pricing position, including (where applicable) a copy of all Sellers’ transfer pricing documentation that meets the requirements of Dutch and German tax regulations.

 

Value added tax

 

10.38                          Each of the Group Companies is registered with the Tax Authorities in their country of incorporation as an “entrepreneur” for Value Added Tax, Goods and Services Tax, Sales Tax, or similar taxes (VAT) purposes.

 

10.39                          During the current financial year and the five (5) previous financial years preceding the date of this Agreement all Value Added Tax charged to any of the Group Companies was fully refundable and was fully refunded.

 

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10.40                          No Group Company has decided or agreed to decide that any rents paid or received or the acquisition of any real estate will be subject to VAT.

 

10.41                          No Group Company owns any assets to which the provisions of article 13 of the Executionary Decree Value Added Tax 1968 (Uitvoeringsbeschikking Omzetbelasting) (or other comparable provisions of Applicable Laws in other countries where a Group Company was or is incorporated) apply.

 

11                                           Management, Employees

 

11.1                                 The Disclosed Information contains for each Group Company the employment agreements with their respective Employees.

 

11.2                                 There are no persons holding power of attorney or who are authorised to dispose of any funds of the Group Companies or to commit or bind the Group Companies in any other way.

 

11.3                                 None of the Group Companies nor any of the Sellers has made any commitment towards the Employees, the staff association or the trade unions as regards a future change to the employment conditions of the Employees, other than in the ordinary course of business.

 

11.4                                 Other than one Employee loan of EUR 1,500, there are no outstanding loans, advances or guarantees by a Group Company to or for the benefit of any Employee or any person connected with any of them, and no Group Company has provided any financial assistance to an Employee, or past or prospective Employee, which is outstanding, nor is there any amount due, as per the date of this Agreement, to any Employee (or his/her dependants) other than for accrued remuneration or reimbursement of reasonable business expenses incurred in the ordinary course of business.

 

11.5                                 None of the Group Companies has within the period of two (2) years before the date of this Agreement initiated any collective dismissal or entered into a social plan.

 

11.6                                 No redundancy, change of termination of the employment and/or pension conditions is pending or in progress with respect to any Employee of any Group Company.

 

11.7                                 There is no term of employment for any Employee of any Group Company which provides that a change of control of any Group Company shall entitle the Employee to any payment or benefit whatsoever or to treat himself as redundant or otherwise dismissed or released from any obligation. Neither the execution of this Agreement or the Transaction documents, nor Completion shall give rise to any obligation to pay a bonus, indemnity or any other sum to any Employees, directors and/or officers of any Group Company.

 

11.8                                 The Group Companies have no current obligations with respect to severance, pension, bonus, profit sharing, stock purchase or stock option plans, company saving plans or employee funds provided by the Group Companies other than those required by law or applicable bonus regulations. None of the Group Companies is bound by collective bargaining agreements and to the Best Knowledge of the Sellers there are

 

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no customs and procedure or general promises in place at any of the Group Companies.

 

11.9                                 The Company does not fall within the scope of a mandatory industry wide pension fund.

 

11.10                          No current or former Employee has seriously injured himself at work or contracted any serious illness or disease at work.

 

11.11                          To the Best Knowledge of the Sellers the Group Companies have complied with all applicable labour law, regulations, instructions and obligations imposed by the competent local authorities in the fields of labour law, social security law, health and safety law, as well as with the provisions of the employment agreements and any other labour related contract.

 

11.12                          All Employees are bound by an effective and valid non-competition agreement or clause, which fully complies with the applicable legal requirements and such agreement or clause can be waived by the Group Companies.

 

11.13                          No claim in relation to the Group Companies’ current or former Employees, managing directors or officers has been made during the three (3) years preceding the date of this Agreement, or to the Best Knowledge of the Sellers has been threatened, against any Group Company or against any person whom any Group Company is liable to indemnify.

 

11.14                          There is not, and during the three (3) years preceding the date of this Agreement there has not been, any collective labour dispute or industrial action affecting any Group Company and to the best of the knowledge, information and belief of any of the Sellers there are no facts or circumstances which might give rise to any collective labour dispute.

 

11.15                          There are no strikes, work stoppages, slowdowns or lockouts or other material labour disputes pending or to the Best Knowledge of the Sellers threatened against or involving any Group Company.

 

11.16                          No Employee has within a period of five (5) years before the date of this Agreement been involved in any criminal proceedings relating to the Business.

 

11.17                         To the best of Sellers’ knowledge, there is no social security or wage tax audit in progress involving any Group Company.

 

11.18                          To the best of Sellers’ knowledge no Employee is or was, due to illness, injury or other disability, unable to work (arbeidsongeschikt), or absent from work, for a period of more than two (2) consecutive months.

 

11.19                          No Employee or former Employee has suffered an illness, injury or other disability in the performance of his duties/activities that has resulted or may result in a claim against any of the Group Companies.

 

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11.20                          No Employee is sick and/or disabled (arbeidsongeschikt) according to the Work and Income (Capacity for Work) Act (Wet werk en inkomen naar arbeidsvermogen), other than described in the Disclosed Information. The Group Companies have fully complied with the statutory obligation to reintegrate any (formerly) disabled employee(s).

 

12                                           Agreements, relations

 

12.1                                 All material agreements to which any of the Group Companies is a party at the date of this Agreement are set out in the Disclosed Information (Material Agreements). All the Material Agreements are in full force and effect and are validly binding on the Group Companies and to the Best Knowledge of the Sellers on the counterparties of the Group Companies.

 

12.2                                 None of the Group Companies is in default with respect to the performance of contractual obligations or any other obligations in relation to the Material Agreements and to Sellers’ Best Knowledge there are no circumstances that could give rise to such a default.

 

12.3                                 No party with whom a Group Company has entered into a Material Agreement has given notice of its intention to terminate, or has sought to repudiate, cancel or disclaim, the Material Agreement, or change its terms. To the Best Knowledge of the Sellers, no fact or circumstance exists, including the entering into of this Agreement or any agreement contemplated by the Transaction, which might invalidate or give rise to a ground for termination, avoidance, cancellation or repudiation of a Material Agreement or change its terms to which a Group Company is a party.

 

12.4                                 During a period of 3 (three) years prior to the date of this Agreement no business partner of the Group Companies has claimed for a compensation as a result of or in connection with the termination of the contract or the contractual relationship between such business partner and the respective Group Company.

 

12.5                                 To the Best Knowledge of the Sellers, this Agreement and the consummation of the Transaction does not and will not cause any existing material legal relationship with any of the Group Companies to be varied or terminated or give any material supplier, customer or other business partner the right to vary or terminate any such relationship and will not affect any right, claim or obligation of any of the Group Companies.

 

12.6                                 No Group Company is or has agreed to become a member of a joint venture, consortium, partnership or association (other than a bona fide trade association).

 

12.7                                None of the Group Companies has given any guarantee or warranty, or made any representations in respect of a sale of shares or an undertaking or part of an undertaking.

 

13                                           Intragroup arrangements and subsidies

 

13.1                                 None of the Group Companies has made any payments to any of the Sellers and/or any of its Affiliates, other than salary payments and/or management fees in the ordinary course, nor are there any amounts due to the Seller and/or any of its Affiliates

 

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by any Group Company, nor is any of the Sellers and/or any of their Affiliates entitled to any payment by any of the Group Companies.

 

13.2                                 To Sellers’ Best Knowledge, no fact or circumstance (including, without limitation, the execution and performance of this Agreement) exists which might entitle a Governmental Entity to require repayment of, or refuse an application by a Group Company for, the whole or part of a grant or subsidy and no Group Company is liable or likely to be liable to repay an investment or grant of subsidies.

 

14                                           Insurance

 

14.1                                 The Group Companies’ insurance policies (i) are in full force and effect, valid and enforceable and (ii) to the Best Knowledge of the Sellers provide adequate insurance coverage for all the Assets and activities of each Group Company both before and after the Completion Date.

