Exhibit 10.3

 

SFX ENTERTAINMENT, INC.

 

$10,000,000 9.625% Second Lien Senior Secured Notes due 2019

 

PURCHASE AGREEMENT

 

September 18, 2014

 

SFX Entertainment, Inc., a Delaware corporation (the “Issuer”), proposes,
subject to the terms and conditions stated herein, to issue and sell to an
entity controlled by Robert F.X. Sillerman (the “Purchaser”), $10,000,000
aggregate principle amount of the Issuer’s 9.625% Second Lien Senior Secured
Notes due 2019 (the “Additional Notes”).  The Additional Notes will be issued
pursuant to that certain Indenture dated as of February 4, 2014 (as amended and
supplemented by the First Supplemental Indenture, dated April 14, 2014, the
Second Supplemental Indenture, dated May 5, 2014, the Third Supplemental
Indenture, dated May 6, 2014,  the Fourth Supplemental Indenture, dated June 13,
2014,  the Fifth Supplemental Indenture, dated July 25, 2014, the Sixth
Supplemental Indenture, dated September 9, 2014, and as may further be amended
and supplemented from time to time the “Indenture”), among the Issuer, the
Guarantors (as defined below) and U.S. Bank National Association, as trustee
(the “Trustee”), pursuant to which the Issuer’s outstanding $220,000,000 in
aggregate principal amount of 9.625% Second Lien Senior Secured Notes due 2019
(the “Existing Notes”, and, together with the Additional Notes, the “Notes”)
were issued.  Concurrently with the offering of the Additional Notes, the Issuer
will consummate an offering of $65 million aggregate principal amount of its
Issuer’s 9.625% Second Lien Senior Secured Notes due 2019 (the “144A/Reg S
Notes”) in an underwritten offering to qualified institutional buyers in
reliance on Rule 144A of the Securities Act of 1933, as amended (the “Securities
Act”), and certain non-U.S. persons in transactions outside the United States in
reliance on Regulation S of the securities Act.  The 144A/Reg S Notes will be
issued pursuant to the Indenture.  The Additional Notes and the 144A/Reg S Notes
will each constitute an additional issuance of the Existing Notes and will
become part of the same series as the Existing Notes and, except as to issuance
date and offering price, will have identical terms to the Existing Notes.

 

The Issuer’s obligations under the Additional Notes, including the due and
punctual payment of interest on the Additional Notes, will be irrevocably and
unconditionally guaranteed (the “New Guarantees”) by the guarantors listed in
Schedule I hereto (the “Guarantors”).  The Issuer’s obligations under the
Existing Notes are irrevocably and unconditionally guaranteed by the Guarantors.
This Agreement is to confirm the agreement concerning the purchase of the
Additional Notes from the Issuer by the Purchaser.

 

The Issuer and the Guarantors have agreed to secure (on an equal and ratable
basis with the Existing Notes) the Additional Notes and the New Guarantees by
granting to the Trustee, acting as collateral agent (the “Second Lien Collateral
Agent”), for the benefit of the Trustee and the holders of the Notes, a second
priority lien on (i) substantially all of the Issuer’s tangible and intangible
assets (other than certain excluded assets as described in the Indenture),
including certain capital stock of the Issuer’s subsidiaries and
(ii) substantially all of the assets of each Guarantor (collectively, the
“Collateral”) to the extent and in the manner set forth in the Second

 

