Document:

Exhibit 10.1

 

AMENDED AND RESTATED SECONDMENT AGREEMENT

 

This Amended and Restated Secondment Agreement (this “Agreement”), dated April 6, 2015 but effective as of April 1, 2014 (the “Effective Date”), confirms the terms and conditions which will apply during the international, long-term assignment of Ritty van Straalen (“you” or “your” or “Employee”) to the office of SFX Entertainment, Inc. in New York/NY (the “Company” and, together with the Employee, the “Parties” and each, a “Party”).  This Agreement amends and restates in its entirety that certain agreement by and among the Home Company, ID&T/SFX North America LLC and Employee, dated as of January 9, 2013 (the “Initial Secondment Agreement”).

 

The international, long-term assignment offered to you herein is subject to you securing a passport, necessary work permit and visa in accordance with Section 1(b), the costs of which will be reimbursed by the Home Company (as defined below), and your acceptance of the terms and conditions outlined in this Agreement.  All conditions laid down in your employment agreement with ID&T Enterprise BV, de Entree 300, 1101 EE Amsterdam, the Netherlands (“the Home Company”) dated June 1, 2004, remain applicable and the Parties acknowledge and agree that during the Term, you shall be working under such employment agreement; provided, however, that in the event of any conflict between the terms of this Agreement and the terms of such employment agreement, or any other agreement Employee has with any of the parties hereto, the terms of this Agreement shall control.  All allowances deriving from your international, long-term assignment will cease upon your repatriation.

 

For the purpose of this international, long-term assignment, your home country will be the Netherlands (the “Home Country”) and the host country will be the United States of America (the “US” or the “Host Country”).  Your international, long-term assignment will commence on January 1, 2013 and will end on January 1, 2016, in accordance with the terms and conditions of this Agreement.  Your position at the Company will be Chief Executive Officer and President of Live Entertainment.  The term of this Agreement shall commence on the Effective Date and shall continue until January 1, 2016 (the “Term”).

 

In consideration of the promises and mutual covenants and agreements set forth in this Agreement, the parties hereto hereby agree as follows:

 

1.                                      EMPLOYMENT.

 

a.                                      The Dutch Employment Option.  Following the expiration of the Term, Employee shall decide whether to repatriate to the Home Country or remain in the Host Country as an employee of the Company.  In the event that Employee elects to repatriate to the Home Country (the “Dutch Employment Option”), Employee shall do so by providing the Chief Executive Officer of the Company with written notice of his intent to exercise the Dutch Employment Option no less than ninety (90) calendar days prior to such requested repatriation.  In the event that Employee elects to exercise the Dutch Employment Option, the Parties shall agree, in writing, upon the terms and conditions of an employment agreement to govern Employee’s employment with the Home Company (or an affiliate thereof) in the Home Country, which employment agreement shall be governed by Dutch law (the “Dutch Employment Agreement”).  In the event that Employee elects to remain in the Host Country, the Parties shall agree, in writing, upon the terms and 

 

 

conditions of an employment agreement to govern Employee’s employment with the Company (or an affiliate thereof) in the Host Country, which employment agreement shall be governed by New York law and shall treat Employee as a US resident (the “US Employment Agreement”).  Regardless of whether Employee enters into a Dutch Employment Agreement or a US Employment Agreement, such employment agreement shall provide for (i) a term of thirty nine (39) months (the “Extended Term”) and (ii) the same position, salary, bonus, benefits and severance payment, in the aggregate, as provided for in this Agreement; provided, however, that such employment agreement shall not include any of the benefits set forth in Sections 2(d)-(f) and in Sections 2(j)-(o).

 

Upon Employee’s exercise of the Dutch Employment Option, if at all, Employee shall be entitled to receive a one-time, lump sum payment of $8,000 to assist with any costs and expenses incurred by Employee in connection with his repatriation to the Home Country (the “Repatriation Expenses”).

 

b.                                      Eligibility to Work; Immigration Law Compliance.  Employee acknowledges and agrees that, so long as Employee is a resident of the US, his employment during the Term is subject to and conditioned upon (i) the successful application for and maintenance of all immigration visa(s), work permit(s), and related documentation and permissions required to authorize Employee to work in the US, and Employee’s ability to provide documents which prove his identity and demonstrate his authorization to work in the US, in compliance with the Immigration Reform Act; (ii) Employee’s ability to legally work for the Company in the US and his execution of such documents as may be requested or required for the commencement and continuation of such employment; and (iii) Employee executing, obtaining, and, as applicable, delivering to the Company any and all necessary visa forms and/or other documents required by applicable immigrations laws or regulations for his employment in the US.  Employee shall use best efforts in securing any such immigration visas, work permits, and related documents and permissions; provided, however, that the failure of Employee to secure any such immigration visas, work permits, and related documents and permissions shall be deemed to have the same effect as if Employee had exercised the Dutch Employment Option.

 

2.                                      COMPENSATION AND BENEFITS.  Subject to the terms and conditions of this Agreement, specifically including Section 1(a), the Company hereby agrees to pay or otherwise provide Employee with the following compensation and benefits during the Term:

 

a.                                      Annual Salary.  The Company shall pay Employee a base salary equal to $352,800.00 per year (the “Annual Salary”), less applicable taxes, withholdings, and deductions, and any other deductions that may be authorized by Employee, from time to time, in accordance with applicable federal, state and/or local law.  The Parties acknowledge and agree that, until such time as Employee repatriates to the Home Country, if at all, Employee is a US resident for tax purposes and is subject to taxation in accordance with applicable law.  The Annual Salary shall be payable in monthly installments or otherwise in accordance with the Company’s standard payroll practices and procedures, as in effect from time to time.  

 

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Employee acknowledges and understands that his position of employment with the Company is considered “exempt,” as that term is defined under the Fair Labor Standards Act and applicable state or local law.  As an exempt employee, Employee is not eligible to receive overtime pay.

 

Notwithstanding the foregoing, the Annual Salary may be reviewed by the Company from time to time and may be subject to upward adjustment, in the Company’s sole discretion, based upon a review and consideration of various factors, including but not limited to Employee’s performance and the Company’s overall financial performance.

 

b.                                Bonus.  The Company shall pay Employee a guaranteed bonus equal to $150,000.00 per year (as it may be adjusted from time to time, the “Annual Bonus”), less applicable taxes, withholdings, and deductions, and any other deductions that may be authorized by Employee, from time to time, in accordance with applicable federal, state and/or local law.  The Annual Bonus shall be payable in accordance with the Company’s standard payroll practices and procedures, as in effect from time to time, but in no event later than March 31st of the following year.

 

During the Term, Employee will be eligible to participate in any applicable annual incentive compensation plan, program and/or arrangement as may be established by the Chief Executive Officer of the Company from time to time.  During the Term, for each calendar year, Employee may have a target and/or discretionary bonus opportunity under such plan, program and/or arrangement, if any, in an amount to be established by the Chief Executive Officer of the Company.  Such amount (the “Discretionary Bonus”) may be based on the satisfaction of certain performance criteria to be established by the Chief Executive Officer of the Company and the payment thereof may be made, in the sole discretion of the Company, in cash and/or stock.  The failure of the Company to award Employee any Discretionary Bonus shall not give rise to any claim by Employee against the Company.

 

c.                                 Stock Options.  Employee has been granted 500,000 stock options at an exercise price of $5.23 per share (the “Grant”).  The Grant will vest over 5 years in accordance with the following schedule: (i) 20% on October 30, 2014, and (ii) 20% on each of the first four anniversaries of the Effective Date, with 20% of the Grant becoming exercisable on each such anniversary.  The Grant is part of, and is subject to, the Company’s 2013 Equity Compensation Plan, as amended (the “Plan”).

 

The Company hereby agrees that Employee’s option grant pursuant to that certain Nonqualified Stock Option Award Agreement, dated as of November 8, 2014 (the “2013 Option Agreement”), and all prior grants made to Employee under the Plan, are hereby amended such that Employee shall have the full ten-year term to exercise the options granted thereunder if Employee ceases to be employed by the Company for any reason other than termination by the Company for Cause or the voluntary termination by Employee (which shall not include by reason of his 

 

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death, Disability, Constructive Termination or Change of Control (as such terms are defined in the 2013 Option Agreement)).