 

14.2                                 All Group Companies comply with all requirements under the Group Companies’ insurance policies to maintain adequate coverage. No notices of default with respect to any provision of any Group Companies’ insurance policies have been received by any Group Company and all premiums due on such insurance policies have been paid. All such policies are in full force and effect and will not be impaired as a result of the performance of this Agreement.

 

14.3                                 The Group Companies have timely and properly made all claims and given all notices necessary for the Group Companies to make recovery under the insurance policies. In addition, during the period of two (2) years prior to the date of this Agreement, no insurance claim filed by the Group Companies was denied by the relevant insurance company.

 

14.4                                 No insurance company with whom a Group Company has entered into an insurance policy has given written notice of its intention to terminate, or has sought to repudiate, cancel or disclaim, the insurance policy or change or indicated to change the terms of such insurance policy.

 

14.5                                 All liabilities pre-Completion arising out of insured risks or incidents under insurance policies of the Group Companies but occurring post-Completion shall remain or continue to be insured on an occurrence basis.

 

15                                           No brokers’ fees

 

15.1                                No person has or will receive any payment, finder’s fee or similar fee, commission or other benefit or compensation, fee for financial, accounting or legal advisory services or other similar fees, commission or compensation in connection with the Transaction or any related agreement made by or on behalf of any Group Company, nor will any of the Group Companies have any obligation to pay any such amount, fee, commission, benefit or compensation as a result of the consummation of the Transaction contemplated by this Agreement other than as provided for in this Agreement.

 

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16                                           Permits

 

16.1                                 The Group Companies have obtained all licences and permits including environmental permits (the Permits) required for the current operation of the Business in the places and manner in which such Business is now carried on. Each of the Permits is in full force and effect and is not subject to any appeals of further proceedings and no notice of amendment, cancellation, non-prolongation or non-renewal has been received. The Group Companies conduct their Business in accordance with the Permits and the terms and conditions relating thereto.

 

16.2                                 To Sellers’ Best Knowledge, there are no facts or circumstances that are likely to give rise to the amendment, cancellation, non-prolongation or non-renewal of any of the Permits as a result of the execution or the performance of this Agreement.

 

16.3                                 All appropriate or necessary action in connection with the renewal or extension of any Permit has been taken.

 

17                                           Litigation/Compliance with Applicable Laws

 

17.1                                 None of the Group Companies or any of their respective directors or officers, nor, any of their respective Employees, associated or affiliated persons is party to any disputes or civil, regulatory, financial, administrative, penal or disciplinary proceedings (including litigation, arbitration and binding advice proceedings) involving an amount in excess of EUR 25,000 (in words: twenty five thousand euro) (other than as claimant in the collection of debt in the ordinary course of business) nor the subject of any investigation by any Governmental Entity. To Sellers’ Best Knowledge, no such disputes, proceedings and/or investigations are threatened.

 

17.2                                 None of the Group Companies nor any of their respective directors or officers or any of their respective Employees, associated persons or affiliated persons, has been enjoined by the order of any Governmental Entity from engaging in or continuing any conduct or practice in connection with any activity currently conducted by the Group Companies.

 

17.3                                 No Group Company has engaged in any act or has permitted to exist any state of affairs which has (i) led to a request by any Governmental Entity to modify or change the manner in which its Business is or was carried on, (ii) led to the imposition of specific conditions in respect of the conduct of its Business, or (iii) resulted in any disciplinary or enforcement action being commenced or threatened against any Group Company. None of the Group Companies is a to the Best Knowledge of the Sellers party to any agreement with, or subject to any order of, any Governmental Entity which imposes conditions more restrictive than the ones set forth in the Applicable Laws regarding their capital adequacy, risk management, asset/liability management or credit policies or management, nor has any Group Company to the Best Knowledge of the Sellers been advised or, orally by any Governmental Entity that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order or agreement.

 

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17.4                                 With respect to each of the Group Companies, there is no pending or, to the Best Knowledge of the Sellers threatened, and there has not been in the past any audit, review, enforcement action, order or disclosure by any of them to a Governmental Entity regarding a violation or non-compliance of any Applicable Law or legal non-compliance with respect to corrupt practices, money laundering, unlawful trade or commerce, or unlawful technology transfer laws.

 

17.5                                 To the Best Knowledge of the Sellers, none of the Sellers nor any of their directors, agents, members, managers, distributors, current or former Employees or other person associated with or acting on their behalf, has:

 

(i) directly or indirectly, taken any action which would cause any of the Sellers to be in violation of any Applicable Laws regarding anti-corruption or anti-bribery (as in effect at the time of such action), and

 

(ii) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, made, offered or authorized any unlawful payment to foreign or domestic government officials or employees, whether directly or indirectly, or made, offered or authorized any unlawful bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment, whether directly or indirectly, while knowing that all or a portion of such money or thing of value will be offered, given or promised to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty.

 

18                                           Intellectual property rights

 

18.1                                 The Group Companies (i) have full legal and beneficial title and may freely dispose of the domain names, the trademarks and the trade names, and (ii) have been granted the licences and other agreements, as set out in the Disclosed Information (together the Intellectual Property Rights).

 

18.2                                 All agreements and registrations relating to the Intellectual Property Rights are in full force and effect and have not been revoked or terminated nor will be revoked, terminated or modified as a result of any Transaction. There is no breach or default (or event which with notice or lapse of time would become a default) by any Group Company under any of such agreements. Other than as specified in the agreements entered into in connection with the licensed Intellectual Property, no royalty or licensing fee is, or other payment or consideration or will be, payable to any person in respect of any Intellectual Property Rights used by any Group Company.

 

18.3                                 The Group Companies have taken appropriate measures to protect the Intellectual Property Rights, whether registered or unregistered. Nothing has been done or omitted to be done by any Group Company by which any registration or application for registration, of Intellectual Property Rights by the Company is or will be subject to cancellation, limitation or other adverse modification.

 

79

 

18.4                                 None of the Group Companies uses any Intellectual Property Rights which infringes any third party’s rights and the Intellectual Property Rights of the Group Companies are not being infringed by third parties.

 

18.5                                 The Group Companies have all the Intellectual Property Rights necessary for each Group Company to carry on its Business as conducted at the date of this Agreement.

 

18.6                                 Where licences have been granted to a Group Company, the relevant Group Company has at all times complied with the license agreement(s) in all material respects.

 

18.7                                 To the Best Knowledge of the Sellers no name or mark identical or similar to the names and marks owned by the Group Companies has been registered or is being used by any person in the same or similar business as the Business in the countries in which any of the Group Companies has registered or is using such name or mark.

 

19                                           Data Protection

 

19.1                                 The Business of the Group Companies complies with any applicable privacy and data protection laws, including but not limited to the Data Protection Act (Wet Persoonsregistratie) and the Database (Legal Protection) Act (Databanken Wet) and, if required, notifications in relation to data controlled or processed by any Group Company have been made and the required approvals of data protection authorities have been obtained. No Group Company has received any claim from any individual or any authority seeking compensation and/or imposing a penalty for breaches, actual or alleged, of applicable privacy and data protection laws. The transfer of the Shares as contemplated will not result in any liabilities in connection with data protection or privacy laws.

 

20                                           Disclosed Information

 

20.1                                 All information supplied by any of the Sellers or their Representatives to the Purchaser or its Representatives as referred to in the Disclosed Information is true, accurate and not misleading, whether by omission or otherwise.

 

20.2                                 The Sellers are not aware of any facts, circumstances or other information, which Sellers reasonably believe to be relevant for a prospective buyer of the Shares that has not been Fairly Disclosed in the Disclosed Information.

 

20.3                                 The documents, statements and any other information furnished to the Purchaser and its Representatives by any of the Sellers or their Representatives in connection with the Transaction contemplated by this Agreement to the Best Knowledge of the Sellers:

 

(i)                          accurately represents the Business, income, Assets, contractual relationships, results of operation and liabilities and affairs of each Group Company as of the date of this Agreement; and

 

(ii)                       does not contain any untrue statement or fact and does not omit any statement or fact, the omittance of which would make such statement or fact false or misleading.

