PRESENTATION 1 Disclaimer This presentation contains - - PowerPoint PPT Presentation

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NET HOLDING CORPORATE PRESENTATION

Disclaimer

This presentation contains forward-looking statements about Net Holding A.S. and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future growth potential of markets and products, profitability in specific areas, the future product portfolio, development of and competition in economies and markets of the Group. These forward looking statements involve known and unknown risks, uncertainties and other factors, many

• f which are outside of Net Holding’s control, are difficult to predict and may cause actual results to differ

significantly from any future results expressed or implied in the forward-looking statements on this presentation. While Net Holding believes that the assumptions made and the expectations reflected on this presentation are reasonable, no assurance can be given that such assumptions or expectations will prove to have been correct and no guarantee of whatsoever nature is assumed in this respect. The uncertainties include, inter alia, the risk of a change in general economic conditions and government and regulatory actions. These known, unknown and uncertain factors are not exhaustive, and other factors, whether known, unknown or unpredictable, could cause the Group’s actual results or ratings to differ materially from those assumed

• hereinafter. Net Holding A.S. undertakes no obligation to update or revise the forward-looking statements
• n this presentation whether as a result of new information, future events or otherwise.

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Table of Contents

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• The World of Merit International Page 4
• Net Holding Financial Highlights Page 15
• Core Business Activities Page 23
• Merit Hotels-Casinos & Revenue Generation Page 26
• Branding & Marketing Page 33

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Gaming Leader in Northern Cyprus and Eastern Europe

• Uniquely Positioned to offer world class gaming experience within a

maximum of 4-hours flight time from Russian speaking countries, Middle East, Europe, Africa and Scandinavian countries.

• Our dominant

position in N. Cyprus enables us to pursue global growth

• pportunities in the neighborhood of our region. Merit opened 5 new

casinos in Montenegro and Croatia and plans to add 8 more casinos in Eastern Europe in the next two years.

• Significant real estate base; Book value of hotel&casinos at 1,6 bn TL and

book value of investment property at 531 mn TL in Turkey, Northern Cyprus and Azerbaijan, except Bodrum Land.

• Exclusive Joint Venture Agreement with Scientific Games in 26 neighbouring

countries to develop acquire and operate Lottery concessions.

• Net Holding founded in 1981 and listed on Borsa Istanbul (BIST) since 1989

with the ticker symbol “NTHOL”. The combined avg. daily trading volume of Net Group companies (NTHOL – 0.5 mn $ / NTTUR - 2.2 mn $) was more than 2.7 mn $ in 2017.

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Milestones: The Path to Growth

Beginnings (1974- 1990) Early Years (1990- 1999) Transformation Years (2000-2010) International Expansion (2011- 2016)

▪ 1974 Net Turizm founded by

• Mr. Besim Tibuk

▪ 1981 Net Holding established ▪ 1985 First Casino opened in Turkey ▪ 1989 NTHOL listed on Istanbul Stock Exchange ▪ 1990 Net Turizm listed ▪ 1994 Total 21 Casinos in Turkey ▪ 1996 Acquisition of Merit Crystal Cove in TRNC ▪ 1996 Casinos outlawed in Turkey ▪ 1998 Opening of Merit Cyprus Garden and Merit Crystal Cove ▪ 2006 Bodrum Milas Project Agreement ▪ 2007 Acquisition of Antalya Duty Free license with Nuance group ▪ 2008 Opening of Merit Lefkosa ▪ 2009 First Texas Holdem Poker Tournament ▪ 2010 Acquisition of Merit Esprit Hotel ▪ 2013 Opening of Merit Royal Hotel & Casino ▪ 2013 Re-opening of Park under Merit brand ▪ 2014 Antalya Duty Free sold to Nuance for USD150 mn ▪ 2014 Bid and won Turkish National Lottery Tender together with JV partner SG. ▪ 2014 Opening of Merit Royal Premium Hotel ▪ 2016 Market entry to Montenegro with opening of casino in Podgorica ▪ 2016 Opening of Merit Casino Royal Splendid and Avala in Budva ▪ 2016 Opening of 2016 Market entry to Croatia with opening

• f Merit Casino Grand Lav in

Split ▪ 2016 Opening of Merit Casino Libertas in Dubrovnik

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From single casino on 2000 to 10 casinos on 2017

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Casino Performance: EBITDA & Sales *

90 132 138 134 179

20 40 60 80 100 120 140 160 180 200

2013 2014 2015 2016 2017 E CASINO SALES (mn $) 32 45 51 52 74

10 20 30 40 50 60 70 80

2013 2014 2015 2016 2017 E CASINO EBITDA (mn $)

* These tables are taken from independent auditors’ report in EBITDA breakdown page by TL and converted to $ with, end of year CBRT fx rates.

