Document:

Exhibit 10.12

 

Morgan Stanley & Co. International plc

c/o Morgan Stanley & Co. LLC

1585 Broadway, 5th Floor

New York, NY 10036

 

	
 
    	
February   13, 2014
    

 

	
To:
    	
AMAG   Pharmaceuticals, Inc.
    
	
 
    	
1100   Winter Street
    
	
 
    	
Waltham,   Massachusetts 02451
    
	
 
    	
Attention:
    	
Mr.   Frank E. Thomas: Executive Vice President, Chief Operating Officer
    
	
 
    	
Telephone   No.:
    	
(617)   498-3377
    
	
 
    	
Facsimile   No.:
    	
(617)   588-0475
    

 

Re:                             Additional Warrants

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Warrants issued by AMAG Pharmaceuticals, Inc. (“Company”) to Morgan Stanley & Co. International plc (“Dealer”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  This Confirmation shall replace any previous agreements and serve as the final documentation for the Transaction.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.

 

Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.

 

1.                                      This Confirmation evidences a complete and binding agreement between Dealer and Company as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and Company had executed an agreement in such form (but without any Schedule except for the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine)) on the Trade Date.  In the event of any inconsistency between provisions of that Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.  The parties hereby agree that no Transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.

 

2.                                      The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for purposes of the Equity Definitions.  The terms of the particular Transaction to which this Confirmation relates are as follows:

 

General Terms.

 

	
 
    	
Trade   Date:
    	
February   13, 2014
    
	
 
    	
 
    	
 
    
	
 
    	
Effective   Date:
    	
The   third Exchange Business Day immediately prior to the Premium Payment Date
    
	
 
    	
 
    	
 
    
	
 
    	
Warrants:
    	
Equity   call warrants, each giving the holder the right to purchase a number of   Shares equal to the Warrant Entitlement at a price per Share equal to the   Strike Price, subject to the terms set forth under the caption “Settlement   Terms” below.  For the purposes of the   Equity Definitions, each reference to a Warrant herein shall be deemed to be   a reference to a Call Option.
    
	
 
    	
 
    	
 
    
	
 
    	
Warrant   Style:
    	
European
    

 

 

	
 
    	
Seller:
    	
Company
    
	
 
    	
 
    	
 
    
	
 
    	
Buyer:
    	
Dealer
    
	
 
    	
 
    	
 
    
	
 
    	
Shares:
    	
The   common stock of Company, par value USD 0.01 per Share (Exchange symbol   “AMAG”)
    
	
 
    	
 
    	
 
    
	
 
    	
Number   of Warrants:
    	
184,540.  For the avoidance of doubt, the Number of   Warrants shall be reduced by any Warrants exercised or deemed exercised   hereunder.  In no event will the Number   of Warrants be less than zero.
    
	
 
    	
 
    	
 
    
	
 
    	
Warrant   Entitlement:
    	
One   Share per Warrant
    
	
 
    	
 
    	
 
    
	
 
    	
Strike   Price:
    	
USD   34.1190.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notwithstanding   anything to the contrary in the Agreement, this Confirmation or the Equity   Definitions, in no event shall the Strike Price be subject to adjustment to   the extent that, after giving effect to such adjustment,  the Strike Price would be less than USD   19.95, except for any adjustment pursuant to the terms of this Confirmation   and the Equity Definitions in connection with stock splits or similar changes   to Company’s capitalization.
    
	
 
    	
 
    	
 
    
	
 
    	
Premium:
    	
USD   640,500
    
	
 
    	
 
    	
 
    
	
 
    	
Premium   Payment Date:
    	
February   14, 2014
    
	
 
    	
 
    	
 
    
	
 
    	
Exchange:
    	
The   NASDAQ Global Select Market
    
	
 
    	
 
    	
 
    
	
 
    	
Related   Exchange(s):
    	
All   Exchanges
    

 

Procedures for Exercise.

 

	
 
    	
Expiration   Time:
    	
The   Valuation Time
    
	
 
    	
 
    	
 
    
	
 
    	
Expiration   Dates:
    	
Each   Scheduled Trading Day during the period from, and including, the First   Expiration Date to, but excluding, the 180th Scheduled Trading Day following the First   Expiration Date shall be an “Expiration Date” for a number of Warrants equal   to the Daily Number of Warrants on such date; provided that, notwithstanding anything to the contrary in   the Equity Definitions, if any such date is a Disrupted Day, the Calculation   Agent, in good faith and in a commercially reasonable manner, shall make   adjustments, if applicable, to the Daily Number of Warrants or shall reduce   such Daily Number of Warrants to zero for which such day shall be an   Expiration Date and shall designate a Scheduled Trading Day or a number of   Scheduled Trading Days as the Expiration Date(s) for the remaining Daily   Number of Warrants or a portion thereof for the originally scheduled   Expiration Date; and provided further   that if such Expiration Date has not occurred pursuant to this clause as of   the eighth Scheduled Trading Day following the last scheduled Expiration Date   under the Transaction, the Calculation Agent shall have the right to declare   such Scheduled Trading Day to be the final Expiration Date and the   Calculation Agent shall determine its good faith estimate of the fair market   value for the Shares as of the Valuation Time on that eighth Scheduled   Trading Day or on any subsequent Scheduled
    

 

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Trading   Day, as the Calculation Agent shall determine using commercially reasonable   means.
    
	
 
    	
 
    	
 
    
	
 
    	
First   Expiration Date:
    	
May   15, 2019 (or if such day is not a Scheduled Trading Day, the next following   Scheduled Trading Day), subject to Market Disruption Event below.
    
	
 
    	
 
    	
 
    
	
 
    	
Daily   Number of Warrants:
    	
For   any Expiration Date, the Number of Warrants that have not expired or been   exercised as of such day, divided by   the remaining number of Expiration Dates (including such day), rounded down   to the nearest whole number, subject to adjustment pursuant to the provisos   to “Expiration Dates”.
    
	
 
    	
 
    	
 
    
	
 
    	
Automatic   Exercise:
    	
Applicable;   and means that for each Expiration Date, a number of Warrants equal to the   Daily Number of Warrants for such Expiration Date will be deemed to be   automatically exercised at the Expiration Time on such Expiration Date.
    
	
 
    	
 
    	
 
    
	
 
    	
Market   Disruption Event:
    	
Section   6.3(a) of the Equity Definitions is hereby amended by replacing clause (ii)   in its entirety with “(ii) an Exchange Disruption, or” and inserting   immediately following clause (iii) the phrase “; in each case that the   Calculation Agent determines is material.”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Section   6.3(d) of the Equity Definitions is hereby amended by deleting the remainder   of the provision following the words “Scheduled Closing Time” in the fourth   line thereof.
    

 

Valuation Terms.

 

	
 
    	
Valuation   Time:
    	
Scheduled   Closing Time; provided that if the principal   trading session is extended, the Calculation Agent shall determine the   Valuation Time in its reasonable discretion.
    
	
 
    	
 
    	
 
    
	
 
    	
Valuation   Date:
    	
Each   Exercise Date.
    

 

Settlement Terms.

 

	
 
    	
Settlement   Method Election:
    	
Applicable;   provided that (i) references to   “Physical Settlement” in Section 7.1 of the Equity Definitions shall be   replaced by references to “Net Share Settlement”; (ii) Company may elect Cash   Settlement only if Company represents and warrants to Dealer in writing on   the date of such election that (A) Company is not in possession of any   material non-public information regarding Company or the Shares, (B) Company   is electing Cash Settlement in good faith and not as part of a plan or scheme   to evade compliance with the federal securities laws, and (C) the assets of   Company at their fair valuation exceed the liabilities of Company (including   contingent liabilities), the capital of Company is adequate to conduct the   business of Company, and Company has the ability to pay its debts and   obligations as such debts mature and does not intend to, or does not believe   that it will, incur debt beyond its ability to pay as such debts mature and   (iii) the same election of settlement method shall apply to all Expiration   Dates hereunder.
    
	
 
    	
 
    	
 
    
	
 
    	
Electing   Party:
    	
Company
    

 

3

 

	
 
    	
Settlement   Method Election Date:
    	
The   third Scheduled Trading Day immediately preceding the First Expiration Date.
    
	
 
    	
 
    	
 
    
	
 
    	
Default   Settlement Method:
    	
Net   Share Settlement.
    
	
 
    	
 
    	
 
    
	
 
    	
Net   Share Settlement:
    	
If   Net Share Settlement is applicable, then on the relevant Settlement Date,   Company shall deliver to Dealer a number of Shares equal to the Share   Delivery Quantity for such Settlement Date to the account specified herein   free of payment through the Clearance System, and Dealer shall be treated as   the holder of record of such Shares at the time of delivery of such Shares   or, if earlier, at 5:00 p.m. (New York City time) on such Settlement Date,   and Company shall pay to Dealer cash in lieu of any fractional Share based on   the Settlement Price on the relevant Valuation Date.
    
	
 
    	
 
    	
 
    
	
 
    	
Share   Delivery Quantity:
    	
For   any Settlement Date, a number of Shares, as calculated by the Calculation   Agent, equal to the Net Share Settlement Amount for such Settlement Date divided by the Settlement Price on the Valuation Date for   such Settlement Date.
    
	
 
    	
 
    	
 
    
	
 
    	
Net   Share Settlement Amount:
    	
For   any Settlement Date, an amount equal to the product of (i) the number of   Warrants exercised or deemed exercised on the relevant Exercise Date, (ii) the Strike Price Differential for the relevant   Valuation Date and (iii) the Warrant Entitlement.
    
	
 
    	
 
    	
 
    
	
 
    	
Cash   Settlement:
    	
If   Cash Settlement is applicable, on the relevant Settlement Date, Company shall   pay to Dealer an amount of cash in USD equal to the Net Share Settlement   Amount for such Settlement Date.
    
	
 
    	
 
    	
 
    
	
 
    	
Settlement   Price:
    	
For   any Valuation Date, the per Share volume-weighted average price as displayed   under the heading “Bloomberg VWAP” on Bloomberg page AMAG <equity> AQR   (or any successor thereto) in respect of the period from the scheduled   opening time of the Exchange to the Scheduled Closing Time on such Valuation Date   (or if such volume-weighted average price is unavailable, the market value of   one Share on such Valuation Date, as determined by the Calculation Agent). Notwithstanding the   foregoing, if (i) any Expiration Date is a Disrupted Day and (ii) the   Calculation Agent determines that such Expiration Date shall be an Expiration   Date for fewer than the Daily Number of Warrants, as described above, then   the Settlement Price for the relevant Valuation Date shall be the   volume-weighted average price per Share on such Valuation Date on the   Exchange, as determined by the Calculation Agent based on such sources as it   deems appropriate using a volume-weighted methodology, for the portion of   such Valuation Date for which the Calculation Agent determines there is no   Market Disruption Event.
    
	
 
    	
 
    	
 
    
	
 
    	
Settlement   Dates:
    	
As   determined pursuant to Section 9.4 of the Equity Definitions, subject to   Section 9(k)(i) hereof; provided that   Section 9.4 of the Equity Definitions is hereby amended by (i) inserting the   words “or cash” immediately following the word “Shares” in the first line   thereof and (ii) inserting the words “for the Shares” immediately following   the words “Settlement Cycle” in the second line thereof.
    

 

4

 

	
 
    	
Other   Applicable Provisions:
    	
If   Net Share Settlement is applicable, the provisions of Sections 9.1(c), 9.8,   9.9, 9.11 and 9.12 of the Equity Definitions will be applicable, except that   all references in such provisions to “Physically-settled” shall be read as   references to “Net Share Settled.” “Net Share Settled” in relation to any   Warrant means that Net Share Settlement is applicable to that Warrant.
    
	
 
    	
 
    	
 
    
	
 
    	
Representation   and Agreement:
    	
Notwithstanding   Section 9.11 of the Equity Definitions, the parties acknowledge that any   Shares delivered to Dealer may be, upon delivery, subject to restrictions and   limitations arising from Company’s status as issuer of the Shares under   applicable securities laws.
    

 

3.                                      Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

	
 
    	
Method   of Adjustment:
    	
Calculation   Agent Adjustment.  For the avoidance of   doubt, in making any adjustments under the Equity Definitions, the   Calculation Agent may make adjustments, if any, to any one or more of the   Strike Price, the Number of Warrants, the Daily Number of Warrants and the   Warrant Entitlement.  Notwithstanding   the foregoing, any cash dividends or distributions on the Shares, whether or   not extraordinary, shall be governed by Section 9(f) of this Confirmation in   lieu of Article 10 or Section 11.2(c) of the Equity Definitions.
    

 

Extraordinary Events applicable to the Transaction:

 

	
 
    	
New   Shares:
    	
Section   12.1(i) of the Equity Definitions is hereby amended by deleting the text in   clause (i) thereof in its entirety (including the word “and” following clause   (i)) and replacing it with the phrase “publicly quoted, traded or listed (or   whose related depositary receipts are publicly quoted, traded or listed) on   any of the New York Stock Exchange, The NASDAQ Global Select Market or The   NASDAQ Global Market (or their respective successors)”.
    

 

Consequence of Merger Events:

 

	
 
    	
Merger   Event:
    	
Applicable; provided that if an event   occurs that constitutes both a Merger Event under Section 12.1(b) of the   Equity Definitions and an Additional Termination Event under Section   9(h)(ii)(B) of this Confirmation, Section 9(h)(ii)(B) will apply.
    
	
 
    	
 
    	
 
    
	
 
    	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
 
    	
Share-for-Other:
    	
Cancellation   and Payment (Calculation Agent Determination)
    
	
 
    	
 
    	
 
    
	
 
    	
Share-for-Combined:
    	
Cancellation   and Payment (Calculation Agent Determination); provided   that Dealer may elect, in its commercially reasonable judgment, Component   Adjustment (Calculation Agent Determination) for all or any portion of the   Transaction.
    
	
 
    	
 
    	
 
    
	
 
    	
Modified   Calculation
    	
 
    

 

5

 

	
 
    	
Agent   Adjustment:
    	
If,   in respect of any Merger Event to which Modified Calculation Agent Adjustment   applies, the adjustments to be made in accordance with Section 12.2(e)(i) of   the Equity Definitions would result in Company being different from the   issuer of the Shares, then with respect to such Merger Event, as a condition   precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity   Definitions, Dealer, the Issuer of the Affected Shares and the entity that   will be the Issuer of the New Shares shall, prior to the Merger Date, have   entered into such documentation containing agreements relating to “tacking”   and “holding period” related considerations under U.S. securities law and   credit exposure assumed by Dealer as the result Merger Event, as reasonably   requested by Dealer that Dealer has determined, in its good faith, reasonable   judgment, to be reasonably necessary or appropriate to allow Dealer to   continue as a party to the Transaction, as adjusted under Section 12.2(e)(i)   of the Equity Definitions, and to preserve its hedging or hedge unwind   activities in connection with the Transaction in a manner compliant with   applicable legal and regulatory requirements, and if such conditions are not   met or if the Calculation Agent determines that no adjustment that it could   make under Section 12.2(e)(i) of the Equity Definitions will produce a   commercially reasonable result, then the consequences set forth in Section   12.2(e)(ii) of the Equity Definitions shall apply.
    

 

Consequence of Tender Offers:

 

	
 
    	
Tender   Offer:
    	
Applicable;   provided that Section 12.1(d)   of the Equity Definitions is hereby amended by replacing “10%” with “25%” in   the third line thereof; provided further, that if an event occurs that   constitutes both a Tender Offer under Section 12.1(d) of the Equity   Definitions and Additional Termination Event under Section 9(h)(ii)(A) of   this Confirmation, Section 9(h)(ii)(A) will apply.
    
	
 
    	
 
    	
 
    
	
 
    	
Share-for-Share:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
 
    	
Share-for-Other:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
 
    	
Share-for-Combined:
    	
Modified   Calculation Agent Adjustment
    
	
 
    	
 
    	
 
    
	
 
    	
Announcement   Event:
    	
If   an Announcement Date occurs in respect of a Merger Event (for the avoidance   of doubt, determined without regard to the language in the definition of   “Merger Event” following the definition of “Reverse Merger” therein) or   Tender Offer (such occurrence, an “Announcement Event”), then on the earliest   of the Expiration Date, Early Termination Date or other date of cancellation   (the “Announcement Event Adjustment Date”) in respect of each Warrant, the   Calculation Agent will determine the economic effect on such Warrant of the   relevant event (regardless of whether the Announcement Event actually results   in a Merger Event or Tender Offer, and taking into account such factors as   the Calculation Agent may determine, including, without limitation, changes   in volatility, expected dividends, stock loan rate or liquidity relevant to   the Shares or the Transaction whether prior to or after the Announcement   Event or for any period of time, including, without limitation, the period   from
    

 

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the   Announcement Event to the relevant Announcement Event Adjustment Date).  If the Calculation Agent determines that   such economic effect on any Warrant is material, then on the Announcement   Event Adjustment Date for such Warrant, the Calculation Agent may make such   adjustment to the exercise, settlement, payment or any other terms of such   Warrant as the Calculation Agent determines appropriate to account for such   economic effect, which adjustment shall be effective immediately prior to the   exercise, termination or cancellation of such Warrant, as the case may be.
    
	
 
    	
 
    	
 
    
	
 
    	
Announcement   Date:
    	
The   definition of “Announcement Date” in Section 12.1 of the Equity Definitions   is hereby amended by (i) replacing the words “a firm” with the word “any” in   the second and fourth lines thereof, (ii) replacing the word “leads to the”   with the words “, if completed, would lead to a” in the third and the fifth   lines thereof, (iii) replacing the words “voting shares” with the word   “Shares” in the fifth line thereof, and (iv) inserting the words “by any   entity” after the word “announcement” in the second and the fourth lines   thereof.
    
	
 
    	
 
    	
 
    
	
 
    	
Nationalization,   Insolvency or Delisting:
    	
Cancellation   and Payment (Calculation Agent Determination); provided that, in addition to the provisions of Section   12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting   if the Exchange is located in the United States and the Shares are not   immediately re-listed, re-traded or re-quoted on any of the New York Stock   Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or   their respective successors); if the Shares are immediately re-listed,   re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ   Global Select Market or The NASDAQ Global Market (or their respective   successors), such exchange or quotation system shall thereafter be deemed to   be the Exchange.
    

 

Additional Disruption Events:

 

	
 
    	
Change   in Law:
    	
Applicable;   provided that Section 12.9(a)(ii) of   the Equity Definitions is hereby amended by (i) replacing the word “Shares”   with the phrase “Hedge Positions” in clause (X) thereof and (ii) inserting   the parenthetical “(including, for the avoidance of doubt and without   limitation, adoption or promulgation of new regulations authorized or   mandated by existing statute)” at the end of clause (A) thereof.
    
	
 
    	
 
    	
 
    
	
 
    	
Failure   to Deliver:
    	
Not   Applicable
    
	
 
    	
 
    	
 
    
	
 
    	
Insolvency   Filing:
    	
Applicable
    
	
 
    	
 
    	
 
    
	
 
    	
Hedging   Disruption:
    	
Applicable;   provided that:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i)                           Section   12.9(a)(v) of the Equity Definitions is hereby amended by inserting the   following three phrases at the end of such Section:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“For   the avoidance of doubt, the term “equity price risk” shall be deemed to   include, but shall not be limited to, stock price and volatility risk. And,   for the further avoidance of doubt, any such transactions or
    

 

7

 

	
 
    	
 
    	
assets   referred to in phrases (A) or (B) above must be available on commercially   reasonable pricing terms. For purposes of the immediately preceding sentence,   a de minimis increase in the   cost of acquiring, establishing, re-establishing, substituting, maintaining,   unwinding or disposing of any transaction(s) or asset(s) that the Hedging   Party deems necessary to hedge the equity price risk of entering into and   performing its obligations with respect to the relevant Transaction shall not   give rise to a Hedging Disruption.”; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)                        Section   12.9(b)(iii) of the Equity Definitions is hereby amended by inserting in the   third line thereof, after the words “to terminate the Transaction”, the words   “or a portion of the Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    	
 
    
	
 
    	
Increased   Cost of Hedging:
    	
Not Applicable
    
	
 
    	
 
    	
 
    
	
 
    	
Loss   of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    	
 
    
	
 
    	
Maximum   Stock Loan Rate:
    	
200 basis points
    
	
 
    	
 
    	
 
    
	
 
    	
Increased   Cost of Stock Borrow:
    	
Applicable
    
	
 
    	
 
    	
 
    
	
 
    	
Initial   Stock Loan Rate:
    	
25 basis points
    
	
 
    	
 
    	
 
    
	
 
    	
Hedging   Party:
    	
For all applicable Additional Disruption Events,   Dealer.
    

