<PAGE>


                              AMENDED AND RESTATED
                              EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is being
executed as of January 1, 2000 (the "Effective Date") between SFX ENTERTAINMENT,
INC. ("Employer"), a Delaware corporation, and DAVID FALK ("Employee")
(collectively the "Parties") to be effective as of the Effective Date.

     WHEREAS, the Employer and the Employee entered into a certain Employment
Agreement effective as of April 29, 1998 (The "Employment Agreement"); and

     WHEREAS, the Employer and the Employee desire to amend and restate the
Employment Agreement on the terms and conditions set forth herein;

     NOW, THEREFORE, the Parties do hereby agree as follows:

     1. Employment. Employer hereby employs Employee, and Employee hereby
accepts such employment, subject to the terms and conditions set forth below.

     2. Duties.

          2.1. Capacities

               2.1.1 Employee shall be employed in the capacity of Chairman of
          SFX Sports Holdings, Inc., and SFX Sports Group, Inc. (together the
          "Sports Group"), and in such capacity, shall have the rights and
          responsibilities attendant to that of the chief executive officer of a
          subsidiary of a publicly traded company. Employee will, subject to
          consultation with, and approval of, the Executive Chairman and the
          President and Chief Executive Officer of the Employer, have decision
          making power over any decisions, with respect to changing the Sports
          Group's policies, personnel, culture, compensation structure,
          reporting systems or configuration and alignment of operating
          divisions. Employee's duties in such capacity shall be to control,
          direct and supervise the day-to-day operations of the Sports Group.
          All sports-related businesses of Employer (other than motorized

                                       1

<PAGE>

          sports or any sports-related business that provides less than 25% of
          the revenues of any entity acquired by Employer, if a condition of the
          purchase agreement for such entity is for such business to be operated
          within the entity acquired) will be operated under the Sports Group
          and will report to Employee subject only to the oversight and
          direction of the Employer's Board of Directors (the "Board"). Employee
          shall also perform other duties which may be reasonably assigned to
          him from time to time by the Executive Chairman and the President and
          Chief Executive Officer of Employer, or by Employer's Board of
          Directors, and that are consistent with his position.

               2.1.2 Employee shall be a member of the Office of the Chairman of
          Employer, which shall be the highest management body of Employer,
          reporting solely and directly to the Executive Chairman of Employer.
          The Office of the Chairman shall include (in addition to the Executive
          Chairman and the Employee) the President and Chief Executive Officer
          of Employer, the ("Chief Executive Officer") the Chief Financial
          Officer of Employer, and one or more Executive Vice Presidents of
          Employer

               2.1.3 It is expressly understood that Employee may (1) devote a
          reasonable amount of time to charitable, civic and industry-related
          boards or organizations, (2) manage his personal, financial and legal
          affairs and (3) with the express prior written approval of the Board,
          which approval shall not be unreasonably withheld, serve as a director
          of any corporate entity; provided, that any such activity does not
          substantially interfere with the performance by Employee of his duties
          and responsibilities under this Agreement, including continuing to be
          associated with or serving on any associations, organizations and
          boards, with which Employee is associated with or is serving on as of
          the Effective Date.




                                       2
<PAGE>

               2.2. Additional Positions. During the Term of Employment (as
          defined in Section 5.1 hereof), Employee agrees, and Employer shall
          appoint Employee, to serve as a director of Employer, the Sports Group
          and each subsidiary of the Sports Group; provided, Employer agrees
          that Employee shall be indemnified for serving in any and all such
          capacities on a basis no less favorable than is provided by the
          Employer's bylaws as may be amended from time-to-time or by any
          written agreement between the Employee and the Employer regarding
          indemnification, in a manner consistent with that provided to Senior
          Executives (as defined in Section 9.2 hereof) of the Employer, and, if
          ever not so indemnified, Employee may, without limiting any other
          remedies, cease serving in such director positions. In addition,
          Employee shall continue as Chairman of Financial Advisory Management
          Enterprises, Inc.

               2.3. Place of Performance. In connection with his employment by
          the Employer, Employee shall be based in the Washington, D.C.
          metropolitan area at the current offices of the Sports Group. Employee
          shall be provided with office space and support staff equivalent to
          that provided to him by the Sports Group immediately before the
          Effective Date.

     3. Compensation.

          3.1. Salary and Withholding.

               3.1.1 Salary. During the Term of Employment, as compensation for
          services rendered by Employee, Employer shall pay Employee a base
          salary ("Salary") in semi-monthly installments at an annual rate equal
          to $450,000. Employee's Salary shall be reviewed by the Executive
          Chairman of Employer in accordance with Employer's standard policies
          and practices, and may be increased, but not decreased, at Employer's
          discretion. In any event, Employee's Salary shall be increased
          effective as of each anniversary of the Effective Date by 5.0% over
          the then effective Salary.



                                       3
<PAGE>


               3.1.2 Withholding for Taxes. Compensation (herein defined) shall
          be subject to any and all applicable payroll and withholding
          deductions required by the law of any jurisdiction, state or federal,
          taxing authority with respect to such Compensation.

               3.1.3 Definition of Compensation. The Salary, and the other
          perquisites set forth in this Agreement including the Benefits, are
          herein collectively referred to as the "Compensation."