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2017 EBITDA GUIDANCE

$68

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Total Visits to Merit Properties (mn people) Occupancy and ADR

Merit: Operational Statistics

0.8 1.1 1.5

0.5 1 1.5 2 2014 2015 2016

300.0 308 267 247

50% 52% 54% 56% 58% 60% 62% 64% 50 100 150 200 250 300 350 2013 2014 2015 2016 $

Revenue Distribution By Currency (2016) Visitors Nationality (2016)

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Disciplined Execution of Our Expansion Strategy

Geographic Areas of Future Development Interest for Merit

• Merit is clear regional leader in integrated casino resort development and management and is well

positioned to bring its expertise and business model to selected countries in Eastern Europe.

• 5 new casinos opened in 2016 in Montenegro and Croatia with 386 slot machines and 79 tables.
• 8 new casinos planned in 2017 and 2018. When completed, the expansion to increase our gaming

capacity to more than 1,500 machines and 200 live tables in Eastern Europe.

• Capital efficient asset-light expansion model with an average investment of 3 mn € per point.

Macedonia Ukraine Bulgaria Bosnia Serbia Slovenia

Corporate Action

• NET Holding made an application to merge NTTUR

and NTHOL via a share swap on February 8th, 2017. CMB approved the merger on July 21th, 2017 .

• Independent valuation conducted by KPMG

determined the ratio to be 0.97861.

• The merger to result in elimination of cross-holding

pattern that existed since 1989 through NTTUR & NTHOL merger and 1,064 mn TL outside interests.

• Restructuring of entire Net Group into regional

gaming operator focused on casinos, sports betting and lottery management.

• Simplification of participants through mergers and

wind ups. This elimination will solidify minority rights and application of corporate governance compliance.

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Ownership Structure (Pre-Merger)

Net Holding Shareholder Structure

Foreign Institutional Investors 148,984,000 44.00% Net Group (Treasury Shares) 77,878,000 23.00% Tibuk Family 57,562,000 17.00% Free Float 54,176,000 16.00% Total 338,600,000 100.00%

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Ownership Structure (Post-Merger)

Net Holding Shareholder Structure

Foreign Institutional Investors 242,917,754 43.08% Net Group (Treasury Shares) 81,310,910 14.42% Tibuk Family 145,931,092 25.88% Free Float 93,716,181 16.62% Total 563,875,937 100.00%

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NET HOLDING FINANCIAL HIGHLIGHTS

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Financial Overview

*-12 mn TL non-cash impact: The impact of depreciation of TL on foreign currency debt stock.

• 4.3 mn TL is cash impact.

mn TL 1HF17 1HF16 Chg. FY 2016 FY 2015 Chg. Revenues 242.8 184.4 32% 478.6 403.1 19% EBITDA 48.1 36.2 33% 143.7 83.9 71% OPERATING PROFIT 5.6 0.2 n.m. 68.5 30.5 124% Investment Income (Net) 1.6 2.2

• 29%

4.2 124.8

• 97%

Interest (Expense)/ Revenue*

• 16.3
• 15.6

4%

• 31.7
• 30.5

4% Foreign Exchange (Loss)/Profit

• 17.9

0.6 n.m.

• 8.0
• 2.3

248% Other Financial Commissions

• 1.0
• 0.5

92%

• 2.6
• 4.0
• 35%

Profit Before Tax

• 28.6
• 13.5

112% 28.5 124.6

• 77%

Tax 10.1 4.0 152%

• 32.8
• 27.2

21% Net Profit

• 19.9
• 10.4

91%

• 4.3

97.4 n.m. Minorities

• 3.2

4.8 n.m. 19.9 31.3

• 37%

Attributable profit

• 16.7
• 15.2

10% 24.2 66.1 n.m.