 

d.                                Ordinary Income Tax Equalization.  Employee will be subject to an ordinary income tax equalization plan in order to mitigate any disadvantage to Employee with respect to Employee’s ordinary income taxes as a result of Employee’s residence in the US as opposed to the Home Country.  In furtherance of the foregoing, in each year of the term that Employee is a US resident for tax purposes, after Employee files his tax return for the previous calendar year (the “Tax Return”), the Company’s tax advisors shall prepare an estimate (i) of Employee’s aggregate combined tax rate in the US (including any applicable state and local income taxes) for such previous calendar year (the “US Tax Rate”), and (ii) of Employee’s hypothetical aggregate combined tax rate that Employee would have paid had he been employed in the Home Country and been considered a Dutch resident for tax purposes in such previous calendar year (the “Dutch Tax Rate”), in each case, solely with respect to Employee’s ordinary income received from the Company except as may be provided by Section 2(e).  In calculating the US Tax Rate and the Dutch Tax Rate, the Company’s tax advisors shall (x) use the actual deductions claimed by Employee on his respective Tax Return(s) and (y) subsequently determine the estimated ordinary income tax that Employee would have to pay in the US (the “US Tax Amount”) and in the Netherlands (the “Dutch Tax Amount”).  If the US Tax Amount is greater than the Dutch Tax Amount, then the Company shall pay Employee an amount equal to such difference (the “Tax Equalization Payment”) within 30 days of such determination (the “Tax Determination Date”).  If the Dutch Tax Amount is greater than the US Tax Amount (such difference, the “Excess Amount”), then neither Party shall be obligated to make any payment to the other Party; provided, however, that the Excess Amount shall be credited to future Tax Equalization Payments in chronological order until such credit is exhausted.  Notwithstanding anything in this Agreement, (1) the calculation of the US Tax Amount and the Dutch Tax Amount shall in all cases exclude the effects of any Tax Equalization Payment, and (2) the Parties acknowledge and agree that it is Employee’s sole responsibility to file his Tax Returns on a timely basis and to pay any amounts that may be due in connection therewith, except as set forth in Section 2(j).

 

In the event that, subsequent to the Tax Determination Date, Employee’s US Tax Amount or Dutch Tax Amount is adjusted for a particular calendar year as a result of an audit or amendment, then the Company’s tax advisors shall re-compute the US Tax Amount and the Dutch Tax Amount as if any such changes had been reflected in Employee’s applicable Tax Return and the terms and conditions of the previous paragraph shall apply to any additional tax payment (or tax credit) that may be due; provided, however, that the Company shall pay any interest or penalty in connection with any such tax audit or amendment unless such interest or penalty is the result of information or data that was provided by Employee.

 

e.                                 Capital Gains Tax Equalization.  Employee represents and warrants that Employee beneficially owns 71,487 shares of common stock of the Company (the “Shares”).  In the event that, in connection with a Change of Control Transaction, (i) Employee is required to sell the Shares, and (ii) at the time of such sale, 

 

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Employee is a US resident and is subsequently required to pay capital gains taxes in connection with such sale, then any such capital gains shall be included in the calculation of the US Tax Rate, the Dutch Tax Rate, the US Tax Amount and the Dutch Tax Amount, to the extent applicable; provided, however, that if the terms of such Change of Control Transaction allow for a tax-free reorganization, then Employee shall participate in such tax-free transaction and any capital gains subsequently realized by Employee shall not be included in the calculation of the US Tax Rate, the Dutch Tax Rate, the US Tax Amount or the Dutch Tax Amount.

 

For the avoidance of doubt, any capital gains earned by Employee in connection with the purchase or sale of any securities or assets other than the Shares shall not be subject to the terms and conditions of this Section.

 

For purposes of this Agreement, the term “Change of Control Transaction” shall mean the occurrence of either of the following events:

 

(1)         any “person” or “group” as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), is or becomes in a single transaction or a series of related transactions the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), by way of merger, consolidation or other business combination or purchase, of 50% or more of the total voting power of the voting stock of the Company (whether directly or indirectly through the voting stock of any direct or indirect parent of the Company); or

 

(2)         the sale, lease, transfer or other conveyance, in one or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to any person in a transaction in which, immediately after the consummation thereof, the persons beneficially owning, directly or indirectly, voting stock representing 50% or more of the total voting power of the voting stock of the Company immediately prior to such consummation do not beneficially own, directly or indirectly, voting stock representing 50% or more of the total voting power of the voting stock of the Company or the surviving or transferee person.

 

f.                                  Social Security.  Employee will be subject to the various social insurances of the Home Country.  The Company shall, on Employee’s behalf, pay to the Home Company an amount for social insurance contributions, which will be equal to the amount which Employee would have paid had Employee continued to work and live in the Home Country.

 

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g.                                 Vacation and Sick Leave.  Employee shall observe the Host Country’s official public holidays, as set forth by the Host Country, and such public holidays shall replace the public holidays observed in the Home Country.  In addition to the Host Country’s official public holidays, Employee shall be entitled to (i) 5 weeks paid time off per calendar year and (ii) sick leave on terms that are made generally available from time to time to similarly situated employees of the Company, in each case, in accordance with and subject to the Company’s respective paid time off and sick leave policies, as in effect from time to time.

 

h.                                Working Hours.  Employee shall observe the working hours that are expected of similarly situated employees of the Company.  The Company must agree in writing to any variation to these hours.

 

i.                                    Personal Travel Expense Reimbursement.  Employee is entitled to (i) 2 round-trip tickets to the Netherlands for Employee and his family, and (ii) 1 additional round-trip ticket to the Netherlands for Employee and his wife in the event of serious illness or death of a member of Employee’s family or a member of Employee’s wife’s family.  For the avoidance of doubt, any such travel shall be in accordance with the Company’s travel guidelines and expense reimbursement policy, as in effect from time to time.

 

j.                                   Professional Advisors.  Employee is entitled to tax advice from the Company’s designated tax advisors in both the US and the Netherlands at no cost to Employee in connection with the filing of Employee’s Tax Returns.  Employee acknowledges and agrees that he shall be obligated to follow the reasonable advice of such tax advisors and the Company hereby indemnifies Employee in connection with any such advice, which indemnity shall include any interest or penalties that may be incurred by Employee.

 

Employee is also entitled to reimbursement of up to a maximum of $5,000 in connection with Employee’s retention of independent legal counsel in connection with the negotiation of this Agreement.

 

k.                                Moving Expenses.  During the Term, Employee shall be entitled to a one-time reimbursement of any reasonable and documented moving expenses up to a maximum of $15,000 plus a maximum of up to 3 months of rent overlap between Employee’s two residences, if any.

 

l.                                    Pension Benefits.  During Employee’s international, long-term assignment, Employee shall remain a participant of the pension plan of the Home Country in accordance with applicable law, which amounts shall be paid by a subsidiary of the Company organized in the Home Country.

 

m.                            Education Expenses.  Employee shall be entitled to reimbursement of any reasonable and documented tuition expenses for Employee’s children up to a maximum of $18,600 in the aggregate for all children during the Term.

 

n.                                Car Allowance.  Employee has received a one-time lump sum payment in the aggregate amount of $6,500 as a car allowance.

 

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o.                                Housing Allowance.  Employee shall receive an aggregate amount of $16,225 per month as a housing allowance, less applicable taxes, withholdings, and deductions, and any other deductions that may be authorized by Employee, from time to time, in accordance with applicable federal, state and/or local law, which housing allowance shall be payable together with the Annual Salary in accordance with Section 2.1(a).

 

p.                                Expenses.  In accordance with the next sentence, Employee shall be entitled to reimbursement for all reasonable expenses that he incurs in connection with the performance of his duties and obligations hereunder.  Upon presentment by Employee of appropriate and sufficient documentation, as determined in the Company’s sole direction, the Company shall reimburse Employee for all such reasonable expenses in accordance with the Company’s expense reimbursement policy, as in effect from time to time, and as may be deductible to the Company pursuant to the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder.