          3.2. Expenses. Employer shall reimburse Employee, in accordance with
     Employer's standard expense reimbursement policy, for reasonable expenses
     incurred by Employee, upon presentation of documentation reasonably
     acceptable to Employer in accordance with the policies applicable to Senior
     Executives of the Employer. Expenses incurred by Employee that are
     consistent with the practices of the Sports Group prior to the Effective
     Date, including but not limited to hotel accommodations and first class air
     travel, shall be deemed reasonable under this Section 3.2. In connection
     with such reimbursement, Employer shall provide Employee with a credit card
     or cards to be used for paying such expenses. Such card or cards shall be
     the property of Employer and upon termination of the Term of Employment
     shall be returned to Employer by Employee. Employee shall be responsible
     for and shall reimburse Employer for any and all payments made by Employer
     for Employee's personal, non-reimbursable expenses charged on any such card
     or cards. To the extent appropriate, Employee shall be permitted to travel
     on charter flights or on the Employer's corporate jet.

          3.3. Grant of Stock Options and Restricted Stock.

               3.3.1 Grants. Employer shall grant Employee stock options (the "
          Stock Options") and stock to Employee during the Term of Employment in
          a manner and amount consistent



                                       4
<PAGE>

          with grants made to Senior Executives of the Employer; provided, that
          Stock Options for at least 45,000 shares of Common Stock shall be
          granted in each of the calendar years comprising the Term of
          Employment). Each Stock Option shall have an exercise price equal to
          the closing price of the Common Stock on the date of the grant. Each
          Stock Option shall have a ten-year term and shall vest and become
          exercisable on a schedule to be determined by the Board or the Stock
          Option Committee, but in no event shall the vesting schedule exceed
          the Term of Employment, nor shall the terms and conditions of such
          options (including those terms and conditions described above) be any
          less favorable than the terms and conditions applicable to options
          granted to the other Senior Executives of Employer. The Employee shall
          be permitted to use shares of Common Stock to exercise the Stock
          Options and to pay any withholding obligation upon such exercise. The
          Stock Options shall be granted as incentive stock options under the
          Internal Revenue Code of 1986, as amended (the "Code"), to the extent
          permitted under the Code.

               3.3.2 Termination of Employment. Notwithstanding the foregoing,
          in the event that Employee ceases to be employed by Employer for any
          reason whatsoever (including upon death or permanent and total
          disability of Employee) other than as a result of a voluntary
          termination (that is not a Constructive Termination Event) or
          termination for Cause, (x) all restricted stock which may be granted
          pursuant to this Section 3.3 shall vest immediately and all options
          granted pursuant to this Section 3.3 shall vest and become exercisable
          immediately, and (y) the balance of all remaining stock options to be
          granted during the Term of Employment pursuant to this Section 3.3
          shall immediately be granted and shall vest and become exercisable
          immediately at an exercise price per share equal to the lower of (A)
          the closing price of the Common Stock on the date of the relevant
          event or occurrence and (B) the exercise price of the last option
          granted to Employee prior to such event or occurrence, and Employee
          shall retain the right to exercise each such options described in
          clauses (x) and (y) during the remaining original term of each such
          option. In the event of Employee's voluntary



                                       5
<PAGE>

          termination (that is not a Constructive Termination Event) or
          termination for Cause, all unvested options and restricted stock shall
          be forfeited, all vested option shall remain exercisable until the
          first to occur of the end of the original term or one year following
          the termination of employment, and no Stock Options not thereto
          granted will be granted.

               3.3.3 Adjustments. The number of shares subject to the Stock
          Options to be granted under this Section 3.3, and the kind of shares
          subject to such options shall be equitably adjusted to reflect any
          change in the Common Stock including, without limitation, a
          recapitalization, spin-off, stock split, consolidation, reorganization
          or merger. To the extent applicable, this Section 3.3 shall
          automatically be deemed to be modified to ensure that Employee's
          rights with respect to acceleration of option grants, acceleration of
          option vesting and other rights are at least as favorable as the
          rights that from time to time are generally applicable to other Senior
          Executives of Employer.

          3.4. Other Benefits. During the Term of Employment, Employer shall
     provide the following additional benefits to Employee:

               3.4.1 Health Insurance. Medical, dental and hospitalization
          insurance for Employee and his family with the same scope and coverage
          and on the same terms as is provided by Employer to the Chief
          Executive Officer and other Senior Executives of Employer, as may be
          amended from time to time; provided, that such insurance shall have no
          gap in coverage with Employee's current insurance; and provided,
          further, that such insurance will have no exclusions for pre-existing
          conditions.

               3.4.2 Term Life Insurance. Term life insurance upon the life of
          Employee in an amount and on the same terms consistent with insurance
          made available to the Chief Executive



                                       6
<PAGE>

          Officer and other Senior Executives of Employer, as may be amended
          from time to time, including, if applicable, split-dollar insurance
          policies, provided, that such insurance shall have no gap in coverage
          with Employee's current insurance; and provided, further, that such
          insurance will have no exclusions for pre-existing conditions.

               3.4.3 Disability Insurance. Disability insurance in an amount and
          on the same terms consistent with insurance made available to the
          Chief Executive Officer and other Senior Executives of Employer, as
          may be amended from time-to-time, provided, that such insurance shall
          have no gap in coverage with Employee's current insurance; and
          provided, further, that such insurance will have no exclusions for
          pre-existing conditions.