 

	
 
    	
Determining   Party:
    	
For   all applicable Extraordinary Events, Dealer.
    
	
 
    	
 
    	
 
    
	
 
    	
Non-Reliance:
    	
Applicable.
    
	
 
    	
 
    	
 
    
	
 
    	
Agreements   and Acknowledgments Regarding Hedging Activities:
    	
Applicable
    
	
 
    	
 
    	
 
    
	
 
    	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    	
 
    
	
4.
    	
Calculation   Agent.
    	
Dealer; provided   that following the occurrence and during the continuation of an Event of   Default pursuant to Section 5(a)(vii) of the Agreement with respect to which   Dealer is the Defaulting Party, (i) Dealer may designate a nationally or   internationally recognized third-party dealer with expertise in   over-the-counter corporate equity derivatives (an “Equity   Derivatives Dealer”) that is not an   affiliate of Dealer and with respect to which no event of the type described   in Section 5(a)(vii) of the Agreement is ongoing to replace Dealer as   Calculation Agent, or (ii) if Dealer does not so designate any replacement   Calculation Agent by the 10th Exchange Business Day following the date a calculation   or determination is required to be made hereunder by the Calculation Agent   and no such calculation or determination is made, Company shall have the   right to designate an independent Equity Derivatives Dealer to replace Dealer   as Calculation Agent and, in each case, the parties shall work in good faith   to execute any appropriate documentation required by such replacement   Calculation Agent.
    

 

8

 

	
 
    	
 
    	
Any judgment, determination or calculation by the   Calculation Agent shall be made in good faith and in a commercially   reasonable manner.  Following any   determination or calculation by the Calculation Agent hereunder, upon a   written request by Company, the Calculation Agent shall promptly provide to   Company by e-mail to the e-mail address provided by Company in such request a   report (in a commonly used filed format for the storage and manipulation of   financial data) displaying in reasonable detail the basis for such   determination or calculation (including any assumptions used in making such   determination or calculation), it being understood that the Calculation Agent   shall not be obliged to disclose any confidential or proprietary models or   any confidential or proprietary information used by it for such determination   or calculation.
    

 

5.                                      Account Details.

 

(a)                                 Account for payments to Company:  To Be Advised

 

Account for delivery of Shares from Company:  To Be Advised

 

(b)                                 Account for payments to Dealer:

 

	
 
    	
Bank:
    	
Citibank,   N.A.
    
	
 
    	
SWIFT:
    	
CITIUS33
    
	
 
    	
Bank   Routing:
    	
021-000-089
    
	
 
    	
Acct   Name:
    	
Morgan   Stanley and Co.
    
	
 
    	
Acct   No.
    	
30632076
    
	
 
    	
 
    	
 
    
	
 
    	
Account   for delivery of Shares to Dealer:
    
	
 
    	
 
    
	
 
    	
To   be provided by Dealer
    

 

6.                                      Offices.

 

(a)                                 The Office of Company for the Transaction is:  Inapplicable, Company is not a Multibranch Party.

 

(b)                                 The Office of Dealer for the Transaction is: New York

 

Morgan Stanley & Co. International plc

c/o Morgan Stanley & Co. LLC

1585 Broadway, 5th Floor

New York, NY 10036

 

7.                                      Notices.

 

(a)                                 Address for notices or communications to Company:

 

AMAG Pharmaceuticals, Inc.

Attention:                                         Frank Thomas: Executive Vice President, Chief Operating Officer

Telephone No.:             (617) 498-3377

Facsimile No.:                   (617) 588-0475

 

(b)                                 Address for notices or communications to Dealer:

 

Morgan Stanley & Co. International plc

c/o Morgan Stanley & Co. LLC

1585 Broadway, 5th Floor

 

9

 

New York, NY 10036

Attention:                                         Usman Khan

Telephone:                                   (212) 761-0955

Facsimile:                                         (212) 507-4261

Email:                                                            usman.s.khan@morganstanley.com

 

With a copy to:

Morgan Stanley & Co. International

c/o Morgan Stanley & Co.

1221 Avenue of the Americas, 34th Floor

New York, NY 10020

Attention:                                         Anthony Cicia

Telephone:                                   (212) 762-4828

Facsimile:                                         (212) 507-4338

Email:                                                            Anthony.Cicia@morganstanley.com

 

8.                                      Representations and Warranties of Company.

 

Each of the representations and warranties of Company set forth in Section 3 of the Underwriting Agreement (the “Underwriting Agreement”), dated as of February 11, 2014, between Company and J.P. Morgan Securities LLC, as representative of the Underwriters party thereto (the “Underwriters”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.  Company hereby further represents and warrants to Dealer on the date hereof, on and as of the Premium Payment Date and, in the case of the representations in Section 8(d), at all times until termination of the Transaction, that:

 

(a)                                 Company has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Company’s part; and this Confirmation has been duly and validly executed and delivered by Company and constitutes its valid and binding obligation, enforceable against Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.

 

(b)                                 Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Company hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument filed as an exhibit to Company’s Form 10-K filed on March 4, 2013, as amended, Form 10-Q filed on May 6, 2013, Form 10-Q filed on August 7, 2013, Form 10-Q filed on November 6, 2013 or Form 10-K filed on February 10, 2014, in each case, with the Securities and Exchange Commission, as updated by any subsequent filings, to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which Company or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument.

 

(c)                                  No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Company of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act of 1933, as amended (the “Securities Act”) or state securities laws.

 

(d)                                 A number of Shares equal to the Maximum Number of Shares (as defined below) (the “Warrant Shares”) have been reserved for issuance by all required corporate action of Company.  The Warrant Shares have been duly authorized and, when delivered against payment therefor (which may include Net Share Settlement in lieu of cash) and otherwise as contemplated by the terms of the Warrants following the exercise of the Warrants in accordance with the terms and conditions of the Warrants,

 

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will be validly issued, fully-paid and non-assessable, and the issuance of the Warrant Shares will not be subject to any preemptive or similar rights.

 

(e)                                  Company is not and, after consummation of the transactions contemplated hereby, will not be required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

 

(f)                                   Company is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended.

 

(g)                                  Company is not, on the date hereof, in possession of any material non-public information with respect to Company or the Shares.

 

(h)                                 To Company’s knowledge, no state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.

 

(i)                                     Company (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least $50 million.

 

(j)                                    Company has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Amendment Agreement (the “Amendment”) dated as of February 11, 2014 delivered by Company to Dealer and entitled “Amendment to Rights Plan”; such execution, delivery and performance have been duly authorized by all necessary corporate action on Company’s part; and the Amendment has been duly and validly executed and delivered by Company and constitutes its valid and binding obligation, enforceable against Company in accordance with its terms.

 

(k)                                 Neither the execution and delivery of the Amendment nor the incurrence or performance of obligations of Company thereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Company, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument filed as an exhibit to Company’s Form 10-K filed on March 4, 2013, as amended, Form 10-Q filed on May 6, 2013, Form 10-Q filed on August 7, 2013, Form 10-Q filed on November 6, 2013 or Form 10-K filed on February 10, 2014, in each case, with the Securities and Exchange Commission, as updated by any subsequent filings, to which Company or any of its subsidiaries is a party or by which Company or any of its subsidiaries is bound or to which Company or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument, or breach or constitute a default under any agreements or contracts of Company or any of its subsidiaries.

 

9.                                      Other Provisions.

 

(a)                                 Opinions.  Company shall deliver to Dealer an opinion of counsel, dated as of the Trade Date, with respect to the matters set forth in Sections 8(a), 8(b), 8(c), 8(d), 8(j) and 8(k) of this Confirmation.  Delivery of such opinion to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.  In addition, in connection with the entry into or consummation of any Inversion Transaction (as defined below), Company shall deliver to Dealer an opinion of counsel (subject to customary qualifications, assumptions and exceptions), dated as of the date of such Inversion Transaction, with respect to the matters set forth in Sections 8(a), 8(b), 8(c), 8(d), 8(j) and 8(k) of this Confirmation (as if references therein to (i) “execute, deliver” were replaced with “assume”, (ii) “execution, delivery” and “execution and delivery” were replaced with “assumption” and (iii) “executed and delivered” were replaced with “assumed”); provided that no such opinion shall be required in respect of the matters set forth in Sections 8(j) and 8(k) of this Confirmation if the issuer of the Shares following such Inversion Transaction does not have a rights plan, “poison pill” or similar agreement in effect.  “Inversion Transaction” means any Merger Event, reincorporation of Company, corporate inversion of Company

 

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or similar transaction pursuant to which (x) the consideration for the Shares includes (or, at the option of a holder of Shares, may include) shares of an entity or person that is not a corporation or is not organized under the laws of the United States, any State thereof or the District of Columbia, (y) the Company following such Merger Event, reincorporation of Company or corporate inversion of Company is organized in a jurisdiction other than the United States, any State thereof or the District of Columbia or (z) the Company following such Merger Event, reincorporation of Company, corporate inversion of Company or similar transaction will not be a corporation.

 

(b)                                 Repurchase Notices.  Company shall, on any day on which Company effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares on such day, subject to any adjustments provided herein, is (i) less than 21,175,000 (in the case of the first such notice) or (ii) thereafter more than 590,000 less than the number of Shares included in the immediately preceding Repurchase Notice.  Company agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s commercially reasonable hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from commercially reasonable hedging activities or cessation of commercially reasonable hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and reasonable expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person actually may become subject to, as a result of Company’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person, as a result of Company’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, such Indemnified Person shall promptly notify Company in writing.  Company shall not be liable to the extent that the Indemnified Person fails to notify Company within a commercially reasonable period of time of any action commenced against it in respect of which indemnity may be sought hereunder.  In addition, Company shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Company agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Company shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Company under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

 

(c)                                  Regulation M.  Company is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of any securities of Company, other than (i) a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M and (ii) the distribution of up to USD 200,000,000 of Convertible Senior Notes due 2019.  Company shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.

 

(d)                                 No Manipulation.  Company is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

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(e)                                  Transfer or Assignment.  Company may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.  Dealer may, (i) without Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any affiliate of Dealer, and (ii) with Company’s consent, transfer or assign all or any part of its rights or obligations under the Transaction to any third party; provided, in each case, that (x) Company will not be required to pay the transferee on any payment date an amount under Section 2(d)(i)(4) of the Agreement greater than an amount that Company would have been required to pay to Dealer in the absence of such transfer or assignment, and (y) Dealer shall have caused the transferee to make such Payee Tax Representations and to provide such tax documentation as may be reasonably requested by Company.  If at any time at which (A) the Section 16 Percentage exceeds 7.5%, (B) the Warrant Equity Percentage exceeds 14.5%, or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Warrants to a third party on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a Terminated Portion, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants underlying the Terminated Portion, (2) Company were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the Company shall be able to settle any corresponding obligation in cash or in Share Termination Delivery Units in its discretion in accordance with the provisions of Section 9(j).  The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and each person subject to aggregation of Shares with Dealer under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder directly or indirectly beneficially own (as defined under Section 13 or Section 16 of the Exchange Act and rules promulgated thereunder) and (B) the denominator of which is the number of Shares outstanding.  The “Warrant Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Warrants and the Warrant Entitlement and (2) the aggregate number of Shares underlying any other warrants purchased by Dealer from Company, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Company that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations (other than any Form 13F, Schedule 13D or Schedule 13G filing under the Exchange Act) or other requirements (including obtaining prior approval from any person or entity but excluding any such requirement in respect of which prior approval has been obtained) of a Dealer Person, or would result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.  Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Company, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations.  Dealer shall be discharged of its obligations to Company only to the extent of any such performance.

 

(f)                                   Dividends.  If at any time during the period from and including the Effective Date, to and including the last Expiration Date, an ex-dividend date for a cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), then the Calculation Agent will adjust any of the Strike Price, Number of Warrants, Daily Number of Warrants and/or any other variable relevant to the exercise, settlement or payment of the Transaction to preserve the fair value of the Warrants to Dealer after taking into account such dividend.

 

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(g)                                  Role of Agent.  Morgan Stanley & Co. LLC (“MS&CO”) is acting as agent for both parties but does not guarantee the performance of either party. (i) Neither Dealer nor Company shall contact the other with respect to any matter relating to the Transaction without the direct involvement of MS&CO; (ii) MS&CO, Dealer and Company each hereby acknowledges that any transactions by Dealer or MS&CO with respect to Shares will be undertaken by Dealer as principal for its own account; (iii) all of the actions to be taken by Dealer and MS&CO in connection with the Transaction shall be taken by Dealer or MS&CO independently and without any advance or subsequent consultation with Company; and (iv) MS&CO is hereby authorized to act as agent for Company only to the extent required to satisfy the requirements of Rule 15a-6 under the Exchange Act in respect of the Transaction.

 

(h)                                 Additional Provisions.

 

(i)                                     Amendments to the Equity Definitions:

 

(A)                               Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “material”; and adding the phrase “or Warrants” at the end of the sentence; provided that no adjustment under Section 11.2(c) of the Equity Definitions shall accelerate Dealer’s ability to exercise the Warrants or extend the length of time in which the Warrants are exercisable on account of any event that is based on (a) an observable market, other than the market for Company’s own stock or (b) an observable index, other than an index calculated or measured solely by reference to Company’s own operations.

 

(B)                               Section 11.2(c) of the Equity Definitions is hereby amended by (w) replacing the words “a diluting or concentrative” with “material” in the fifth line thereof, (x) adding the phrase “or Warrants” after the words “the relevant Shares” in the same sentence, (y) deleting the words “diluting or concentrative” in the sixth to last line thereof and (z) deleting the phrase “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares)” and replacing it with the phrase “(and, for the avoidance of doubt, adjustments may be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Shares).”

 

(C)                               Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the word “a material”; and adding the phrase “or Warrants” at the end of the sentence; provided that such event is not based on (a) an observable market, other than the market for Company’s own stock or (b) an observable index, other than an index calculated or measured solely by reference to Company’s own operation.

 

(D)                               Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA Master Agreement with respect to that Issuer.”

 

(E)                                Section 12.9(b)(iv) of the Equity Definitions is hereby amended by:

 

(x)                                 deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and

 

(y)                                 replacing the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares” with the phrase “such Lending Party does not lend Shares” in the penultimate sentence.

 

(F)                                 Section 12.9(b)(v) of the Equity Definitions is hereby amended by:

 

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(x)                                 adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and

 

(y)                                 (1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C), (3) deleting the penultimate sentence in its entirety and replacing it with the sentence “The Hedging Party will determine the Cancellation Amount payable by one party to the other in a commercially reasonable manner.” and (4) deleting clause (X) in the final sentence.

 

(ii)                                  Notwithstanding anything to the contrary in this Confirmation, upon the occurrence of one of the following events, with respect to the Transaction, (1) Dealer shall have the right to designate such event an Additional Termination Event and designate an Early Termination Date pursuant to Section 6(b) of the Agreement, (2) Company shall be deemed the sole Affected Party with respect to such Additional Termination Event and (3) the Transaction, or, at the election of Dealer in its sole discretion, any portion of the Transaction, shall be deemed the sole Affected Transaction; provided that if Dealer so designates an Early Termination Date with respect to a portion of the Transaction, (a) a payment shall be made pursuant to Section 6 of the Agreement as if an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Warrants equal to the number of Warrants included in the terminated portion of the Transaction, and (b) for the avoidance of doubt, the Transaction shall remain in full force and effect except that the Number of Warrants shall be reduced by the number of Warrants included in such terminated portion:

 

(A)                               A “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than Company, its subsidiaries and its and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the common equity of Company representing more than 50% of the voting power of such common equity.  Notwithstanding the foregoing, any transaction or transactions set forth in this clause (A) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights, in connection with such transaction or transactions consists of shares of common stock, American depositary receipts, ordinary shares or other common equity interests, in each case, that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights.

 

(B)                               Consummation of (I) any recapitalization, reclassification or change of the Shares (other than changes resulting from a subdivision, combination or changes solely in par value) as a result of which the Shares would be converted into, or exchanged for, stock, other securities, other property or assets or (II) any share exchange, consolidation or merger of Company pursuant to which the Shares will be converted into cash, securities or other property or assets or (III) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of Company and its subsidiaries, taken as a whole, to any person other than one of Company’s subsidiaries.  Notwithstanding the foregoing, any transaction or transactions set forth in this clause (B) shall not constitute an Additional Termination Event if (x) at least 90% of the consideration received or to be received by holders of the Shares, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights, in connection with such transaction or transactions consists of shares of common stock, American depositary receipts, ordinary shares or other common equity interests, in each case,

 

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that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions, and (y) as a result of such transaction or transactions, the Shares will consist of such consideration, excluding cash payments for fractional Shares and cash payments made pursuant to dissenters’ appraisal rights.

 

(C)                               Default by Company or any of its Significant Subsidiaries (as defined below) with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $15 million (or its foreign currency equivalent) in the aggregate of Company and/or any such Significant Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable prior to its stated maturity or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable (after the expiration of all applicable grace periods) at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise, and such acceleration shall not have been rescinded or annulled or such failure to pay shall not have been cured, as the case may be, within 30 days after written notice to Company by the trustee or holders at least 25% in principal amount of Company’s outstanding debt as of the Premium Payment Date has been received.  “Significant Subsidiary” means a subsidiary that is a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X promulgated by the SEC; provided that in the case of a subsidiary that meets the criteria of clause (3) of the definition thereof but not clause (1) or (2) thereof, such subsidiary shall not be deemed to be a Significant Subsidiary unless the subsidiary’s income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principle exclusive of amounts attributable to any non-controlling interests for the last completed fiscal year prior to the date of such determination exceeds $15 million.

 

(D)                               A final judgment for the payment of $15 million (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) rendered against Company or any of its Significant Subsidiaries, which judgment is not discharged or stayed within 60 days after (I) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (II) the date on which all rights to appeal have been extinguished.

 

(E)                                Dealer, despite using commercially reasonable efforts, is unable or reasonably determines, based on the advice of counsel, that it is impractical or illegal, to hedge its exposure with respect to the Transaction in the public market without registration under the Securities Act or as a result of any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Dealer).

 

(i)                                     No Collateral or Setoff.  Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Company hereunder are not and shall not be secured by any collateral.  Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.

 

(j)                                    Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.

 

(i)                                     If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to holders of Shares consists solely of cash, (ii) a Merger Event or Tender Offer that is within Company’s control, or (iii) an Event of Default in which Company is the Defaulting Party or a

 

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Termination Event in which Company is the Affected Party other than an Event of Default of the type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Company’s control), and if Company would owe any amount to Dealer pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Company shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Company gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Company remakes the representation set forth in Section 8(g) as of the date of such election and (c) Dealer agrees, in its sole discretion, to such election, in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

Share Termination Alternative:                        If applicable, Company shall deliver to Dealer the Share Termination Delivery Property on the date (the “Share Termination Payment Date”) on which the Payment Obligation would otherwise be due pursuant to Section 12.7 or Section 12.9 of the Equity Definitions or Section 6(d)(ii) of the Agreement, as applicable, subject to Section 9(k)(i) below, in satisfaction, subject to Section 9(k)(ii) below, of the relevant Payment Obligation, in the manner reasonably requested by Dealer free of payment.

 

Share Termination Delivery 

Property:                                                                                                                                              A number of Share Termination Delivery Units, as calculated by the Calculation Agent, equal to the relevant Payment Obligation divided by the Share Termination Unit Price.  The Calculation Agent shall adjust the amount of Share Termination Delivery Property by replacing any fractional portion of a security therein with an amount of cash equal to the value of such fractional security based on the values used to calculate the Share Termination Unit Price (without giving effect to any discount pursuant to Section 9(k)(i)).

 

Share Termination Unit Price:                                The value to Dealer of property contained in one Share Termination Delivery Unit on the date such Share Termination Delivery Units are to be delivered as Share Termination Delivery Property, as determined by the Calculation Agent in its discretion by commercially reasonable means.  In the case of a Private Placement of Share Termination Delivery Units that are Restricted Shares (as defined below), as set forth in Section 9(k)(i) below, the Share Termination Unit Price shall be determined by the discounted price applicable to such Share Termination Delivery Units.  In the case of a Registration Settlement of Share Termination Delivery Units that are Restricted Shares (as defined below) as set forth in Section 9(k)(ii) below, notwithstanding the foregoing, the Share Termination Unit Price shall be the Settlement Price on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable.

 

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The Calculation Agent shall notify Company of the Share Termination Unit Price at the time of notification of such Payment Obligation to Company or, if applicable, at the time the discounted price applicable to the relevant Share Termination Units is determined pursuant to Section 9(k)(i).