 

80

 

ANNEX 13.6 — PURCHASER’S WARRANTIES

 

A.                                   The Purchaser is a company duly incorporated and validly existing under the laws of the jurisdiction where it has been incorporated.

 

B.                                   The Purchaser has full corporate power and authority to enter into this Agreement and to perform fully the obligations to be performed by it hereunder, and this Agreement is valid and binding upon the Purchaser and enforceable in accordance with its terms.

 

C.                                   The execution and delivery of this Agreement by the Purchaser will not, and the consummation of the Transaction and the compliance by the Purchaser with the provisions of this Agreement will not, result in a breach of or constitute a default under (i) any provision of the articles of association or other constitutional documents of the Purchaser or (ii) any decree, order, rule of any court or government or agency thereof which is binding on the Purchaser.

 

D.                                   Other than as referred to in this Agreement, no consent or approval by, notice to or registration with any Governmental Entity or other authority is required on the part of the Purchaser in connection with the execution of this Agreement or the consummation of the Transaction.

 

E.                                    The Purchaser has obtained all relevant internal approvals to enter into this Agreement, to perform the obligations to be performed by it hereunder and to complete the Transaction.

 

81

 

SIGNATURE PAGES

 

Sellers

 

	
Lewis   Holding B.V.
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ D.F.M. Lewis
    	
 
    	
 
    
	
Name:
    	
Mr D.F.M. Lewis
    	
 
    
	
Title:
    	
Director
    	
 
    
	
 
    	
 
    	
 
    
	
Address:
    	
Johannes Verhulststraat 126-2 1071 NM   Amsterdam, the Netherlands
    
	
Attention:
    	
Mr D.F.M. Lewis
    	
 
    
	
Tel:
    	
·
    	
 
    
	
Fax:
    	
·
    	
 
    
	
E-mail:
    	
david@davidlewis.nl
    	
 
    
	
 
    	
 
    	
 
    
	
Mountain B.V.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ A.J. Hardenberg
    	
 
    	
 
    
	
Name:
    	
Mr A.J. Hardenberg
    	
 
    
	
Title:
    	
Director
    	
 
    
	
 
    	
 
    
	
Address:
    	
Siciliëboulevard 214, 3059 XT Rotterdam, the   Netherlands
    
	
Attention:
    	
Mr A.J. Hardenberg
    	
 
    
	
Tel:
    	
·
    	
 
    
	
Fax:
    	
·
    	
 
    
	
E-mail:
    	
ah@aldaevents.nl
    	
 
    
				

 

82

 

Purchaser

 

SFXE Netherlands Holdings B.V.

 

 

	
/s/ M. Slater
    	
 
    	
/s/ S. Finkel
    
	
Name:
    	
Mr M. Slater
    	
Name:
    	
Mr S. Finkel
    
	
Title:
    	
Director
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    	
 
    
	
Address:
    	
Prins Bernhardplein 200, (1097JB) Amsterdam,   the Netherlands
    
	
Attention:
    	
General Counsel
    	
 
    	
 
    
	
Tel:
    	
646-561-6385
    	
 
    	
 
    
	
Fax:
    	
646-417-7393
    	
 
    	
 
    
	
E-mail:
    	
howard@sfxii.com
    	
 
    	
 
    
					

 

Parent

 

	
SFX   Entertainment, Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/ R. van Straalen
    	
 
    	
 
    	
 
    
	
Name: 
    	
Mr R. van Straalen
    	
 
    	
 
    
	
Title: 
    	
Chief Operating Officer
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Address:
    	
430 Park Avenue, 6th floor, New   York, NY 10022 USA
    
	
Attention:
    	
General Counsel
    	
 
    	
 
    
	
Tel:
    	
646-561-6385
    	
 
    	
 
    
	
Fax:
    	
646-417-7393
    	
 
    	
 
    
	
E-mail:
    	
howard@sfxii.com
    	
 
    	
 
    
					

 

83

 

Company

 

	
Alda   Holding B.V.
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/ A.J. Hardenberg
    	
 
    	
 
    	
 
    
	
Name:
    	
Mountain B.V.
    	
 
    	
 
    
	
Title:
    	
Director
    	
 
    	
 
    
	
Name:
    	
Mr A.J. Hardenberg
    	
 
    	
 
    
	
Title:
    	
Director
    	
 
    	
 
    
					

 

For acknowledgement and acceptance in accordance with Clause 20.3, Clause 21.1 and Clause 22 hereof:

 

	
Mr   D. Lewis
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/ D. Lewis
    	
 
    	
 
    	
 
    

 

	
Mr   A. Hardenberg
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
/s/ A. Hardenberg
    	
 
    	
 
    	
 
    

 

84Exhibit 10.1

 

Exhibit
10.15

 

COLLABORATION
AGREEMENT

 

THIS
COLLABORATION AGREEMENT (“Agreement”) is made as of this 18th day of August 2014 (the “Effective
Date”), by and between Capsugel US, LLC and its Affiliates with an address at 412 Mt. Kemble Ave, Suite 200C, Morristown,
NJ 07960 (“CAPSUGEL”) and Cardax, Inc., and its Affiliates, with a corporate address at 2800 Woodlawn Dr.,
Suite 129, Honolulu, HI 96822 (“CARDAX”). CARDAX and CAPSUGEL are each a “Party” and together constitute
the “Parties”

 

RECITALS

 

WHEREAS,
CAPSUGEL is experienced in formulating, developing, manufacturing, testing and packaging of health and nutrition products;
and

 

WHEREAS,
CARDAX is experienced in developing products that are based on its astaxanthin technologies; and

 

WHEREAS,
CAPSUGEL and CARDAX desire to enter into an arrangement under which the Product (as defined below) will be formulated and developed
for the purpose of identifying a marketing partner(s) (“Marketer”) for Marketer’s onward sale of the
Product in the Territory.

 

NOW,
THEREFORE, the Parties hereto agree to the following:

 

SECTION
1

 

DEFINITIONS

 

The
following terms for the purpose of this Agreement shall have the following respective meanings:

 

1.1
“Active Ingredient” shall mean the synthetic Astaxanthin and/or esters thereof that will be formulated in the
Product as the active ingredient of the Product.

 

1.2
“Adjusted Net Sales” shall mean [***].

 

1.3
“Administrative Cost” shall mean [***].

 

1.4
“Affiliate” shall mean, with respect to either Party, all entities which, directly or indirectly, are controlled
by, control or are under common control with such Party. For purposes of this Agreement, the word “control” shall
mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an
entity, including through ownership of more than fifty percent (50%) of the voting shares or interest of an entity; provided,
however, with respect to CAPSUGEL, the term “Affiliate” shall be limited to entities who directly or indirectly through
one or more intermediaries are controlled by the parent of CAPSUGEL’s direct parent entity and with respect to CARDAX the
term “Affiliate” shall not include Cardax Pharmaceuticals, Inc.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   1

    	 

    

 

1.5
“Applicable Laws” shall mean all applicable laws, statutes, ordinances, codes, rules and regulations applicable
to the formulation, development and/or manufacture, marketing, distribution sale, and disposal of the Product or any aspect thereof
and the obligations of CAPSUGEL or CARDAX, as the context requires under this Agreement.

 

1.6
“Annual Period” shall mean the twelve (12) month period beginning on the first day in which the Launch Date
occurs and each twelve (12) month period beginning on the anniversary of such day thereafter.

 

1.7
“Commercially Reasonable Efforts” means a Party’s reasonable efforts and diligence, consistent with professional
business standards generally practiced in the health and nutrition industry, applied in accordance with the Party’s commercially
reasonable business, legal, medical and scientific judgment, including the efforts and resources the Party would use for a product
owned by it or to which it has rights, which is of similar market potential at a similar stage in its product life, taking into
account the competitiveness of the marketplace, the proprietary position of the compound, the Applicable Laws, the profitability
of the applicable products, and other relevant factors including, without limitation, technical, legal, scientific or medical
factors.

 

1.8
“Development Plan” shall have the meaning set forth in Section 2.1.

 

1.9
“Disclosing Party” shall have the meaning set forth in the Confidentiality Agreement.