               3.4.4 Other Benefit Programs. Employee shall be entitled to
          participate in all other employee benefit programs of Employer which
          the Board may, in its sole discretion, regularly make available to the
          other Senior Executives of Employer (such as a stock bonus plan,
          retirement plans and fringe benefits), on terms no less favorable than
          those provided to such other Senior Executives.

               3.4.5 Office in New York. Employer shall provide reasonable
          office facilities in New York, New York at its principal executive
          offices, with secretarial and support services, for the use of
          Employee.

               3.4.6 Gross-Up.

                    (a) Anything in this Agreement to the contrary
               notwithstanding, in the event it shall be determined that any
               payment, award, benefit or distribution (or any acceleration of
               any payment, award, benefit or distribution) by Employer (or any
               of its affiliated entities) to or for



                                       7
<PAGE>

               the benefit of Employee (a "Payment") would be subject to the
               excise tax imposed by Section 4999 of the Code, or any
               corresponding provisions of state or local tax laws, or any
               interest or penalties are incurred by Employee with respect to
               such excise tax (such excise tax, together with any such interest
               and penalties, are hereinafter collectively referred to as the
               "Excise Tax"), then Employee shall be entitled to receive an
               additional payment (a "Gross-Up Payment") from Employer in an
               amount such that after payment by Employee of all taxes
               (including any interest or penalties imposed with respect to such
               taxes), including, without limitation, any income taxes (and any
               interest and penalties imposed with respect thereto) and Excise
               Tax imposed upon the Gross-Up Payment, Employee retains an amount
               of the Gross-Up Payment equal to 100% of the Excise Tax imposed
               upon the Payments. The payment of a Gross-Up Payment shall not be
               conditioned upon the occurrence of a termination of employment.

                    (b) Subject to the provisions of Section 3.4.6(a), all
               determinations required to be made under this Section 3.4.6,
               including whether and when a Gross-Up Payment is required and the
               amount of such Gross-Up Payment and the assumptions to be
               utilized in arriving at such determination, shall be made by
               Employer's independent accounting firm as of immediately prior to
               the Change in Control (the "Accounting Firm"), which shall
               provide detailed supporting calculations both to Employer and
               Employee within fifteen (15) business days of the receipt of
               notice from Employee that there has been a Payment, or such
               earlier time as is requested by Employer. In the event that the
               Accounting Firm is serving as accountant or auditor for the
               individual, entity or group effecting the Change in Control,
               Employer shall appoint another nationally recognized accounting
               firm reasonably acceptable to Employee to make the determinations
               required hereunder (which accounting firm shall then be referred
               to as the Accounting Firm hereunder). All fees and expenses of
               the Accounting Firm shall be bome solely by Employer. Any
               Gross-Up Payment, as determined pursuant to this Section 3.4.6,
               shall be paid by Employer to Employee within five (5) days
               following receipt of the Accounting Firm's determination. Any
               determination by the Accounting Firm



                                       8
<PAGE>

               shall be binding upon Employer and Employee. As a result of the
               uncertainty in the application of Section 4999 of the Code at the
               time of the initial determination by the Accounting Firm
               hereunder, it is possible that Gross-Up Payments which will not
               have been made by Employer should have been made
               ("Underpayment"), consistent with the calculations required to be
               made hereunder. In the event that Employee thereafter is required
               to make a payment of any Excise Tax (or any additional Excise
               Tax), the Accounting Firm shall determine the amount of the
               Underpayment that has occurred and any such Underpayment shall be
               promptly paid by Employer to or for the benefit of Employee. In
               the event of any claim by the Internal Revenue Service for any
               Excise Tax or additional Excise Tax, Employer shall have the
               right to control the defense of such claim and Employee shall
               cooperate and assist Employer in connection therewith as
               reasonably requested by Employer; provided that all expenses of
               such claim (including any additional interest or penalties) shall
               be paid by Employer, and Employer shall indemnify and hold the
               Employee harmless, on an after-tax basis, for any Excise Tax or
               income tax (including any interests and penalties) imposed as a
               result of such representation and payment of costs and expenses.
               In addition, Employee will cooperate as reasonably requested by
               Employer with Employer in making any refund claim for any Excise
               Tax already paid, and any refunds of any such tax (or any
               Gross-Up Payments or other payments made by Employer in respect
               thereof) obtained by the Employee shall be promptly returned to
               Employer.

                    If Employer directs the Employee to pay such claim and sue
               for a refund, Employer shall advance the amount of such payment
               to the Employee, on an interest-free basis and shall indemnify
               and hold the Employee harmless, on an after-tax basis, from any
               Excise Tax or income tax (including interest or penalties with
               respect thereto) imposed with respect to such advance or with
               respect to any imputed income with respect to such advance; and
               further provided that any extension of the statute of limitations
               relating to payment of taxes for the taxable year of the Employee
               with respect to which such contested amount is claimed to be due
               is limited solely to such contested amount.




                                       9
<PAGE>

               Furthermore, Employer's control of the contest shall be limited
               to issues with respect to which a Gross-Up Payment would be
               payable hereunder and the Employee shall be entitled to settle or
               contest, as the case may be, any other issue raised by the
               Internal Revenue Service or any other taxing authority.

                    The reimbursement of expenses provided for in Section 3.2,
               the stock and option awards provided for in Section 3.3. the
               benefits provided for in this Section 3.4 and any other benefits
               hereafter granted to Employee by the Board are hereinafter
               referred to as the "Benefits."