 

3.                                      TERMINATION.

 

a.                                      Events of Termination.  The Company and Employee agree that this Agreement, and Employee’s employment with the Company, shall terminate upon the earliest to occur of the following events:

 

i.                              mutual written agreement of the Company and Employee;

 

ii.                           termination of Employee’s employment by the Company with Cause.  For purposes of this Agreement, the term “Cause” shall mean:  (a) any act or omission of Employee that, in connection with his employment with the Company, amounts to or constitutes a breach of a fiduciary duty, gross negligence, willful misconduct, or material misconduct, or that amounts to or constitutes fraud, embezzlement, or misappropriation, provided that any such act or omission has potential material adverse consequences to the Company; (b) Employee’s material breach of any term(s) of this Agreement which is not cured within five (5) days following the Company’s written notice of such a material breach; (c) Employee’s material violation of any policy(ies) established, adopted, or maintained by the Company which is not cured within five (5) days following the Company’s written notice of such material violation; (d) any act or omission of Employee that is demonstrably and materially injurious to the Company; (e) any act or omission of Employee that causes the Company to suffer or endure public disgrace, disrepute, or economic harm; (f) Employee’s misappropriation of corporate assets or corporate opportunities; (g) Employee’s refusal to perform the duties required or requested consistent with Employee’s obligations under this Agreement, which refusal continues for more than 5 days following the Company’s written notice of such refusal; or (h) any act or omission of Employee (other than any athletic activity) that renders Employee unable to carry out his material responsibilities, duties, and authorities as the Company’s 

 

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Chief Executive Officer and President of Live Entertainment in accordance with the terms and conditions of this Agreement;

 

iii.                        termination of Employee’s employment by the Company without Cause;

 

iv.                       termination of Employee’s employment by Employee with Good Reason, provided that Employee has first provided written notice of such reason to the Company no later than thirty (30) days after the event or occurrence constituting Good Reason first arises, with such notice affording the Company thirty (30) days, from the date of the Company’s receipt of such notice, to cure the deficiency, and further provided that, upon such cure by the Company, “Good Reason” shall not be deemed to exist for purposes of this Agreement.  The term “Good Reason” shall mean the occurrence of either of the following events without the consent of Employee:  (a) a material breach of this Agreement by the Company; or (b) a material reduction in Employee’s responsibility, authority, or duties relative to Employee’s responsibility, authority or duties in effect immediately prior to such reduction, except for any change in title or reporting relationship (such title or reporting change shall not, in and of itself, constitute Good Reason);

 

v.                          termination of Employee’s employment by Employee, upon fourteen (14) calendar days’ prior written notice to the Company, without Good Reason;

 

vi.                       death or Disability of Employee.  Employee shall be deemed to be “Disabled” if he is unable to perform the essential functions of his position, with or without a reasonable accommodation, for either 120 consecutive days, or 180 aggregate days in a twelve-month period, by reason of any physical or mental impairment; or

 

vii.                    the commencement of Employee’s employment under the Dutch Employment Agreement.

 

b.                                      Termination Date.  This Agreement shall terminate in accordance with the following schedule (as applicable to the particular circumstances surrounding Employee’s termination, the “Termination Date”):

 

i.                              if the Agreement is terminated pursuant to Section 3(a)(i), upon the date that the Parties mutually agree, in writing, to terminate the Agreement and Employee’s employment with the Company;

 

ii.                           if the Agreement is terminated pursuant to Section 3(a)(ii) or 3(a)(iii), immediately upon the date when written notice thereof is mailed or delivered personally to Employee, or any such other date as may be set forth in such written notice;

 

iii.                        if this Agreement is terminated pursuant to Section 3(a)(iv), thirty (30) days after an officer of the Company has received written notice thereof, via mail or personal delivery, from Employee, and only then if the 

 

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Company has not cured any deficiency described in such notice by such date;

 

iv.                       if this Agreement is terminated pursuant to Section 3(a)(v), fourteen (14) calendar days after the Chief Executive Officer of the Company has received written notice thereof, via mail or personal delivery, from Employee;

 

v.                          if this Agreement is terminated pursuant to Section 3(a)(vi), immediately upon the date of Employee’s death or Disability; or

 

vi.                       if the Agreement is terminated pursuant to Section 3(a)(vii), immediately upon the effective date of the Dutch Employment Agreement.

 

4.                                      EFFECT OF TERMINATION.

 

a.                                Termination by the Company Without Cause.  Expressly excluding any termination pursuant to Sections 3(a)(i), (ii), (iv), (v), (vi) or (vii), if (i) this Agreement is terminated by the Company without Cause pursuant to Section 3(a)(iii) above or (ii) if the Company or one of its affiliates declines to offer Employee employment under a Dutch Employment Agreement or a US Employment Agreement, in either case, in accordance with the terms and conditions of this Agreement (with the Company agreeing that it may decline to offer the Employe employment under the Dutch Employment Agreement or the US Employment Agreement, as the case may be, by providing Employee with written notice thereof not less than 90 days prior to the end of the Term), then Employee shall receive:

 

i.                              any Annual Salary earned but unpaid as of the Termination Date plus the pro rata amount of the Annual Bonus to the extent unpaid as of the Termination Date (collectively, the “Statutory Amounts”); and

 

ii.                           subject to Employee meeting the terms and conditions of Section 4(f) below, an amount (the “Severance Payment”) equal to 12 months of the Employee’s then-current Annual Salary as of the Termination Date (such salary on a per month basis, the “Monthly Salary”) plus an additional amount equal to the Monthly Salary for each full calendar year of Employee’s employment hereunder starting on January 1, 2015 plus an additional amount equal to the sum of (x) the Annual Bonus and (y) 1/12th of the Annual Bonus for each full calendar year of the Employees’s employment hereunder Starting on January 1, 2015.  The Severance Payment, if owed to Employee pursuant to the terms and conditions of this Agreement, shall be paid, in the Company’s sole discretion, either (1) in a lump sum no later than 70 days after the Termination Date or (2) in 12 substantially equal monthly installments commencing with the first regular payroll of the Company following the effective date of the Release (as that term is defined below).

 

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b.                                Termination by Employee with Good Reason.  If this Agreement is terminated by Employee with Good Reason at any time during the Term, subject to the notice and cure period provided in Section 3(a)(iv), Employee shall receive:

 

i.                              the Statutory Amounts; and

 

ii.                           subject to Employee meeting the terms and conditions of Section 4(f) below, an amount equal to the Severance Payment.  The Severance Payment, if owed to Employee pursuant to the terms and conditions of this Agreement, shall be paid, in the Company’s sole discretion, either (1) in a lump sum no later than 70 days after the Termination Date or (2) in 12 substantially equal monthly installments commencing with the first regular payroll of the Company following the effective date of the Release.

 

c.                                 Termination Due to Death or Disability of Employee.  If this Agreement is terminated due to the death or Disability of Employee at any time during the Term, Employee or Employee’s estate, as applicable, shall receive:

 

i.                              the Statutory Amounts; and

 

ii.                           subject to Employee meeting the terms and conditions of Section 4(f) below, an amount equal to 6 months of the then-current Annual Salary as of the Termination Date (or such greater amount provided for under the laws of the Home Country) plus 50% of Employee’s Annual Bonus for the prior year, which shall be paid in a lump sum no later than 70 days after the Termination Date.

 

d.                                      Termination with Cause.  If this Agreement is terminated by the Company with Cause pursuant to Section 3(a)(ii) above, Employee shall receive:

 

i.                              the Statutory Amounts; and

 

ii.                           subject to Employee meeting the terms and conditions of Section 4(f) below, an amount equal to 3 months of the then-current Annual Salary as of the Termination Date, which shall be paid in a lump sum no later than 70 days after the Termination Date.