 

Share Termination Delivery Unit:             One Share or, if the Shares have changed into cash or any other property or the right to receive cash or any other property as the result of a Nationalization, Insolvency or Merger Event (any such cash or other property, the “Exchange Property”), a unit consisting of the type and amount of Exchange Property received by a holder of one Share (without consideration of any requirement to pay cash or other consideration in lieu of fractional amounts of any securities) in such Nationalization, Insolvency or Merger Event.  If such Nationalization, Insolvency or Merger Event involves a choice of Exchange Property to be received by holders, such holder shall be deemed to have elected to receive the maximum possible amount of cash.

 

Failure to Deliver:                                                                                                Inapplicable

 

Other applicable provisions:                                         If Share Termination Alternative is applicable, the provisions of Sections 9.8, 9.9, 9.11 and 9.12 (as modified above) of the Equity Definitions will be applicable, except that all references in such provisions to “Physically-settled” shall be read as references to “Share Termination Settled” and all references to “Shares” shall be read as references to “Share Termination Delivery Units”.  “Share Termination Settled” in relation to the Transaction means that the Share Termination Alternative is applicable to the Transaction.

 

(k)                                 Registration/Private Placement Procedures.  If, in the reasonable opinion of Dealer, based on the advice of counsel, following any delivery of Shares or Share Termination Delivery Property to Dealer hereunder, such Shares or Share Termination Delivery Property would be in the hands of Dealer subject to any applicable restrictions with respect to any registration or qualification requirement or prospectus delivery requirement for such Shares or Share Termination Delivery Property pursuant to any applicable federal or state securities law (including, without limitation, any such requirement arising under Section 5 of the Securities Act as a result of such Shares or Share Termination Delivery Property being “restricted securities”, as such term is defined in Rule 144 under the Securities Act, or as a result of the sale of such Shares or Share Termination Delivery Property being subject to paragraph (c) of Rule 145 under the Securities Act) (such Shares or Share Termination Delivery Property, “Restricted Shares”), then delivery of such Restricted Shares shall be effected pursuant to either clause (i) or (ii) below at the election of Company, unless Dealer waives the need for registration/private placement procedures set forth in (i) and (ii) below.  Notwithstanding the foregoing, solely in respect of any Daily Number of Warrants exercised or deemed exercised on any Expiration Date, Company shall elect, prior to the first Settlement Date for the first applicable Expiration Date, a Private Placement Settlement or Registration Settlement for all deliveries of Restricted Shares for all such Expiration Dates which election shall be applicable to all remaining Settlement Dates for such Warrants and the procedures in clause (i) or clause (ii) below shall apply for all such delivered Restricted Shares on an aggregate basis commencing after the final Settlement Date for such Warrants.  The Calculation Agent shall make reasonable adjustments to settlement terms and provisions under this Confirmation to reflect a single Private Placement or Registration Settlement for such aggregate Restricted Shares delivered hereunder.

 

(i)                                     If Company elects to settle the Transaction pursuant to this clause (i) (a “Private Placement Settlement”), then delivery of Restricted Shares by Company shall be effected in customary

 

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private placement procedures with respect to such Restricted Shares reasonably acceptable to Dealer; provided that Company may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Company to Dealer (or any affiliate designated by Dealer) of the Restricted Shares or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Restricted Shares by Dealer (or any such affiliate of Dealer).  The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Dealer, due diligence rights (for Dealer or any designated buyer of the Restricted Shares by Dealer), opinions and certificates, and such other documentation as is customary for private placement agreements, all reasonably acceptable to Dealer.  In the case of a Private Placement Settlement, Dealer shall determine the appropriate discount to the Share Termination Unit Price (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or any Settlement Price (in the case of settlement of Shares pursuant to Section 2 above) applicable to such Restricted Shares in a commercially reasonable manner and appropriately adjust the number of such Restricted Shares to be delivered to Dealer hereunder, which discount shall only take into account the illiquidity resulting from the fact that the Restricted Shares will not be registered for resale and any commercially reasonable fees and expenses of Dealer (and any affiliate thereof) in connection with such resale.  Notwithstanding anything to the contrary in the Agreement or this Confirmation, the date of delivery of such Restricted Shares shall be the Exchange Business Day following notice by Dealer to Company, of such applicable discount and the number of Restricted Shares to be delivered pursuant to this clause (i).  For the avoidance of doubt, delivery of Restricted Shares shall be due as set forth in the previous sentence and not be due on the Share Termination Payment Date (in the case of settlement of Share Termination Delivery Units pursuant to Section 9(j) above) or on the Settlement Date for such Restricted Shares (in the case of settlement in Shares pursuant to Section 2 above).

 

(ii)                                  If Company elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Company shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Dealer, to cover the resale of such Restricted Shares in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities due diligence rights, opinions and certificates, and such other documentation as is customary for equity resale underwriting agreements, all reasonably acceptable to Dealer.  If Dealer, in its sole reasonable discretion, is not satisfied with such procedures and documentation Private Placement Settlement shall apply.  If Dealer is satisfied with such procedures and documentation, it shall sell the Restricted Shares pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Restricted Shares (which, for the avoidance of doubt, shall be (x) the Share Termination Payment Date in case of settlement in Share Termination Delivery Units pursuant to Section 9(j) above or (y) the Settlement Date in respect of the final Expiration Date for all Daily Number of Warrants) and ending on the earliest of (i) the Exchange Business Day on which Dealer completes the sale of all Restricted Shares or, in the case of settlement of Share Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales equals or exceeds the Payment Obligation (as defined above), (ii) the date upon which all Restricted Shares have been sold or transferred pursuant to Rule 144 (or similar provisions then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act and (iii) the date upon which all Restricted Shares may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision then in force) or Rule 145(d)(2) (or any similar provision then in force) under the Securities Act, provided that Dealer shall use commercially reasonable efforts, taking into account prevailing market conditions, promptly to complete the sale of all Restricted Shares.  If the Payment Obligation exceeds the realized net proceeds from such resale, Company shall transfer to Dealer by the open of the regular trading session on the Exchange on the Exchange Trading Day immediately following such resale the amount of

 

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such excess (the “Additional Amount”) in cash or in a number of Shares (“Make-whole Shares”) in an amount that, based on the Settlement Price on such day (as if such day was the “Valuation Date” for purposes of computing such Settlement Price), has a dollar value equal to the Additional Amount.  The Resale Period shall continue to enable the sale of the Make-whole Shares, provided that Company shall be permitted to suspend or delay any Resale Period for customary “black-out” periods.  If Company elects to pay the Additional Amount in Shares, the requirements and provisions for Registration Settlement shall apply.  This provision shall be applied successively until the Additional Amount is equal to zero.  For the avoidance of doubt, Dealer shall cease selling Make-whole Shares, and the Resale Period shall terminate, when the Additional Amount has been reduced to zero, and if at such time, Dealer holds any excess Make-whole Shares, such Shares shall promptly be returned to Company.  In no event shall Company deliver a number of Restricted Shares greater than the Maximum Number of Shares.

 

(iii)                               Without limiting the generality of the foregoing, Company agrees that (A) any Restricted Shares delivered to Dealer may be transferred by and among Dealer and its affiliates and Company shall effect such transfer without any further action by Dealer and (B) after the period of 6 months from the Trade Date (or 1 year from the Trade Date if, at such time, informational requirements of Rule 144(c) under the Securities Act are not satisfied with respect to Company) has elapsed in respect of any Restricted Shares delivered to Dealer, Company shall promptly remove, or cause the transfer agent for such Restricted Shares to remove, any legends referring to any such restrictions or requirements from such Restricted Shares upon request by Dealer (or such affiliate of Dealer) to Company or such transfer agent, without any requirement for the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document, any transfer tax stamps or payment of any other amount or any other action by Dealer (or such affiliate of Dealer). Notwithstanding anything to the contrary herein, to the extent the provisions of Rule 144 of the Securities Act or any successor rule are amended, or the applicable interpretation thereof by the Securities and Exchange Commission or any court change after the Trade Date, the agreements of Company herein shall be deemed modified to the extent necessary, in the opinion of outside counsel of Company, to comply with Rule 144 of the Securities Act, as in effect at the time of delivery of the relevant Shares or Share Termination Delivery Property.

 

(iv)                              If the Private Placement Settlement or the Registration Settlement shall not be effected as set forth in clauses (i) or (ii), as applicable, then failure to effect such Private Placement Settlement or such Registration Settlement shall constitute an Event of Default with respect to which Company shall be the Defaulting Party.

 

(l)                                     Limit on Beneficial Ownership.  Notwithstanding any other provisions hereof, Dealer may not exercise any Warrant hereunder or be entitled to take delivery of any Shares deliverable hereunder, and Automatic Exercise shall not apply with respect to any Warrant hereunder, to the extent (but only to the extent) that, after such receipt of any Shares upon the exercise of such Warrant or otherwise hereunder and after taking into account any Shares deliverable to Dealer under the letter agreement dated February 11, 2014 between Dealer and Company regarding Base Warrants (the “Base Warrant Confirmation”), (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the Applicable Share Limit.  Any purported delivery hereunder shall be void and have no effect to the extent (but only to the extent) that, after such delivery and after taking into account any Shares deliverable to Dealer under the Base Warrant Confirmation, (i) the Section 16 Percentage would exceed 7.5%, or (ii) the Share Amount would exceed the Applicable Share Limit. If any delivery owed to Dealer hereunder is not made, in whole or in part, as a result of this provision, Company’s obligation to make such delivery shall not be extinguished and Company shall make such delivery as promptly as practicable after, but in no event later than one Business Day after, Dealer gives notice to Company that, after such delivery, (i) the Section 16 Percentage would not exceed 7.5%, and (ii) the Share Amount would not exceed the Applicable Share Limit.

 

(m)                             Share Deliveries. Notwithstanding anything to the contrary herein, Company agrees that any delivery of Shares or Share Termination Delivery Property shall be effected by book-entry transfer through the facilities of DTC, or any successor depositary, if at the time of delivery, such class of Shares or class of Share Termination Delivery Property is in book-entry form at DTC or such successor depositary.

 

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(n)                                 Waiver of Jury Trial.   Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction.  Each party (i) certifies that no representative, agent or attorney of the other party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.

 

(o)                                 Tax Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Company and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Company relating to such tax treatment and tax structure.

 

(p)                                 Maximum Share Delivery.

 

(i)                                     Notwithstanding any other provision of this Confirmation, the Agreement or the Equity Definitions, in no event will Company at any time be required to deliver a number of Shares greater than two times the Number of Shares (the “Maximum Number of Shares”) to Dealer in connection with the Transaction.

 

(ii)                                  In the event Company shall not have delivered to Dealer the full number of Shares or Restricted Shares otherwise deliverable by Company to Dealer pursuant to the terms of the Transaction because Company has insufficient authorized but unissued Shares (such deficit, the “Deficit Shares”), Company shall be continually obligated to deliver, from time to time, Shares or Restricted Shares, as the case may be, to Dealer until the full number of Deficit Shares have been delivered pursuant to this Section 9(p)(ii), when, and to the extent that, (A) Shares are repurchased, acquired or otherwise received by Company or any of its subsidiaries after the Trade Date (whether or not in exchange for cash, fair value or any other consideration), (B) authorized and unissued Shares previously reserved for issuance in respect of other transactions become no longer so reserved or (C) Company additionally authorizes any unissued Shares that are not reserved for other transactions; provided that in no event shall Company deliver any Shares or Restricted Shares to Dealer pursuant to this Section 9(p)(ii) to the extent that such delivery would cause the aggregate number of Shares and Restricted Shares delivered to Dealer to exceed the Maximum Number of Shares.  Company shall immediately notify Dealer of the occurrence of any of the foregoing events (including the number of Shares subject to clause (A), (B) or (C) and the corresponding number of Shares or Restricted Shares, as the case may be, to be delivered) and promptly deliver such Shares or Restricted Shares, as the case may be, thereafter.

 

(iii)                               Notwithstanding anything to the contrary in the Agreement, this Confirmation or the Equity Definitions, the Maximum Number of Shares shall not be adjusted on account of any event that (x) constitutes a Potential Adjustment Event solely on account of Section 11.2(e)(vii) of the Equity Definitions and (y) is not an event within Company’s control.

 

(q)                                 Right to Extend.  Dealer may postpone or add, in whole or in part, any Expiration Date or any other date of valuation or delivery with respect to some or all of the relevant Warrants (in which event the Calculation Agent shall make appropriate adjustments to the Daily Number of Warrants with respect to one or more Expiration Dates) if Dealer reasonably determines (i) in its commercially reasonable judgment, that such extension is reasonably necessary or appropriate to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions or (ii) based on the advice of counsel, to enable Dealer to effect purchases of Shares in connection with its commercially reasonable hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Issuer or an affiliated purchaser of Issuer, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

 

(r)                                    Status of Claims in Bankruptcy.  Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Company with respect to the Transaction that are senior to the claims of common stockholders of Company in any United States bankruptcy proceedings of Company; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in

 

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the event of a breach by Company of its obligations and agreements with respect to the Transaction; provided, further, that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.

 

(s)                                   Securities Contract; Swap Agreement.  The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.

 

(t)                                    Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

(u)                                 Agreements and Acknowledgements Regarding Hedging. Company understands, acknowledges and agrees that: (A) at any time on and prior to the last Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction;  (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Settlement Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Settlement Prices, each in a manner that may be adverse to Company.

 

(v)                                 Early Unwind. In the event the sale of the “Option Securities” (as defined in the Underwriting Agreement) is not consummated with the Underwriters for any reason, or Company fails to deliver to Dealer opinions of counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Company under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date.  Each of Dealer and Company represents and acknowledges to the other that upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(w)                               Payment by Dealer. In the event that (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Dealer owes to Company an amount calculated under Section 6(e) of the Agreement, or (ii) Dealer owes to Company, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero.

 

(x)                                 Inversion Transaction.  Company shall not enter into or consummate any Inversion Transaction unless the successor Company immediately following such Inversion Transaction repeats to Dealer immediately following such Inversion Transaction the representations and warranties set forth in

 

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Sections 8(a), 8(b), 8(c), 8(d), 8(j) and 8(k) of this Confirmation (as if references therein to (i) “execute, deliver” were replaced with “assume”, (ii) “execution, delivery” and “execution and delivery” were replaced with “assumption” and (iii) “executed and delivered” were replaced with “assumed”).  Notwithstanding anything to the contrary in this Confirmation if Company enters into or consummates any Inversion Transaction pursuant to which Company following such Inversion Transaction is organized under the laws of a jurisdiction other than the Islands of Bermuda, the Netherlands, Belgium, Switzerland, Luxembourg, the Republic of Ireland, Canada or the United Kingdom, then such Inversion Transaction shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Company shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.  If, at any time following the occurrence of any Inversion Transaction, Dealer reasonably determines in its good faith judgment that (x) such Inversion Transaction has had a material adverse effect on Dealer’s rights and obligations under the Transaction or (y) Dealer would incur an increased (as compared with circumstances existing on the Trade Date) amount of tax, duty, expense or fee (other than brokerage commissions and excluding (I) any de minimis increased amount of tax, duty, expense or fee and (II) any such increased amount that is incurred solely due to the deterioration of the creditworthiness of Dealer), to (1) acquire, establish, re-establish, substitute, maintain, unwind or dispose of any transaction(s) or asset(s) it deems necessary to hedge the economic risk of entering into and performing its obligations with respect to the Transaction, or (2) realize, recover or remit the proceeds of any such transaction(s) or asset(s) (each of the events described in clause (x) and clause (y) above, an “Inversion Event”), then, in either case, Dealer shall give prompt notice to Company of such Inversion Event.  Concurrently with delivering such notice, Dealer shall give notice to Company of a commercially reasonable Price Adjustment that Dealer determines, in its good faith, commercially reasonable judgment, appropriate to account for the economic effect on the Transaction of such Inversion Event and provide Company with supporting documentation for such Price Adjustment (unless Dealer determines in its good faith, commercially reasonable judgment that no Price Adjustment will produce a commercially reasonably result, in which case Dealer shall so notify Company).  Unless Dealer determines in its good faith, commercially reasonable judgment that no Price Adjustment will produce a commercially reasonably result, within two Scheduled Trading Days of receipt of such notice, Company shall notify Dealer that it elects to (A) agree to amend the Transaction to take into account such Price Adjustment or (B) pay Dealer an amount determined by Dealer (and in respect of which Dealer has provided to Company supporting documentation) that corresponds to such Price Adjustment (and, in each case, Company shall be deemed to have repeated the representation set forth in Section 8(g) of this Confirmation as of the date of such election).  If Company fails to give such notice to Dealer of its election by the end of that second Scheduled Trading Day, or if Dealer determines in its good faith, commercially reasonable judgment that no Price Adjustment will produce a commercially reasonably result, then such failure or such determination, as the case may be, shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (1) Company shall be deemed to be the sole Affected Party, (2) the Transaction shall be the sole Affected Transaction and (3) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.  For the avoidance of doubt, the parties hereto agree and acknowledge that the occurrence of an Inversion Event shall not preclude the occurrence of one or more additional, subsequent Inversion Events, it being understood and agreed that any Price Adjustment described in clause (A) above and/or any payment described in clause (B) above shall be calculated without duplication in respect of any prior such Price Adjustment and/or payment.

 

(y)                                 Counterparts.  This Confirmation may be executed in several counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

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Please confirm that the foregoing correctly sets forth the terms of the agreement between Dealer and Company with respect to the Transaction, by manually signing this Confirmation or this page hereof as evidence of agreement to such terms and providing the other information requested herein and returning an executed copy to Dealer.

 

 

	
Very   truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
MORGAN STANLEY & CO.
    
	
 
    	
 
    	
INTERNATIONAL PLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Joseba Picaza
    
	
 
    	
 
    	
Name:
    	
Joseba Picaza
    
	
 
    	
 
    	
Title:
    	
Executive Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
MORGAN STANLEY & CO. LLC
    
	
 
    	
 
    	
as   Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Scott McDavid
    
	
 
    	
 
    	
Name:
    	
Scott McDavid
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Accepted   and confirmed as of the Trade Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
AMAG   Pharmaceuticals, Inc.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ William K.   Heiden
    	
 
    	
 
    
	
Authorized Signatory
    	
 
    	
 
    
	
Name:
    	
William K. Heiden,   President and Chief Executive OfficerExhibit 10.1

 

1st AMENDED AND RESTATED
 SHARE PURCHASE AGREEMENT OF ROCK CITY S.A. (CURRENT
 DENOMINATION OF A.H.O.S.P.E. EMPREENDIMENTOS E PARTICIPAÇÕES S.A.)

 

This 1st Amended and Restated Share Purchase Agreement (“Amended and Restated Agreement”) is entered into as of February 12, 2014, by and among:

 

ROBERTO MEDINA, Brazilian, single, advertising businessman, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista José Silva de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, bearer of Identity Card issued by IFP/RJ under No. 01.952.064-2 and enrolled with the Individual Taxpayers Register (“CPF/MF”) under No. 034.653.737-15 (“Roberto”);

 

RUBEM MEDINA, Brazilian, married, economist, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite 204 — part, bearer of Identity Card issued by IFP/RJ under No. 01.641.538-2 and enrolled with the CPF/MF under No. 007.525.687-87 (“Rubem”);

 

ROBERTA MEDINA, Brazilian, married, advertising businesswoman, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista José Silva de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, bearer of Identity Card issued by IFP/RJ under No. 09.937.615-4 and enrolled with the CPF/MF under No. 073.284.507-62 (“Roberta”);

 

RODOLFO MEDINA, Brazilian, married, businessman, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista Silva José de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, bearer of Identity Card issued by the IFP/RJ under No. 099376147-0 and enrolled with the CPF/MF under No. 073.915.557-11 (“Rodolfo”);

 

MARCELLA FERNANDES CHULAM, Brazilian, single, student, with commercial address in City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite 204 — part, bearer of Identity Card issued by DETRAN under No. 020.324.343-1 and enrolled with the CPF/MF under No. 103.078.447-73 (“Marcella”); and

 

FILIPE FERNANDES CHULAM, Brazilian, single, business administrator, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite 204 — part, bearer of Identity Card issued by IFP/RJ under No. 10908645-4 and enrolled with the CPF/MF under No. 091.564.147-06 (“Filipe” and, collectively with Roberto, Rubem, Roberta, Rodolfo and Marcella, hereinafter referred to collectively as

 

 

“Sellers”);

 

and:

 

SFX ENTRETENIMENTO DO BRASIL PARTICIPAÇÕES LTDA., a sociedade limitada with its principal place of business at Rua Bandeira Paulista, No. 716, cjts. 91 e 92, São Paulo, State of São Paulo, 04532-002, enrolled with the corporate taxpayer register under CNPJ/MF No. 17.789.916/0001-75, herein represented in accordance with its articles of association (“SFX do Brasil” and, collectively with the Sellers, “Parties” or “Party” individually);

 

and further, as intervening parties (the “Intervening Parties”):

 

SFX ENTERTAINMENT INC., a corporation with its principal place of business at 430 Park Avenue, 6th Floor, New York City, New York 10022, herein represented pursuant to its bylaws (“SFX”);

 

LIONEL CHULAM, Brazilian, married, economist, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite 204 — part, bearer of Identity Card issued by the IFP/RJ under No. 3.184.619, enrolled with the CPF/MF under No. 341.356.697-00 (“Lionel”),

 

ROCK CITY S.A. (current denomination of A.H.O.S.P.E. Empreendimentos e Participações S.A.), a sociedade por ações with its principal place of business in the Avenida Paisagista José Silva de Azevedo Neto, No. 200, block 1, suite 205, part, Rio de Janeiro, State of Rio de Janeiro, 22775-056, enrolled with the CNPJ/MF under No. 19.165.784/0001-36, herein represented pursuant to its bylaws (“Holdco” or “Company”); and

 

ROCK WORLD S.A., a sociedade por ações with its principal place of business in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista José Silva de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, enrolled with the CNPJ/MF under No. 13.212.200/0001-50 (“Rock World”);

 

WHEREAS

 

A.                                    The Parties and the Intervening Parties have entered into the Share Purchase Agreement of A.H.O.S.P.E. Empreendimentos e Participações S.A., on December 12, 2013, whereby, among other provisions, the Purchaser has agreed, subject to the conditions set forth therein, to acquire forty percent (40%) of the total issued and outstanding shares of Rock World (“Original SPA”);

 

B.                                    On January 30, 2014, SFX assigned its rights and obligations under the Original SPA to SFX Brasil pursuant to Section 11.3 of the Original SPA; and

 

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C.                                    The Parties and the Intervening Parties wish to amend certain terms and provisions of the Original SPA.