 

1.10
“Formulation” means a specific combination of excipient(s) that can formulate the Active Ingredient, as well
as compounds other than the Active Ingredient, developed as a result of the work conducted under the Development Plan.

 

1.11
“Force Majeure” shall have the meaning set forth in Section 10.5.

 

1.12
“Indemnified Party” shall have the meaning set forth in Section 8.3.

 

1.13
“Indemnifying Party” shall have the meaning set forth in Section 8.3.

 

1.14
“Intellectual Property Rights” means a composition of matter, formula, process, method of use, invention, improvement,
business name, domain name or database right to the extent any of the foregoing is protected in a utility model, trademark, service
mark, trade name or business name, copyright, registered design, design right, patent, know-how, trade secret, rights in or to
confidential information all goodwill related thereto and any other intellectual property right of any nature whatsoever throughout
the world (whether registered or unregistered and including all applications and rights to apply for the same).

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   2

    	 

    

 

1.15
“Launch Date” shall mean the date upon which Marketer first offers the Product for commercial sale in the
Territory .

 

1.16
“Loss or Losses” shall mean any and all damages, fines, fees, settlements, payments, obligations, penalties,
deficiencies, losses, costs and expenses, including, without limitation, environmental losses, interest, court costs, reasonable
fees of attorneys, accountants and other experts and other reasonable expenses of litigation or other proceedings or of any claim,
default or assessment.

 

1.17
“Manufacturing Facility” shall mean those areas of CAPSUGEL or CAPSUGEL’s subcontractors manufacturing,
packaging, laboratory and warehousing facilities utilized in the formulation, manufacture, packaging, storage, testing, shipping
or receiving of the Product.

 

1.18
“Materials” mean all excipient(s) and inactive raw materials used in the formulation of the Product. For the
avoidance of doubt, “Materials” does not include any Active Ingredient or work in process or finished goods inventory.

 

1.19
“Net Sales” means [***].

 

1.20
“Product” shall mean Active Ingredient Formulated in CAPSUGEL’s proprietary Lipid Multi-Particulate Technology,
including any improvements or derivatives of such technology.

 

1.21
“Receiving Party” shall have the meaning set forth in the Confidentiality Agreement.

 

1.22
“Regulatory Approvals” means any and all approvals, licenses, registrations, or authorizations of the relevant
Regulatory Authority, necessary for the development, manufacture, use, storage, import, transport, export or commercialization
of the Product in a particular country or jurisdiction.

 

1.23
“Regulatory Authority (ies)” means any governmental regulatory authority within a Territory involved in regulating
any aspect of the development, manufacture, testing, market approval, sale, distribution, packaging or use of the Product.

 

1.24
“Regulatory Filings” shall mean the registrations, permits, licenses, authorizations, presentations, notifications,
filings and/or approvals (together with all applications therefore and all related documents required by the FDA and all other
laws for the development, manufacture, use, importation, export, marketing, sale and distribution of the Product within the Territory.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   3

    	 

    

 

1.25
“Royalty Payment” shall have the meaning set forth in Section 5.1.

 

1.26
“Specifications” shall mean the Product description and attributes agreed upon between the Parties upon conclusion
of the Development Plan and appended to this Agreement as Exhibit B that will be attached hereto and, when attached, will
be a part hereof, prior to commercialization of the Product.

 

1.27
“Territory” shall mean worldwide.

 

Section
2

 

Product
Development, Manufacture and Commercialization

 

	2.1	Governance
    Process Among the Parties. Both CARDAX and CAPSUGEL will agree upon a development plan, which shall be in writing
    and attached hereto as Exhibit A (the “Development Plan”), which shall describe various parameters
    including each Party’s duties, obligations, time schedule and deliverables schedule. The activities performed under
    the Development Plan (the “Development Activities”) shall be administered by a joint project team (“JPT”),
    which shall review/update/amend the Development Plan for the Product in the Territory and coordinate the Formulation, development,
    manufacturing and commercialization of the Product, including identifying and selecting one or more Marketers as contemplated
    under Section 2.4. Each Party shall appoint a project manager to oversee that Party’s performance of its obligations under
    this Agreement and shall notify the other Party of the name and full contact details of its appointed project manager. The
    JPT shall comply with this Agreement for decisions specifically assigned to a Party pursuant to this Agreement. Meetings shall
    take place by telephone or in person and the JPT will operate by consensus. If consensus cannot be reached, the matter will
    be submitted to the Head of Dosage Form Solutions of CAPSUGEL and the President and CEO of CARDAX for resolution. If such
    matter is not resolved, then the Parties may attempt to mediate such issue under the JAMS mediation rules. No member or any
    Affiliate of any member of the JPT shall have any liability under this Agreement and shall be exculpated to the fullest extent
    not prohibited by law from any liability to any Party that such member is not an employee, officer, consultant or acting in
    any similar capacity.
	 	 
	2.2	CAPSUGEL
    Responsibilities. With respect to the Product, CAPSUGEL, [***] shall [***] perform the development work necessary
    to formulate, analytically develop and take all other developmental actions necessary or required to develop the Product and
    manufacture pre-clinical and clinical batches (collectively, the “CAPSUGEL Development Activities”). For
    purposes of further clarification, CAPSUGEL Development Activities shall include, without limitation, each of the following
    performed with all due diligence, care and skill and in accordance with all other Applicable Laws: 

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   4

    	 

    

 

	 	(a)	Formulation
    Development. Formulation shall mean a specific combination of Materials that formulate the Active Ingredient, as well
    as compounds other than the Active Ingredient, developed as a result of the work conducted under the Development Plan. The
    development of the Formulation of the Product, includes without limitation, all stability tests and other studies as applicable,
    providing CARDAX reports of such stability tests, using Commercially Reasonable Efforts to modify the Formulation as necessary
    and develop processes capable of scale-up and commercialization in accordance with Applicable Laws.
	 	 	 
	 	(b)	Analytical
    Methods. Developing and validating analytical methods including but not limited to dissolution, assay, and stability as
    agreed upon by the Parties.
	 	 	 
	 	(c)	Manufacture
    of Study Batches. The manufacture [***] of batches of Product in amounts specified on or about the dates determined as
    reasonably necessary for conducting all required for CAPSUGEL/CARDAX funded studies. Any other batches required or reasonably
    required by the Marketer for applying for and all actions related to additional Regulatory Approvals and Regulatory Filings
    of the Product and any related communications, studies or support for the FDA or any other Regulatory Authority (ies), which
    may include human and animal studies, shall be paid for by the Marketer, unless the Parties agree otherwise.
	 	 	 
	 	(d)	Manufacturing
    Development. Development of manufacturing processes and systems in conformance with cGMP requirements of FDA to manufacture
    pilot batches, exhibit batches and commercial batches of Product.
	 	 	 
	 	(e)	Reporting.
    CAPSUGEL shall, throughout the performance of the Development Plan studies, consult with CARDAX on matters including technical,
    intellectual property and regulatory aspects and keep the other apprised of all developments.
	 	 	 
	 	(f)	Commercial
    Manufacturing. CAPSUGEL shall manufacture the Product for each Marketer unless otherwise agreed by the Parties and the
    applicable Marketer.

 

	2.3	CARDAX
    Responsibilities.

 

	 	(a)	CARDAX
    shall be responsible for [***] the Active Ingredient [***], subject to reasonable notice and delivery schedules and reasonable
    amounts required by CAPSUGEL for it to perform its obligations under this Agreement or as otherwise agreed by CARDAX.
	 	 	 
	 	(b)	[***]

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   5

    	 

    

 

	2.4	Joint
    Responsibilities.

 

[***]

 

The
marketing of the Product shall be carried out by one or more mutually identified Marketer(s) by the JPT or otherwise in accordance
with Section 2.1. CAPSUGEL and CARDAX will jointly control identification, decision rights, and terms for a Marketer as determined
by the JPT or otherwise in accordance with Section 2.1. If a Marketer is not identified, or the terms are not determined, by the
JPT or otherwise in accordance with Section 2.1, then the Marketer (and such terms) may be designated by either Party, subject
to the reasonable approval of the other Party.