     4. Intentionally Deleted.

     5. Term of Employment.

          5.1. Definition of Term of Employment. The "Term of Employment", as
     used in this Agreement, shall mean the period commencing on the Effective
     Date and terminating with the first to occur of the following:

               5.1.1 April 29, 2003 (the "Term Date");

               5.1.2 termination of the Term of Employment by Employer without
          Cause;

               5.1.3 termination of the Term of Employment by Employee by notice
          to Employer at any time following a Constructive Termination Event (as
          such term is defined in Section 9.1 hereof); and


                                       10
<PAGE>


               5.1.4 termination of the Term of Employment as permitted by, and
          in accordance with, the provisions of Section 6.

          5.2. Effect of Termination of Term of Employment. Upon termination of
     the Term of Employment, the following provisions shall apply:

               5.2.1 Employee shall no longer be employed by Employer;

               5.2.2 Employee shall no longer be obligated to provide any
          employment, consulting or similar services to Employer;

               5.2.3 If the Term of Employment is terminated pursuant to
          Sections 5.1.2 or 5.1.3 hereof, then the provisions of Section 7.1
          hereof shall become effective and the Employer shall be irrevocably
          and unconditionally obligated to fulfill and discharge all of the
          obligations imposed upon it pursuant to the provisions thereof,

               5.2.4 In the event Employer issues a press release concerning the
          termination of Employee's employment with Employer, Employee will be
          offered an opportunity that is reasonable under the circumstances to
          comment on such release; and

               5.2.5 Employee (or his guardian or estate, as applicable) shall
          in all events be paid (within thirty (30) days following the date of
          termination of the Term of Employment), (A) all accrued but unpaid
          Salary through the date of termination, (B) all accrued vacation
          through the date of termination, and (C) all unreimbursed business
          expenses through the date of termination. In addition, Employee shall
          retain all rights with respect to vested equity awards (and the
          applicable



                                       11
<PAGE>

          provisions of Section 3.3), and shall be entitled to all other
          Benefits which are provided in accordance with and subject to the
          terms of Employer's generally applicable employee benefit plans,
          practices and policies. The payments and Benefits described in this
          Section 5.2.5 shall be referred to herein as the "Accrued
          Obligations."

     6. Termination of Employment.

          6.1. Employer's Right to Terminate the Term of Employment. During the
     Term of Employment, Employer may terminate the Term of Employment with or
     without Cause (as herein defined) by providing written notice thereof to
     Employee.

               6.1.1 Effect of a For Cause Termination. If Employer terminates
          the Term of Employment for Cause, such termination shall take effect
          immediately upon written notice thereof being provided to Employee
          subsequent to the completion of the procedure set forth in Section
          6.1.2. In such event, Employer shall provide Employee with the Accrued
          Obligations. Upon Employer's full, complete and timely fulfillment and
          discharge of the aforesaid obligations, all obligations of Employer to
          Employee hereunder shall be totally and completely satisfied, and
          Employer shall have no further obligations of any type to Employee
          pursuant to this Agreement (except as may be provided under Sections
          3.3, 3.4.6, 18 or 19).

               6.1.2 Definition of "Cause". Cause for termination of the Term of
          Employment shall exist only if, during the Term of Employment:

                    (a) Employee is convicted of a felony involving moral
               turpitude which would render Employee unable to perform his
               duties set forth in this Agreement; or

                    (b) Employee engages in conduct that constitutes willful
               gross neglect



                                       12
<PAGE>

               or willful gross misconduct in carrying out his duties under this
               Agreement resulting, in either case, in a material adverse
               economic effect upon the business of Employer.

     For purposes of this Section 6. 1, no act, or failure to act, by Employee
shall be considered "willful" unless committed in bad faith, and without a
reasonable belief that the act or omission was in the best interests of Employer
or any of its subsidiaries. Cause shall not exist under this Section 6.1 unless
and until Employer has delivered to Employee a copy of a resolution duly adopted
by a majority of the Board at a meeting of the Board called and held for such
purpose (after reasonable, but in no event less than ten (10) days notice, to
Employee and an opportunity for Employee, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board, Employee
was guilty of the conduct set forth in this Section 6.1 and specifying the
particulars thereof in detail. This Section 6.1 shall not prevent Employee from
challenging in an arbitration proceeding the Board's determination that Cause
exists or that Employee has failed to cure any act (or failure to act) that
purportedly formed the basis for the Board's determination. Employer must
provide notice to Employee that it is intending to terminate his employment for
Cause within sixty (60) days after Employer has knowledge of the occurrence of
the event it believes constitutes Cause.

          6.2. Termination of the Term of Employment upon Employee's Death or
     Permanent and Total Disability. The Term of Employment shall be deemed
     terminated in the event of death or upon the termination of Employee's
     employment following the permanent and total disability of Employee during
     the Term of Employment.

               6.2.1 Effect. In the event of a termination of the Term of
          Employment for death or permanent and total disability, Employer shall
          provide Employee with the Accrued Obligations. Upon Employer's full,
          complete and timely fulfillment and discharge of the aforesaid



                                       13
<PAGE>

          obligations, all obligations of Employer to Employee hereunder shall
          be totally and completely satisfied, and Employer shall have no
          further obligations of any type to Employee pursuant to this Agreement
          (except as may be provided under Sections 3.3, 3.4.6, 18 or 19).