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the Parties hereto agree to enter into this Amended and Restated Agreement pursuant to the following provisions:

 

(Capitalized terms not otherwise specifically defined herein shall have the meaning assigned to them under the Original SPA.)

 

1.1.                           The Parties herein agree to modify original Sections 1.1, 2.4, 4.1, 8.4, 9.1, 11.1.1 (hereafter renumbered as new Section 11.2.1), and 11 (hereafter renumbered as new Section 12) of the Original SPA, in order to correct cross references set forth therein.

 

1.2.                           The Parties agree that, due to the assignment of the rights and obligations of SFX under SPA to SFX Brasil, under the terms of Clause 11.3 of the Original SPA, (i) SFX Brasil shall be included in the Original SPA as a Party; and (ii) all references made to the “Purchaser” in the Original SPA shall be deemed to be references to SFX and SFX do Brasil, jointly.

 

1.3.                           The Parties agree that the schedules and exhibits to the Original SPA shall remain in full force and effect as originally drafted, except for (i) Schedule 11.2, hereafter renumbered as Schedule 12.2 and (ii) for the provisions of the “Waiver of Closing Delivery” entered into among the parties as of February 11, 2014 (“Waiver”).

 

1.4.                           The Parties agree to amend and restate the Original SPA, as follows:

 

“SHARE PURCHASE AGREEMENT OF
  A.H.O.S.P.E. EMPREENDIMENTOS E PARTICIPAÇÕES S.A.

 

This Share Purchase Agreement (“Agreement”) is entered into as of February 12, 201, by and among:

 

ROBERTO MEDINA, Brazilian, single, advertising businessman, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista José Silva de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, bearer of Identity Card issued by IFP/RJ under No. 01.952.064-2 and enrolled with the Individual Taxpayers Register (“CPF/MF”) under No. 034.653.737-15 (“Roberto”);

 

RUBEM MEDINA, Brazilian, married, economist, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite

 

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204 — part, bearer of Identity Card issued by IFP/RJ under No. 01.641.538-2 and enrolled with the CPF/MF under No. 007.525.687-87 (“Rubem”);

 

ROBERTA MEDINA, Brazilian, married, advertising businesswoman, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista José Silva de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, bearer of Identity Card issued by IFP/RJ under No. 09.937.615-4 and enrolled with the CPF/MF under No. 073.284.507-62 (“Roberta”);

 

RODOLFO MEDINA, Brazilian, married, businessman, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista Silva José de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, bearer of Identity Card issued by the IFP/RJ under No. 099376147-0 and enrolled with the CPF/MF under No. 073.915.557-11 (“Rodolfo”);

 

MARCELLA FERNANDES CHULAM, Brazilian, single, student, with commercial address in City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite 204 — part, bearer of Identity Card issued by DETRAN under No. 020.324.343-1 and enrolled with the CPF/MF under No. 103.078.447-73 (“Marcella”); and

 

FILIPE FERNANDES CHULAM, Brazilian, single, business administrator, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite 204 — part, bearer of Identity Card issued by IFP/RJ under No. 10908645-4 and enrolled with the CPF/MF under No. 091.564.147-06 (“Filipe” and, collectively with Roberto, Rubem, Roberta, Rodolfo and Marcella, hereinafter referred to collectively as “Sellers”);

 

and:

 

SFX ENTRETENIMENTO DO BRASIL PARTICIPAÇÕES LTDA., a sociedade limitada with its principal place of business at Rua Bandeira Paulista, No. 716, cjts. 91 e 92, São Paulo, State of São Paulo, 04532-002, enrolled with the corporate taxpayer register under CNPJ/MF No. 17.789.916/0001-75, herein represented in accordance with its articles of association (“SFX do Brasil” and, collectively with the Sellers, “Parties” or “Party” individually);

 

and further, as intervening parties (the “Intervening Parties”):

 

SFX ENTERTAINMENT INC., a corporation with its principal place of business at 430 Park Avenue, 6th Floor, New York City, New York 10022, herein represented by Robert FX Sillerman, Chief Executive Officer, pursuant to its bylaws (“SFX”);

 

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LIONEL CHULAM, Brazilian, married, economist, with commercial address in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas No. 4430, suite 204 — part, bearer of Identity Card issued by the IFP/RJ under No. 3.184.619, enrolled with the CPF/MF under No. 341.356.697-00 (“Lionel”),

 

ROCK CITY S.A. (current denomination of A.H.O.S.P.E. Empreendimentos e Participações S.A.), a sociedade por ações with its principal place of business in the Avenida Paisagista José Silva de Azevedo Neto, No. 200, block 1, suite 205, part, Rio de Janeiro, State of Rio de Janeiro, 22775-056, enrolled with the CNPJ/MF under No. 19.165.784/0001-36, herein represented pursuant to its bylaws (“Holdco” or “Company”); and

 

ROCK WORLD S.A., a sociedade por ações with its principal place of business in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Paisagista José Silva de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca, enrolled with the CNPJ/MF under No. 13.212.200/0001-50 (“Rock World”);

 

WHEREAS

 

A.                                   Rock World is a Brazilian company engaged in the entertainment business, concentrating the businesses, contracts, assets and rights used in the organization of Music Festivals (as defined in Section 1.1 below) held under the “Rock in Rio” name and/or using any of the “Rock in Rio” trademarks (“Rock in Rio Festivals”), including trademarks and other intellectual property rights and the RW Subsidiaries (as defined in Section 1.1 below), as well as all knowledge, expertise and know-how relating to the organization and execution of the Rock in Rio Festivals (“Rock in Rio Business”);

 

B.                                   The Sellers own together, as of this date, four million and seven hundred and thirteen and eight hundred and thirteen (4,713,813) shares of Rock World representing fifty percent (50%) of the total issued and outstanding shares of Rock World;

 

C.                                   IMX Live S.A. (“IMX”) owns, as of this date, four million and seven hundred and thirteen and eight hundred and thirteen (4,713,813) shares of Rock World representing fifty percent (50%) of the total issued and outstanding shares of Rock World;

 

D.                                   Roberto has the right to acquire shares of Rock World held by IMX representing thirty percent (30%) of the total outstanding shares of Rock World under the IMX Option (as defined below);

 

E.                                    Under an option agreement entered into as of November 21, 2013, between the Sellers and the Purchaser, the Purchaser has the right to acquire a number of common shares of Holdco representing fifty percent (50%) of the total

 

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issued and outstanding shares of Holdco (“SFX Option”);

 

F.                                     The Purchaser will purchase and acquire from Sellers, directly and indirectly, forty percent (40%) of the total issued and outstanding shares of Rock World, in accordance with the terms and conditions set forth in this Agreement;

 

G.                                   Roberto agrees to assign to Holdco the right to acquire shares of Rock World held by IMX representing thirty percent (30%) of the total outstanding shares of Rock World under the IMX Option (as defined below) and Purchaser agrees to provide the necessary funds in order to allow Holdco to exercise such right and to pay the exercise price to IMX under the IMX Option (as defined below), it being understood that the IMX Option shall not be exercised sooner than December 17, 2013 (the “IMX Option Exercise Date”); and

 

H.                                  Purchaser and Sellers agree to create a holding company to hold the shares of Rock World held by each of them as a result of the transactions contemplated in this Agreement (Holdco) and to exercise their rights over Rock World through such holding company by means of a shareholders agreement to be executed by Purchaser and Sellers on the Closing Date (as defined below).

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and for other good and valuable consideration, the Parties hereto agree to enter into this Agreement, upon which terms and conditions the sale of the Shares (as defined in Section 2.2(b) below) by Sellers to Purchaser shall be governed, pursuant to the following provisions:

 

I.                                       DEFINITIONS

 

1.1                              Definitions.  As used herein, the following terms shall have the following meanings:

 

“Action” means any litigation, action, suit, proceeding, condemnation, investigation, judicial or administrative claim, by or before any court or other Governmental Authority, or any arbitration proceeding.

 

“Affiliate” means, with respect to any specified Person, any other Person who or that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such specified Person.

 

“Agreement” is defined in the preamble.

 

“Applicable Law” means any statute, law, regulation, rule, ruling, order, writ, injunction or decree of or by any Governmental Authority applicable to such Person or its business, properties or assets.

 

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“Basket Amount” means an amount equal to three million Reais (R$3,000,000.00), adjusted annually in accordance with the CDI.

 

“Better World Espanha” means Better World SL, Sociedad Unipersonal.

 

“Better World Portugal” means Better World — Comunicação, Publicidade e Entretenimento S.A.

 

“Business Day” means any day (excluding Saturdays and Sundays) on which commercial banks generally are open in Rio de Janeiro for the transaction of normal banking business.

 

“Cap” is defined in Section 8.4(b).

 

“CDI” means an interest rate, expressed as an annual percentage, equal to the result of compounding (on a daily basis) and calculated based upon a year of two hundred and fifty-two (252) business days, the interest rate for Interbank Certificates of Deposit (Certificados de Depósitos Interbancários - CDI) of one Business Day published under the name “DI Rates - extra-group transactions” (Taxa DI - over extra grupo) by the Securities Custody and Settlement Center (CETIP S.A. — Mercados Organizados) or any reference rate of the National Financial System (Sistema Financeiro Nacional) that may replace it.

 

“Closing” is defined in Section 4.1 below.

 

“Closing Date” is defined in Section 4.1 below.

 

“Companies” means the Company and the Subsidiaries.

 

“Company” means Holdco.

 

“Company Persons” means (a) each consultant or independent contractor of any of the Companies who is a natural person and is paid compensation in excess of (one hundred thousand Reais (R$100,000.00) per annum; and (b) each director, officer and employee of any of the Companies.

 

“Confidential Information” is defined in Section 10.1 below.

 

“Control” means, with respect to a given company or Person, (i) the ownership of shareholders’ rights which ensure to its owner, in a permanent manner, the majority of the votes in the company’s resolutions and the power to elect the majority of the Person’s management; and (ii) the actual use of such power to direct the company’s activities and to guide the operation of the Person’s bodies, as provided in article 116 of Law No. 6404, of December 15, 1976, as amended from time to time (Corporations Law). The expressions and terms “Controlling”, “Controlled by”,

 

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“under common Control” and “Controlled” have the meanings logically arising out of the definition of “Control”.

 

“De Minimus Amount” means an amount equal to fifteen thousand Reais (R$15,000.00), adjusted annually in accordance with the CDI.

 

“De Minimus Loss” has the meaning of Section 8.4(a).

 

“Encumbrance” means any and all burden and/or encumbrances of any nature, including, but not limited to guarantee, security interest, hypothecation, collateral, mortgage on security interest on another party’s property (direito real sobre coisa alheia), restriction, attachment (penhora), injunction, right to future credit, easement, charge, usufruct, trust, fiduciary assignment of rights, attachment, pledge, option, preemptive right, priority right, right of first refusal caução, alienação fiduciaria or cessão fiduciaria, or adverse claim of any nature. The Subsidiaries’ Shareholders Agreements, the shareholders agreement among the Sellers, the Existing Shareholders Agreement of Rock World/New Shareholders Agreement of Rock World and the IMX Option are not considered an “Encumbrance” under this Agreement.

 

“Escrow Agent” is defined in Section 2.4 below.

 

“Escrow Agreement” is defined in Section 2.4 below.

 

“Escrow Cash” is defined in Section 2.4 below.

 

“Escrow Arrangement” means the execution by the Parties and the Escrow Agent of the Escrow Agreement and the deposit of the full amount of the Escrow Cash by the Purchaser in the Escrow Account no later than two (2) Business Days prior to the Closing Date.

 

“Executive Officers of Rock World” means Luis Justo, Roberta Coelho and Lionel Chulam.

 

“Existing Shareholders’ Agreement of Rock World” means the Shareholders’ Agreement of Rock World, entered into on September 28, 2012, between the Sellers and IMX.

 

“Family Group” means each of the Roberto’s Family Group, the Rubem’s Family’s Group and the Chulam’s Family Group, as defined in Schedule 5.

 

“Financial Statements” is defined in Section 5.8 below.

 

“Fundamental Representations of the Sellers” mean the representations and warranties of the Sellers of Sections 5.1, 5.2, 5.3, 5.4(B), 5.5, 5.6 and 5.23 below.

 

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“GAAP” means generally accepted accounting principles applicable in the country for which any particular financial statements of the Company and the Subsidiaries is prepared, as in effect on the date of this Agreement.

 

“GAAS” means generally accepted auditing standards in the United States.

 

“Governmental Authority” means any domestic or foreign governmental, regulatory or administrative authority, agency or commission, any court, tribunal or arbitral body, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental authority.

 

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

 

“Holdco Shareholders’ Agreement” means the Shareholders’ Agreement of Holdco to be entered into by and among Purchaser and the Sellers on the Closing Date in the form provided in Schedule 4.2(g) hereto.

 

“ICC Rules” is defined in Section 12.2 below.

 

“IMX” means IMX Live S.A.

 

“IMX Option” means the Contrato de Opção de Compra de Ações de Emissão da Rock World S.A. entered into by and between Roberto and IMX on November 4, 2013 which grants Roberto (or any assignee designated by Roberto) the right to acquire shares of Rock World held by IMX representing thirty percent (30%) of the total and outstanding shares of Rock World.

 

“Indemnified Claim” is defined in 8.5(b) below.

 

“Indemnified Party” is defined in 8.5(a) below

 

“Indemnifying Party” is defined in Section 8.5(a) below.

 

“Intellectual Property Assets” is defined in Section 5.12.

 

“Intellectual Property Registrations” is defined in Section 5.12 below.

 

“Knowledge” means the actual knowledge (and not any constructive or imputed knowledge, but after due inquiry) of any fact, circumstance or condition. Sellers shall be deemed to have “Knowledge” of any matter if such matter shall be actually known to Roberto Medina or to any of the Executive Officers of Rock World.

 

“Letter of Credit” is defined in Section 2.4 below.

 

“Losses” means any and all claims, liabilities, losses, causes of action, fines,

 

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penalties, costs and expenses, including reasonable attorneys’ fees and court costs, excluding, however, any indirect, incidental, consequential, moral or punitive damages, or damages on account of lost profits, revenues or opportunities or diminution in value, provided, that in calculating Losses, no provision or adjustment shall be made for any multiple of earnings, provided, further, that such exclusions shall not apply (and will thus be subject to indemnification hereunder) where they are paid to third parties by the Indemnified Party.

 

“Material Adverse Effect” means any change or variation in and any event, fact, circumstance, development or effect on the Rock in Rio Business, the Company or the Subsidiaries in the aggregate, that has had (i) a material adverse effect on the business, operations, condition (financial or otherwise), assets or liabilities of the Company or the Subsidiaries, taken as a whole, or (ii) any effect that prevents the transactions contemplated by this Agreement; provided that “Material Adverse Effect” shall exclude any change or effect arising out of or related to (and other than arising out of the gross negligence or willful misconduct of the Sellers or any violation by the Sellers of the terms of this Agreement): (a) a change in Law, GAAP or other accounting standards, principles or interpretations thereof applicable to the Rock in Rio Business, the Company or the Subsidiaries, (b) changes generally applicable to financial, economic, political or similar conditions (including acts of war, armed hostilities, terrorism, weather conditions or any other force majeure) in Brazil or any other country, (c) changes or conditions generally applicable in the industries in which the Rock in Rio Business, the Company or the Subsidiaries operate (it being understood that in any controversy concerning the applicability of the preceding exceptions, the Sellers shall have the burden of proof with respect to the elements of such exceptions); (d) any actions taken, or failure to take action, or such other changes, in each case, which Purchaser has approved, consented to or requested in writing, (e) any failure by any of the Company or the Subsidiaries to meet their internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself, or (f) any matters disclosed in the Schedules (including the reasonably foreseeable impact thereof); provided, in the case of clauses (a), (b) and (c), that such conditions or changes do not have a disproportionate impact on the Business, the Company or any of the Subsidiaries relative to other participants in such industries.

 

“Material Assets” means (i) the Intellectual Property Assets; (ii) seven million and five hundred and forty-two and one hundred (7,542,100) shares of Rock World, representing eighty percent (80%) of the total and outstanding capital stock of Rock World to be owned by Holdco on the Closing Date; (iii) equity interest in Better World Portugal representing one hundred percent (100%) of the total and outstanding capital stock of Better World Portugal; (iv) equity interest in Better World Espanha representing one hundred percent (100%) of the total and outstanding capital stock of Better World Espanha;  (v) equity interest in RIR

 

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Madrid representing sixty percent (60%) of the total and outstanding capital stock of RIR Madrid; and (vi) equity interest in Rock Official representing fifty percent (50%) of the total and outstanding capital stock of Rock Official.

 

“Material Agreements”  means any contract (including all amendments thereto): (a)  which involves or may reasonably be expected to involve the expenditure or receipt by Rock World and/or any Subsidiary of more than five hundred thousand Reais (R$500,000.00) annually; (b) which evidences, secures or relates to any indebtedness of any kind of either Rock World and/or any Subsidiary involving more than five hundred thousand Reais (R$500,000.00); (c) under which either Subsidiary has advanced or loaned any other Person amounts in the aggregate exceeding five hundred thousand Reais (R$500,000.00); (d) any partnership, joint venture or other similar agreement involving a sharing of profits or expenses by either of the Subsidiaries with respect to the Material Assets in excess of five hundred thousand Reais (R$500,000.00) annually; (e) which relates to the ownership, license, assignment, reproduction, distribution, performance, display, creation or use of any Intellectual Property Assets by either Subsidiary (other than non-exclusive licensing in the ordinary course of business that does not exceed a term of two (2) years); and (f) which restricts the ability of either Subsidiary to carry on business anywhere in the world.

 

“Music Festival” means a set of events whose main attraction is music, open to the public in general, which may involve secondary attractions of a different nature, social and commercial activities involving foods, beverages and other products, as well as services in general and involving a variety of different music attractions, musicians and music bands.

 

“New Shareholders’ Agreement of Rock World” means a shareholders’ agreement to be entered between the Company and IMX to regulate IMX rights as a minority shareholder of Rock World, in a form to be mutually agreed between the Sellers and IMX, provided that the Purchaser and the Sellers in their capacity as shareholders of the Company will not be treated differently under such shareholders’ agreement.

 

“Organizational Documents” means any charter, certificate of incorporation, memorandum or articles of association, bylaws, operating agreement or similar formation or governing documents and instruments, and shareholder or similar agreements.

 

“Parties” is defined in the preamble.

 

“Party” is defined in the preamble.

 

“Permits” is defined in Section 5.14 below.

 

“Person” means any Governmental Authority or any individual, firm, partnership,

 

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corporation, limited liability company, joint venture, trust, unincorporated organization or other entity or organization, whether or not a legal entity.

 

“Purchase and Sale” is defined in Section 2.1 below.

 

“Purchase Price” is defined in Section 2.2 below.

 

“Purchaser” means SFX and SFX do Brasil, jointly.

 

“Purchaser Indemnified Party” is defined in Section 8.1 below.