  

Any
additional costs/activities required from a Marketer will be subject to agreement of the JPT or otherwise as provided in Section
2.1, including but not limited to pre-launch out-of-pocket expenses and the funding of such costs and expenses. These costs will
be shared [***].

 

	2.5	Ownership
    of Application. CARDAX shall own and control all information and rights in, to and under all Regulatory Approvals
    in the Territory (including all associated contents and correspondences) and applications therefore related to the Product
    and any other marketing authorizations within the Territory, unless otherwise mutually agreed upon by the Parties.

 

Section
3

 

Intellectual
Property Matters

 

3.1
Background IP. This Agreement shall not change, modify or otherwise affect any rights
to any confidential information, inventions, patents, patent applications or other Intellectual Property Rights owned or developed
by either Party before the Effective Date or developed by a Party after the Effective Date other than under the terms of this
Agreement (“Background IP”). This Agreement shall not confer on either
Party any rights in and/or to any Background IP of the other party, except as otherwise provided in this Agreement. 

 

3.2
CAPSUGEL Property. CARDAX acknowledges that CAPSUGEL possesses certain inventions,
processes, know-how, trade secrets, improvements, other intellectual properties and other assets, including but not limited to
formulation recipes, processing details, laboratory analyses, analytical methods, procedures and techniques, computer technical
expertise and software, which have been independently developed by CAPSUGEL, including but not limited to, the Background IP of
CAPSUGEL (collectively “Capsugel Property”). CARDAX and CAPSUGEL agree
that any Capsugel Property or improvements thereto which are used, improved, modified or developed by CAPSUGEL under or during
the term of this Agreement are the product of CAPSGUEL’s technical expertise possessed and developed by CAPSUGEL prior to
the Effective Date and are the sole and exclusive property of CAPSUGEL.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   6

    	 

    

 

 

3.3
CARDAX Property. CAPSUGEL acknowledges that CARDAX possesses certain inventions,
processes, know-how, trade secrets, improvements, other intellectual properties and other assets, which have been independently
developed by CARDAX, including but not limited to, the Background IP of CARDAX (collectively “CARDAX Property”).
CAPSUGEL and CARDAX agree that any CARDAX Property or improvements thereto which are used, improved, modified or developed by
CARDAX under or during the term of this Agreement are the product of CARDAX’s technical expertise possessed and developed
by CARDAX prior to the Effective Date and are the sole and exclusive property of CARDAX.

 

3.4
Use of Confidential Information. CARDAX may use the confidential information of CAPSUGEL generated under this Agreement,
except for CAPSUGEL’s internal technical protocols and Background IP, to the extent necessary (i) in connection with seeking
regulatory approval for a Compound Formulation or the Product and/or (ii) filing a patent application. “Compound Formulation”
means any specific combination of excipient(s) and the Active Ingredient developed as a result of the work conducted under
this Agreement. CARDAX may use and disclose CAPSUGEL’s internal technical protocols and Background IP, to the extent necessary
for Regulatory Approvals as contemplated by Section 2.3(b) to the extent reasonably determined by CAPSUGEL after notice and consultation
with CAPSUGEL by CARDAX.

 

3.5
Inventions. Each Party will own all of its inventions and other Intellectual Property Rights made under this Agreement,
including any patents, patent applications and other Intellectual Property Rights related to such inventions, if any, made solely
by its employees or independent contractors or employees or independent contractors of its Affiliates, unless otherwise expressly
set forth herein.

 

3.6
Joint Inventions. The Parties will jointly own all inventions and other Intellectual Property Rights jointly made under
this Agreement that are directly resulting from work conducted under this Agreement in accordance with the Development Plan and
related specifically to the Product or the Compound Formulation, including any patents, patent applications and other Intellectual
Property Rights related to such inventions, if any, unless otherwise expressly set forth herein. During the Term, each Party hereby
provides a worldwide, exclusive, royalty free, perpetual license of such Intellectual Property Rights for use by each licensee
in its business in connection with the development and marketing and commercialization of the Product. For avoidance of doubt,
no Party or any of its Affiliates shall have any rights to the Background IP of the other Party nor shall any Party have rights
to any trademarks, service marks, trade names, business names or product names developed by the other Party. All decisions regarding
the protection and exploitation of joint investments and other Intellectual Property Rights shall be determined by the JPT or
otherwise in accordance with Section 2.1.

 

3.7
[reserved] 

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   7

    	 

    

  

3.8
Freedom to Operate. CARDAX acknowledges that it shall be solely and fully responsible
to use its Commercially Reasonable Efforts for doing any and all freedom to operate assessments regarding possible infringement
of third party intellectual property rights for the Product in the part of the Territory that the Parties reasonably determine
require such protection; provided, however, each Party shall be solely and fully responsible for doing any and all freedom to
operate assessments regarding possible infringement of third party intellectual property rights for any and all of its Intellectual
Property Rights.

 

Section
4

 

Exclusivity

 

[***]

 

Section
5

 

Consideration

 

5.1
Royalty Payments. CAPSUGEL shall pay to CARDAX a royalty equal to [***]
of the Adjusted Net Sales (“Royalty Payment”) within [***]
after the end of [***]. 

 

5.2
Mode of Payment. CAPSUGEL will endeavor to contract with Marketer to receive profit sharing payments in U.S. dollars
and CAPSUGEL will in turn pay CARDAX its share in U.S. dollars. Should Marketer require that local currency based payments be
made to CAPSUGEL then CAPSUGEL will pay CARDAX its share in such local currency unless otherwise agreed. For instances in which
Marketer sells the product in a local currency other than U.S. dollars but agrees to pay CAPSUGEL in U.S. dollars, the conversion
of local currency to USD will be a mutually agreeable methodology with such Marketer (e.g., using the Marketer’s standard
accounting methodology such as its average daily rate for its accounting month).

 

5.3
Taxes. All federal, national, regional, district, local or other governmental income tax or similar tax that is imposed
on either Party as a result of income, shall be the responsibility of such Party. All amounts payable by CAPSUGEL to CARDAX under
this Agreement shall be paid free and clear of all deductions or withholdings whatsoever, except as may be required by law. If
any deductions or withholdings are required by law to be made from any of the amounts payable by CAPSUGEL to CARDAX, the amount
of any such withholding may be treated as part of the Royalty Payment, depending on the timing and the applicable legal requirements
and CAPSUGEL shall provide CARDAX a receipt of any such withholdings.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   8

    	 

    

 

Section
6

 

Regulatory
Requirements 

 

6.1
Regulatory Contacts. [***] CAPSUGEL shall notify CARDAX immediately, and in no event, no later than three (3) business
day(s), after it receives any contact or communication from any governmental or regulatory authority, including without limitation
the FDA, that in any way relates to or may have an impact on a Product or the CAPSUGEL Development Activities.

 

6.2
Regulatory Inspections. Throughout the Term of this Agreement, CAPSUGEL agrees to cooperate with any governmental or
regulatory body, particularly the FDA, which requests a general GMP inspection or audit or any inspection or audit relative to
the manufacture, storage, handling, or shipment of Product manufactured, stored, handled, or shipped by CAPSUGEL. In addition,
CAPSUGEL shall use its Commercially Reasonable Efforts to meet all reasonable U.S. FDA and other appropriate regulatory demands.

 

6.3
CARDAX Inspection. CARDAX shall have the right to audit CAPSUGEL’s facilities, quality systems and records from
time to time upon reasonable notice and CARDAX shall have the right to have a third party accounting firm, subject to a non-disclosure
agreement, audit CAPSUGEL’s financials as they relate to Net Sales and Adjusted Net Sales. In the event that the amount
of the Royalty Payment for any quarter is 10% or more than the amount reported by CAPSUGEL, then CAPSUGEL will pay the costs and
expenses of the audit or investigation.

 

6.4
Regulatory Notices. CAPSUGEL shall provide prompt written notice to CARDAX of the occurrence of, and the results of
any regulatory notices including inspections as referenced in this Section 6 relating to the manufacture of Product.