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Summarized Segmental Review

mn TL 1HF17 1HF16 Chg. FY 2016 FY 2015 Chg. EBITDA

• N. Cyprus

62.2 46.1 34.9% 180.7 147.4 22.6% Merit Crystal Cove 12.4 9.2 34.8% 32.1 28.0 14.6% Merit Lefkosa 4.3 3.1 38.7% 41.7 30.9 35.0% Merit Royal 32.8 24.3 35.0% 65.2 57.6 13.2% Merit Cyprus Gardens 0.8 0.6 33.3% 8.1 4.7 72.5% Merit Park 11.9 8.9 33.7% 33.6 26.2 28.2% Eastern Europe

• 1.7

0.3 n.m. 1.0 0.0 n.m. Others 1.6

• 0.1

n.m. 1.0

• 0.8

n.m. Holding

• 13.0
• 7.9

64.6%

• 32.3
• 52.6
• 38.6%

Consolidation adj.

• 1.0
• 2.2
• 54.5%
• 6.8
• 10.1
• 33.2%

Consolidated EBITDA 48.1 36.2 32.9% 143.7 83.9 71.3%

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Cash Flow

mn TL 1HF17 1HF16 Chg. FY2016 FY2015 Chg. Reported EBITDA 48.1 36.2 11.9 143.8 83.9 59.9 Working Capital

• 15.2
• 7.1
• 8.1
• 5.1
• 18.1

13.0 Cash Flow generated by operations 32.9 29.1 3.8 138.7 65.8 72.9 Net interest expenses

• 34.3
• 12.3
• 21.9
• 21.0
• 16.9
• 4.1

Taxes paid

• 14.9
• 12.0
• 2.9
• 11.3
• 19.1

7.8 Operating Cash Flow

• 16.2

4.8

• 21.0

106.3 29.8 76.5 Capital Expenditure (net)

• 56.6
• 90.2

33.6

• 239.9
• 103.5
• 136.4

Cash Flow before financing activities

• 72.8
• 85.4

12.6

• 133.6
• 72.7
• 60.9

Net borrowings 26.5 1.0 25.5 98.6

• 275.2

373.8 Share sale (buybacks) 1.8 28.3

• 26.5

31.2 200.1

• 168.9

Net increase (decrease) in cash

• 44.6
• 56.1

11.6

• 3.8
• 147.8

144.0

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Debt Structure

• 69% of the total debt stock is in FX, 31% in local currency for 1HF17.
• Average maturity of bank loans is 3.4 years.
• Financial Lease Liability for 2016FY is 16.8 mn TL.
• JC assigned «A» rating in 2016 and upgraded outlook from stable to positive. The 4th upgrade since Japan Credit

Rating Agency (JCR) started rating Net Holding.

• As of 30 June 2017 the average effective interest rates of USD, EUR and TRY bank borrowings are 5.53%, 4.64% and

%13,54 (31 December 2016: USD – 6.56%, EUR – 4.84% , GBP – 4.09% TRY- 13.53%)

mn TL 1HF17 1HF16 Chg. FY2016 FY2015 Chg. Nature of Facility TL Bank Debt (secured) 28.4 15.2 13.2 13.4 16.7

• 3.3

Debt Short Term 20.7 3.7 17.0 3.7 3.7 0.0 Debt Long Term 7.7 11.5

• 3.8

9.7 13.0

• 3.3

Fx Bank Debt (secured) 406.2 90.9 315.3 290.2 83.5 206.7 Debt Short Term 74.3 44.9 29.4 65.2 44.3 20.9 Debt Long Term 331.9 46.0 285.9 225.0 39.2 185.8 Capital Market Debts 150.0 350.0

• 200.0

250.0 350.0 -100.0 Bond Short Term 50.0 300.0

• 250.0

100.0 200.0 -100.0 Bond Long Term 100.0 50.0 50.0 150.0 150.0 0.0 Accrued interest 3.1 4.7

• 1.6

4.5 4.8

• 0.3

Total Outstanding Debt 587.7 460.8 126.9 558.1 455.0 103.1 Less Available Cash 434.9 427.1

• 44.5

479.4 483.2

• 3.8

Net Debt 152.8 33.7 74.1 78.7

• 28.2 106.9

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Capital Expenditures / Expectations in Casinos

Net Holding Expectation

mn € ** These capital expenditures are only in casinos for maintenance purposes. * RoB: Renovations on Buildings.