 

“Real” means a Brazilian Real.

 

“Real Estate” is defined in Section 5.19 below.

 

“Related Parties” means any Person which is: (i) the Sellers and/or Lionel; (ii) an antecessor, descendent or collateral up to the second level of any of the Sellers, Lionel or their respective spouses; (iii) the estate of any individuals indicated in item “i” above; and (iv) any company which the Persons mentioned in items “i”, “ii” or “iii” above Control.

 

“Representative” means, with respect to any Person, any officer, director, principal, attorney, employee, agent, consultant, accountant or other representative of such Person.

 

“RIR Madrid” means Rock in Rio Madrid S.A.

 

“Rock in Rio Business” means the entirety of the businesses, contracts, assets and rights which are comprised in the organization of Rock in Rio Festivals, including trademarks and other intellectual property rights and the Rock World and the Subsidiaries, as well as all Knowledge, expertise and know-how relating to the design, organization, and execution of the foregoing activities.

 

“Rock in Rio Festivals” means Music Festivals held under the “Rock in Rio” name and/or using any of the “Rock in Rio” trademarks.

 

“Rock Official” means Rock Official Comércio de Roupas Ltda.

 

“Rock World” means Rock World S.A.

 

“RW Shares” means, seven million and five hundred and forty-two and one hundred (7,542,100) shares issued by Rock World, representing eighty percent (80%) of the total and outstanding capital stock of Rock World.

 

“RW Subsidiaries” means Better World Portugal, Better World Espanha, RIR Madrid and Rock Official.

 

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“Sellers” is defined in the preamble.

 

“Seller Indemnified Party” is defined in Section 8.2.

 

“Seller Indemnified Parties” is defined in Section 8.28.2 below.

 

“SFX Option” means the Option Agreement entered into as of November 21, 2013, as amended on the date hereto, between the Sellers and the Purchaser, whereby the Purchaser has the right to acquire a number of common shares of Holdco representing fifty percent (50%) of the total issued and outstanding shares of Holdco and, indirectly, forty percent (40%) of the total issued and outstanding shares of Rock World.

 

“Shares” is defined in Section 2.2 below.

 

“Subsidiaries” means RW and RW Subsidiaries.

 

“Subsidiaries Shareholders’ Agreement” means, together, (i) the Shareholders’ Agreement of RIR Madrid, entered into on January 16, 2007 between Better World Portugal and Live Nation España, S.L. (formerly Gamerco S.A.); and (ii) the Existing Shareholders’ Agreement of Rock World.

 

“Taxes” means, pursuant to Applicable Law, any and all taxes, including any interest, penalties or other additions to tax that may become payable in respect thereof, due to any Governmental Authority, whether disputed or not, which taxes shall include, without limiting the generality of the foregoing, all income tax (including income tax required to be deducted or withheld from or accounted for in respect of any payment), corporation tax, such tax taken to include surtax, capital gains tax, tax on profits, tax on gross receipts, withholding tax, license charges or taxes, taxes on stock, sales and use taxes, ad valorem taxes, value added tax, custom duties, excise taxes and duties, franchise taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, transfer Taxes, customs, tariffs, social security and retirement fund contributions, imposts, fees, duties, assessments, withholdings or charges of any kind (including, for example, ITR, IRPJ, CSL, PIS, COFINS, ISS, INSS and FGTS).

 

“Tax Return” means any and all returns, reports, declarations, statements, bills, schedules, claims for refund or written information of or with respect to any Tax which is required to be supplied to any taxing authority, including any schedule or attachment thereto, and including any amendment thereof.

 

“Transition Period” is defined in Section 7.1 below.

 

“Uncapped Sellers Indemnity Obligations” means the Fundamental Representations and the material covenants of Sellers under this Agreement.

 

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II.                                  PURCHASE AND SALE

 

2.1                              Purchase and Sale.  At Closing, upon the terms and conditions set forth in this Agreement, Sellers shall sell and transfer, or cause to be sold and transferred, to Purchaser, and Purchaser shall acquire from Sellers, all of the Shares (the “Purchase and Sale”), free and clear of all Encumbrances and with all rights attaching thereto (except for the dividends to be distributed by the Subsidiaries in respect of the fiscal year ended in December 31, 2013, which are to be distributed to the Sellers and to the other shareholders of the respective Subsidiary at time of distribution, in compliance with Applicable Law).

 

2.2                              Purchase Price.  Subject to the terms and conditions of this Agreement, and in consideration of the transactions described in this Agreement, the purchase price to be paid by Purchaser for the Shares (as defined in item (b) below) shall be equal to one hundred and fifty million Brazilian Reais (R$150,000,000.00) (“Purchase Price”), divided as follows:

 

(a)                                An amount in Reais to be informed by the Representative of the Sellers to the Purchaser no later than 2 (two) Business Days before the Closing Date (“Primary Purchase Price”) to be paid by Purchaser in a capital increase of the Company on the Closing Date (as defined in Section 4.1 below), in exchange for shares issued by the Company representing twenty five percent (25%) of the total and outstanding capital stock of the Company (“Shares of the Capital Increase”); and

 

(b)                                An amount in Reais to be informed by the Representative of the Sellers to the Purchaser no later than 2 (two) Business Days before the Closing Date equal to the balance between the Purchase Price and the Primary Purchase Price (“Secondary Purchase Price”) to be paid by Purchaser to each of the Sellers in accordance with Section 2.3 below, in exchange for shares issued by the Company representing twenty five percent (25%) of the total and outstanding capital stock of the Company (“Shares of Sellers” and, together with the Shares of the Capital Increase, “Shares”).

 

2.3                               Payment of Purchase Price.  Purchaser shall pay the Purchase Price on the Closing Date, directly or by means of the distribution of the Escrow Cash, as provided in Section 2.4 below, in any case by means of wire transfers of immediately available funds (TED) in the amounts and to the accounts specified below:

 

(a)                                 Capital increase of the Company: the full amount of the Primary Purchase Price to a bank account in the name of the Company to be informed by the Representative of the Sellers to the Purchaser no later than 2 (two) Business Days before the Closing Date;

 

(b)                                 Roberto: an amount in Reais corresponding to 45% (forty five percent) of the

 

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Secondary Purchase Price, in accordance with the following wire transfer instructions: Banco Citibank S.A., agency 37, account No. 3704556-3;

 

(c)                                  Rubem: an amount in Reais corresponding to 10% (ten percent) of the Secondary Purchase Price, in accordance with the following wire transfer instructions: Itaú Unibanco S.A., agency 3831, account No. 00623-8;

 

(d)                                 Rodolfo: an amount in Reais corresponding to 11.25% (eleven point twenty five percent) of the Secondary Purchase Price, in accordance with the following wire transfer instructions: Itaú Unibanco S.A., agency 3752, account No. 02873-2;

 

(e)                                  Roberta: an amount in Reais corresponding to 11.25% (eleven point twenty five percent) of the Secondary Purchase Price, in accordance with the following wire transfer instructions: Banco BTG Pactual S.A., agency 001, account No. 138571;

 

(f)                                   Marcella: an amount in Reais corresponding to 11.25% (eleven point twenty five percent) of the Secondary Purchase Price, in accordance with the following wire transfer instructions: Banco BTG Pactual S.A., agency 001, account No. 79384; and

 

(g)                                  Filipe: an amount in Reais corresponding to 11.25% (eleven point twenty five percent) of the Secondary Purchase Price, in accordance with the following wire transfer instructions: Banco BTG Pactual S.A., agency 001, account No. 79385.

 

2.4                               The SFX Option is hereby exercised by delivery to the Sellers of the original of an irrevocable and unconditional standby letter of credit issued by Deutsche Bank AG New York Branch and confirmed by Deutsche Bank S.A. — Banco Alemão, a copy of which is attached hereto as Schedule 2.4 (“Letter of Credit”), which cannot be drawn prior to January 4, 2014 and in any event not sooner than two (2) Business Days prior to the Closing Date. Sellers’ Representative (acting on behalf of the Sellers), the Purchaser and Holdco shall enter into an escrow agreement (the “Escrow Agreement”) with Deutsche Bank S.A. — Banco Alemão (or other first tier Brazilian financial institution agreed by the Parties, the “Escrow Agent”) within 60 (sixty) days from the date hereof, pursuant to which the Purchaser will deposit or cause to be deposited into the escrow account in Brazil (“Escrow Account”), no later than two (2) Business Days prior to the Closing Date, the full amount of the Purchase Price (the “Escrow Cash”) and the Sellers’ Representative shall deliver the  original Letter of Credit to the Purchaser for cancellation. If the Escrow Agreement is not fully implemented and the Letter of Credit is not renewed for additional three (3) months by March 15, 2014, the Company may draw on the full amount of the Letter of Credit.  The Escrow Agreement will provide that distribution of the Escrow

 

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Cash shall be made by the Escrow Agent to Holdco and to the Sellers, in immediately available funds (TED) and according to the instructions provided in Section 2.3 above, no later than noon São Paulo time of the same day of delivery to the Escrow Agent of the certificate of the Seller ́s Representative to the effect that (i) the IMX Notice has been delivered as described in Section 4.1.1 below, (ii) the closing act described in Section 4.2(e) has been completed, and (iii) that upon transfer of the Escrow Cash in accordance with Section 2.3 above of the Share Purchase Agreement there remains only the ministerial act contemplated by Section 4.2(f) below of the Share Purchase Agreement, which will be effected immediately after such transfer either by IMX’s physical participation in the Closing on the Closing Date or by the Sellers’ exercise of a power-of-attorney to transfer the Shares of IMX contained in the IMX Option that is effective and can be used on the Closing Date.  Roberto as Representative of the Sellers shall provide SFX with a statement duly signed by Roberto substantially in the form of Schedule 2.4 hereto. Purchaser undertakes to keep the Letter of Credit in full force and effect until (and including) the date when the Escrow Arrangement is fully completed or the Closing Date, whichever occurs first.  The Sellers agree not to use the power-of-attorney to transfer the Shares of IMX contained in the IMX Option without the written consent of Purchaser, unless such power-of-attorney is effective and can be used on the Closing Date.

 

III.                             CONDITIONS TO CLOSING

 

3.1                              Condition to Each Party’s Obligation.  The respective obligations of Sellers, on the one hand, and Purchaser, on the other hand, to effect the Closing (as defined in Section 4.1 below), shall be subject to satisfaction or waiver, to the extent permitted by Applicable Law, of the following condition on or prior to the Closing Date:

 

(a)                                 No Statute or Ruling.  No statute, rule or regulation shall have been enacted or promulgated by any Governmental Authority, and there shall be no order, ruling, decree or injunction of a court of competent jurisdiction in effect, which makes illegal or otherwise prohibits the consummation of the transactions contemplated by this Agreement.

 

3.2                              Condition to Obligations of Purchaser to Effect the Closing.  The obligations of Purchaser to effect the Closing shall be further subject to the satisfaction or waiver, to the extent permitted by Law, of the following condition on or prior to the Closing Date:

 

(a)                                 IMX Option Exercise.  The IMX Option shall have been timely exercised as provided in Section 4.1.1 below, but not sooner than the IMX Option Exercise Date.

 

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(b)                                 The foregoing condition in this Section 3.2 is for the sole benefit of Purchaser and may be waived by Purchaser, in whole or in part, at any time and from time to time in the sole discretion of Purchaser. The failure by Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

 

3.3                              Condition to Obligation of Sellers to Effect the Closing.  The obligations of Sellers to effect the Closing shall be subject to satisfaction or waiver of the following condition on or prior to the Closing Date:

 

(a)                                 Guarantee of Payment. Purchaser shall deliver to the Sellers the Letter of Credit, which is on the date hereof (and will remain until Closing) in full force and effect.

 

(b)                                 The foregoing condition in this Section 3.3 is for the sole benefit of Sellers and may be waived by Sellers, in whole or in part, at any time and from time to time in the sole discretion of Sellers. The failure by Sellers at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

 

IV.                              CLOSING OF THE TRANSACTION

 

4.1                              Closing.  The Closing of the Purchase and Sale (the “Closing”) shall be held at the offices of Pinheiro Guimarães Advogados, at Avenida Rio Branco 181, 27o andar, Rio de Janeiro, State of Rio de Janeiro, at 11 a.m. on the same date of the closing of the IMX Option and not earlier than January 4, 2014, provided that all preliminary steps described in Sections 4.1.1 through 4.1.2 below have been taken (the “Closing Date”).

 

4.1.1.                 Fulfillment of Condition to Obligations of Sellers to Effect the Closing. Not earlier than December 18, 2013 and not later than December 19, 2013, Roberto shall assign to Holdco all of his rights and obligations under the IMX Option by executing the assignment substantially in the form of Schedule 4.1.1(a) hereto and Holdco shall exercise the IMX Option in full by sending a notice substantially in the form of Schedule 4.1.1(b) hereto (“IMX Notice”) to the e-mail address alan.adler@imx.com.br, as provided in the IMX Option, a copy of the executed assignment substantially in the form of Schedule 4.1.1(a) and of such e-mail serving as evidence of exercise of compliance with the obligations set forth in this Section 4.1.1 and the condition set forth in Section 3.2(a) above.

 

4.1.2.                 Upon delivery of the IMX Option by Holdco as provided in Section 4.1.1 above, the Parties automatically (without the need for any further action, notice or

 

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document) assume an unconditional, irrevocable and irreversible obligation to close the transactions contemplated in this Agreement and termination is no longer available to any Party, except in case of proven fraud or willful misconduct by a Party, as declared by a competent court or arbitral tribunal by a decision not subject to appeal. As a result, Clause 9 below in no longer valid or in effect.

 

4.2                              Closing Deliveries. At Closing, the Parties shall perform the following acts and shall deliver or cause to be delivered the following documents, which shall be deemed to have concurrently occurred:

 

(a)                    the Purchaser shall subscribe the Shares of the Capital Increase, execute a Shareholders’ Meeting of the Company approving such capital increase, substantially in the form provided in Schedule 4.2(a) hereto, and pay the Primary Purchase Price as described in Section 2.2(a) above in immediately available funds, in accordance with Section 2.3 above;

 

(b)                    the Purchaser shall pay to the Sellers the Secondary Purchase Price as described in Section 2.2(b) above, in immediately available funds, in accordance with Section 2.3 above;

 

(c)                     each of the Sellers shall deliver to the Purchaser a receipt of the portion of the Secondary Purchase Price paid directly to such Sellers, substantially in the form provided in Schedule 4.2(c) hereto;

 

(d)                    the Sellers shall transfer the Shares of Sellers to the Purchaser by executing the relevant transfer orders in the Share Transfer Registry Book (Livro de Registro de Transferência de Ações Nominativas) of the Company, duly signed by the Sellers and shall deliver to the Purchaser a copy of the transfer terms;

 

(e)                     the Sellers shall cause the Company to make the relevant annotations in the Share Registry Book (Livro de Registro de Ações Nominativas) of the Company, reflecting the ownership of the Shares by Purchaser and shall deliver to the Purchaser a copy of the relevant annotation;

 

(f)                      the Sellers shall deliver to the Purchaser a copy of (1) the relevant transfer order in the Share Transfer Registry Book (Livro de Registro de Transferência de Ações Nominativas) of Rock World, reflecting the transfer of the Shares in Rock World to the Company; and (2) the relevant annotations in the Share Registry Book (Livro de Registro de Ações Nominativas) of Rock World reflecting the ownership of the Shares in Rock World by the Company;

 

(g)                     the Purchaser and Sellers shall execute the Company Shareholders’ Agreement substantially in the form provided in Schedule 4.2(g) hereto;

 

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(h)                    the Purchaser and Sellers shall hold and cause to be held pursuant to the Shareholders’ Agreement of the Company (1) a Shareholders’ Meeting of the Company and a Shareholders’ Meeting of Rock World substantially in form of Schedules 4.2(h)(1) and 4.2(h)(2) hereto to (i) approve amendment of the by-laws of the Company and Rock World, respectively; (ii) approve election of the members of the Board of Directors of the Company and Rock World; and (2) a Board of Directors’ Meeting of the Company and a Board of Directors’ Meeting of Rock World to approve election of the officers of the Company and Rock World;

 

(i)                        the Purchaser and Sellers shall execute a pledge agreement of the Pledged Interests, as provided in Section 8.8 below, substantially in the form of Schedule 4.2(i) herein; and

 

(j)                       Roberto and the Company shall execute an employment agreement, substantially in the form of Schedule 4.2(j) herein.

 

V.                                   REPRESENTATIONS AND WARRANTIES OF SELLERS.

 

5.                                     The Sellers each hereby severally and jointly, within each Family Group pursuant to Schedule 5 hereto, represent and warrant to Purchaser that the statements contained in this Article V are true and correct as of the date of this Agreement and as of the Closing Date (except for any such representation and warranty that expressly is made as of a specific date, which such representation and warranty shall be true and correct as of such date), subject to such qualifications as set forth in the disclosure schedules delivered by the Sellers to Purchaser concurrently with the execution of this Agreement (the “Sellers Disclosure Schedules”).  The disclosures in the Schedules are to be taken as relating to the representations and warranties of Sellers with respect to the Company and the Subsidiaries as a whole, notwithstanding the fact that the Schedules are arranged by sections corresponding to the sections in this Agreement or that a particular Section of this Agreement makes reference to a specific Section of the Schedules and notwithstanding that a particular representation and warranty may not make a reference to the Schedules. The disclosures in each Section of the Schedules are disclosures for the corresponding section of this Agreement and, to the extent that the relevance of such disclosure is reasonably apparent on its face, disclosures to each other Section of this Agreement.

 

5.1                              Authority.  Sellers and Intervening Parties have the necessary authority and, as applicable, corporate power and to enter into this Agreement and to perform its obligations hereunder.  This Agreement has been duly executed and delivered by the Sellers and Intervening Parties and constitutes legal, valid, and binding obligations of Sellers, enforceable against the Sellers in accordance with its respective terms.

 

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5.2                              Organization.  The Company and each of the Subsidiaries is an entity duly incorporated or organized and validly existing and in good standing under the laws of its jurisdiction of organization. All corporate actions taken by the Company and each of the Subsidiaries have been duly authorized, and the Company and each of the Subsidiaries has not taken any action that in any material respect conflicts with, or constitutes a material default under, or results in a material violation of, any provisions of its certificate of association or by-laws or similar Organizational Documents. The Company and each of the Subsidiaries has all requisite corporate power and authority to own, lease and otherwise hold and operate its properties and other assets and to carry on its business as it is now being conducted and as currently proposed to be conducted, except where the failure to be so organized, existing or in good standing or to have such corporate power and authority has not had, and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

5.3                              Title to Shares.  (A) Schedule 5.3(a) provides an accurate description of the ownership structure for each of the Company and the Subsidiaries as of this date and as of the Closing Date. (B) Sellers are the sole owners of the Shares, and the Company as of the Closing Date will be, owner of the RW Shares, and the Shares and the RW Shares have been validly issued and are free and clear of any and all Encumbrances.  RW owns the shares of the other Subsidiaries free and clear of any and all Encumbrances.  Except for this Agreement, and except as provided in Schedule 5.3(B), Sellers have not entered into any contract or commitment providing for the direct or indirect sale of the Shares, the RW Shares, the shares issued by the RW Subsidiaries, or the rights relating thereto. There are no outstanding or authorized options, warrants, rights, agreements or commitments to which the Company, RW or any Subsidiary is a party or which are binding on any of them providing for the issuance, disposition or acquisition of any capital stock of any Subsidiary.  There are no outstanding stock appreciation, phantom stock or similar rights with respect to any Subsidiary.  There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any capital stock of any Subsidiary.

 

5.4                              Action. Except as set forth in Schedule 5.4, there is no (A) Action pending or, the Sellers’ Knowledge, threatened by or against or relating to the Company and the Subsidiaries that is likely to result in a judgment adverse to such party in excess of five thousand Reais (R$5,000.00) or, notwithstanding the amount in controversy, that is expected to have a Material Adverse Effect on the Rock in Rio Business; (B) Action pending or, to the Sellers’ Knowledge, threatened by or against or relating to the issuance or ownership of the Shares or the RW Shares, which may, in any way, prevent the consummation of the Purchase and Sale, or could affect the legality, validity or enforceability of this Agreement. The Company has not issued any securities other than the Shares and Rock World has not issued any securities

 

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other than RW Shares.

 

5.5                              Holdco. Holdco has no assets and liabilities and has not engaged in any activity or business prior to the Closing Date other than the ownership of the RW Shares on Closing Date and activities directly incidental thereto.