 

6.5
Recordkeeping. CAPSUGEL shall keep true, accurate, and complete books, records, reports, and accounts (hereinafter
“Records”) of all business or activities in connection with or relating to the manufacture, storage, handling,
and shipment, including all validations, qualification, and validation protocols, of Product and this Agreement. CARDAX has the
right, upon reasonable prior notice and during normal business hours, to inspect and examine such Records. CAPSUGEL agrees to
retain all such Records for a period of five (5) years after the expiration of the Term or after termination of this Agreement.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   9

    	 

    

 

6.6
Recall. In the event that either Party believes it may be necessary to conduct a recall, field correction, market withdrawal,
stock recovery, or other similar action with respect to any Product which was sold under this Agreement (a “Recall”),
CARDAX and CAPSUGEL shall promptly consult with each other in good faith as to how best to proceed, it being understood and agreed
that the final decision as to any Recall of any Product sold by Marketer(s) shall be made jointly; provided, however, that neither
Party shall be prohibited hereunder from taking any action that it is required to take by Applicable Law or taking Commercially
Reasonable Efforts to mitigate the loss from any Recall or seizure or to protect the public. Each of CAPSUGEL and CARDAX shall
make a permanent, complete and accurate record of all costs incurred by it in connection with any Product Recall or seizure. With
respect to any Recall or seizure of any Product caused by the negligence, mistake or omission of CAPSUGEL, CAPSUGEL shall (i)
reimburse CARDAX for all out-of-pocket costs and expenses reasonably incurred by CARDAX in connection with the Recall or seizure,
including, without limitation, replacing the Product subject to the Recall or seizure in accordance with this Agreement; and (ii)
as provided in Section 8.1, indemnify and save CARDAX and its Affiliates harmless from and against any and all damages to or claims
by third parties associated (or Affiliated) with or resulting from any such Recall or seizure. With respect to any Recall or seizure
caused by the negligence, mistake or omission of CARDAX (including but not limited to failure of the Active Ingredient to meet
the Specifications), CARDAX shall: (i) reimburse CAPSUGEL for all out-of-pocket costs and expenses reasonably incurred by CAPSUGEL
in connection with the Recall or seizure; and (ii) as provided in Section 8.2, indemnify and save CAPSUGEL and its Affiliates
harmless from and against any and all damages to or claims by third parties associated with or resulting from any such Recall
or seizure.

 

With
respect to any Recall or seizure of a Product not caused by the negligence, mistake or omission of either Party, each Party shall
bear [***] of the aggregate costs of any and all out-of-pocket costs, expenses and losses reasonably incurred by either Party
in connection with the Recall or seizure.

 

If
CAPSUGEL and CARDAX cannot agree which party is at fault or whether a Recall or seizure was reasonably beyond the control of the
Parties, then an independent technical expert, acceptable to both Parties, shall be designated to make such determination. The
designated technical expert shall not be an employee, consultant, officer, director or shareholder of, or otherwise associated
with, CAPSUGEL, CARDAX or their respective Affiliates. The technical expert’s determination will be, in the absence of fraud
or manifest error, binding and conclusive upon the Parties.

 

Each
Party shall keep the other fully informed of any notification or other information, whether received directly or indirectly, which
might affect the marketability, safety or effectiveness of a Product, or which might result in liability issues or otherwise necessitate
action on the part of either party, or which might result in Recall or seizure of the Product.

 

Prior
to any reimbursement pursuant to this Section 6 the Party claiming reimbursement shall provide the other Party with all available
documentation of all reimbursable costs and expenses.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   10

    	 

    

 

Section
7

 

Representations
and Warranties

 

7.1
Representations and Warranties of CAPSUGEL. CAPSUGEL hereby represents and warrants to CARDAX as follows:

 

	 	(a)	CAPSUGEL
    is a corporation in good standing under the laws of the jurisdiction of its organization and authorized to do business wherever
    necessary to fulfill the terms and conditions of this Agreement;
	 	 	 
	 	(b)	CAPSUGEL
    has the full power and authority to execute and deliver this Agreement and perform its covenants, duties and obligations described
    in this Agreement;
	 	 	 
	 	(c)	This
    Agreement is the valid, legal and binding obligation of CAPSUGEL, enforceable in accordance with its terms;
	 	 	 
	 	(d)	Neither
    the execution and delivery of this Agreement nor the performance of CAPSUGEL’s covenants, duties and obligations described
    in this Agreement constitute or will constitute a default under or conflict with any judgment, decree or order of any court
    or other governmental body to which CAPSUGEL is subject and will not conflict or be inconsistent with or result in the termination,
    modification, breach or default under the terms of any contract, commitment, covenant, agreement, instrument, document or
    understanding to which CAPSUGEL is a party;
	 	 	 
	 	(e)	CAPSUGEL
    is not a party to, nor to CAPSUGEL’s knowledge is CAPSUGEL as of the Effective Date threatened with, any legal or equitable
    action or proceeding before any court, arbitrator, administrative agency or other tribunal which is reasonably likely to adversely
    affect its ability to execute and deliver this Agreement or fully and timely perform its covenants, duties and obligations
    described in this Agreement;
	 	 	 
	 	(f)	CAPSUGEL
    has obtained and continuously maintained all permits, authorizations and licenses issued by all federal, state and local governmental
    agencies and authorities necessary for the conduct of CAPSUGEL’s businesses as of the Effective Date;
	 	 	 
	 	(g)	CAPSUGEL
    has and shall continue to follow, comply with and adhere to all Applicable Laws necessary for the conduct of CAPSUGEL’s
    businesses; 

 

CAPSUGEL
shall during the performance of the CAPSUGEL Development Activities ensure that, at all times, its employees, contractors, consultants,
sub-contractors carry out their duties with all reasonable skill and care customary for the type of scientific research and development
work covered by this Agreement and shall at all times comply with all applicable laws and regulations; record experimental data
and all other material information relating to the CAPSUGEL Development Activities in individual notebooks or other appropriate
formats and treat the same as Confidential Information; ensure that, at all times, its employees, contractors, consultants and
sub-contractors are fully aware of and comply with the confidentiality provisions of their respective contracts which, for the
avoidance of doubt, are comparable to the confidentiality provisions set out in this Agreement; keep CARDAX informed of the progress
of the CAPSUGEL Development Activities by providing bi-weekly written reports and such other interim reports or updates as CARDAX
may reasonably request.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   11

    	 

    

  

7.2
Representations and Warranties of CARDAX. CARDAX hereby represents and warrants to CAPSUGEL as follows:

 

	 	(a)	CARDAX
    is a corporation in good standing under the laws of the jurisdiction of its organization and authorized to do business wherever
    necessary to fulfill the terms and conditions of this Agreement;
	 	 	 
	 	(b)	CARDAX
    has the full power and authority to execute and deliver this Agreement and perform its covenants, duties and obligations described
    in this Agreement;
	 	 	 
	 	(c)	This
    Agreement is the valid, legal and binding obligation of CARDAX, enforceable in accordance with its terms;
	 	 	 
	 	(d)	Neither
    the execution and delivery of this Agreement nor the performance of CARDAX’s covenants, duties and obligations described
    in this Agreement constitute or will constitute a default under or conflict with any judgment, decree or order of any court
    or other governmental body to which CARDAX is subject and will not conflict or be inconsistent with or result in the termination,
    modification, breach or default under the terms of any contract, commitment, covenant, agreement, instrument, document or
    understanding to which CARDAX is a party;
	 	 	 
	 	(e)	CARDAX
    is not a party to, nor to CARDAX’s knowledge is CARDAX as of the Effective Date threatened with, any legal or equitable
    action or proceeding before any court, arbitrator, administrative agency or other tribunal which is reasonably likely to adversely
    affect its ability to execute and deliver this Agreement or fully and timely perform its covenants, duties and obligations
    described in this Agreement; and
	 	 	 
	 	(f)	CARDAX
    has obtained and continuously maintains all permits, authorizations and licenses issued by all federal, state and local governmental
    agencies and authorities necessary for the conduct of CARDAX’s businesses as of the Effective Date. 