               6.2.2 Definition and Effective Date. Employee shall be considered
          "permanently and totally disabled" for purposes of this Section 6.2 if
          he is unable to perform with reasonable continuity his material duties
          hereunder by reason of any medically determinable physical or mental
          impairment, which inability to perform has lasted for a continuous
          period of not less than six (6) months. A termination for permanent
          and total disability shall take effect upon thirty (30) days written
          notice from Employer to Employee, provided Employee does not return to
          perform his material duties with reasonable continuity during such
          30-day period.

          6.3. Employee's Right to Terminate. Employee may terminate the Term of
     Employment at any time, for any reason, by providing thirty (30) days
     written notice thereof to Employer, and such termination shall not be
     deemed a breach of this Agreement.

               6.3.1 Effective Date. If Employee so terminates the Term of
          Employment (other than under Section 5.1.3) such termination shall
          take effect upon the date designated in the notice provided to
          Employer which shall, in no event, be earlier than thirty (30) days
          following the delivery of such notice; provided, that Employer shall
          have the right in the event of such notice by Employee to accelerate
          the Employee's effective date of termination to any such date that the
          Employer deems appropriate in its sole discretion.

               6.3.2 Effect. If Employee so terminates the Term of Employment
          (other than under Section 5.1.3), Employer shall provide Employee with
          the Accrued Obligations. Upon



                                       14
<PAGE>

          Employer's full, complete and timely fulfillment and discharge of the
          aforesaid obligations, all obligations of Employer to Employee
          hereunder shall be totally and completely satisfied and Employer shall
          have no further obligations of any type to Employee pursuant to this
          Agreement (except as may be provided under Sections 3.3., 3.4.6, 18 or
          19 hereof).

          6.4. Termination of Agreement upon Fulfillment of Post Termination of
     Employment Obligations. If the Term of Employment is terminated pursuant to
     Sections 5.1.2 or 5.1.3 hereof, then this Agreement shall thereafter be
     deemed to be terminated upon Employer's full, complete and timely
     fulfillment and discharge of all obligations imposed upon Employer pursuant
     to the provisions of Sections 3.3, 3.4.6, 7.1, 18 or 19 hereof.

     7. Post-Termination of Employment Obligations.

          7.1. Employer's Obligations after Termination of Term of Employment.
     If the Term of Employment is terminated pursuant to Sections 5.1.2 or 5.1.3
     hereof, then the following provisions shall apply:

               7.1.1 If the Term of Employment is so terminated, Employer shall
          provide Employee with the Accrued Obligations. In addition, Employer
          shall be obligated to pay to the Employee, for a period of time
          commencing on the date of termination of the Term of Employment and
          continuing until the Term Date (herein called the "Surviving
          Obligation Period"), Employee's Salary for the remaining period
          pursuant to this Agreement.

               7.1.2 Employee shall continue to be entitled to participate
          during the Surviving Obligation Period in any and all of the
          profit-sharing and retirement income, stock purchase, savings,
          executive compensation plans at the same level, in the same amount and
          to the




                                       15
<PAGE>

          same degree the Employee was entitled to participate at the time of
          such termination, to the extent permitted by the terms of such plans,
          and applicable law. If Employee's participation in any such plan is
          barred, Employer shall arrange to provide Employee during the
          Surviving Obligation Period with benefits substantially similar to
          those which he was entitled to receive under such plans prior to the
          time of such termination.

               7.1.3 Employer shall maintain in full force and effect for
          Employee for the longer of (a) one year after termination of the Term
          of Employment and (b) the Surviving Obligation Period all life,
          accident, medical and health care plans and disability benefit
          programs and programs or arrangements in which Employee was entitled
          to participate immediately prior to the time of such termination
          provided that Employee's continued participation is possible under the
          general terms and provisions of such plans and programs, and under
          applicable law. If Employee's participation in any such plan or
          program is barred, Employer shall arrange to provide Employee with
          benefits substantially similar to those which he was entitled to
          receive under such plans and programs of Employer prior to the time of
          such termination; provided, however, that the cost to Employer to
          provide such benefits shall be no greater than the contribution made
          by Employer for such benefits for other senior executives of Employer.
          In such event, appropriate adjustment shall be made so that the after
          tax value thereof to Employee is similar to the after tax value to him
          of the benefit plans in which Employee is not eligible to participate.
          At the end of such period, Employee shall have the option to have
          assigned to him at no cost and with no apportionment of pre-paid
          premiums, any assignable insurance policy owned by Employer and
          relating specifically to Employee.

               7.1.4 Employer shall be obligated to provide to Employee, for a
          one year period commencing on the date of termination of the Term of
          Employment, use of a similar office and secretarial support.



                                       16
<PAGE>

          7.2 No Mitigation. Under no circumstances shall the Employee be
     required, whether by seeking other employment or otherwise, to mitigate the
     amount of any payment or benefit under this Agreement, and there shall be
     no offset against amounts due the Employee under this Agreement or any
     other agreement on account of any subsequent employment he may obtain or
     for any amount allegedly due Employer by Employee.

     8. Employee's Rights on Change in Control.

          8.1 Change in Control Payments. In the event of a Change in Control,
     the Term of Employment shall not terminate, but Employer shall be obligated
     to pay to Employee an amount equal to Employee's Salary for the period from
     the date of the Change in Control until the Term Date. Such payment shall
     be paid to Employee in a lump sum within thirty (30) days of a Change in
     Control.