5 5 5 5 5 5 3 3 23 23 12 3 3 7 7 5 5 5 5 5 5 3 3 3 3 3 3 5 10 15 20 25 30 35 40

2014 2015 2016 2017 2018 2019

Maintenance Eastern Europe Merit Royal RoB MCC expansion Others

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Business Activities

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Merit Casinos 35,000 m2 gaming space in 5 Casinos in Northern Cyprus and Eastern Europe. 40% of gaming market in N. Cyprus. Casino

• perator with 4,390 slot machines & 486 live

game tables. (including Skopje & Svilengrad) Only company to operate as a casino chain in Northern Cyprus. Merit Poker Exclusive JV with Bwin, own brands Lebanese Poker Tour(LPT), Russian Poker Tour (RPT), Merit Mediterranean Poker Cup (MMC), Merit Poker Winter Fest, Merit Poker Fall Open, Merit World Cup of Poker, Merit Poker Summer Open, Merit Poker Spring Open, Merit Poker Festival.

Gaming Hotel Management

Merit International Hotels & Resorts

• Only company to operate as a hotel chain in

Northern Cyprus.

• Mostly 5-Star Casino Hotels with 4,305 beds in

Northern Cyprus, 36% of 5-Star bed capacity.

Real Estate Development

• 11.7 mn m2 of land in Turkey, 2.5 mn m2 in

Northern Cyprus & 0.3mn m2 of land in Baku, Azerbaijan.

• All real estate will be revalued in 2017 with

expectations of value increases especially for Northern Cyprus.

• Bodrum Land of 10 mn m2 not included in

revaluation and does NOT show on B/S; appraised at 620 mn $ in 2013.

Lottery

• New privatization schedule will be determined by

Sovereign Wealth Fund administration. We expect that, tender will have down payment base on management fee.

• We are following the opportunities closely in our

region.

Core Activities Other Activities

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Gaming Business Update

• BULGARIA

Svilengrad – Casino is under construction, the only 5-star hotel in the area. Operations in Svilengrad – just 2,5 hours driving distance from Istanbul – will start by the end of 2017.

• MACEDONIA

Skopje – Merit Marriott Hotel – Casino is expected to be

• pen in the end of 2017.

Lottery Business Update

• Exclusive Joint Venture Agreement with Scientific

Games covering 26 countries surrounded by Turkey, additionally with IGT, starting strategic partnership. TURKEY

• New privatization structure and schedule will be

determined by Sovereign Wealth Fund administration.

• We are in talks for managing a lottery company in the

Eastern Europe countries.

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Casino Data in Northern Cyprus

Merit Royal & P. Slots: 894 Table Games: 60 Hotel Rooms:243 Merit Poker Tables: 116 EBITDA 2016: 18.6 mn $ Merit Crystal Cove Slots: 635 Table Games: 50 Hotel Rooms:277 EBITDA 2016: 9.1 mn $ Merit Lefkosa Slots: 1,233 Table Games: 40 Hotel Rooms:125 EBITDA 2016: 11.9 mn $ Merit Cyprus Gardens Slots: 194 Table Games: 20 Hotel Rooms: 90 EBITDA 2016: 2.3 mn $ Merit Park Slots: 544 Table Games: 45 Hotel Rooms:285 EBITDA 2016: 9.6 mn $

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Merit Skopje * Slots: 170 Table Games: 36 Merit Svilengrad * Slots: 220 Table Games: 40

Casino Data in Eastern Europe

Merit Casino Skopje and Merit Casino Svilengrad will be opened in end of 2017. Merit Avala Slots: 123 Table Games: 23 Merit Royal Splendid Slots:70 Table Games:15 Merit Montenegro Slots: 70 Table Games: 11 Merit Libertas Slots: 114 Table Games: 14 Merit Grand Lav Slots: 123 Table Games: 16

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Casino Revenue Generation -2016

Slots 25% Live Games 75%

17% 29% 30% 61% 43% 83% 71% 70% 39% 57% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Merit Royal Merit Park Merit Lefkosa Merit Cyprus Garden Merit Crystal Cove Slots Live Games

Total Casino Distribution

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Revenue Distribution by Live Games in 2016