 

Disclaimer.
THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT ARE THE PARTIES’ ONLY WARRANTIES AND NO OTHER WARRANTY, EXPRESS,
IMPLIED OR STATUTORY, WILL APPLY. EACH PARTY EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. FOR THE AVOIDANCE OF DOUBT, EACH PARTY EXPRESSLY
DISCLAIMS ANY AND ALL WARRANTIES OF NON-INFRINGEMENT THAT ARE NOT EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   12

    	 

    

 

Section
8

 

Indemnification

 

8.1
CAPSUGEL’s Indemnification of CARDAX. CAPSUGEL shall indemnify, defend and hold CARDAX, its Affiliates and their
respective officers, directors, employees and agents harmless from and against any and all third party Losses suffered, incurred
or sustained by CARDAX or to which CARDAX becomes subject at any time, to the extent arising out of or resulting, directly or
indirectly, from: (a) any breach of CAPSUGEL’s representations, warranties or obligations under this Agreement; (b) any
personal injury, death or property damage caused by the possession, use, or consumption by any person of any Product that does
not comply with the Specification in any way or is the result of actions or inactions of CAPSUGEL in its manufacturing or is alleged
to result from any inherent risk of the Formulation or a defect in the Formulation; and (c) any other negligent act or omission
on the part of CAPSUGEL, its Affiliates or their respective employees or agents except, in each case, to the extent such claims
are attributable to the gross negligence or willful misconduct of CARDAX.

 

8.2
CARDAX’s Indemnification of CAPSUGEL. CARDAX shall indemnify, defend and hold CAPSUGEL, its Affiliates and their respective
officers, directors, employees and agents harmless from and against any and all third party Losses suffered, incurred or sustained
by CAPSUGEL or to which CAPSUGEL becomes subject at any time, to the extent arising out of or resulting, directly or indirectly,
from (a) any breach of CARDAX’s representations, warranties or obligations under this Agreement; (b) any personal injury,
death or property damage caused by the possession, use or consumption by any person of any Product supplied by CAPSUGEL under
this Agreement that does not comply with the Specifications as a result of actions or inactions of CARDAX or is alleged to result
from any inherent risk of the Product or a defect in the Active Ingredient; and (c) any other negligent act or omission on the
part of CARDAX, its Affiliates or their respective employees or agents except, in each case, to the extent such claims are attributable
to the gross negligence or willful misconduct of CAPSUGEL.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   13

    	 

    

 

8.3
Indemnification Process. If CARDAX, Affiliates or their respective employees, servants or agents, or CAPSUGEL, its
Affiliates or their respective employees, servants or agents (in each case an “Indemnified Party”), receive
any written claim which such Indemnified Party believes is the subject of indemnity hereunder by the other Party hereto (an “Indemnifying
Party”), the Indemnified Party shall, as soon as reasonably practicable after forming such belief, give notice thereof
to the Indemnifying Party, provided that the failure to give timely notice to the Indemnifying Party as contemplated hereby
shall not release the Indemnifying Party from any liability to the Indemnified Party unless the Indemnifying Party demonstrates
that the defense of such claim is prejudiced by such failure. The Indemnifying Party shall have the right, by prompt notice to
the Indemnified Party to assume the defense of such claim at its cost, with counsel reasonably satisfactory to the Indemnified
Party. If the Indemnifying Party does not so assume the defense of such claim or, having done so, does not diligently pursue such
defense, the Indemnified Party may assume the defense, with counsel of its choice, but at the cost of the Indemnifying Party.
If the Indemnifying Party so assumes the defense, it shall have absolute control of the litigation; the Indemnified Party may,
nevertheless, participate therein through counsel of its choice and at its cost. The Party not assuming the defense of any such
claim shall render all reasonable assistance to the Party assuming such defense, and out-of-pocket costs of such assistance shall
be for the account of the Indemnifying Party. No such claim shall be settled other than by the Party defending the same, and then
only with the consent of the other Party, which consent shall not be unreasonably withheld; provided that the Indemnified
Party shall have no obligation to consent to any settlement of any such claim which (i) imposes on the Indemnified Party
any liability or obligation which cannot be assumed or performed in full by the Indemnifying Party, (ii) does not unconditionally
release the Indemnified Party, (iii) does require a statement as to or an admission of fault, culpability or failure to act
by or on behalf of Indemnified Party or any of its Affiliates or (iv) does impose any restrictions on the conduct of business
by the Indemnified Party or its Affiliates.

 

8.4
Limitation of Damages. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES
OR LOST PROFITS ARISING UNDER OR RELATING TO THIS AGREEMENT. Except in the event of (i) a Party’s gross negligence or willful
misconduct and/or (ii) a Party’s breach of its confidentiality obligation, the total liability of one Party to the other
Party (and its Affiliates) arising out of or in connection with this Agreement or the Products, whether in contract, tort (including
negligence), statute or otherwise, shall, to the maximum extent permitted by Applicable Law, be limited to the amount of revenues
it receives under this Agreement.

 

8.5
Insurance. During the Term and for a period of two (2) years after the termination of the Agreement or the expiry date
of the last batch manufactured whichever is later, thereafter, each Party shall obtain and maintain, at its sole expense adequate
product liability insurance for the Product as it reasonably deems necessary and appropriate. Evidence of coverage, in the form
of certificates of insurance, shall be provided promptly upon registration of the Product in given countries and as reasonably
requested thereafter.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   14

    	 

    

 

Section
9

 

Confidentiality
and Publicity

 

Confidentiality.
The Parties agree that the terms of the Confidentiality Agreement entered into between the parties dated Nov 19, 2013 shall govern
this Agreement.

 

Section
10

 

Term
and Termination

 

10.1
Term and Renewal. The initial term of this Agreement shall be for three (3) years from the Launch Date; provided,
however, that this Agreement shall automatically renew every three (3) years subject to the achievement of certain Commercial
Milestones (unless waived by both parties) to be set forth in Exhibit C, [***]. In addition, any contract entered into
by the Parties with a Marketer for the Product shall survive termination of this Agreement in accordance with its terms, including
any renewal rights provided therein.

 

10.2
Termination for Breach. A material breach that is subject to cure that is not cured within [***] of written notice
of breach shall be cause for termination, provided that if the breaching party is diligently pursuing in good faith the remedy
of the breach at the expiration of such [***] cure period, then such [***] cure period shall be extended for a reasonable period
to effect the cure. Upon any breach by CAPSUGEL, CARDAX shall be permitted to use all Intellectual Property of CAPSUGEL used in
the Formulation and the Product to the extent necessary for the development and marketing of the Product. Upon any breach by CARDAX,
CAPSUGEL shall be permitted to use all Intellectual Property of CARDAX used in the Active Ingredient and the Product to the extent
necessary for the development and marketing of the Product in accordance with the terms of this Agreement as of the date of such
termination.

 

10.3
Termination for Bankruptcy. This Agreement may be terminated by either Party, forthwith, or at any time thereafter
by notice to the other if the other becomes bankrupt or insolvent, or enters into liquidation whether compulsorily or voluntarily,
or convenes a meeting of its creditors, or has a receiver appointed over all or part of its assets, or ceases for any reason to
carry on business.

 

10.4
Development or Commercial Non-Viability.

 

In
the event that CAPSUGEL reasonably determines that the development of the Compound Formulation is not feasible with Commercially
Reasonable Efforts in accordance with the Development Plan, with such changes as reasonably requested by CAPSUGEL, then CAPSUGEL
may discontinue the development of the Compound Formulation and Product and terminate this Agreement, in which case, CARDAX shall
have the right to license the Intellectual Property Rights as provided in Section 4.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   15

    	 

    

 

In
the event that CARDAX reasonably determines that, with Commercially Reasonable Efforts by the Parties, the development of a Product
is not feasible due to any legal, or technical developments with respect to the Product, including but not limited to conflicts
of Intellectual Property Rights; withdrawal of a Product by a major regulatory agency for safety or efficacy reasons; or inability
of the Parties to produce a Product that passes FDA required biostudies, in which such developments make the Product nonviable
or that the Product is not acceptable to any applicable Marketer, then, CARDAX may elect to discontinue the development of the
Product and terminate this Agreement.