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Lien Collateral Agreement among the Issuer, the Guarantors and the Second Lien
Collateral Agent, dated as of February 4, 2014, and the Indenture.  The
Indenture also requires the Issuer and the Guarantors to deliver additional
security documents, including account control agreements and related agreements,
as amended, supplemented, restated, renewed, refunded, replaced, restructured,
repaid, refinanced or otherwise modified from time to time creating the second
lien security interests in the Collateral which shall be subordinate only
(subject to certain permitted liens) to the first lien security interests of the
secured parties under the Revolving Credit Agreement (as defined below) in the
Collateral. On February 7, 2014, the Issuer entered into a $30 million aggregate
principal amount first lien revolving facility (the “Revolving Credit Facility”)
pursuant to the terms of the first lien credit agreement by and among the
Issuer, the guarantors parties thereto and the lenders party thereto (as amended
by the Amendment No. 1 dated August 15, 2014, and as may be further amended,
restated, supplemented or modified from time to time, the “Revolving Credit
Agreement”). The Issuer, each Guarantor, the Second Lien Collateral Agent, and
the collateral agent under the Revolving Credit Facility entered into the
intercreditor agreement, dated February 7, 2014 to govern, among other things,
the rights and priorities of the secured parties under the Revolving Credit
Facility and the Notes.

 

The Issuer and Purchaser hereby represent, warrant, acknowledge and agree as
follows (this Purchase Agreement being referred to hereinafter as this
“Agreement”):

 

1.                                      Purchase, Sale and Delivery of
Additional Notes.  The Additional Notes will be offered and sold to the
Purchaser without registration under the Securities Act, in reliance on an
exemption pursuant to Section 4(a)(2) under the Securities Act.

 

(a)                                 On the basis of the representations,
warranties and agreements contained in this Agreement, but subject to the terms
and conditions contained herein, the Purchaser hereby agrees to purchase the
Additional Notes and the Issuer hereby agrees to sell, transfer and deliver the
Additional Notes to the Purchaser at a purchase price of U.S. $10,000,000.

 

(b)                                 On a date (the “Closing Date”) to be agreed
upon between the Issuer and the Purchaser (but in no event later than the fifth
business day after the date hereof), the Issuer shall issue the Additional Notes
to the Purchaser in the form of certificated securities and otherwise in
accordance with the terms and conditions set forth in the Indenture.  The
Purchaser shall immediately thereafter deliver U.S. $10,000,000 as payment for
the Additional Notes in Federal (same day) funds by wire transfer to the bank
account provided by the Issuer to the Purchaser, drawn to the order of the
Issuer.

 

2.                                      Representations of the Issuer.  The
Issuer represents and warrant to the Purchaser as follows:

 

(a)                                 The Issuer has all requisite corporate power
and authority to enter into this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby.  This Agreement has been
duly authorized, executed and delivered by the Issuer and constitutes the legal
and binding agreement of the Issuer, enforceable against it in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors’ rights
generally or general principles of equity.

 

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(b)                                 The Issuer has all requisite corporate power
and authority to enter into the Indenture to perform its obligations thereunder
and to consummate the transactions contemplated thereby.  The Indenture has been
duly authorized by the Issuer and constitutes a legal and binding agreements of
the Issuer, enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors’ rights generally or general
principles of equity.

 

(c)                                  The execution, delivery and performance by
the Issuer of this Agreement and the Indenture, as applicable, and the
consummation of the transactions contemplated hereby and thereby, do not as of
the date hereof and/or will not as of the Closing Date (as applicable)
(i) violate the certificate of incorporation or bylaws of the Issuer,
(ii) violate any material agreement to which the Issuer is a party or by which
the Issuer, or any of its subsidiaries, properties or assets is bound, or
(iii) violate any law, rule, regulation, judgment, injunction, order or decree
applicable to the Issuer.

 

(d)                                 Assuming the accuracy of the representations
of the Purchaser made in this Agreement, the issuance of the Additional Notes on
the Closing Date will be exempt from registration under the Securities Act, as
amended by virtue of the exemption contained in Section 4(a)(2) thereof.