Roulette 53% Blackjack 16% Poker 27% Baccarat 4%

Total Casino Distribution

61% 43% 51% 40% 50% 22% 44% 27% 52% 38% 7%

10% 13% 22% 8% 12%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Merit Royal Merit Park Merit Lefkosa Merit Cyprus Garden Merit Crystal Cove Roulette Blackjack Baccarat Poker

Roulette; 51% Blackjack; 37% Poker; 22%

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Peer Casino Operators vs. Net Holding

Data Net Holding Las Vegas Sands Wynn Resorts MGM China Wynn Macau Melco Philip. Bloomberry Philip. VIP Tables 42 318 171 162 178 108 188 GGR (mn $) 0.72 9.00 17.81 6.85 14.68 2.64 2.23 Mass Table 444 2,340 620 252 425 165 204 GGR (mn $) 0.21 2.40 7.80 3.89 3.78 1.00 1.07 Revenues (mn $) 137 13,320 6,491 1,920 4,589 614 769 Ebitda (mn $) 52 4,306 1,505 534 950 133 215 Ebitda Margin 38% 32% 23% 28% 21% 22% 28%

Roulette; 51% Blackjack; 37% Poker; 22%

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Peer Casino Operators vs. Net Holding (EV/EBITDA)*

EV/EBITDA 2017 EV/EBITDA 2018 & Margins

EBITDA Margin

• n the right scale

5.2x 12.1x 13.5x 11.4x 13.7x 9.1x 10.3x

38% 34% 25% 28% 34% 31% 36%

0% 5% 10% 15% 20% 25% 30% 35% 40% 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x Net Holding Las Vegas Sands Corp Wynn Resorts Ltd MGM China Holdings Ltd Wynn Macau Ltd Melco Philippines Bloomberry Resorts

* All calculations have been done according to 2.70 TL Nthol price.

6.1x 12.1x 14.0x 11.4x 7.7x 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x Net Holding Las Vegas Casinos Macau Casinos Philippines Casinos Eastern Europe Casinos

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• Merit Casinos has an active base of

more than 700,000 members registered to their Player Loyalty Program & Tracking System at four different levels; Sapphire, Silver, Gold and Platinum.

• Valued members of Merit Casinos’ Player

Loyalty program have enjoyed the distribution of over 30 mn$ of promotional tickets during 2012-2016 period, on top and above of all regular winnings from slot machines. These promotional tickets are not redeemable as cash but only used for playing at slot machines.

PLAYER CLUB CARD

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200 400 600 800 1,000 1,200 2012 2013 2014 2015 2016 2017 2018 2019 56 128 274 396 578 700 900 1,100

Player Club Card (1,000 people)

Net Holding Expectation

Mega Jackpot

• Merit Casinos offer to its slot machine players a unique experience by its

Mega Progressive Jackpot system, linking with Wide Area Progressive all of its 4,000 slot machines at its 10 casinos.

• In the 29-casino Northern Cyprus gaming market, Merit is the only casino to
• ffer a 0.5 mn $ plus Mega Progressive Jackpot plus sub-tier additional

jackpots at its casinos thus creating a clear uncontested competitive edge on the island & in the region.

• Since the inception of the Mega Progressive Jackpot in 2012, Merit has paid
• ut a total of over 13 mn $ in various jackpots to their qualified slot machine

players on top and above of regular slot machine winnings.

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A New Brand in Gaming: Merit Poker

• Leading Texas Hold’em Poker Tournament Operator «Merit Poker» has exclusive JV

with Bwin while developing its own brands; Lebanese Poker Tour (LPT), Russian Poker Tour (RPT) and Mediterranean Poker Cup (MPC).

• Merit Poker has been founded by Merit Casinos in 2008 and specializes in Texas

Hold’em Tournaments & cash games.

• During 2008-2015 period, Merit Poker has successfully organized 57 international

tournaments and 841 satellite tournaments in Northern Cyprus with 35,074 players from 87 different countries actively listed.

• Merit Poker has distributed a total of 50 mn $ in total tournament prizes to players.
• Merit Poker owns & operates the following Texas Hold’em Tournament brands; Merit

Mediterranean Cup (MMC), Lebanese Poker Tour (LPT), Russian Poker Tour (RPT), Merit Poker Winter Fest, Merit Poker Fall Open, Merit World Cup of Poker, Merit Poker Summer Open, Merit Poker Spring Open, Merit Poker Festival.