          8.2 Stock and Option Acceleration. In addition to the payment required
     under Section 8.1, in the event of a Change in Control (i) all restricted
     stock which may be granted pursuant to Section 3.3 hereof shall vest
     immediately and all Stock Options granted pursuant to Section 3.3 shall
     vest and become exercisable immediately, and (ii) the balance of all
     remaining Stock Options to be granted during the Term of Employment
     pursuant to Section 3.3 shall immediately be granted and shall vest and
     become exercisable immediately. The exercise price of all Stock Options
     accelerated on a Change in Control shall be the lower of (a) the closing
     price of the Common Stock on the date of the Change in Control, and (b) the
     lowest price of any options granted to Employee prior to the Change in
     Control. Employee shall retain the right to exercise all Stock Options
     granted prior to, or which are accelerated upon, a Change in Control during
     the remaining original term of each such option. Upon the acceleration of
     all Stock Options, Employer shall have no obligation to grant any
     additional Stock Options to Employee.


                                       17
<PAGE>


          9. Certain Definitions. As used herein, the following terms shall have
     the meanings indicated below:

               9.1. Constructive Termination Event. A "Constructive Termination
          Event" shall be deemed to be the occurrence of any one or more of the
          following events during the Term of Employment:

               9.1.1 the assignment by Employer to the Employee of duties that
          are inconsistent with the Employee's office with Employer at the time
          of such assignment, or the removal by Employer from the Employee of
          those duties described in Section 2.1 above, including without
          limitation failure to nominate or re-nominate Employee for election to
          the Board of Directors of Employer and failure of Robert F.X.
          Sillerman (and his affiliates) to vote his (and their) shares in favor
          of such nomination; or

               9.1.2 any removal of the Employee from, or any failure to elect
          or reelect the Employee to, the Designated Office (as defined in
          Section 9.3 hereof), except in connection with the Employee's
          promotion, with his prior written consent, to a higher office (if any)
          with Employer; or

               9.1.3 a reduction by Employer in the amount of the Employee's
          Salary as then in effect, or the failure of Employer to pay such
          Salary to the Employee at the time and in the manner specified in
          Section 3 of this Agreement; or

               9.1.4 the discontinuation or material reduction by Employer of
          the Employee's participation in any stock option, bonus or other
          employee benefit plan or arrangement



                                       18
<PAGE>

          (including, without limitation, any profit-sharing, life insurance,
          medical, dental, hospitalization, incentive compensation or retirement
          plan or arrangement) in which the Employee is a participant or the
          failure to grant the Stock Options; or

               9.1.5 the failure of Employer to obtain the assumption by any
          successor to Employer of the obligations imposed upon Employer under
          this Agreement, as required by Section 17 of this Agreement; or

               9.1.6 the failure by Employer to reimburse the Employee for the
          reasonable business expenses incurred by the Employee in the
          performance of his duties to Employer, including, without limitation,
          reasonable expenditures for business entertainment and for travel in
          connection with Employer's business; or

               9.1.7 the failure of Employer to observe, fulfill or perform any
          obligation, requirement or restriction imposed upon it pursuant to
          this Agreement which is not referenced in the foregoing subsections of
          this Section 9.1, and such failure continues uncorrected for thirty
          (30) days after notice thereof to Employer; or

               9.1.8 Intentionally Deleted.

               9.1.9 Intentionally Deleted.

               9.1.10 the failure by Employer to put any sports related business
          of Employer (other than motorized sports or any sports related
          business that provides less than 25% of the revenues of any entity
          acquired by Employer, if a condition of the purchase agreement for
          such entity


                                       19
<PAGE>

          is for such business to be operated under the entity acquired) into
          the Sports Group, in which case the sports related business may be
          held by Employer outside of the Sports Group.

               Employee's right to terminate the Term of Employment for a
          Constructive Termination Event shall not be affected by his mental or
          physical incapacity, and his continued employment prior to terminating
          employment for a Constructive Termination Event shall not constitute
          consent to or a waiver of rights with respect to, any act or failure
          to act constituting a Constructive Termination Event.

          9.2. Senior Executives. The "Senior Executives" shall mean all members
     of Employer's Office of the Chairman (howsoever called), and all senior
     executive officers of Employer.

          9.3. Designated Office. The "Designated Office" shall mean Chairman of
     the Sports Group and member of the Office of the Chairman of Employer.

          9.4. Change in Control. A "Change in Control" shall mean the
     occurrence of any one of the following events:

          (i) any "person," as such term is used in Sections 3(a)(9) and 13(d)
     of the Securities Exchange Act of 1934 (other than Employee or entities
     controlled by Employee), becomes a beneficial owner of 50% or more of the
     voting power of Employer or of the Common Stock beneficially owned by
     Robert F.X. Sillerman as of the date hereof;

          (ii) all or substantially all of the assets or business of Employer
     are disposed of pursuant to a merger, consolidation, sale or other
     transaction (unless the shareholders of Employer, immediately prior to such
     merger, consolidation or other transaction beneficially own, directly or




                                       20
<PAGE>

     indirectly, in substantially the same proportion as they owned the voting
     power of Employer, all of the voting power or other ownership interests of
     the entity or entities, if any, that succeed to the business of Employer);

          (iii) Employer combines with another company and, immediately after
     such combination, (A) the shareholders of Employer immediately prior to the
     combination do not hold, directly or indirectly, more than 50% of the
     voting power of the combined company or (B) the members of the Board
     immediately prior to the Board's approval of the merger transaction do not
     constitute a majority of the combined company's board of directors;

          (iv) the majority of the Board consists of individuals other than
     incumbent directors (which term shall mean members of Board as of the
     Effective Date), except that any person who becomes a director subsequent
     to such date whose election or nomination was supported by two-thirds of
     the directors who then comprise the incumbent directors shall be considered
     an incumbent director;

          (v) (A) a direct or indirect (including by sale or transfer of any
     intermediate holding company) sale or transfer of the voting securities of
     the Sports Group (including by way of merger, consolidation or similar
     transaction) following which one or more persons other than Employer
     beneficially owns 50% or more of the voting power of the Sports Group or
     (B) a sale or transfer of all or substantially all the assets of the Sports
     Group and its subsidiaries as a whole; or the liquidation or dissolution of
     Employer or of the Sports Group.