 

e.                                       All Other Terminations.  Subject to Sections 4(a)-(d) above, if this Agreement is terminated (i) by Employee without Good Reason at any time during the Term, (ii) by mutual written agreement of the Company and Employee pursuant to Section 3(a)(i) at any time during the Term, (iii) upon the effective date of the Dutch Employment Agreement, or (iv) for any reason other than as specified in Sections 4(a)-(d), Employee shall receive only the Statutory Amounts.

 

f.                                        Release of Claims Against the Company.  Notwithstanding the foregoing, no payment shall be made or benefit provided to Employee or Employee’s estate, as applicable, pursuant to this Section 4 of the Agreement, other than the Statutory Amounts, unless Employee or a representative or agent of Employee’s estate, as applicable, signs and, if applicable, does not revoke a general release of all claims against the Company, and any related, affiliated, or associated persons and/or

 

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entities as the Company may designate or determine in its sole discretion, in such form as the Company may reasonably require (the “Release”).  The Release must be signed by Employee or Employee’s estate, as applicable, and returned to the Company within the period designated by the Company, which shall not extend later than fifty (50) days after the Termination Date.  Any payment to be made or benefit provided pursuant to this Section 4 of the Agreement shall be tendered in accordance with the schedule to be set forth in the Release.

 

5.                                      [INTENTIONALLY OMITTED].

 

6.                                      RESTRICTIVE COVENANTS.  The Parties acknowledge and agree that the Company is engaged in a highly competitive industry and that Employee is highly qualified to serve as the Company’s Chief Executive Officer and President of Live Entertainment based on Employee’s extensive experience in executive and managerial positions both with the Company and with ID&T USA LLC and affiliated companies.  More specifically, Employee served as (i) the Chief Executive Officer of ID&T USA LLC from 2012 until the Effective Date, (ii) the Chief Operations Officer of ID&Q B.V. from 2008 to 2010, and (iii) the Chief Executive Officer of ID&T Enterprise from 2010 through 2012, which positions have resulted in Employee having extensive knowledge of the Company, its operations, and its industry.  As a result of the foregoing, the Company would suffer irreparable harm and incur substantial damage if Employee were to enter into competition with the Company.  Therefore, in order for the Company to protect its legitimate business interests, Employee covenants and agrees as follows:

 

a.                                      Employee shall not, at any time during his employment with the Company (provided that the Company may, in its sole discretion, on not less than 180 days prior written notice to Employee, extend such temporal duration for up to an additional twenty four (24) months after the termination of such employment; provided, however, that the Company continues to pay Employee his then-current Annual Salary and Annual Bonus during such extended period beyond the period during which severance is being paid pursuant to Section 4a hereof), anywhere in (a) the New York City or Los Angeles metropolitan areas, or (b) any other area within 100 miles of any live event produced by the Company or any of its affiliates or licensees within the past 24 months which event had greater than 5,000 patrons, either directly or indirectly:  (i) accept employment with or render services to any person or entity that is a business competitor of the Company (including but not limited any person or entity relating in any way to live entertainment, electronic dance music, or the production of music festivals), or has at any time during Employee’s employment with the Company engaged or attempted to engage in business competition with the Company, in a position, capacity, or function that is similar, in title or substance, whether in whole or in part, to any position, capacity, or function that Employee held with or in which Employee served the Company; (ii) invest in any person or entity that is a business competitor of the Company (including but not limited any person or entity relating in any way to live entertainment, electronic dance music, or the production of music festivals), or has at any time during Employee’s employment with the Company engaged or attempted to engage in business competition with the Company, except that Employee may own up to one percent (1%) of any outstanding class of securities of any company registered under Section 12 of the Securities Exchange Act of 1934, as amended; or (iii) perform services on his

 

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own behalf or personally engage in business competition with the Company (including but not limited to any services or engagement relating in any way to live entertainment, electronic dance music, or the production of music festivals);

 

b.                                      Employee shall not, at any time during his employment with the Company and for a period of one (1) year thereafter, for any reason, on his own behalf or on behalf of any other person or entity:  (i) solicit, invite, induce, cause, or encourage to alter or terminate his, her, or its business relationship with the Company any client, customer, supplier, vendor, licensee, licensor, or other person or entity that, at any time during Employee’s employment with the Company, had a business relationship with the Company, or any person or entity whose business the Company was soliciting or attempting to solicit at the time of Employee’s termination, (a) with whom Employee had contact, or for whom Employee performed services, to any extent, during his employment with the Company, and (b) with whom Employee did not have a business relationship prior to his employment with the Company; (ii) solicit, entice, attempt to solicit or entice, or accept business from any such client, customer, supplier, vendor, licensee, licensor, person, or entity; or (iii) interfere or attempt to interfere with any aspect of the business relationship between the Company and any such client, customer, supplier, vendor, licensee, licensor, person, or entity; and

 

c.                                       Employee shall not, at any time during his employment with the Company and for a period of one (1) year thereafter, either directly or indirectly, on his own behalf or on behalf of any other person or entity:  (i) solicit, invite, induce, cause, or encourage any director, officer, employee, agent, representative, consultant, or contractor of the Company to alter or terminate his, her, or its employment, relationship, or affiliation with the Company; (ii) interfere or attempt to interfere with any aspect of the relationship between the Company and any such director, officer, employee, agent, representative, consultant, or contractor; or (iii) engage, hire, or employ, or cause to be engaged, hired, or employed, in any capacity whatsoever, any such director, officer, employee, agent, representative, consultant, or contractor.

 

Employee further represents, warrants, agrees, and understands that:  (i) the covenants and agreements set forth in this Section 6 of the Agreement are reasonable in their geographic scope, temporal duration, and content; (ii) the Company’s agreement to employ Employee, and a portion of the compensation and consideration to be paid to Employee hereunder, are in consideration for such covenants and Employee’s continued compliance therewith; (iii) Employee shall not raise any issue of, nor contest or dispute, the reasonableness of the geographic scope, temporal duration, or content of such covenants and agreements in any proceeding to enforce such covenants and agreements; (iv) the enforcement of any remedy under this Agreement will not prevent Employee from earning a livelihood, because Employee’s past work history and abilities are such that Employee can reasonably expect to find work in other areas and lines of business; (v) the covenants and agreements set forth in this Section 6 of the Agreement are essential for the Company’s reasonable protection, are designed to protect the Company’s legitimate business interests, and are necessary and implemented for legitimate business reasons; and (vi) in entering into this Agreement, the Company has relied upon Employee’s representation that he will comply in full with the covenants and agreements set

 

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forth in this Section 6 of the Agreement.  As used in this Section 6, the term “Company” shall mean the Company together with its affiliates.

 

7.                                      CONFIDENTIALITY.

 

a.                                      Confidential Information.  Employee acknowledges that during his employment with the Company, and by the nature of Employee’s duties and obligations hereunder, Employee will come into close contact with confidential information of the Company and its subsidiaries, affiliates, and/or other related entities, as applicable, including but not limited to:  trade secrets, know-how, Inventions (as that term is defined below), business plans, finances, pricing, sales and marketing information, products, research, market intelligence, services, forms, technologies, concepts, methods, sources, methods of doing business, patterns, processes, programs, devices, tools, compilations of information, development, manufacturing, purchasing, engineering, computer programs (whether in source code or object code), theories, techniques, procedures, strategies, systems, designs, works of art, the identity of and any information concerning affiliates or customers, or potential customers, information received from others that the Company is obligated to treat as confidential or proprietary, and any other technical, operating, financial, and other business information that has commercial value, whether relating to the Company, its business, potential business, operations, or finances, or the business of any of the Company’s affiliates, subsidiaries, related entities, clients, customers, suppliers, vendors, licensees, or licensors, that Employee may develop or of which Employee may acquire knowledge during his employment with the Company, or from his colleagues while working for the Company, whether prior to, during, or subsequent to his execution of this Agreement, and all other business affairs, methods, and information not readily available to the public (collectively, “Confidential Information”).  Confidential Information does not include:  (i) Employee’s general skills and experience; (ii) information that was lawfully in Employee’s possession prior to his employment with the Company (other than through breach by a third party of any confidentiality obligation to the Company); (iii) information that is or becomes publicly available without any direct or indirect act or omission on Employee’s part; (iv) information that is required to be disclosed pursuant to any applicable law, regulation, judicial or administrative order or decree, or request by other regulatory organization having authority pursuant to the law; provided, however, that Employee shall first have given reasonable notice to the Company prior to making such disclosure, and shall have given the Company the opportunity to seek a protective order preventing or limiting such disclosure; or (v) information that is generally known within the industries or trades in which the Company transacts business.