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Newest Tournaments: Roulette and Backgammon

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• Tournaments which have organized in the Merit Casinos attracted more attention

than expected, as a result, turned into an activity that all guests eagerly track its annual timetable eagerly.

• For the first time, the Merit Open International Backgammon Tournament was

held in 2013. Being grew with an increasing interest year over year, with 500 people from 40 countries it became the biggest international modern backgammon tournament in the world in 2016. This large organization, which is a partnership of Worldwide Backgammon Federation and Casino Merit Park, has won a prestigious place in the world backgammon society. The hotel reservations become filled 6 months in advance as the tournament is taking place in the first week of November.

• Roulette tournaments for the first time launched in 2014 with the ‘’Roulette Park’’
• brand. It have won the favor of all casino guests, as well. The roulette

tournaments which are held every year in January, February and March with high award ceremonies try combine the enthusiasm of the competition with

• entertainment. Casino Merit Park's tournaments are continuing with new ideas

added.

Merit Brand Combines with Technology

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JCR, Japan Credit Rating Agency Corporate Credit Rating - Annual Review

Strengths

• Sustained operational volume and earnings growth throughout

FY2015 and the 1H2016 despite the downturn in the tourism industry across Turkey.

• Established market-leading position in the TRNC luxury hotel and

chance games industry under the Merit brand.

• Low levels of financial leverage and high share of equity in the funding
• f Company operations setting a suitable base for further expansion.
• Absence of foreign currency risk along with the high share of tangible

assets and real estate portfolio creating a wealth effect and contributing to asset quality.

• Future strategies relating to regional expansion in the chance games

industry along with plans regarding National Lottery privatization.

• Expected contribution of the merger between Net Holding and Net

Turizm to productivity, transparency and compliance with Corporate Governance Practices.

*Assigned by Japan Credit Rating Agency, JCR on October 7, 2016

• Japan Credit Rating Agency assigned «A» rating in 2016 and upgraded outlook from stable to positive.
• Our 4th upgrade since Japan Credit Rating Agency (JCR) started rating Net Holding.
• Net Holding successfully issued 750 mn TL Corporate Bond between 2013-2017.
• NTHOL Corporate Bonds are one of the most liquid non-banking corporate bonds.

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Land & Buildings

Properties Number of Properties Book Value mn $ Istanbul 22 30.6 Other locations in Turkey 52 23.0 TRNC 61 477.0 Azerbaijan 2 0.7 Total 137 531.2

Bodrum Land

300 mn $ of monetization opportunity – NOT even on balance sheet.

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1,000 hectares (10 mn of land running along just behind the town of Gulluk on the Mediterranean coast; 5 minutes drive from Bodrum International Airport, 30 minutes from the town of Bodrum. Topography lends itself well to villas as it will allow each property to feel relatively secluded with uninterrupted views. The Project includes an iconic grand resort hotel, spa retreats up on the hills, world class conference facilities, golf club at International PGA standarts, polo club mainly geared to affluent international tourists. Current zonning plan is “Tourism” with 30% buildable-to-land area ratio, allowing 3 mn m2 of buildable space. Savills, has produced a report in 2011 with 16% buildable to land area ratio (max. allowed in 2011), accordingly; Stage 1: 3, 304 residential keys and 141 hotel rooms for the golf hotel, 382 for the grand resort hotel and 132 rooms for the spa hotel. Stage 2: Adding 545 hotel rooms and another 3,304 residential keys. The property is under a revenue sharing agreement with a local developer since 2007 that entitles NTHOL to 19% of the revenues of the Project, with a deadline to finish construction until June 2013, which has elapsed. Due to the type of the contract, the title of the property has been passed to developer & the asset (plus attached revenue sharing deal) can not yet be seen in NTHOL accounts. Three routes of monetization remain available per established judiciary practice & agreement between parties; a) Developer exercises his call option & buys out Net Holding’s shares in this project at 300 mn $ b) Developer sells to 3rd party with Net Holding’s consent, 60% of proceeds goes to Net Group. c) Developer defaults on contract, Net Holding gets back the land to its B/S at new market value without any compensation to developer.