 

10.5
Termination for Force Majeure. Neither Party shall be liable to the other for default or delay in the performance of
any of its obligations under this Agreement if such default or delay shall be caused directly or indirectly by accident, fire,
flood, riot, war, terrorism, act of God, embargo, strike, failure or delay of normal source of supply of materials, or delay of
carriers, equipment failure or complete or partial shutdown of plant by any of the foregoing causes or other causes beyond its
reasonable control, including FDA action (“Force Majeure”).

 

10.6
No Waiver. The failure of either Party to terminate this Agreement by reason of the breach of any of its provisions
by the other Party shall not be construed as a waiver of the rights or remedies available for any subsequent breach of the terms
and provisions of this Agreement.

 

10.7
Property. In the event of termination of this Agreement for whatever cause, in addition to the other obligations of
the Parties hereunder, each Party shall return to the other Party or to the other Party’s designee no later than thirty
(30) days after the effective date of termination all of such other Party’s property, including all proprietary information,
in its possession, except to the extent required to be retained by law or to comply with such Party’s continuing obligations
hereunder.

 

10.8
Survival. The provisions of Sections 3.6, 4, 6, 8, 9 and 11 shall survive any termination of this Agreement.

 

Section
11

 

Miscellaneous

 

11.1
Dispute Resolution. This Agreement shall be governed by and interpreted in accordance under the laws of the State of
New York. Any dispute, controversy or claim arising out of this Agreement, or the breach, termination or invalidity thereof, shall
be discussed between the senior management of the Parties who will attempt to resolve the matter amicably. Any disputes which
cannot be resolved in this way within sixty (60) days of one Party notifying the other of the existence of a dispute shall be
finally settled before JAMS in accordance with the expedited arbitration procedures of JAMS. The arbitration shall be conducted
in English in New York, New York, USA. The costs of the arbitration payable to JAMS shall be funded equally by the parties, provided
that the prevailing party shall be reimbursed for such costs and expenses and its own actual out of pocket costs

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   16

    	 

    

 

11.2
Integration and Amendment. This Agreement, the Exhibits hereto contain the complete agreement between the Parties with
respect to the subject matter hereof. All previous and collateral agreements, representations, warranties, promises and conditions
relating to the subject matter of this Agreement are superseded by this Agreement. This Agreement may only be amended by a written
instrument duly executed by the Parties hereto.

 

11.3
Assignment. Neither Party may assign this Agreement without the prior written consent of the other Party; provided,
however that either Party may assign in connection with a merger or sale of all or substantially all of its stock or assets, provided
the assignee agrees to be bound by all of the terms and conditions of this Agreement.

 

11.4
Waiver. No waiver of any default by either Party shall be deemed to constitute a waiver of any subsequent default with
respect to the same or any other provision hereof. No waiver shall be effective unless made in writing with specific reference
to this Agreement and signed by a duly authorized representative of the Party granting the waiver.

 

11.5
Notice. Any notice or request expressly provided for or permitted under this Agreement shall be in writing, delivered
manually or by mail, e-mail, or facsimile and shall be deemed sufficiently given if and when received by the Party to be notified
at its address first set forth below, or if and when mailed by registered mail or certified mail, postage prepaid, addressed to
such Party at such address, or upon delivery confirmation. Either Party, by notice to the other, may change its address for receiving
such notices.

  

	If
    to CAPSUGEL:	CAPSUGEL
    US, LLC
	 	412
    Mt. Kemble Ave. Suite 200C
	 	Morristown,
    NJ 07960 USA
	 	Attn:
    President, Dosage Form Solutions
	Telephone:	[***]
	Facsimile:	[***]
	E-mail:	[***]
	 	 
	With
    a copy to 	CAPSUGEL
    US, LLC
	 	412
    Mt. Kemble Ave. Suite 200C
	 	Morristown,
    NJ 07960 USA
	 	Attn:
    General Counsel
	Telephone:	[***]
	Facsimile:	[***]
	E-mail:	[***]

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   17

    	 

    

 

 

	If
    to CARDAX:	CARDAX,
    Inc.
	 	2800
    Woodlawn Dr., Suite 129
	 	Honolulu,
    HI 96822
	 	Attn:
    President and CEO
	Telephone:	[***]
	Facsimile:	[***]
	E-mail:	[***]
	 	 
	With
    a copy to	 Herrick,
    Feinstein LLP
	 	2
    Park Avenue
	 	New
    York, NY 10016
	 	Attn:
    Richard M. Morris
	Telephone:	[***]
	Facsimile:
    	[***]
	E-mail:	[***]

 

11.6
Severability of Provisions. Each provision of this Agreement shall be treated as a separate and independent clause,
and the unenforceability of any one clause shall in no way impair the enforceability of any of the other clauses herein. Moreover,
if one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to scope,
activity, subject or otherwise so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate
judicial body or arbitration panel by limiting or reducing such provision or provisions, so as to be enforceable to the maximum
extent allowable under the applicable law as such law shall then be.

 

11.7
Independent Contractors. Each Party hereto shall be an independent contractor of the other. Neither Party shall be
the legal agent of the other for any purpose whatsoever and therefore has no right or authority to make or underwrite any promise,
warranty or representation, to execute any contract or otherwise to assume any obligation or responsibility in the name of or
on behalf of the other Party, except to the extent specifically authorized in writing by the other Party. Neither Party shall
be bound by or liable to any third persons for acts or obligations or debts incurred by the other toward such third party, except
to the extent specifically agreed to in writing by the Party to be so bound. This Agreement shall not create a partnership or
other similar arrangement.

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   18

    	 

    

 

11.8
Announcement. The Parties agree to coordinate external communications (e.g. joint press release) regarding this collaboration.

 

11.9
Headings; Interpretation. The section headings contained in this Agreement are for convenience of reference only, do
not form a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the
context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “but not limited to.”
All references herein to Sections, Sections and Exhibits shall be deemed references to Sections and Sections of, and Exhibits
to, this Agreement unless the context shall otherwise require. All Exhibits attached to this Agreement shall be deemed incorporated
herein by reference as if fully set forth herein. Words such as “herein,” “hereof,” “hereto,”
“hereby” and “hereunder” refer to this Agreement and to the Exhibits, taken as a whole. Except as otherwise
expressly provided herein: (a) any reference in this Agreement to any agreement shall mean such agreement as amended, restated,
supplemented or otherwise modified from time to time; (b) any reference in this Agreement to any law shall include corresponding
provisions of any successor law and any regulations and rules promulgated pursuant to such law or such successor law; and (c) all
terms of an accounting or financial nature shall be construed in accordance with generally accepted accounting principles, as
in effect in the United States from time to time.

 

11.10
Counterparts. This Agreement may be executed by the Parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original and all of which counterparts taken together shall constitute but one and the
same instrument.

 

*
* * Signature Page Follows * * *

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   19

    	 

    

 

IN
WITNESS WHEREOF, the Parties have caused this this Agreement to be executed by their respective duly authorized representatives
as of the day and year first above written.

 

CAPSUGEL
US, LLC

 

	By:
    	/s/
    Amit Patel	 
	Name:
    	Amit
    Patel	 
	Title:	President,
    Dosage Form Solutions	 

 

CARDAX,
INC. 

 

	By:	/s/
    David G. Watumull	 
	Name:	David
    G. Watumull	 
	Title:	President
    and CEO	 

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   20

    	 

    

 

EXHIBIT
A

 

DEVELOPMENT
PLAN

 

[*** six
pages omitted*** ]

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   21

    	 

    

 

EXHIBIT
B

 

SPECIFICATIONS

 

As provided
in Section 1.26, to be provided upon conclusion of the Development Plan

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   22

    	 

    

 

EXHIBIT
C

 

[***]

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   23

    	 

    

 

EXHIBIT
D

 

MASS
MARKET CHANNELS

 

[***]

 

    	CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF
1934. OMISSIONS ARE DESIGNATED [***]. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
   24

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