 

5.6                              No Conflict.  Neither the execution and delivery of this Agreement nor the consummation of the transactions and performance of the terms and conditions hereof by Sellers (A) violate, conflict with or result in the breach of or default under any material provision of the certificate of incorporation, by-laws or other similar governing documents of the Company and the Subsidiaries; (B) violate, conflict with or result in the breach of or default under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Shares, pursuant to, any contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Sellers, the Company or any of the Subsidiaries is a party or by which any of the Shares or any of the assets or properties of the Company or the Subsidiaries is bound or affected; or (B) violate any Applicable Law or Governmental Order applicable to Sellers, to the Company or to any of the Subsidiaries or any of the Material Assets.  The execution and delivery of this Agreement by each of the Sellers does not, and the performance of this Agreement by each of the Sellers will not, require any consent, approval, order, permit, or authorization from any Governmental Authority, except for the approval of the acquisition by CADE under the IMX Option.

 

5.7                              Books and Records.  The Company and the Subsidiaries have all required and/or necessary corporate books, books of account and other financial records under Applicable Law, as applicable, which in all material respects: (a) reflect all items of income and expense and all assets and liabilities required to be reflected therein in accordance with accounting practices, (b) were prepared and kept on a basis consistent with the past practices; (c) are complete and correct, and do not contain or reflect any inaccuracies or discrepancies; and (d) have been maintained in accordance with good business and accounting practices. The share registers of the Company and the Subsidiaries hereto made available to the Purchaser are complete and accurate, and the signatures appearing on all documents contained therein are the true or facsimile signatures of the persons purported to have signed the same. The corporate minute books and other corporate records of the Company and the Subsidiaries hereto made available to the Purchaser are complete and accurate, except where the failures have not had, and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and the signatures appearing on all documents contained therein are the true or facsimile signatures of the persons purported to have signed the same.

 

5.8                              Financial Statements.  (A) Schedule 5.8(A) sets forth true and complete

 

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copies of (i) audited consolidated balance sheets of the RW Subsidiaries (except for Rock Official) as at December 31, 2012 (which do not include Holdco) and unaudited individual balance sheets of Rock Official as at December 31, 2012, together with all related notes and schedules thereto, accompanied by the reports thereon of the RW Subsidiaries’ auditors, where such reports were issued, as applicable, (collectively hereinafter referred to as the “Financial Statements”).  The Financial Statements (i) were prepared in accordance with the books of account and other financial records of the Subsidiaries, (ii) fairly present, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of the Subsidiaries as of the respective dates or for the respective periods set forth therein, and (iii) have been prepared in conformity with GAAP consistently applied with the past practices of the Subsidiaries during the periods involved that are necessary for a fair presentation of the consolidated financial condition of the Subsidiaries and the results of the operations of the Subsidiaries as of the dates thereof or for the periods covered thereby. Neither of the Subsidiaries has any material liabilities or obligations (whether known or unknown, absolute, accrued or contingent) except for liabilities or obligations reflected or reserved against in the Financial Statements and current liabilities incurred in the ordinary course of business since December 31, 2012. (B) Attached as Schedule 5.8(B) are copies of pro forma unaudited consolidated balance sheets of the RW Subsidiaries (except for Rock Official) as at September 30, 2013 and the related pro forma consolidated statements of income of the RW Subsidiaries for the nine month period then ended, and and unaudited individual balance sheets of Rock Official as at September 30, 2013. Although such balance sheets and income statements are preliminary in nature, to the best of Sellers’ Knowledge such balance sheets and income statements represent a fair and reasonable estimation of the financial condition and results of operations of the Subsidiaries in all material respects at the date and for the period covered thereby.

 

5.9                              Conduct of business.  Except as set forth in Schedule 5.9, since December 31, 2012, and except in the ordinary course of business as provisioned and/or reserved for in the financial statements of the Subsidiaries and/or as required by Applicable Law, the Subsidiaries have conducted the Rock in Rio Business only in the ordinary course, and there has not been any:

 

(a)                                  change in either the Subsidiaries’ authorized or issued capital stock or other equity interests or securities; except for the IMX Option, grant of any stock option or right to purchase shares of capital stock or other equity interests or securities of the Subsidiaries’; issuance of any security convertible into such capital stock or other equity interests or securities; grant of any registration rights; purchase, redemption, retirement, or other acquisition by either Subsidiary of any shares of any such capital stock or other equity interests or securities; or declaration or payment of any dividend or other distribution or payment in respect of shares of

 

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capital stock or other equity interests or securities;

 

(b)                                  payment or increase by either Subsidiary of any bonuses, salaries, or other compensation to any stockholder, director, officer, or employee, except in the ordinary course of business, or entry into any employment, severance, or similar Contract with any director or officer of senior management position, except as required under Applicable Law;

 

(c)                                   damage to or destruction or loss of any Material Asset, not covered by insurance, that could have a Material Adverse Effect on the Rock in Rio Business;

 

(d)                                  entry into, termination of, or receipt of notice of termination of any Material Contract, except in the ordinary course of business;

 

(e)                                   sale, lease, or other disposition of any asset or property of the Company (including any of the Intellectual Property Assets) except in the ordinary course of business, or mortgage, pledge, or imposition of any Encumbrance on any Material Asset of the Company (including any of the Intellectual Property Assets);

 

(f)                                    material transaction not in the ordinary course of business which has had or would reasonably be expected to have a Material Adverse Effect on the Business;

 

(g)                                   material change in the accounting methods used by the Company and/or any Subsidiary; and

 

(h)                                  binding agreement, whether oral or written, by either Seller or either Company to do or cause to be done any of the foregoing.

 

5.10                       Assets.  The Company and the Subsidiaries are the only and legitimate owners of all Material Assets, which are free and clear of any and all Encumbrances.

 

5.11                       Tax.  The Subsidiaries have (a) in accordance with Applicable Law, timely paid all Taxes (whether or not shown to be due on the Tax Returns) and timely filed with the appropriate Governmental Authorities all Tax Returns; and (b) prepared all Tax Returns correctly and in accordance with applicable Law and such Tax Returns are correct and complete in all material aspects and reflect in all material aspects all liabilities related to Taxes that are required to be shown on such Tax Returns and owed by the Companies for the periods to which they refer. The Subsidiaries have not taken advantage of any amnesty, payment program, rescheduling of payment plan or any similar arrangement regarding Taxes in the previous five (5) years.

 

5.12                       Intellectual Property.  (A) Set forth on Schedule 5.12(A) is a complete and accurate list of all patents, trademarks, trade names, domain names and copyrights which are material to the Rock in Rio Business as currently conducted (collectively,

 

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the “Intellectual Property Assets”).  Except as detailed in Schedule 5.12(A), the Subsidiaries have full right and authority to use all trademarks and trade names used in the Rock in Rio Business. Prior to the date hereof, the Sellers have delivered or made available to the Purchaser true, correct and complete copies of all written agreements relating to Intellectual Property Assets which either Company is licensed or authorized by others to use, or which either Company has licensed or authorized for use by others. (B) Registrations.  Set forth on Schedule 5.12(B) is a complete and accurate list of all trademark registrations, trademark applications, patent registrations, patent applications, copyright registrations and copyright applications of the Subsidiaries (or in process of being transferred to the Subsidiaries) evidencing Intellectual Property Assets (collectively, the “Intellectual Property Registrations”).  Prior to the date hereof, the Sellers have delivered or made available to the Purchaser true, correct and complete copies of each of the Intellectual Property Registrations.

 

5.13                       Subsidiaries.  The Company and the Subsidiaries do not own or hold, directly or indirectly, any equity or other ownership interest in any corporations, limited liability companies, partnerships, joint ventures or other entities, except for the participations described in Exhibit 5.13.

 

5.14                       Permits.  Except for those that are not expected to cause a Material Adverse Effect, the Subsidiaries hold all authorizations, permits, licenses, approvals, registries, certificates, operational permits (alvarás), enrollments and receipts required, in accordance with federal, state and municipal legislation, and/or required by Governmental Authorities and entities, in order to conduct, develop and maintain all their operations and activities as currently conducted and developed (collectively “Permits”), which are valid and in effect. There are no proceedings pending or, to Sellers’ Knowledge, threatened which might reasonably be expected to result in the revocation or termination of any Permit of the Companies.

 

5.15                       Material Agreements.  Set forth on Schedule 5.15 is a complete and accurate list of all Material Agreements and all amendments, supplements and modifications (whether oral or written) in respect of such Material Agreements. Prior to the execution of this Agreement, the Purchaser has been provided with (i) true and complete copies of all written Material Agreements, together with all amendments, supplements and modifications thereto (and summaries of all oral amendments, supplements and modifications), and (ii) reasonably complete and accurate written descriptions of all oral Material Agreements.  Each Material Contract is valid and binding on the Company and/or the Subsidiary party thereto and, to the Knowledge of the Sellers, on the other parties thereto and is in full force and effect and upon consummation of the transactions contemplated by this Agreement, shall continue in full force and effect without penalty or other adverse consequences.  The Company and/or the Subsidiary party thereto is in material compliance with and is not in breach or violation of, or default under, any Material Contract and, to the

 

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Knowledge of the Sellers, no other party to any Material Contract is in breach or violation thereof or default thereunder.  Except as set forth in Schedule 5.15, to the Sellers’ Knowledge, no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, (i) result in a breach or violation of, or default under, any Material Contract, (ii) give any entity the right to declare a default, seek damages or exercise any other remedy under any Material Contract, (iii) give any entity the right to accelerate the maturity or performance of any Material Contract or (iv) give any entity the right to cancel, terminate or modify any Material Contract.

 

5.16                       Related Party Transactions.  Except as set forth on Schedule 5.16, there are no contracts, agreements, arrangements, transfers of assets or liabilities or other commitments or transactions, whether or not entered into in the ordinary course of business, to or by which any of the Subsidiaries, on the one hand, and any Seller or Related Parties on the other hand, is or has been a party or otherwise bound or affected.

 

5.17                       Labor Matters.  (a) Except as set forth in Schedule 5.17(a) or except in the ordinary course of business as provisioned and/or reserved for in the financial statements of the Subsidiaries and/or as required by Applicable Law, there are no (i) outstanding loans and advances (other than routine business advances to be repaid or formally accounted for within sixty (60) days) made by either Subsidiary to, or made to either Subsidiary by, any Company Persons, (ii) current employment, consulting or severance agreements that either Subsidiary is a party to with any Company Persons, (iii) severance or bonuses payable to any Company Person upon termination of employment or engagement or upon the consummation of the transaction contemplated under this Agreement, and (iv) employee pension, plans, welfare benefit plans, stock bonus, stock option, restricted stock, stock appreciation right, stock purchase, bonus, incentive, deferred compensation, severance, vacation plans, or any other employee benefit plan, program, policy or arrangement maintained or contributed to by the Subsidiaries.

 

(a)                                  The Subsidiaries are in compliance in all material respects with all Applicable Laws relating to employment and employment practices, terms and conditions of employment, and wages and hours, and are not engaged nor have engaged in any unfair labor practice or unlawful employment practice.

 

(b)                                  Except as set forth on Schedule 5.17(b), no Subsidiary is a party to any labor or collective bargaining agreement or similar agreements, and there are no labor or collective bargaining agreements or similar agreements that pertain to employees of any Subsidiary.

 

(c)                                   Except as set forth on Schedule 5.17(c), there are no pending or, to Sellers’ Knowledge, threatened strikes, work stoppages, slowdowns or lockouts

 

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against any Subsidiary and no pending material unfair labor practice charges, grievances or complaints filed or, to Sellers’ Knowledge, threatened to be filed with any Governmental Authority based on the employment or termination by any Subsidiary of any individual.

 

(d)                                  There are no claims or controversies pending or, to the Knowledge of Sellers, threatened involving any labor union or similar organization, or otherwise, with respect to employees of the Subsidiaries.

 

5.18                       Insurance.  The Subsidiaries maintain insurance policies to cover all risks relating to Rock in Rio Business, which cover risk and amounts customary to such risks, to the Sellers’ Knowledge.  All such insurance policies are valid and in force until this date and there is no fact or circumstance which could make such insurance policies void or ineffective.  None of the Subsidiaries has breached any obligation undertaken under any such insurance policies which may materially affect the financial condition of any of the Subsidiaries. All premiums due and payable for such insurance policies have been paid in the ordinary course of business.

 

5.19                       Real Estate.  Schedule 5.19 sets forth a complete and correct list of all real estate properties leased by the Subsidiaries, in Brazil or abroad, indicating the name of lessor, date of signature and term, as well as the annual amounts charged, which have been duly paid by the Subsidiaries to the extent effectively owed.

 

5.20                       Bankruptcy.  There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by or, to Seller’s Knowledge, threatened in writing against any of the Sellers or any of the Subsidiaries.

 

5.21                       No Broker.  Except as set forth on Schedule 5.21, no broker, finder or investment company is entitled to any brokerage, finder’s or other fee or commission payable by the Company and/or any of the Subsidiaries in connection with the transactions contemplated by this Agreement.

 

5.22                       No Misstatements.  No representation or warranty made by any Seller in this Agreement, the Seller Disclosure Schedules or any certificate delivered or deliverable pursuant to the terms hereof contains or will contain any untrue statement of a material fact, or omits, or will omit, when taken as a whole, to state a material fact, necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

 

5.23                       Compliance with Foreign Corrupt Practices Act and Anti-Bribery Laws and Regulations.  Neither the Company nor any of its Subsidiaries, nor its respective directors, officers, employees, agents, affiliates, or other persons acting on behalf of the Company or any of its Subsidiaries have offered, given or promised, or authorized any offer, gift or promise of any money or other thing of value, directly

 

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or indirectly, through an intermediary or otherwise, to or for the benefit of any government official of a domestic or foreign national state or any instrumentality thereof, to any political party or official thereof, or to any candidate for political office for purposes of: (i) influencing any act or decision of such government official, political party, party official or candidate in his, her or its official capacity; (ii) inducing such government official, political party, party official or candidate to do or omit to do any act in violation of the lawful duty of such government official, political party, party official or candidate; or (iii) inducing such government official, political party, party official or candidate to use his, her or its influence with any government to affect or influence any act or decision of such government, in each case to assist the parties hereto in obtaining or retaining business for or with, or directing business to, any person.  For purposes of this Agreement, the term “government official” includes, but is not limited to, directors, officers or employees of wholly or partially state-owned or state-controlled corporations or enterprises; any person holding a legislative, administrative or judicial office of a country, whether appointed or elected; any person exercising a public function for a country, including for a public agency or public enterprise; and any official or agent of a public international organization.  The Company, to the Knowledge of the Sellers, have since its incorporation been in compliance with the Foreign Corrupt Practices Act (the “FCPA”) and other laws prohibiting the bribery of foreign or domestic government officials.  The Company and its Subsidiaries, to the Knowledge of the Sellers, have at all times been in compliance with all anti-bribery laws and regulations that may apply to any portion of such entity. The Company and each of its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management’s authorization.

 

VI.                              REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

6.                                     Purchaser hereby represents and warrants to Sellers as follows:

 

6.1                              Organization and Qualification.  Purchaser is a corporation duly organized and validly existing under the laws of the State of Delaware and has the requisite corporate or similar power and authority to carry on its business as now being conducted.

 

6.2                              Authority.  Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and to perform its respective obligations hereunder.  The execution, delivery and performance of this Agreement and the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action on the part of Purchaser.

 

6.3                              Enforceability.  This Agreement has been duly and validly executed and delivered by Purchaser and constitutes a valid and binding agreement of Purchaser

 

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enforceable against it in accordance with its terms, subject to (A) applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application from time to time in effect that affect creditors’ rights generally, (B) general principles of equity and (C) the power of a court to deny enforcement of remedies generally based upon public policy.

 

6.4                              No Violation or Breach.  The execution and delivery of this Agreement nor the consummation of the transactions and performance of the terms and conditions hereof by Purchaser will (A) result in a material violation or breach of or material default under any provision of the certificate of incorporation or bylaws or other similar governing documents of Purchaser or any agreement, indenture or other instrument under which Purchaser are bound; or (B) violate any Applicable Law or Governmental Order.

 

6.5                              Consents.  No consent, approval, authorization or permit of, or filing with or notification to, any Person is required for or in connection with the execution and delivery of this Agreement by Purchaser or for or in connection with the consummation by Purchaser of the transactions contemplated hereby.

 

6.6                              Actions.  There is no Action pending or, to Purchaser’s Knowledge, threatened in writing against Purchaser that, if adversely determined would have a material adverse effect on Purchaser ́s ability to perform its obligations under this Agreement.

 

6.7                              Funds.  Purchaser has, and at all times prior to Closing will have, sufficient funds available to enable Purchaser to consummate the transactions contemplated hereby and to pay the Purchase Price, the other payments required of Purchaser hereunder and all fees and expenses of Purchaser.  Consummation of the transactions contemplated hereby will not cause Purchaser to become insolvent.

 

6.8                              Bankruptcy.  There are no bankruptcy, reorganization or arrangement proceedings pending against, being contemplated by or, to Purchaser’s Knowledge, threatened in writing against Purchaser.

 

6.9                              No Broker.  No broker, finder or investment company is entitled to any brokerage, finder’s or other fee or commission payable by the Purchaser in connection with the transactions contemplated by this Agreement.

 

6.10                       Due Diligence, Inspection. Without any limitation to Purchaser ́s indemnity protections hereunder, Purchaser and its advisors have conducted their own independent investigation, review, analysis and a full scope due diligence of the Company and the Subsidiaries and the businesses and operations, assets, liabilities, results of operations, financial condition and prospects of the Company and the Subsidiaries, which is in a form and substance usually adopted for transactions

 

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similar to those contemplated hereby, including legal, Tax, accounting and operational matters.

 

VII.                         COVENANTS

 

7.1                              Conduct of Business.  Except as provided in Schedule 7.1, during the period between the date hereof and the earlier between the termination of this Agreement and the Closing Date (the “Transition Period”), Sellers shall and shall cause the Subsidiaries to conduct the Rock in Rio Business in the ordinary course, in a manner consistent with past practice. Without limiting the foregoing, during the Transition Period, except as otherwise contemplated by this Agreement, without the prior written consent of Purchaser, which shall not be unreasonably withheld, conditioned or delayed, Sellers shall not, and shall cause the Subsidiaries not to, take or omit to take any action that would result in breach of the representations and warranties in Section V above. Without limiting the foregoing, Sellers shall not, and shall cause the Companies not to, except as required by Law or GAAP, in the ordinary course of business consistent with past practice or with the prior written consent of Purchaser, such consent not to be unreasonably withheld, conditioned, or delayed:

 

(a)                                  except to the extent required to complete the IMX Option on or prior to the Closing Date, (i) issue, sell or grant any capital stock or other equity or equity-related interest or (ii) issue, sell or grant, or authorize or propose the issuance, sale or grant of any options, warrants, call rights, convertible securities, commitments, rights to purchase or subscribe to, or enter into any contract with respect to the issuance or sale of, any capital stock of or other equity interests in the Company or in the Subsidiaries or make any changes (by stock split, reverse stock split, combination, recapitalization, reorganization, formation of new subsidiaries or otherwise) in the corporate or capital structure of the Company or in the Subsidiaries;

 

(b)                                  enter into, assume or amend any Material Agreement, other than (i) Material Agreements entered into, assumed or amended with the prior consent of the Purchaser, (ii) other Material Agreements not covered by clause (i) above entered into in the ordinary course of business providing for payments over the term of such Material Agreements of no more than five hundred thousand Reais (R$500,000.00) per year, individually, or one million reais (R$1,000,000.00) per year, in the aggregate, (iii) renewal of any Material Agreement (including by replacing the relevant vendor, contractor or supplier), substantially in the same terms and conditions as currently in force (with values adjusted for inflation, agreements with unions, foreign exchange fluctuation affecting prices of services provided or in accordance with market standards), or (iv) amendments to any Material Agreements with respect to previously agreed or scheduled amendments;

 

(c)                                   except as required pursuant to existing written agreements in effect

 

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prior to the date of this Agreement, or as otherwise required by Applicable Law: (i) grant or provide any severance or termination payments or benefits to any employee, except, in the case of employees who are not statutory officers, in the ordinary course of business consistent with past practice; (ii) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any bonus to, or make any new equity awards to any employee, except for as in the ordinary course of business, consistent with past practice; (iii) enter into any contract with any labor union, labor organization, works council or other employee Representatives, other than in the ordinary course of business, except for the annual renewal thereof, consistent with past practice;

 

(d)                                  incur or guarantee any indebtedness or other obligations or issue or sell any debt securities in excess of five hundred thousand Reais (R$500,000.00), or create or permit any Encumbrance on Material Assets (except as provided in the Agreement) or forgive, cancel or compromise any Indebtedness, or transfer, waive or release any right of material value with respect to the Rock in Rio Business;

 

(e)                                   distribute, sell, assign, transfer, lease, license, or otherwise dispose of any interest in Intellectual Property Assets, other than in the ordinary course of business (including non-exclusive licenses granted in the ordinary course of business with a term not exceeding two (2) years);

 

(f)                                    other than loans between RW and any of the Subsidiaries in the ordinary course of business, grant any loans to others or purchase any debt securities of others or amend the terms of any outstanding loan agreement, other than in the ordinary course of business, consistent with past practice;

 

(g)                                   initiate or settle any Litigation with a judgment, or that is likely to result in a judgment, in excess of fifty thousand Reais (R$50,000);

 

(h)                                  adopt or change any Subsidiaries’ accounting policies or procedures, including with respect to reserves, depreciation or amortization policies or rates, revenue recognition policies, billing and invoicing policies, or payment or collection policies of practices;

 

(i)                                      take any action that would result in any of the Closing Conditions not being satisfied or that would delay their satisfaction; or

 

(j)                                     offer to discuss entering into, negotiate entering into, authorize the entrance into, or enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing.