 

In recognition of the foregoing, Employee covenants and agrees as follows:

 

i.                              Employee will use Confidential Information only in the performance of his duties and obligations hereunder for the Company.  Employee will not use Confidential Information, directly or indirectly, at any time during or after his employment with the Company, for his personal benefit, for the benefit of any other person or entity, or in any manner adverse to the

 

13

 

interests of the Company.  Further, Employee will keep secret all Confidential Information and will not make use of, divulge, or otherwise disclose Confidential Information, directly or indirectly, to anyone outside of the Company, except with the Company’s prior written consent;

 

ii.                           Employee will take all necessary and reasonable steps to protect Confidential Information from being disclosed to anyone within the Company who does not have a need to know the information and to anyone outside of the Company, except with the Company’s prior written consent;

 

iii.                        Employee shall not at any time remove, copy, download, or transmit any information from the Company during the term of this Agreement, except for the benefit of the Company and in accordance with this Agreement and the Company’s policies; and

 

iv.                       Promptly upon Employee’s termination, and in any event no later than three (3) business days after Employee’s employment with the Company ceases, Employee shall return to the Company any and all Confidential Information in his possession, custody, or control, including but not limited to all memoranda, notes, records, plans, reports, forecast, marketing information, financial records and information, employee or contractor records and files, client lists, training materials, trade secrets, and all other documents (and all copies thereof), whether in electronic or hard copy form, which Employee obtained while employed by the Company or otherwise serving or acting on behalf of the Company, or which Employee may then possess or have under Employee’s control.

 

b.                                      Duration of Covenant.  Employee acknowledges and agrees that his obligations under this Section 7 of the Agreement shall remain in effect forever.  Notwithstanding the foregoing, nothing in this Agreement shall be construed as, or shall interfere with, abridge, limit, restrain, or restrict Employee’s right to communicate with any federal, state, or local government agency charged with the enforcement and/or investigation of claims of discrimination, harassment, retaliation, improper wage payments, or any other unlawful employment practices under federal, state, or local law, or to file a charge, claim, or complaint with, or participate in or cooperate with any investigation or proceeding conducted by, any such agency.

 

c.                                       Retention of All Other Rights.  Employee’s obligations under this Section 7 of the Agreement are in addition to, and not in place or lieu of, any other statutory or common law obligations that Employee may have with regard to the maintenance, preservation, protection, use, and/or disclosure of Confidential Information, and the Company specifically reserves all rights it may have against Employee should Employee violate any such statutory or common law obligations.  As used in this Section 7, the term “Company” shall mean the Company together with its affiliates.

 

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8.                                      INJUNCTIVE RELIEF.  Employee agrees that it would be difficult to measure any damages caused to the Company which might result from any breach by Employee of the covenants and agreements set forth in Sections 6 and 7 of this Agreement, and that in any event money damages would be an inadequate remedy for any such breach.  Accordingly, and notwithstanding any other provision of this Agreement, Employee agrees that if Employee breaches, or the Company reasonably believes that Employee is likely to breach, Sections 6 or 7 of this Agreement, the Company shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach, without showing or proving any actual damage to the Company.  Any award or relief to the Company may, in the discretion of the court, include the Company’s costs and expenses of enforcement (including reasonable attorneys’ fees, court costs, and expenses).  Nothing contained in this Section 8 of the Agreement or in any other provision of the Agreement shall restrict or limit in any manner the Company’s right to seek and obtain any form of relief, legal or equitable, and shall not waive the Company’s right to any other relief related to any dispute arising out of this Agreement or related to Employee’s employment with the Company.

 

9.                                      WORKS FOR HIRE.  As it is used in this Section 9 of the Agreement, the term “Inventions” means all discoveries, designs, creations, developments, improvements, methods, techniques, practices, methodologies, data models, databases, scripts, know-how, processes, application program interfaces, software programs, software source documents and training manuals, codes, works of authorship, ideas, inventions, and contributions of any kind, whether or not they are patentable or registrable under federal or state copyright laws or similar statutes or protectable under common-law principles, and regardless of their form or state of development, that are made or conceived by Employee, alone or with others, or while Employee was serving as a consultant to the Company.  Notwithstanding anything else in this Agreement, this Section 9 shall not apply to an Invention for which no software program, application program interface, equipment, supplies, resources, facilities, data, products, information, materials, or trade secret information of the Company was used, and which was developed entirely on Employee’s own time, unless the Invention:  (i) relates to the Company’s business or potential business; or (ii) results from tasks assigned to Employee by the Company or from work performed by Employee for the Company.

 

All Inventions are exclusively the property of the Company.  Employee will promptly disclose in writing, in full detail to persons authorized by the Company, all Inventions which Employee makes during his employment with the Company and for a period of one (1) year immediately following the end of Employee’s employment with the Company, which relate either to Employee’s work assignment at the Company, or to the Company’s trade secrets or confidential or proprietary information, for the purpose of determining the Company’s rights in each such Invention.  Employee will not file any patent application relating to any such Invention without the prior written consent of the Company’s Chief Executive Officer or his/her designee.  If Employee does not prove that Employee made the Invention entirely after leaving the Company’s employment, the Invention is presumed to have been made during the period of time Employee was employed by the Company.

 

All Inventions will belong solely to the Company from conception.  The Company shall be the sole owner of all issued patents, pending patent applications, copyrights, domain names, trade secrets, trademarks, service marks, and all other intellectual property or other rights (collectively, the “Proprietary Rights”) in connection with all Inventions in the US and/or in any other country.  Employee further acknowledges and agrees that such Inventions and other works

 

15

 

of authorship are “works made for hire” as defined in the U.S. Copyright Law, 17 U.S.C. § 101 et seq. (as amended), prepared by Employee within the scope of his employment with the Company, for purposes of the Company’s rights under copyright laws.  To the extent that title to any Invention or any materials comprising or including any Invention, including all Proprietary Rights embodied therein, does not, by operation of law, vest in the Company, or is not considered “works made for hire,” Employee hereby irrevocably assigns to the Company all of his rights, title and interest to that Invention, including all Proprietary Rights embodied therein, free of all encumbrances and restrictions.  At any time during or after Employee’s employment with the Company that the Company requests, Employee will take any action, including signing whatever written documents of assignment the Company deems reasonably necessary, to formally evidence Employee’s irrevocable assignment to the Company of any Invention and all related Proprietary Rights, and, upon the Company’s request, he shall deliver to the Company any documents which the Company deems necessary to effect the transfer or prosecution of rights for all Inventions and Proprietary Rights in the US and/or in any other country.  At all times during and after Employee’s employment with the Company, Employee will assist the Company in obtaining, maintaining and renewing patent, copyright, trademark and other appropriate protection for any Invention, in the US and in any other country, at the Company’s expense.  In the event that the Company is unable, after reasonable effort, to secure Employee’s signature on any document or documents needed to apply for or prosecute any patent, copyright, domain name, trademark, or other right or protection relating to an Invention, for any other reason whatsoever, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney-in-fact, to act for and on Employee’s behalf to execute and file any such application or applications, and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, domain names, trademarks, or similar protections thereon with the same legal force and effect as if executed by Employee.  Employee hereby waives all rights of publicity, moral rights or droit morale, and agrees not to enforce or permit others to enforce such rights against the Company or its successors in interest.