 

3.                                      Representations of the Purchaser.  The
Purchaser acknowledges that the Existing Notes have not been registered under
the Securities Act and that the Issuer does not intend to register the
Additional Notes under the Securities Act, and the Purchaser represents and
warrants to the Issuer as follows:

 

(a)                                 The Purchaser has received a copy of the
preliminary offering memorandum with respect to the 144A/Reg S Notes, dated
September 17, 2014 (the “Preliminary Offering Memorandum”), a pricing term sheet
(the “Pricing Term Sheet”) setting forth the terms of the 144A/Reg S Notes
omitted from the Preliminary Offering Memorandum and certain other information
and a final offering memorandum, dated September 18, 2014 (the “Offering
Memorandum”), setting forth information regarding the Issuer, the Guarantors,
the Notes and the Guarantees with respect to the 144A/Reg S Notes.

 

(b)                                 The Purchaser understands and accepts that
the purchase of the Additional Notes involves various risks, including the risks
outlined in the Offering Memorandum.  The Purchaser represents that it is able
to bear any loss associated with an investment in the Additional Notes.

 

(c)                                  The Purchaser is familiar with the
business, financial condition and operations of the Issuer, all as generally
described in the Offering Memorandum. The Purchaser has had access to such
information concerning the Issuer and the Additional Notes as it deems necessary
to enable it to make an informed investment decision concerning the purchase of
the Additional Notes.

 

(d)                                 The Purchaser understands that, unless it
notifies the Issuer in writing to the contrary at or before the Closing Date,
each of the Purchaser’s representations and warranties

 

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contained in this Agreement will be deemed to have been reaffirmed and confirmed
as of the Closing Date, taking into account all information received by the
Purchaser.

 

(e)                                  The Purchaser understands that no federal
or state agency has passed upon the merits or risks of an investment in the
Additional Notes or made any finding or determination concerning the fairness or
advisability of this investment.

 

(f)                                   The Purchaser has such knowledge, skill
and experience in business, financial and investment matters that the Purchaser
is capable of evaluating the merits and risks of an investment in the Additional
Notes. With the assistance of the Purchaser’s own professional advisors, to the
extent that the Purchaser has deemed appropriate, the Purchaser has made its own
legal, tax, accounting and financial evaluation of the merits and risks of an
investment in the Additional Notes and the consequences of this Agreement.  The
Purchaser has considered the suitability of the Additional Notes as an
investment in light of its own circumstances and financial condition and the
Purchaser is able to bear the risks associated with an investment in the
Additional Notes and its authority to invest in the Additional Notes.

 

(g)                                  The Purchaser is an “accredited investor”
as defined in Rule 501(a)(3) under the Securities Act.  The Purchaser agrees to
furnish any additional information requested by the Issuer or any of its
affiliates to assure compliance with applicable U.S. federal and state
securities laws in connection with the purchase and sale of the Additional
Notes.

 

(h)                                 The Purchaser is acquiring the Additional
Notes solely for its own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of the
Additional Notes.  The Purchaser understands that the Additional Notes have not
been registered under the Securities Act or any State Securities Laws by reason
of specific exemptions under the provisions thereof which depend in part upon
the investment intent of the Purchaser and of the other representations made by
the Purchaser in this Agreement.  The Purchaser understands that the Issuer is
relying upon the representations and agreements contained in this Agreement (and
any supplemental information) for the purpose of determining whether this
transaction meets the requirements for such exemptions.

 

(i)                                     The Purchaser understands that the
Additional Notes are “restricted securities” under applicable federal securities
laws and that the Securities Act and the rules of the U.S. Securities and
Exchange Commission (the “Commission”) provide in substance that the Purchaser
may dispose of the Additional Notes only pursuant to an effective registration
statement under the Securities Act or an exemption therefrom, and the Purchaser
understands that the Issuer has no obligation or intention to register any of
the Additional Notes, or to take action so as to permit sales pursuant to the
Securities Act (including Rule 144 thereunder). Accordingly, the Purchaser
understands that under the Commission’s rules, the Purchaser may dispose of the
Additional Notes principally only in private resale transactions which are
exempt from registration under the Securities Act, in which event the transferee
will acquire “restricted securities” subject to the same limitations as in the
hands of the Purchaser. Consequently, the Purchaser understands that the
Purchaser must bear the economic risks of the investment in the Additional Notes
for an indefinite period of time.