 

7.2                              From the date of this Agreement to the Closing, the Company and its Subsidiaries shall:  (i) provide to Purchaser (and its officers, directors, employees, accountants, consultants, legal counsel, advisors, agents, financing sources and other

 

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representatives (collectively, “Representatives”)) access at reasonable times upon prior notice to the directors, officers, employees, agents, properties, offices and other facilities of the Company and its Subsidiaries and to the books and records thereof and (ii) furnish promptly such information concerning the business, properties, contracts, assets, liabilities, personnel and other aspects of the Company and its Subsidiaries as Purchaser or its Representatives may reasonably request.  The Sellers will permit Purchaser and its Representatives to meet with the officers of the Company and its Subsidaries responsible for the financial statements and internal controls of the Company and its Subsidiaries to discuss such matters as Purchaser may deem reasonably necessary or appropriate to satisfy its obligations under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 and any rules and regulations relating thereto. Without limitation to the foregoing, the Sellers will use their best efforts to cause Rock World to produce US GAAP and US GAAS audited financial statements with an unqualified opinion (on a consolidated basis) for the calendar years 2012 and 2013, on or before March 2, 2014. All costs relating to compliance with such foreign obligations will be borne exclusively by Purchaser.

 

7.3                              Further Action; Consents; Filings.

 

(a)                                  Upon the terms and subject to the conditions hereof, each of the parties hereto shall use its commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action and do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement, (ii) obtain from any governmental entity or any other person all consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made by Purchaser or the Sellers or any of their Subsidiaries in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement, including those required under the Brazilian law, and (iii) make all necessary filings, and thereafter make any other required submission, with respect to this Agreement, and the transactions contemplated by this Agreement required under applicable Law.  The parties hereto shall cooperate with each other in connection with the making of all such filings, including by providing in good faith copies of all such documents to the non-filing party and its advisors prior to filing and, if requested, by accepting all reasonable additions, deletions or changes suggested in connection therewith.

 

(b)                                  In connection with the foregoing, each party will (i) promptly notify the other party in writing of any communication received by that party or its Affiliates from any Governmental Entity, and provide the other party with a copy of any such written communication (or summary of any oral communication), and (ii) not participate in any substantive meeting or discussion with any Governmental Entity in respect of any filing, investigation or inquiry concerning the transactions contemplated hereby unless it consults with the other party in advance, and to the 

 

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extent permitted by such Governmental Entity, give the other party the opportunity to attend and participate.  Each of Purchaser and the Company will have the right to review in advance, and to the extent practicable each will consult with the other, in each case subject to Laws relating to the exchange of information, with respect to all material written information submitted to any third party or any Governmental Entity in connection with the requisite approvals.  In exercising the foregoing right, each of the parties will act reasonably and as soon as possible.  Each party agrees that it will consult with the other party with respect to obtaining all requisite approvals and each party will keep the other party apprised of the status of material matters relating to completion of the transactions contemplated hereby.

 

(c)                                   Notwithstanding anything to the contrary in this Agreement, if any proceeding is instituted (or threatened to be instigated) challenging any transaction contemplated by this Agreement, it is expressly understood and agreed that no party to this Agreement:  (i) shall have any obligation to litigate or contest any administrative or judicial action or proceeding or any decree, judgment, injunction or other order, whether temporary, preliminary or permanent; (ii) shall be under any obligation to make proposals, execute or carry out agreements or submit orders providing for (1) the divestiture, license or other disposition or holding separate (through the establishment of a trust or otherwise) of any assets or categories of assets of such party or any of its affiliates or Subsidiaries, (2) the imposition of any limitation or regulation on the ability of such party or any of its affiliates or Subsidiaries to freely conduct their business or own such assets or (3) any limitation on the ability of Purchaser or any of its affiliates or Subsidiaries to exercise full rights of ownership of such shares; (iii) or shall be required to take any other action or agree to any limitation that could reasonably be expected to have a Material Adverse Effect.  Nothing in this Section 7.3 shall limit a party’s right to terminate this Agreement pursuant to Section IX below if such party has, until such date, complied in all material respects with its obligations under this Section 7.3.

 

7.4                              From the date of this Agreement until the earlier of the Closing or the termination of this Agreement, each party shall promptly notify the other party in writing of any pending or, to the Knowledge of such party, threatened action, proceeding or investigation by any Governmental Entity or any other person (i) challenging or seeking material damages in connection with this Agreement or the transactions contemplated hereunder or (ii) seeking to restrain or prohibit the consummation of the transactions contemplated hereunder or otherwise limit the right of Purchaser to own or operate all or any portion of the business, assets or properties of the Company or any Company Subsidiary.

 

VIII.                    INDEMNIFICATION

 

8.1                              Indemnification by Sellers.  Subject to the terms and limitations set forth in this Agreement, Sellers shall severally and jointly within each Family Group 

 

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pursuant to Schedule 5 hereto, indemnify, defend, reimburse and hold harmless Purchaser, its Affiliates and their respective directors, officers and partners (each such Person, a “Purchaser Indemnified Party” and, collectively, the “Purchaser Indemnified Parties”) from and against any and all Losses actually incurred by any Purchaser Indemnified Party in relation to (i) any breach or non-performance of any representation or warranty of Sellers contained in Section V above; (ii) any covenants or obligations of Sellers under this Agreement and (iii) any violations of anti-corruption laws or regulations occurring prior to the Closing Date, including (A) any violation discovered after the Closing Date whether known or unknown to Purchaser or any of the Sellers at the time of the Closing Date, (B) the costs of Purchaser’s investigation of the same, including but not limited to costs of retaining outside counsel or consultants to assist in the investigation and representation before the responsible government authority, and (C) all fines, penalties, or costs associated with remedial compliance measures related to any such violation.

 

8.2                              Indemnification by Purchaser.  Subject to the terms and limitations set forth in this Agreement, Purchaser shall indemnify, defend, reimburse and hold harmless Sellers, its Affiliates and their respective directors, officers and partners (each such Person, a “Seller Indemnified Party” and, collectively, the “Seller Indemnified Parties”) from and against any and all Losses actually incurred by any Seller Indemnified Party for any breach or non-performance of (i) any representation or warranty contained in Section VI above and (ii) any covenants or obligations of Purchaser under this Agreement.

 

8.3                              Limitations of Warranties and Damages; No Reliance. (a) Purchaser agrees that except for the representations and warranties expressly set forth in this agreement, Sellers make no representation or warranty whatsoever, whether express or implied, at equity, common law, by statute or otherwise; (b) the Parties agree that the recovery by any Indemnified Party of any damages suffered or incurred by such Indemnified Party as a result of any breach by another Party of any of its obligations under this Agreement shall be limited to the actual damages suffered or incurred by an Indemnified Party as a result of the breach by the breaching Party of its obligations hereunder and in no event shall the breaching Party be liable to an Indemnified Party for any indirect, consequential, special, exemplary or punitive damages suffered or incurred by an Indemnified Party as a result of the breach by the breaching Party of any of its obligations hereunder; and (c) Purchaser acknowledges that it is relying upon only those representations and warranties of Sellers that are expressly contained in this Agreement, as well as upon its own inspections and investigation, in order to satisfy itself as to the condition and suitability of the Shares and the Rock in Rio Business, assets, liabilities, operations or condition (financial or otherwise) of the Company and the Subsidiaries.  Neither the period of survival nor the liability of the Sellers with respect to the Sellers’ representations and warranties shall be affected by any investigation made at any 

 

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time (whether before or after the Closing) by or on behalf of Purchaser or by any actual, implied or constructive knowledge or notice of any facts or circumstances that Purchaser may have as a result of any such investigation or otherwise.  The parties hereto agree that reliance shall not be an element of any claim for misrepresentation or indemnification under this Agreement.  The expiration of the survival period for any representation and warranty shall not affect the rights of any Purchaser Indemnified Party to seek indemnification or otherwise seek recovery of losses or any other recovery from any Seller as a result of fraud, willful misconduct or knowing misrepresentation, as proven by a definitive judgment or arbitration award not subject to appeal (sentença judicial ou decisão arbitral transitada em julgado).

 

8.4                              Limitations of Liability.

 

(a)                                  None of the Purchaser Indemnified Parties shall be entitled to assert any right to indemnification pursuant to Section 8.1 (i) in relation to any Loss or series of Losses, (but excluding those Losses in relation to Uncapped Sellers Indemnity Obligations), which does not exceed the De Minimus Amount (each such Loss or series of Losses, a “De Minimus Loss”); and (2) until the aggregate amount of all Losses actually suffered by the Purchaser Indemnified Parties exceeds the Basket Amount (excluding any De Minimus Loss), in which event the Purchaser Indemnified Parties may make claims for indemnification the full amount of Losses, including the Basket Amount, provided however that the Basket Amount shall not apply with respect to any claim for Losses with respect to the Uncapped Sellers Indemnity Obligations.

 

(b)                                  In no event shall Sellers ever be required to indemnify any Purchaser Indemnified Party for Losses pursuant to Section 8.1 above in any amount exceeding forty-five million Reais (R$45,000,000.00), adjusted annually in accordance with the CDI (“Cap”), except for the Uncapped Sellers Indemnity Obligations or in case of fraud or willful misconduct (fraude ou dolo) or knowing misrepresentation by the Sellers or any officer, director, employee or agent of the Company or any of the Subsidiaries, as proven by a definitive judgment or arbitration award not subject to appeal (sentença judicial ou decisão arbitral transitada em julgado).

 

(c)                                   All claims for indemnification against any of the Sellers must be asserted on or prior to the date that is thirty (30) months following the Closing Date; provided, however, that claims for breaches of the representations of Section 5.11 above must be asserted on or prior to the date that is six (6) years following the Closing Date; provided, further, that claims for indemnification in respect of the Uncapped Sellers Indemnity Obligations must be asserted on or prior to the expiration of the applicable statute of limitations. The claims period is indefinite for claims based on fraud, willful misconduct or knowing misrepresentations, as proven 

 

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by a definitive judgment or arbitration award not subject to appeal (sentença judicial ou decisão arbitral transitada em julgado).  In case a written notice of a claim by the Purchaser to the Sellers has been given prior to the expiration of the applicable periods mentioned above in accordance with this Agreement, then the relevant representations and warranties or indemnification obligations shall survive as to such claim, until such claim has been finally resolved.

 

(d)                                  Notwithstanding anything to the contrary in this Agreement, in no event shall Sellers be required to indemnify any Purchaser Indemnified Party for Losses pursuant to this Agreement in any amount exceeding, in the aggregate, the Purchase Price (including, for the avoidance of doubt, with respect to an Uncapped Sellers Indemnity Obligation).

 

8.5                              Indemnification Procedure.  Claims for indemnification under this Agreement shall be asserted and resolved as follows:

 

(a)                                  If a claim by a third party is made against a Seller Indemnified Party or a Purchaser Indemnified Party (any such Person, an “Indemnified Party”), and if such Indemnified Party intends to seek indemnity with respect thereto under this Section VIII, such Indemnified Party shall furnish written notice of such claim (in reasonable detail and including the factual basis for such claim and the amount thereof) to the Party against whom indemnity is sought (such Party, in such capacity, the “Indemnifying Party”).  Thereafter, the Indemnified Party shall deliver to the Indemnifying Party, promptly after the Indemnified Party’s receipt thereof, copies of all material notices and documents (including court papers) received or transmitted by the Indemnified Party relating to such claim.  The failure or delay of the Indemnified Party to deliver prompt written notice of a claim shall not affect the indemnity obligations of the Indemnifying Party hereunder except to the extent the Indemnifying Party was actually disadvantaged by such failure or delay in delivery of notice of such claim.  Within ten (10) Business Days of delivery of a notice of claim with respect to a third party claim, the Sellers may elect (by written notice delivered to Purchaser) to take all necessary steps properly to diligently contest any third party claim or to prosecute such third party claim to conclusion or, subject to the provisions of this Section, settlement, provided that as a condition to such election the Sellers acknowledge the obligation of the Sellers pursuant to this Article VIII to indemnify the Purchaser Indemnified Parties for all losses that may result from such third-party claim.  If the Sellers make the foregoing election, Purchaser Indemnified Parties will have the right to participate at their own expense in all negotiations and proceedings.  If the Sellers do not make such election within such period or fail to diligently contest such third party claim after such election, the Purchaser shall be free to handle the prosecution or defense of any such Third Party Claim and will permit the Sellers, at the sole cost of the Sellers, to participate in such prosecution or defense and will provide the Sellers with reasonable access to all relevant information and documentation relating to the Claim and the prosecution 

 

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or defense thereof.  No Indemnifying Party shall consent to any settlement, compromise or discharge (including the consent to entry of any judgment) of any such claim without the Indemnified Party’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned); provided that, if the Indemnifying Party assumes the defense of any such claim, the Indemnified Party shall agree to any settlement, compromise or discharge of such claim which the Indemnifying Party may recommend and which by its terms obligates the Indemnifying Party to pay the full amount of Losses in connection with such claim and unconditionally releases the Indemnified Party and its Affiliates from all liability in connection with such claim.  Whether or not the Indemnifying Party shall have assumed the defense of such claim, the Indemnified Party shall not admit any liability with respect to, or settle, compromise or discharge (including the consent to entry of any judgment with respect to), any such claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, delayed or conditioned) unless the Indemnified Party has waived in writing any right to indemnity from the Indemnifying Party with respect to such claim in which case no such consent shall be required.

 

(b)                                  In the event of payment in full by an Indemnifying Party to any Indemnified Party in connection with any claim (an “Indemnified Claim”), such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnified Party as to any events or circumstances in respect of which such Indemnified Party may have any right or claim relating to such Indemnified Claim against any claimant or plaintiff asserting such Indemnified Claim or against any other Person.  Such Indemnified Party shall cooperate with such Indemnifying Party in a reasonable manner and (at such Indemnifying Party’s cost and expense) in prosecuting any subrogated right or claim.

 

(c)                                   Any amount owing by an Indemnifying Party to an Indemnified Party in connection with any Indemnified Claim shall be paid by such Indemnifying Party within fifteen (15) days of final determination thereof (whether by mutual agreement of the Parties or pursuant to arbitral proceedings in accordance with Section XII below).

 

(d)                                  If a Purchaser Indemnified Party proceeds with the defense of any Third Party Claim, all fees and expenses, including reasonable attorneys’ fees, relating to the defense of such Third Party Claim shall be deemed to be Losses for which the Indemnified Parties are entitled to indemnification hereunder.

 

8.6                              Further Indemnity Limitations.

 

(a)                                  The amount of any indemnifiable Loss shall be reduced (i) to the extent any Indemnified Party receives any insurance proceeds with respect to such Loss, (ii) to take into account any payment actually received by an Indemnified 

 

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Party with respect to such Loss

 

(b)                                  Notwithstanding anything to the contrary in this Agreement, Sellers shall not be liable for any Losses based upon, arising out of or otherwise in respect of, (i) any fact, matter, event or circumstance which is disclosed in this Agreement, including the Schedules or it is reasonably apparent that such fact or matter has been disclosed in the Financial Statements of the Company, or (ii) any inaccuracy in or breach of any of the representations or warranties of any Seller contained in this Agreement if Purchaser had knowledge of such inaccuracy or breach prior to the Closing.

 

(c)                                   In case of Losses incurred by the Company or the Subsidiaries, Sellers shall indemnify the Purchaser Indemnified Parties only to the extent of such Purchaser Indemnified Parties direct or indirect pro rata participation in the outstanding capital of the Company and/or the Subsidiaries which directly suffered the Loss.

 

8.7                              Sole and Exclusive Remedy.  The indemnification provisions contained in this Agreement shall be the sole and exclusive remedy of each Party and the Seller Indemnified Parties and the Purchaser Indemnified Parties (i) for any breach of any Party’s representations, warranties, covenants or agreements contained in this Agreement or (ii) otherwise with respect to this Agreement or the transactions contemplated hereby.  In furtherance of the foregoing, each Party hereby waives, to the fullest extent permitted under Applicable Law, any and all rights, claims and causes of action such Party or its Affiliates may have against another Party hereunder or under Applicable Law with respect thereto.

 

8.8                              Pledge of Shares. On Closing Date Sellers will pledge and grant to the Purchaser a security interest in, all of the Sellers’ right, title and interest in shares issued by Holdco, owned by Sellers, representing thirty percent (30%) of the total and outstanding capital stock of Holdco (“Pledged Interests”).  The security interest on the Pledged Interests will be governed by Brazilian law and will secure the prompt and complete payment when due of all Sellers’ obligations under Section 8.1 above, and shall be effective for a period of 30 (thirty) months following the Closing Date, substantially in the form of Schedule 4.2(i) herein. The pledge will not interfere in any way with the voting rights of Sellers.

 

IX.                              TERMINATION

 

9.1                              Termination.  This Agreement may be terminated and the transactions contemplated hereby abandoned prior to the date of exercise of the option under the IMX Option in accordance with Section 4.1.1 above:

 

(a)                                  by the mutual consent of Purchaser and Sellers as evidenced in writing 

 

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signed by each of Purchaser and Sellers;

 

(b)                                  by either Sellers or Purchaser with written notice to the other Party if the Closing shall not have occurred by six (6) months after the date hereof; provided, however, that the right to terminate this Agreement under this Section IX shall not be available to a Party if such Party’s failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date.

 

(c)                                   by either Purchaser or Sellers, if any Governmental Authority having competent jurisdiction has issued a final, non-appealable order, decree, ruling or injunction (other than a temporary restraining order) or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement.

 

(d)                                  by either Party upon a breach of any representation, warranty, covenant or agreement on the part of the other Party set forth in this Agreement, or if any representation or warranty of any Party shall have become untrue, in either case such that the conditions set forth in Sections 3.2(a) or 3.2(b)) or Sections 3.3(a) or3.3(b), as applicable, would not be satisfied (“Terminating Breach”); provided, however, that, if such Terminating Breach is curable by the breaching Party through the exercise of their commercially reasonable efforts and for so long as such Party continues to exercise such commercially reasonable efforts, the other Party may not terminate this Agreement hereunder unless such breach is not cured within fifteen (15) days after notice thereof is provided by non-breaching Party to the breaching Party (but no cure period is required for a breach which, by its nature, cannot be cured).

 

9.2                              Effect of Termination.  In the event of termination of this Agreement by Sellers or Purchaser pursuant to Section 9.1(b), 9.1(c) or 9.1(d) above, written notice thereof shall promptly be given by the terminating Party to the other Party, and this Agreement shall thereupon terminate. If this Agreement is terminated as provided in Section 9.1 above, this Agreement shall become void and have no effect, without any liability to any Party in respect hereof or of the transactions contemplated hereby on the part of any Party, or any of its Affiliates or representatives, except as specified in Section VIII above and except for any liability resulting from such Party’s breach of this Agreement. In addition, if this Agreement is terminated as provided in Section 9.1 above, all filings, applications and other submissions made to any Governmental Authority shall, to the extent practicable, be withdrawn from the Governmental Authority to which they were made. The termination of this Agreement does not result in the waiver by any Party of any right available under Applicable Law or this Agreement against the Party that caused or gave rise to the termination.

 

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X.                                   CONFIDENTIALITY

 

10.1                       The Parties shall hold confidential all Confidential Information directly or indirectly related to this Agreement and to the transactions contemplated herein, as well as all information obtained during the negotiations and investigations for the execution of this Agreement, provided however that such Confidential Information may be provided to or disclosed to its counsel, auditors, any regulatory authority having jurisdiction over it, to any financing source, provided that any such authorized third party to which information has been disclosed has agreed to be bound by confidentiality obligations of similar effect, which shall be subject to the confidentiality obligations provided hereunder, or as necessary to comply with any disclosure obligation to which it is subject under the securities laws of any jurisdiction or under the rules of any exchange on which its shares may be listed or trade. For purposes of this Agreement, “Confidential Information” means any information and document of any nature, including in digital form, which is delivered to any Party by the other Party, or by their consultants, auditors, accountants, attorneys, representatives or employees, which are related to the Parties, the Companies or operations of their clients, suppliers and partners, including, without limitation, know-how managing data, financial data, and market strategy (including earnings, costs and profits related to any products or services of either of the Parties), commercial names, price lists, lists of clients and industries, or any other information, written or not, which is or was used in the operations of any of the Parties or the Companies.