 

On Schedule A, which is an integral part of this Agreement, Employee has completely identified (without disclosing any trade secret, proprietary or other confidential information) every Invention he made before his employment with the Company in which Employee has an ownership interest and which is not the subject matter of an issued patent or a printed publication at the time Employee signs this Agreement.  If Employee becomes aware of any projected or actual use of any such Invention by the Company, Employee will promptly notify the Company in writing of said use.  Except as to the Inventions listed on Schedule A or those which are the subject matter of an issued patent or a printed publication at the time Employee signs this Agreement, Employee will not assert any rights against the Company with respect to any Invention made before his employment with the Company.

 

10.                               NOTICES.  Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be deemed to have been given (i) when delivered personally or by hand (with written confirmation of receipt); (ii) if sent by a nationally-recognized overnight courier, on the date received by the addressee (with written confirmation of receipt); or (iii) on the date sent by electronic mail or facsimile (with confirmation of transmission), to the recipient(s) and address(es) specified below (or to such other recipient and/or address as either Party may, from time to time, designate in writing in accordance with the terms and conditions of this Agreement):

 

16

 

	
 
    	
If   to Employee:
    	
 
    
	
 
    	
 
    	
Ritty   van Straalen
    	
 
    
	
 
    	
 
    	
476   2nd Street
    	
 
    
	
 
    	
 
    	
Brooklyn,   NY 11215
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
If   to the Company:
    	
 
    
	
 
    	
 
    	
SFX   Entertainment, Inc.
    	
 
    
	
 
    	
 
    	
430   Park Avenue, 6th Floor
    	
 
    
	
 
    	
 
    	
New   York, NY 10022
    	
 
    
	
 
    	
 
    	
Attention:   General Counsel
    	
 
    

 

11.                               LEGAL REPRESENTATION.  Employee acknowledges that he was advised to consult with, and has had ample opportunity to receive the advice of, independent legal counsel before executing this Agreement — and the Company hereby advises Employee to do so — and that Employee has fully exercised that opportunity to the extent he desired.  Employee acknowledges that he had ample opportunity to consider this Agreement and to receive an explanation from such legal counsel of the legal nature, effect, ramifications, and consequences of this Agreement.  Employee warrants that he has carefully read this Agreement, that he understands completely its contents, that he understands the significance, nature, effect, and consequences of signing it, and that he has agreed to and signed this Agreement knowingly and voluntarily of his own free will, act, and deed, and for full and sufficient consideration.

 

12.                               DIRECTION, REPORTING, SUPERVISION AND CONTROL OF THE EMPLOYEE.  Employee will work under the direction of the CEO of the Company and be responsible to the CEO and the Board of Directors of the Company.  The Company has the right to set reasonable performance criteria and define the duties and activities to be performed by Employee consistent with the Employee’s position with the Company, including sole control over the tasks which Employee must perform and the manner in which those tasks are to be performed.  The CEO of the Company shall exercise day-to-day supervision and control over Employee and be responsible for all of Employee’s work during the Term.  Employee shall be treated by the Company like other similarly situated employees of the Company, and Employee shall be bound by the policies and procedures of the Company.

 

13.                               RELATIONSHIP BETWEEN THE PARTIES.  This Agreement shall not constitute either a contract for the Home Company to provide services through Employee to the Company or a partnership between the Home Company and the Company.

 

14.                               LIABILITY DURING SECONDMENT.  The Home Company shall not be liable for any act or omission of Employee during the Term, including any liability by way of negligence or arising from any duty of care which may exist, whether by way of contract or otherwise, and the Company shall not make any claim against the Home Company based on any act or omission of the Employee which occurs during the Term.  During the Term, Employee shall not have the authority to act for or on behalf of the Home Company.  Notwithstanding the foregoing, during the Term, the Home Company shall guarantee the obligations of the Company to pay the housing allowance as set forth in Section 2(o) in the event that the Company fails to do so.

 

15.                               COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE CODE.  Notwithstanding anything herein to the contrary, to the maximum extent permitted by applicable law, amounts payable to Employee pursuant to Sections 4(a)(ii), 4(b)(ii), or 4(c)(ii) of this

 

17

 

Agreement shall be made in reliance upon Treas. Reg. Section 1.409A-1(b)(9) (Separation Pay Plans) or Treas. Reg. Section 1.409A-1(b)(4) (Short-Term Deferrals), as applicable.  For this purpose, each payment (including each monthly installment) shall be considered a separate and distinct payment, and each payment made in reliance on Treas. Reg. Section 1.409A-1(b)(9) shall only be payable if the Employee’s termination of employment constitutes a “separation from service” within the meaning of Treas. Reg. Section 1.409A-1(h).

 

16.                               ENTIRE AGREEMENT; AMENDMENT.  This Agreement, together with all exhibits and schedules annexed hereto, constitutes the entire agreement among the parties hereto relating to the subject matter hereof, and supersedes and cancels all prior agreements and understandings, whether oral or written, with respect to the same, including the Initial Secondment Agreement.  In entering into and performing under this Agreement, neither the Company nor Employee has relied upon any promises, representations, or statements except as expressly set forth herein.  No modification, alteration, amendment, revision of, or supplement to this Agreement shall be valid or effective unless the same is memorialized in a writing signed by both by Employee and a duly-authorized representative or agent of the Company.  Neither e-mail correspondence, text messages, nor any other electronic communications constitutes a writing for purposes of Section 10 of this Agreement.

 

17.                               GOVERNING LAW.  This Agreement shall in all respects be interpreted, enforced, and governed by and continued and enforced in accordance with Dutch law.  Any dispute, action or proceeding in connection with the matters related to or arising out of this Agreement shall be submitted to the jurisdiction of the relevant court in the Home Country.

 

18.                               ASSIGNMENT.  This Agreement shall not be assignable by Employee, but shall be binding upon Employee and upon his heirs, administrators, representatives, executors, and successors.  This Agreement shall be freely assignable by the Company without restriction and shall be deemed automatically assigned by the Company with Employee’s consent in the event of any sale, merger, share exchange, consolidation, or other business reorganization.  This Agreement shall inure to the benefit of the Company and its successors and assigns.

 

19.                               SEVERABILITY.  If one or more of the provisions of this Agreement is deemed void by law, then the remaining provisions shall continue with full force and effect and, if legally permitted, such offending provision or provisions shall be replaced with an enforceable provision or enforceable provisions that as nearly as possible effects the parties’ intent.  Without limiting the generality of the foregoing, the parties hereby expressly state their intent that, to the extent any provision of this Agreement is deemed unenforceable due to the scope, whether geographic, temporal, or otherwise, being deemed excessive, unreasonable, and/or overbroad, the court, person, or entity rendering such opinion regarding the scope shall modify such provision(s), or shall direct or permit the parties to modify such provision(s), to the minimum extent necessary to cause such provision(s) to be enforceable.

 

20.                               SURVIVAL.  Upon the termination or expiration of this Agreement, Sections 4 through 9, and 11 through 22, shall survive such termination or expiration, and shall continue, with full force and effect, in accordance with their respective terms and conditions.

 

21.                               WAIVER.  The failure of either Party to insist, in any one or more instances, upon the performance of any of the terms, covenants, or conditions of this Agreement or to exercise any right hereunder, shall not be construed as a waiver or relinquishment of the future performance

 

18

 

of any rights, and the obligations of the Party with respect to such future performance shall continue with full force and effect.  No waiver of any such right will have effect unless given in a writing signed by the Party against whom the waiver is to be enforced.

 

22.                               CHANGE OF CONTROL.  In the event of a Change of Control Transaction, this Agreement shall continue in full force and effect; provided, however, that upon a Change of Control Transaction, Employee shall have the right to exercise the Dutch Employment Option regardless of whether the Minimum US Employment Period has then been fulfilled.

 

23.                               SECTION HEADINGS.  The section headings used in this Agreement are included solely for convenience, and shall not affect, or be used in connection with, the interpretation of this Agreement.

 

24.                               COUNTERPARTS.  This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

 

[Signature page follows.]