     10. Non-Compete Covenant.

          10.l. During Period of Employment. During the Term of Employment,
     Employee will not, without the prior written approval of the Board, become
     employed in any capacity by, or become an officer, director or general
     partner of, any partnership, corporation or other entity that directly
     competes with any business of Employer, or any subsidiary of Employer
     whether now or hereafter conducted.





                                       21
<PAGE>

          10.2. After Termination of Employment. For the period of one (1) year
     following the termination of the Term of Employment by Employer for Cause
     or by Employee on his own initiative (other than due to a Constructive
     Termination Event), Employee will not become employed in any capacity by,
     or become an officer, director, shareholder or general partner of, any
     partnership, corporation or other entity that competed with any material
     business of Falk Associates Management Enterprises, Inc. ("FAME") conducted
     as of April 29, 1998; provided, that this Section 10.2 shall not prevent
     Employee from owning no more than 5% of any class of securities of any
     publicly traded entity. The material businesses of FAME conducted as of
     April 29, 1998 shall be limited to the representation, as a sports agent in
     contract and marketing negotiations, of male basketball and football
     athletes in professional sports, and shall exclude, without limitation,
     such representation of (a) athletes in sports other than basketball and
     football and (b) female professional athletes, as well as the management,
     marketing and/or operation of professional sports teams, sports leagues,
     sports organizational committees or other sports businesses (or related
     consulting or other services), and the organization or the sponsorship of
     sports leagues.

          10.3. No Solicitation of Other Employees. Employee additionally agrees
     that, throughout the Term of Employment and for a period of one (1) year
     after the termination of the Term of Employment by Employer for Cause or by
     Employee on his own initiative (other than due to a Constructive
     Termination Event), Employee shall not directly or indirectly, solicit, or
     attempt to solicit, any employee of Employer's Affiliated Group to leave
     Employer's Affiliated Group for any reason whatsoever.

          10.4. Definition of Affiliated Group. As used above, the term
     "Employer's Affiliated


                                       22
<PAGE>

     Group" shall mean Employer and all corporations, partnerships or other
     organizations which, directly or indirectly, are controlled by Employer.

          10.5. Extraordinary Remedies. In the event of a breach of Employee's
     covenants in this Section 10, it is understood and agreed that Employer
     shall be entitled to injunctive relief as well as other applicable remedies
     at law or in equity available to Employer against Employee or others.

          10.6. Survival. The provisions of this Section 10 shall survive the
     termination of the Term of Employment and the termination of this Agreement
     to the extent applicable; it being understood that in the event of a
     termination of the Term of Employment pursuant to Sections 5.1.1, 5.1.2 or
     5.1.3 hereof, the provisions of this Section 10 shall be of no force or
     effect.

     11. Disclosure of Confidential Information. Except to the extent (a)
authorized by the express prior consent of the Board, (b) required by law or any
legal process or (c) desirable in performing his duties under this Agreement,
Employee will not, directly or indirectly, at any time during the Term of
Employment, or at any time subsequent to the termination of the Term of
Employment, disseminate, disclose, or divulge to any person, firm, corporation,
association or other business entity, Confidential Information (herein defined)
of Employer. As used herein, the term "Confidential Information" means any and
all information about or relating to the trade secrets of Employer or any of its
subsidiaries disclosed to Employee or known by Employee as a consequence of or
through his employment by Employer, if such information is not generally known
in any industry in which Employer or any of its subsidiaries is or may become
engaged during the Term of Employment. In the event of a breach or threatened
breach by Employee of this Section 10, Employer shall be entitled to injunctive
relief as well as other applicable remedies at law or in equity available to
Employer against Employee or others.

                                       23
<PAGE>

     12. Notice. Any notice, request, reply, instruction, or other communication
provided or permitted in this Agreement must be given in writing and may be
served by depositing same in the United States mail in certified or registered
form, postage prepaid, addressed to the Party or Parties to be notified with
return receipt requested, or by delivering the notice in person to such Party or
Parties. Unless actual receipt is required by any provision of this Agreement,
notice deposited in the United States mail in the manner herein prescribed shall
be effective on dispatch. For purposes of notice, the address of Employee, his
spouse, any purported donee or transferee or any administrator, executor or
legal representative of Employee or his estate, as the case may be, shall be as
follows:

              The address of Employee shall be:

                  c/o SFX Sports Group, Inc.
                  5335 Wisconsin Avenue, N.W.
                  Washington, D.C. 20015

              with a copy to:

                  Wachtell, Lipton, Rosen & Katz
                  51 West 52nd Street
                  New York, New York 10019
                  Attention:   Mitchell Presser

              The address of Employer shall be:

                  SFX Entertainment, Inc.
                  650 Madison Avenue
                  New York, New York 10022
                  Attention:   Howard J. Tytel


                                       24
<PAGE>

               with a copy to:

                   Winston & Strawn
                   200 Park Avenue
                   New York, New York 10166
                   Attention:    Jonathan Goldstein

     Employer shall have the right from time-to-time and at any time to change
its address and shall have the right to specify as its address any other address
by giving at least ten (10) days written notice to Employee. Employee shall have
the right from time-to-time and at any time to change his address and shall have
the right to specify as his address any other address by giving at least ten
(10) days written notice to Employer.