 

10.1.1             For the purposes of this Agreement, Confidential Information shall exclude any information that: (i) was available to the public at the time disclosed by a Party to the other Party; (ii) is currently public or eventually becomes public without fault of either of the Parties or any advisors or representatives of the Parties; (iii) the disclosure of which was required by a Governmental Authority or by judicial or administrative order, in the opinion of counsel the failure to comply with which would subject any Party to a penalty or other sanction; or (iv) the disclosure of which was expressly authorized by the other Party.

 

10.1.2             Any information disclosed to third parties by a Seller must be preceded by prior written approval by Purchaser. Except as provided above, any information disclosed to third parties by Purchaser must be preceded by prior written approval by Sellers.

 

XI.                              MISCELLANEOUS

 

11.1                        Common Representative of the Sellers. For all the purposes of this Agreement, all of the Sellers hereby appoint Roberto Medina as their representative, with the necessary powers to receive notices and communications, service of process, take any and all actions and execute any and all documents necessary or

 

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advisable in connection with the provisions and transactions hereunder (“Sellers’ Representative”).  In this regard, the Parties hereby agree that (i) the delivery or receipt of any notices and communications to any of the Sellers shall be made to/by the Sellers’ Representative, and (ii) for the purposes of this Agreement, whenever a notice or communication related to a Seller is issued, such notice shall be considered delivered to the recipient thereof upon its receipt by the Sellers’ Representative. The Sellers may substitute the Sellers’ Representative, at any time, by one (and no more than one) individual of their choice, resident and domiciled in Brazil, by means of a written notice delivered at least five (5) Business Days in advance to the Purchaser. In case Roberto, for any reason, is no longer able to act or receive notices and communications on behalf of the Sellers and the Sellers’ Representative is not replaced within five (5) Business Days, Rodolfo shall be the new Sellers’ Representative.

 

11.2                        Notices.  Subject to the provisions of Section 11.1 above, all notices, requests, claims, demands and other communications hereunder shall be in writing in the English language and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective Parties hereto at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 11.1) or by facsimile, at the fax numbers below, only if followed by telephonic confirmation at the phone numbers below:

 

I.                                                 To the Purchaser:

 

SFX Entretenimento do Brasil Participações Ltda.

Rua Bandeira Paulista No. 716, cjts. 91/92

São Paulo, SP  04532-002

Attn.:                                                                 Rutger Arnoud Scharloo

Telephone:                                   (55 11) 3376-9900

Fax:                                                                       (1 646) 417-7393 (attention to Mitchell Nelson)

Email:                                                            rutger@id-t.com

With a copy to (without representing service of process, summons or notification):

mitchell@sfxii.com

 

II.                                            To SFX:

 

SFX Entertainment Inc.

 

40

 

Attn.:                                                                 Robert F.X. Sillerman

Executive Chairman

430 Park Avenue, 6th Floor

New York, NY  10022

	
Telephone:
    	
(646)   561-6388
    
	
Fax:
    	
(646)   417-7393
    
	
Email:
    	
1@sfxii.com
    

 

with a copy to (without representing service of process, summons or notification):

 

Howard Tytel, Esq.

General Counsel

	
Telephone:
    	
(646)   561-6385
    
	
Fax:
    	
(646) 417-7393
    
	
Email:
    	
howard@sfxii.com
    

 

III.                                       To Roberto, Roberta and Rodolfo:

 

Avenida Paisagista José Silva de Azevedo Neto No. 200, block 1, suite 205, Empreendimento O2, Barra da Tijuca

Rio de Janeiro - RJ

	
Telephone:
    	
(21) 3030-8888
    
	
Fax:
    	
(21)   2490-3046
    
	
Email:
    	
robertomdn@rockinrio.com
    
	
 
    	
luisjusto@rockinrio.com
    

 

with a copy to (without representing service of process, summons or notification):

 

Pinheiro Guimarães Advogados

Avenida Paulista 1842, 24o andar, Torre Norte
 01310-923  São Paulo, SP

	
Telephone:
    	
(11) 4501-5000 / 5004
    
	
Fax:
    	
(11) 4501-5025
    
	
Att.:
    	
Marcelo Lamy Rego
    
	
Email:
    	
mlamy@pinheiroguimaraes.com.br
    
	
 
    	
mmastrocola@pinheiroguimaraes.com.br
    

 

IV.                                        To Rubem:

 

Avenida das Américas No. 4430, sala 204 — parte

Rio de Janeiro - RJ

	
Telephone:
    	
(21) 2122-8200
    
	
Fax:
    	
(21)   2122-8275
    
	
Email:
    	
rubemmedina@artplan.com.br
    

 

41

 

with a copy to (without representing service of process, summons or notification):

 

Pinheiro Guimarães Advogados

Avenida Paulista 1842, 24o andar, Torre Norte
 01310-923  São Paulo, SP

	
Telephone:
    	
(11) 4501-5000 / 5004
    
	
Fax:
    	
(11) 4501-5025
    
	
Att.:
    	
Marcelo Lamy Rego
    
	
Email:
    	
mlamy@pinheiroguimaraes.com.br
    
	
 
    	
mmastrocola@pinheiroguimaraes.com.br
    

 

V.                                             To Lionel, Marcella and Filipe:

 

Av. das Américas 4430, sala 204 — parte

Rio de Janeiro - RJ

	
Telephone:
    	
(21)   2122-8254
    
	
Fax:
    	
(21)   2122-8275
    
	
Email:
    	
lionelchulam@artplan.com.br
    

 

with a copy to (without representing service of process, summons or notification):

 

Pinheiro Guimarães Advogados

Avenida Paulista 1842, 24o andar, Torre Norte

01310-923  São Paulo, SP

	
Telephone:
    	
(11) 4501-5000 / 5004
    
	
Fax:
    	
(11) 4501-5025
    
	
Att:
    	
Marcelo Lamy Rego
    
	
Email:
    	
mlamy@pinheiroguimaraes.com.br
    
	
 
    	
mmastrocola@pinheiroguimaraes.com.br
    

 

11.2.1.           Notifications delivered in accordance with Section 11.2 above shall be considered effective: (i) at the time delivered, if delivered in person; (ii) at the time received, if sent by mail, email or courier service; and (iii) if sent by fax, on the date shown on the transmission confirmation receipt issued by the recipient fax machine, it being understood that whenever notices to the Sellers are delivered by fax or email, such notices shall be valid only if they are simultaneously sent to Pinheiro Guimarães Advogados at fax number (11 4501-5025) or to both email addresses indicated above (i.e. mlamy@pinheiroguimaraes.com.br and mmastrocola@pinheiroguimaraes.com.br).

 

11.3                        Parties in Interest; Assignment. Neither Party shall assign or delegate its rights or obligations under this Agreement without the written consent of the other Party, which consent shall not be unreasonably withheld, delayed or conditioned.  No assignment of this Agreement shall relieve the assigning Party of its obligations

 

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hereunder. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and assigns and shall be enforceable by the Parties hereto and their respective successors and permitted assigns. The Parties hereby agree that the Purchaser may assign, at its sole discretion, its contractual position under this Agreement (including all rights and obligations) to an Affiliate of Purchaser incorporated in Brazil which shares are all held by Purchaser (with the exception of a nominal number of shares held by a nominee shareholder), without the consent of the Sellers, upon simple written notice to the Representative of the Sellers, prior to such assignment, provided, however, that Purchaser will remain jointly and severally liable (devedor solidário) with such Affiliate for all obligations undertaken hereunder, including but not limited to the payment of the Purchase Price and the obligations under Sections IV and 8.2 above, and hereby expressly waives all benefits set forth in articles 333, sole paragraph, 364, 366, 368, 821, 827, 829, 830, 834, 835, 837, 838 and 839 of Federal Law No. 10,402, of January 10, 2002, as amended (the “Brazilian Civil Code”) and articles 77 and 595 of Federal Law No. 5,869, of January 11, 1973, as amended (the “Brazilian Civil Procedure Code”), in connection with any and all obligations of the Purchaser or of the Affiliate to which Purchaser has assigned its rights and obligations hereunder.

 

11.4                        Amendments and Waivers. This Agreement may not be modified or amended except by an instrument in writing signed by each of the Parties.  Sellers may waive compliance by Purchaser, and Purchaser may waive compliance by Sellers, with any term or provision of this Agreement on the part of such Party to be performed or complied with only by an instrument in writing.  The waiver by a Party of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach.

 

11.5                        Irrevocability and Irreversibility; Entire Agreement. This Agreement is irrevocable and irreversible and binds the Parties and their heirs and successors-in-interest. This Agreement, including the Schedules and Exhibits hereto, contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes any prior written or oral agreements, understandings, representations or warranties between the Parties.

 

11.6                        Schedules and Exhibits.  All Schedules and Exhibits hereto that are referred to herein are hereby made a part hereof and incorporated herein by such reference.  Each Schedule to this Agreement shall be deemed to include and incorporate all disclosures made on the other Schedules to this Agreement.  The specification of any Reais amount in the representations and warranties contained in this Agreement or the inclusion of any specific item in the Schedules is not intended to imply that such amounts (or higher or lower amounts) are or are not material, and no Party shall use the fact of the setting of such amounts or the fact of the inclusion of any such item in the Schedules in any claim, dispute or controversy as to whether any obligation, item or matter not described herein or included in a Schedule is or is not

 

43

 

material for purposes of this Agreement.

 

11.7                        Time of Essence; Action on Business Day.  Time is of the essence in this Agreement.  If the date specified in this Agreement for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date that is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day.

 

11.8                        Agreement for the Parties’ Benefit Only; Non-Recourse. This Agreement is not intended to confer upon any Person not a party hereto, other than the Parties’ successors or permitted assigns, any rights or remedies hereunder, and no Person other than the Parties, their successors or permitted assigns is entitled to rely on any representation, warranty, covenant or agreement contained herein. No past, present or future director, officer, employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney or Representative of Purchaser or Sellers, respectively, shall have any liability for any obligations or liabilities of Purchaser or Sellers (as the case may be) under this Agreement or for any claim based on, in respect of, or by reason of, the transactions contemplated hereby.

 

11.9                        Severability.  If any term or other provision of this Agreement shall be held invalid, illegal or incapable of being enforced by any Applicable Law or public policy by a court of competent jurisdiction, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to a Party.  Upon such determination by a court of competent jurisdiction that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to give effect to the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

11.10                 Fees and Expenses.  Except as otherwise expressly provided in this Agreement, all fees and expenses, including fees and expenses of counsel, financial advisors and accountants, in connection with this Agreement and the transactions contemplated hereby, whether or not the Closing shall have occurred, shall be paid by (i) the Purchaser, in respect of fees and expenses incurred by the Purchaser; and (ii) Rock World, in respect of reasonable fees and expenses incurred by the Sellers.  Purchaser shall also be obligated to pay any and all costs of any audit of any of the Companies as may be required to enable Purchaser to complete and file any filing by Purchaser or an Affiliate of Purchaser with any Governmental Authority, as provided in Section 11.11 below.

 

44

 

11.11                 Updates with Governmental Authorities. Purchaser shall be responsible for carrying on, as soon as feasible and in accordance with Applicable Law, any and all administrative procedures, applications, petitions or requirements necessary for the updates and amendments of registrations and processes before Governmental Authorities required as a result of the transactions contemplated hereby in connection with the Companies, including the replacement before such Governmental Authorities of any and all attorneys-in-fact and Representatives appointed by Sellers or the Companies, as the case may be, and Purchaser shall bear any and all costs and expenses incurred for that matter.

 

11.12                 Public Announcement. Without the prior written approval of the other Party (which approval shall not be unreasonably withheld), no Party shall issue, or permit any Representative or Affiliate of such Party to issue, any press releases or otherwise make, or cause any Representative or Affiliate of such Party to make, any public statements with respect to this Agreement and the transactions contemplated hereby, except when such release or statement is deemed in good faith by the releasing Party to be required by Applicable Law or under the applicable rules and regulations of a stock exchange or market on which the securities of the releasing Party or its Affiliates are listed.  In each case to which such exception applies, the releasing Party shall use its reasonable efforts to provide a copy of such release or statement to Purchaser (in the case of a release or statement by Sellers) or Sellers (in the case of a release or statement by Purchaser) and incorporate any reasonable changes which are suggested by such Party prior to releasing or making the statement.

 

11.13                The Sellers acknowledge that SFX is a public company, with reporting and other obligations imposed on it by law, regulation and by the rules of the exchange on which it listed.  As such, the Sellers agree to cooperate and to use their reasonable best efforts to assist SFX in meeting its obligations insofar as they involve the Company and its Subsidiaries. All costs relating to compliance with such obligations will be borne exclusively by Purchaser.

 

11.14                 The Parties agree that all amounts in US Dollars mentioned in this Agreement have been defined, calculated and negotiated on the basis of the following currency quotations (current on the date of negotiation of the bases of this Agreement): US$1.00 = R$2.34 and 1.00€ = R$3.22. In the event of a material devaluation (in excess of ten percent (10%)) of the US Dollar against the Real and/or against the Euro (or against the currency or currencies which may replace them in the future), the amounts shown herein in US Dollars shall be revised/interpreted by the Parties in order to restore the purchasing power/value reference which the Shareholders intended to establish when these amounts were defined.

 

45

 

XII.                         ARBITRATION

 

12.1                        This Agreement shall be governed by, construed, interpreted and enforced in accordance with the laws of Brazil without giving effect to any choice or conflict of laws provision or rule that would cause the application of the Laws of any jurisdiction other than Brazil.

 

12.2                        All disputes, controversies and/or differences involving any of the Parties related to or in connection with this Agreement, including disputes relating to the breach, review, termination, existence, validity or enforceability of this Agreement, be shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce effective as of the date on which the arbitration request is presented (“ICC Rules”), as modified by the provisions set forth on Schedule 12.2.  The Emergency Arbitrator Provisions of the ICC rules shall not apply.

 

12.3                        The arbitration shall take place in the city of Rio de Janeiro, State of Rio de Janeiro, Brazil, where the arbitral award shall be issued.

 

12.4                        The proceeding shall be conducted in the English language.

 

12.5                        The arbitration panel shall be composed by three (3) arbitrators to be appointed according to the ICC Rules. Each Party shall designate an arbitrator, pursuant to the ICC Rules. The arbitrators appointed by the Parties shall jointly appoint the third arbitrator, who shall serve as chairman of the arbitration panel. If any of the Parties does not appoint an arbitrator and/or the party-appointed arbitrators do not appoint the chairman within the term prescribed in the ICC Rules, the chairman of the ICC shall make such appointment.

 

12.6                        If more than two (2) Parties to this Agreement are party to the arbitral proceeding, the multiple claimants and/or the multiple respondents shall appoint their respective arbitrator.  In the absence of such a joint appointment by one of the sides, the ICC shall designate all three arbitrators according to the ICC Rules, being one of them to act as chairman.

 

12.7                        To the fullest extent permitted by the Applicable Law, the Parties waive their right to seek any remedies against the arbitration award and any defenses against its enforcement. The enforcement of the arbitration award may be requested before any courts having competent jurisdiction.  Any deadline for the issuance of the arbitration award may be extended by the arbitration panel, if there is a justifiable reason. The decision of the arbitration panel made by the majority of the arbitrators shall be definitive, shall bind the Parties and shall be enforceable in accordance with the law.

 

12.8                        The fees and expenses with the arbitrators, experts appointed by the arbitrators and the administrative expenses of the ICC that may be incurred in the course of the arbitration proceeding shall be paid by the Parties in accordance with

 

46

 

the ICC Rules.  The final arbitration award may provide for the allocation of such fees and expenses as part of the award.

 

12.9        In the event any of the Parties needs to seek injunctive relief prior to the institution of the arbitration, the Parties elect the venue of the court of the City of Rio de Janeiro, State of Rio de Janeiro, Brazil.  After the institution of the arbitration, the arbitration panel may, at the request of a party to the arbitration proceeding, order any urgent measure it deems appropriate and review any urgent measure determined by the competent court prior to the institution of the arbitration.  The application to a judicial authority for such urgent measures before the institution of the arbitration or the application to a judicial authority for the implementation of measures ordered by the arbitration panel shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the arbitration panel, including the powers to review the judicial order issued by a judicial court prior to the institution of the arbitration.

 

12.10      The Parties hereby agree that the arbitration shall be kept confidential, and its elements (including the arguments of the parties thereto, evidence, reports and other third party statements and any documents submitted or exchanged within the course of the arbitration), may only be disclosed to the arbitration tribunal, to the parties thereto, their attorneys and to any Person necessary for the arbitration, except if the disclosure is (i) required for the compliance of the obligations imposed by Applicable Law or by a Governmental Authority, or (ii) necessary for judicial measures prior to the arbitration (such as court injunctions), in aid of arbitration or post-arbitration (such as the enforcement of arbitral awards and lawsuit to annul the arbitral award), in which cases the relevant party to the arbitration shall use its reasonable best efforts to disclose little Confidential Information as possible. The arbitration shall be conducted on a confidential basis and the arbitrators appointed as set forth in Section 12.5 above shall adhere to the confidentiality obligations set forth herein

 

WITNESS WHEREOF, this Agreement has been duly executed and delivered by each Party as of the date first above written.”

 

1.5.         With due regard to the provisions of this Amended and Restated Agreement, all other terms and conditions of the Original SPA not specifically amended hereby shall remain unchanged and in full force.

 

1.6.         This Amended and Restated Agreement is irrevocable and irreversible and binds the Parties and their heirs and successors-in-interest.  This Amended and Restated Agreement together with the Original SPA, the Waiver and the SFX Option, as amended, contains the entire agreement between the Parties with respect

 

47

 

to the subject matter hereof and supersedes any prior written or oral agreements, understandings, representations or warranties between the Parties.

 

1.4.         This Amended and Restated Agreement shall be governed by, construed, interpreted and enforced in accordance with the laws of Brazil without giving effect to any choice or conflict of laws provision or rule that would cause the application of the Laws of any jurisdiction other than Brazil.  All disputes, controversies and/or differences involving any of the Parties related to or in connection with this Amended and Restated Agreement shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce effective as of the date on which the arbitration request is presented, as per the provisions of the Original SPA.

 

IN WITNESS WHEREOF, this Amended and Restated Agreement has been duly executed and delivered by each Party in four (4) counterparts as of the date first above written.

 

48

 

	
/s/ Rubem Medina
    
	
RUBEM MEDINA
    
	
 
    
	
 
    
	
/s/ Roberta Medina
    
	
ROBERTA MEDINA
    
	
 
    
	
 
    
	
/s/ Rodolfo Medina
    
	
RODOLFO MEDINA
    
	
 
    
	
 
    
	
/s/ Marcella Fernandes Chulam
    
	
MARCELLA FERNANDES CHULAM
    
	
 
    
	
 
    
	
/s/   Filipe Fernandes Chulam
    
	
FILIPE FERNANDES CHULAM
    
	
 
    
	
 
    
	
/s/ Lionel Chulam
    
	
LIONEL CHULAM
    

 

49

 

SFX ENTERTAINMENT INC.

 

	
 
    
	
 
    	
/s/ Ross Kaufman
    
	
 
    	
Name: Ross Kaufman
    
	
 
    	
Title: Attorney-in-fact
    

 

 

SFX ENTRETENIMENTO DO BRASIL PARTICIPAÇÕES LTDA.

 

 

	
 
    	
/s/ Rutger Arnoud Scharloo
    
	
 
    	
Name: Rutger Arnoud Scharloo
    
	
 
    	
Title: Officer
    

 

50

 

ROCK CITY S.A. (current denomination of A.H.O.S.P.E. Empreendimentos e Participações S.A.)

 

 

	
 
    	
/s/ Roberto Medina
    
	
 
    	
Name: Roberto Medina
    
	
 
    	
Position: Officer
    

 

51

 

ROCK WORLD S.A.

 

 

	
 
    	
/s/ Roberto Me dina
    
	
 
    	
Name: Roberto Medina
    
	
 
    	
Position: Chief Executive Officer
    

 

	
 
    	
/s/ Luis Fernando Moura   Justo
    
	
 
    	
Name: Luis Fernando Moura   Justo
    
	
 
    	
Position: Attorney-in-fact
    

 

52

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