 

19

 

	
SFX   ENTERTAINMENT, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Richard Rosenstein 
    	
 
    
	
 
    	
Name:   Richard Rosenstein 
    	
 
    
	
 
    	
Title:   Chief Financial Officer and Chief Administrative Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
ID&T   ENTERPRISE B.V.
    By: ID&T Management B.V., its director
    	
ID&T/SFX   NORTH AMERICA LLC

    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Richard Rosenstein 
    	
 
    	
By:
    	
/s/   Sheldon Finkel 
    	
 
    
	
Name:   Richard Rosenstein 
    	
 
    	
 
    	
Name:   Sheldon Finkel 
    	
 
    
	
Title:   Director
    	
 
    	
Title:   Co-Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
EMPLOYEE
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 /s/ Ritty van Straalen
    	
 
    
	
Ritty   van Straalen
    	
 
    

 

20signpathexh49.htm

Exhibit 4.9

	
Warrant No. D-[  ]

	  	
 

	  	  	
 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

Warrant No. D-[   ]

CLASS D

COMMON STOCK PURCHASE WARRANT

To Purchase [     ]   Shares of Common Stock of

SIGNPATH PHARMA INC.

THIS CLASS D COMMON STOCK PURCHASE WARRANT (this “Warrant”) CERTIFIES that, for value received, [           ]  (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance of this Warrant (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York time) on the seven-year anniversary of the Effective Date (as defined below) (the “Termination Date”) but not thereafter, to subscribe for and purchase from SignPath Pharma Inc., a Delaware corporation (the “Company”), up to [      ] shares (the “Warrant Shares”) of Common Stock, par value $0.001 per share, of the Company (the “Common Stock”).  The purchase price per share of Common Stock (the “Exercise Price”) under this Warrant shall be $3.00 subject to adjustment hereunder.

In addition to the terms defined elsewhere in this Warrant the following capitalized terms shall have the following meanings:

 

“Business Day” means any day other than a Saturday, Sunday or legal holiday in the State of New York.

 

“Effective Date” means the date on which the SEC declares effective a Registration Statement registering for resale the Warrant Shares of the Holder.

“Market Price” means for any security as of any date, the last closing bid price or last closing trade price, respectively, for such security on the Trading Market, as reported by Bloomberg, or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg, or, if the Trading Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported by OTC Markets Group, Inc. (formerly the “Pink Sheets”)  If the Market Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Market Price of such security on such date shall be the fair market value as determined by the board of directors of the Company.  All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

  

  

  

 

	
Warrant No. D-[   ]

	 	
 

	 	 	
 

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or any other entity of any kind.

“Registration Statement” means a registration statement filed by the Company with the Securities and Exchange Commission (“SEC”) for a public offering and sale of securities of the Company (other than a registration statement on Form S-8 or Form S-4, or their successors, or any other form for a limited purpose, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another corporation).

“Subscription Agreement” means that certain Subscription Agreement entered into between the original Holder of this Warrant and SignPath Pharma Inc., which provided for, among other things, the original purchase of this Warrant from SignPath Pharma Inc.

“Trading Day” means (i) a day on which the Common Stock is traded or quoted on a Trading Market, or (ii) if the Common Stock is not traded or quoted on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the OTC Markets Group, Inc. (or any similar organization or agency succeeding to its functions of reporting price); provided, that in the event that the Common Stock is not traded or quoted as set forth in (i), and (ii) hereof, that Trading Day shall mean a Business Day.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NASDAQ Capital Market, the NYSE Euronext, NYSE Markets LLC, the NASDAQ Global Market, the NASDAQ Global Select Market or the OTC Bulletin Board.

1. Title to Warrant.  Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed.  The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

  

  

  

 

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

  

2. Authorization of Shares.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of such purchase rights in accordance with the terms and conditions of this Warrant, including, without limitation, payment of the Exercise Price, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

3. Exercise of Warrant.

(a)           Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (the “Notice of Exercise Form”), at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, the Holder shall also have surrendered the original of this Warrant to the Company and the Company shall have received  payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank.  Certificates for shares purchased hereunder shall be delivered to the Holder promptly following the latest to occur of delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above.  This Warrant shall be deemed to have been exercised and the Warrant Shares (to which the exercise relates) shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date of the latest to occur of (i) delivery to the Company of the Notice of Exercise Form, (ii) surrender of this Warrant and (iii) payment of the aggregate Exercise Price as set forth above and all taxes required to be paid by the Holder, if any, pursuant to Section 5 (“Exercise Date”).

 

(b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c)           Subject to the provisions of this Section 3, if there is a currently effective Registration Statement registering the resale of the Warrant Shares by the Holder, upon either: (i) completion of an underwritten initial public offering, or (ii) the Company’s Common Stock is traded on a national securities exchange or in the over-the-counter market at or above $4.00 per share for 20 consecutive trading days (the “Threshold Price”) (subject to adjustment), then the Company may, within fifteen (15) days of either (A) the Effective Date, or (B) 20 consecutive trading days at or above $4.00 per share , redeem all or any portion of this Warrant for which a Notice of Exercise has not yet been delivered at a price of $.01 per share of Common Stock (such right, a “Redemption”).  To exercise this right, the Company must deliver to the Holder an irrevocable written notice (a “Redemption Notice”), indicating therein the unexercised portion of this Warrant to which such notice applies.  Deposit of such Redemption Notice with a recognized courier service, a recognized overnight delivery service or with the U.S. Postal Service (via certified or registered mail) in accordance with Section 17(d) within the above fifteen (15) Trading Day period shall be considered a timely Redemption.  If the conditions set forth above for such Redemption are satisfied, from the period from the date of the Redemption Notice through and including the Redemption Date (as defined below), then any portion of this Warrant subject to such Redemption Notice for which a Notice of Exercise, the original Warrant certificate and the applicable aggregate Exercise Price shall not have been received from and after the date of the Redemption Notice will be cancelled at 6:30 p.m. (Eastern Time) on the thirtieth (30th) calendar day after the date the Redemption Notice is sent to the Holder (such date, the “Redemption Date”).  Any unexercised portion of this Warrant to which the Redemption Notice does not pertain will be unaffected by such Redemption Notice.  In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant Shares subject to a Redemption Notice that are tendered, with the original of this Warrant certificate and the applicable aggregate Exercise Price, from the time of delivery of the Redemption Notice through 6:30 p.m. (Eastern Time) on the Redemption Date.  The parties agree that any Notice of Exercise delivered following a Redemption Notice shall first apply to the Warrant Shares subject to such Redemption Notice prior to applying to the remaining Warrant Shares available for purchase under this Warrant.  Subject again to the provisions of this Section 3(c), the Company may deliver subsequent Redemption Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise.  The Company’s right to redeem the Warrant shall be exercised ratably among all holders of warrants issued pursuant to Subscription Agreements entered into as part of the same financing.

  

  

  

 

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

  

(d)           If as of six (6) months following the Initial Exercise Date, there is not a currently available Registration Statement permitting the resale of all of the Warrant Shares issuable under this Warrant at the time a Notice of Exercise Form is delivered to the Company (either due to the inability of the Company to either have the SEC declare such Registration Statement effective on or prior to such date or to maintain the effectiveness of such Registration Statement for the duration of the period prescribed in the Registration Statement), the Holder may initiate a cashless exercise (a “Cashless Exercise”), as hereinafter provided.  The Holder may effect a Cashless Exercise by surrendering this Warrant to the Company and noting on the Notice of Exercise Form that the Holder wishes to effect a Cashless Exercise, upon which the Company shall issue to the Holder the number of Warrant Shares determined as follows:

X = Y x (A-B)/A

            where:

X = the number of Warrant Shares to be issued to the Holder;

Y = the number of Warrant Shares with respect to which this Warrant is being exercised;

A = the Market Price as of the Exercise Date; and

B = the Exercise Price.

 

For purposes of Rule 144 under the Securities Act, it is intended and acknowledged that the Warrant Shares issued in a Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares required by Rule 144 shall be deemed to have been commenced, on the date this Warrant was originally issued by the Company.

4. No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5. Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

6. Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7. Transfer, Division and Combination.

(a) Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof and in the Subscription Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.