     13. Vacation. Employee shall be entitled to a minimum of four (4) weeks of
paid vacation during each calendar year, but in no event less than the vacation
provided to other Senior Executives of Employer.

     14. Controlling Law. The execution, validity, interpretation and
performance of this Agreement shall be determined and governed by the laws of
the State of Maryland.

     15. Entire Agreement. This Agreement contains the entire agreement of the
Parties with respect to the employment of Employee, and any prior employment
agreement between Employer and Employee shall be terminated effective as of the
Effective Date.

     16. Severability. If any provision of the Agreement is rendered or declared
illegal or unenforceable by reason of any existing or subsequently enacted
legislation or by decree of a court of last resort, the Parties shall promptly
meet and negotiate substitute provisions for those rendered or declared illegal
or unenforceable, but all remaining provisions of this Agreement shall remain in
full force and effect.



                                       25
<PAGE>

     17. Effect of Agreement, Assignment, Required Assumption. This Agreement
shall be binding upon Employee and his heirs, executors, administrators, legal
representatives, successors and assigns and the Employer and its successors and
assigns. Employee may not assign any rights or obligations hereunder without the
prior written consent of Employer and, except with respect to a successor entity
(as described below), Employer may not assign any rights or obligations
hereunder without the prior written consent of Employee. Employer shall require
any person who is the successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or a substantial portion of the
business or assets of Employer to expressly assume the obligations of Employer
hereunder. The term "Employer" as used in this Agreement shall expressly include
any such successors.

     18. Indemnification. Employer shall indemnify Employee and his legal
representatives to the fullest extent permitted by the laws of the State of
Delaware, and Employee shall be entitled to the protection of such insurance
policies which Employer maintains for the benefit of its directors and officers,
against all costs, charges or expenses whatsoever incurred or sustained by him
or his legal representatives in connection with any action, suit or proceeding
to which he or his legal representatives may be made a party by reason of his
being or having been a director of officer of Employer, or because of actions
taken purportedly on behalf of Employer after the Effective Date. Employer
shall, upon request by Employee, promptly advance or pay any amount for costs,
charge or expenses (including, without limitation, legal fees and expenses
incurred by counsel retained by Employee) in respect of his right to
indemnification hereunder, subject to a later determination as to Employee's
ultimate right to receive such payment. Employee's identification and the
insurance policies maintained for his benefit shall be at least to the same
extent, of the same type and in the same amount as that maintained by Employer
for the Chief Executive Officer of Employer, as may be amended from
time-to-time.

                                       26
<PAGE>


     19. Legal Fees and Expenses. Employee shall be entitled to receive from
Employer the amount of his legal fees (and expenses) reasonably incurred in
connection with claims or disputes under this Agreement, if Employee is the
prevailing party on any issue in any such dispute. The reimbursement shall be
made as soon as practicable following the resolution of such claim or dispute to
the extent Employer receives reasonable written evidence of such fees and
expenses.

     20. Amendments; Waivers. This Agreement cannot be changed, modified or
amended, and no provision or requirement hereof may be waived, without an
affirmative vote of the Board, and the consent in writing of Employee and
Employer. The failure of a party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such party at a
later time to enforce the same. No waiver by a party of the breach of any term
or covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.

     21. Beneficiaries. Whenever this Agreement provides for any payment to
Employee's estate, such payment may be made instead to such beneficiary or
beneficiaries as Employee may have designated in a writing filed with Employer.
Employee shall have the right to revoke any such designation and to redesignate
a beneficiary or beneficiaries by written notice to Employer (and any applicable
insurance company) to such effect.

     22. Resolution of Disputes. Any dispute or controversy between the parties
relating to or arising out of this Agreement or any amendment or modification
hereof shall be determined by arbitration in New York, New York by and pursuant
to the rules then prevailing of the American Arbitration Association, other than
claims for injunctive relief under Sections 10 or 11. All claims



                                       27
<PAGE>

for legal remedies under this Agreement shall be limited to the actual damages
of Employer or Employee, respectively, but shall not limit any payments or
damages provided to Employee under the terms of this Agreement. The arbitration
award shall be final and binding upon the parties and judgment may be entered
there on by any court of competent jurisdiction. The service of any notice,
process, motion or other document in connection with any arbitration under this
Agreement or the enforcement of any arbitration award hereunder may be
effectuated either by personal service upon a party or by certified mail duly
addressed to him or to his executors, administrators, personal representatives,
next of kin, successors or assigns, at the last known address or addresses of
such party or parties.

     23. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original. It shall not be
necessary when making proof of this Agreement to account for more than one
counterpart.

     IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.

SFX ENTERTAINMENT, INC.


/s/                                        By: /s/ David Falk
----------------------------                  ----------------------------
Title:                                         David Falk
Name:





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