 

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(j)                                    The Purchaser agrees: (A) that the
Purchaser will not sell, assign, pledge, give, transfer or otherwise dispose of
the Additional Notes or any interest therein, or make any offer or attempt to do
any of the foregoing, except pursuant to a registration of the Additional Notes
under the Securities Act and all applicable state securities laws, or in a
transaction which is exempt from the registration provisions of the Securities
Act and all applicable state securities laws, (B) that the certificates
representing the Additional Notes will bear a legend making reference to the
foregoing restrictions and (C) that the Issuer and its affiliates shall not be
required to give effect to any purported transfer of such Additional Notes
except upon compliance with the foregoing restrictions.

 

(k)                                 The Purchaser acknowledges that neither the
Issuer nor any other person offered to sell the Additional Notes to it by means
of any form of general solicitation or advertising, including but not limited
to: (A) any advertisement, article, notice or other communication published in
any newspaper, magazine or similar media or broadcast over television or radio
or (B) any seminar or meeting whose attendees were invited by any general
solicitation or general advertising.

 

(l)                                     The Purchaser has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby. 
This Agreement has been duly authorized, executed and delivered by the Purchaser
and constitutes the legal and binding agreement of the Purchaser, enforceable
against it in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors’ rights generally or general principles of equity.

 

(m)                             The execution, delivery and performance by the
Purchaser of this Agreement and the consummation of the transactions
contemplated by this Agreement, do not as of the date hereof and will not as of
the Closing Date (i) violate the organizational documents of the Purchaser,
(ii) violate any material agreement to which the Purchaser is a party or by
which the Purchaser or any of its property or assets is bound, or (iii) violate
any law, rule, regulation, judgment, injunction, order or decree applicable to
the Purchaser.

 

4.                                      Governing Law; Waiver of Trial by Jury. 
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS TO BE EXECUTED AND PERFORMED ENTIRELY IN SUCH STATE.  EACH PARTY
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

 

5.                                      Entire Agreement.  This Agreement
constitutes the entire agreement between the Issuer and Purchaser with respect
to the subject matter hereof and supersedes any prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.  This Agreement is not intended to confer upon any person
other than the parties hereto any rights or remedies hereunder.

 

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6.                                      Assignment.  Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by the
Issuer on the one hand, or the Purchaser on the other hand, without the prior
written consent of the other.  Any purported assignment without such consent
shall be void.

 

7.                                      Amendment.  Neither this Agreement nor
any of the terms hereof may be amended, supplemented, waived or modified except
by an instrument in writing signed by all the parties hereto.

 

8.                                      Damages.  Each party agrees that
monetary damages would not be a sufficient remedy for any breach of this
Agreement by any party and that each non-breaching party shall be entitled to
specific performance, injunctive, rescissionary or other equitable relief as a
remedy for any such breach.

 

9.                                      Counterparts.  This Agreement may be
executed in any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts will together
constitute but one and the same instrument.  Delivery of an executed counterpart
of a signature page by facsimile or other electronic transmission shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

[Signature pages follow]

 

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If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Issuer a counterpart hereof, whereupon this
Agreement, along with all counterparts, will become a binding agreement among
the Issuer and the Purchaser in accordance with its terms.

 

 

 

Very truly yours,

 

 

 

SFX ENTERTAINMENT, INC.,

 

as Issuer

 

 

 

 

 

 

By:

/s/ Richard Rosenstein

 

 

Name: Richard Rosenstein

 

 

Title: Chief Financial Officer

 

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Acknowledged and agreed,
as of the date first above written:

 

SILLERMAN INVESTMENT COMPANY III LLC

 

 

By:

/s/ Robert FX Sillerman

 

 

Name:

Robert F.X. Sillerman

 

 

Title:

Authorized Officer

 

 

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