  

  

  

  

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

 

(b) This Warrant may be divided or combined with other Warrants (if such other Warrants are upon the same terms, other than number of Warrant Shares, as this Warrant) upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e) The Holder acknowledges that it has been advised by the Company that this Warrant and the Warrant Shares issuable upon exercise hereof (collectively the “Securities”) have not been registered under the Securities Act, that the Warrant is being issued, and the shares issuable upon exercise of the Warrant will be issued, on the basis of the statutory exemption provided by section 4(a)(2) of the Securities Act relating to transactions by an issuer not involving any public offering, and that the Company’s reliance upon this statutory exemption is based in part upon the representations made by the Holder contained herein. The Holder acknowledges that he has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities. In particular, the Holder agrees that no sale, assignment or transfer of the Securities shall be valid or effective, and the Company shall not be required to give any effect to any such sale, assignment or transfer, unless (i) the sale, assignment or transfer of the Securities is registered under the Securities Act, and the Company has no obligations or intention to so register the Securities except as may otherwise be provided herein, or (ii) the Securities are sold, assigned or transferred in accordance with all the requirements and limitations of Rule 144 under the Securities Act or such sale, assignment, or transfer is otherwise exempt from registration under the Securities Act.  The Holder represents and warrants that he has acquired this Warrant and will acquire the Securities for his own account for investment and not with a view to the sale or distribution thereof or the granting of any participation therein, and that he has no present intention of distributing or selling to others any of such interest or granting any participation therein. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective Registration Statement and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel reasonably acceptable to the Company (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501 promulgated under the Securities Act or a qualified institutional buyer as defined in Rule 144A(a) under the Securities Act.

  

  

  

 

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

  

     (f)  The Holder acknowledges that the Warrant Shares shall bear the following legend:

“These securities have not been registered under the Securities Act of l933.  Such securities may not be sold or offered for sale, transferred, hypothecated or otherwise assigned in the absence of an effective registration statement with respect thereto under such Act or an opinion of counsel to the Company that an exemption from registration for such sale, offer, transfer, hypothecation or other assignment is available under such Act.”

8. No Rights as Shareholder until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof.  Upon the exercise of this Warrant, the Warrant Shares so purchased shall be, and be deemed to be, issued to such Holder as the record owner of such shares as of the close of business on the Exercise Date with respect to such exercise.

9. Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of such Warrant.

10. Business Days.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

11. Adjustments of Exercise Price and Number of Warrant Shares; Stock Splits, etc.

Stock Dividends and Distributions, Stock Splits and Reclassifications

 

The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following.  In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the Exercise Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted. Any adjustment made herein that result in a decrease (or increase) in the Exercise Price shall also result in a proportional increase (or decrease) in the number of shares of Common Stock into which this Warrant is exercisable. Successive adjustments in the Exercise Price and number of Warrant Shares shall be made whenever any event specified above shall occur. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

 

  

  

  

  

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

  

12. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.  In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose all or substantially all of its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets (“Extraordinary Transaction”), the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 12.  As soon as commercially practicable following the Extraordinary Transaction, the successor or acquiring corporation (if other than the Company), shall deliver to Holder a new warrant in repacement of this Warrant consistent with the provisions referenced in the immediately preceding sentence against receipt by such successor or acquiring corporation of the original of this Warrant.  For purposes of this Section 12, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock.  The foregoing provisions of this Section 12 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

13. Voluntary Adjustment by the Company.  The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

  

  

  

  

  

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

 

14. Notice of Adjustment.  Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give prior written notice thereof to the Holder of at least 15 days prior to the date on which the Company closes its books or takes a record for determining the particular event, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

15. Notice of Corporate Action.  If at any time:

(a)           the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b)           there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with (other than a consolidation or merger in which the Company is the surviving corporation), or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation, or

 (c)           there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

then, in any one or more of such cases, the Company shall give to Holder (i) at least fifteen (15) days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least fifteen (15) days’ prior written notice of the date when the same shall take place.  Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up.  Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 17(d).

  

  

  

 

  

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

 

16. Authorized Shares.  The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant (the “Required Minimum”).  If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than the Required Minimum on such date, then the Board of Directors of the Company shall use commercially reasonable efforts to amend the Company’s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the number of shares of Common Stock that would result from the full exercise of the Warrant Shares at such time, as soon as possible and in any event not later than the 75th day after such date.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant.  Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

17. Miscellaneous.

(a) Governing Law. This Warrant shall be governed by and construed in accordance with the internal laws of the State of Delaware without regard to the conflicts of law principles thereof.  The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Warrant, shall be brought solely in a federal or state court located in the State of Delaware. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the State of Delaware and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in the State of Delaware.  The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto.

(b) Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

(c) Nonwaiver and Attorneys’ Fees.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If any action, suit, arbitration or other proceeding for the enforcement of this Warrant is brought with respect to or because of an alleged dispute, breach, default or misrepresentation in connection with any of the provisions hereof, the successful or prevailing party shall be entitled to recover reasonable attorneys’ fees and other costs incurred in that proceeding, in addition to any other relief to which it or he may be entitled.

(d) Notices. All notices that are required or may be given pursuant to this Warrant must be in writing and delivered personally, by a recognized courier service, by a recognized overnight delivery service, or by registered or certified mail, postage prepaid, to the parties at the following addresses (or to the attention of such other Person or such other address as any party may provide to the other parties by notice in accordance with this section):

	  	  	
If to the Holder:

	  	  	  
	  	  	
[        ]

	  	  	
[        ]

	  	  	  
	  	  	
If to the Company:

	  	  	  
	  	  	1375 California Road
	  	  	Quakertown, Pennsylvania 18951
	  	  	
Attention: Dr. Lawrence Helson

	  	  	
Telephone:  (215) 538-9996

	  	  	  
	  	  	
With a copy to:

	  	  	  
	  	  	
Davidoff Hutcher & Citron LLP

	  	  	
605 Third Avenue

	  	  	
New York, NY 10158

	  	  	
Attention: Elliot H. Lutzker, Esq.

	 	 	Telephone: (646) 428-3210

 

  

  

  

  

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

Any such notice or other communication will be deemed to have been given and received (whether actually received or not) on the day it is personally delivered or delivered by courier or overnight delivery service or, if mailed, when actually received.

(e) Remedies.  Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(f) Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder.

(g) Amendment.  This Warrant may be modified or amended only with the written consent of the Company and the Holder.  Waiver of any provision of this Warrant shall be in writing.

(h) Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(i) Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

  

  

  

  

	
Warrant No. D-[ ]

	 	
  

	 	 	
  

  

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated:  [         ]

	
SIGNPATH PHARMA INC.

 

 

	
By:________________________________________

Lawrence Helson, M.D.,

Chief Executive Officer and President

 

	  

 

  

  

  

 

NOTICE OF EXERCISE

 

To:           SignPath Pharma Inc.

 

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Class C Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of lawful money of the United States.

 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The undersigned, by marking the box following this sentence, indicates his or her intention to exercise this Warrant on a cashless basis in accordance with the terms of this Warrant:  

 

The Warrant Shares shall be delivered to the following:

 

	  	  	  	
_______________________________

	  	  	  	  
	  	  	  	
_______________________________

	  	  	  	  
	  	  	  	
_______________________________

 

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended.

 

	  	  	  	  	  	  	  	
[PURCHASER]

	  	  	  	  	  	  	  	
By: ______________________________

	  	  	  	  	  	  	  	
Name:

	  	  	  	  	  	  	  	
Title:

	  	  	  	  	  	  	  	
Dated:  ________________________

 

  

  

  

 

ASSIGNMENT FORM

 

(To assign the foregoing Class C Warrant, execute

 

this form and supply required information.

 

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

 

_______________________________________________________________.

 

_______________________________________________________________

 

	  	  	  	Dated:  ______________, _______
	 	 	 	 
	  	  	  	
Holder’s Signature:

	
_____________________________

	  	  	  	
Holder’s Address:

	
_____________________________

	  	  	  	  	  _____________________________

 

Signature Guaranteed:  ___________________________________________

 

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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