Document:

Exhibit 10.4

 

WMG ACQUISITION CORP.

Issuer

 

THE SUBSIDIARY GUARANTORS
PARTIES HERETO

 

And

 

WELLS FARGO BANK,
NATIONAL ASSOCIATION,

 

Trustee

 

 

SECOND SUPPLEMENTAL
INDENTURE

 

Dated as of  May 17 ,
2005

 

TO

 

INDENTURE

 

Dated as of April 8, 2004

 

as
amended by the

 

First
Supplemental Indenture

 

Dated
as of November 16, 2004

 

U.S.
Dollar-denominated 7 3/8% Senior Subordinated Notes due 2014

Sterling-denominated 8 1/8%
Senior Subordinated Notes due 2014

 

 

 

 

                This SECOND
SUPPLEMENTAL INDENTURE is dated as of this 17th day of May, 2005 (the “Second
Supplemental Indenture”), among WMG ACQUISITION CORP., a Delaware corporation
(the “Company”), the Subsidiary Guarantors parties hereto (as listed below) and
WELLS FARGO BANK, NATIONAL ASSOCIATION, as indenture trustee (the “Trustee”).

 

                WHEREAS, the Company,
the guarantors parties thereto and the Trustee entered into an Indenture dated
as of April 8, 2004, as amended by the First Supplemental Indenture dated as of
November 16, 2004 among the Company, the Trustee, WEA Urban LLC and WEA Rock
LLC (collectively, the "Indenture"), for the benefit of each other
and for the equal and ratable benefit of the Holders of the U.S.
Dollar-denominated 7 3/8% Senior Subordinated Notes due 2014 and the
Sterling-denominated 8 1/8% Senior Subordinated Notes due 2014 (the “Notes”).
Capitalized terms used herein without definition have the meanings ascribed to
such terms in the Indenture.

 

                WHEREAS, Section
4.16 of the Indenture requires the Company to cause certain Restricted
Subsidiaries to execute and deliver a supplemental indenture to the Indenture
providing for issuance by such Restricted Subsidiary of a Subsidiary Guarantee
of payment of the Notes.

 

                WHEREAS, the
foregoing amendment is permitted under Section 9.01(6) of the Indenture.

 

                WHEREAS, the Company
and the Subsidiary Guarantors desire and have requested the Trustee to join
with it in the execution and delivery of this Second Supplemental Indenture,

 

                NOW, THEREFORE, in
consideration of the addition of the Subsidiary Guarantor named below as
Subsidiary Guarantor hereunder, the Company and the Guarantor named below
covenant and agree with the Trustee as follows:

 

                1. The following
Subsidiary Guarantors shall become Subsidiary Guarantors as of the date of this
Second Supplemental Indenture by execution and delivery of this Second
Supplemental Indenture

 

NonZero, LLC

The Biz, LLC

 

                2.  The Indenture, as supplemented and amended by
this Second Supplemental Indenture, is in all respects ratified and confirmed,
and the Indenture and this Second Supplemental Indenture shall be read, taken
and construed as one and the same instrument.

 

                3.  If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in
this Second Supplemental Indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.

 

                4.  All covenants and agreements in this Second
Supplemental Indenture by the Company and the Subsidiary Guarantors shall bind
their respective successors and assigns, whether so expressed or not.

 

                5.  In case any provision in this Second
Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

 

                6.  Nothing in this Second Supplemental
Indenture, expressed or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Holders any benefit or
any legal or equitable right, remedy or claim under this Second Supplemental
Indenture.

 

                7.  THIS SECOND SUPPLEMENTAL INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

 

2

 

 

                8.  All terms used in this Second Supplemental
Indenture not otherwise defined herein that are defined in the Indenture shall
have the meanings set forth therein.

 

                9.  This Second Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.

 

                10.  The recitals contained herein shall be taken
as statements of the Company and the Subsidiary Guarantors, and the Trustee
assumes no responsibility for their correctness.  The Trustee makes no representations as to
the validity or sufficiency of the Indenture, this Second Supplemental
Indenture or of the Notes and shall not be accountable for the use or application
by the Company of the Notes or the proceeds thereof.

 

 

[REMAINDER OF PAGE INTENTIONALLY
BLANK]

 

 

3

 

 

                IN WITNESS
WHEREOF, the parties have executed this Second Supplemental Indenture as of the
date first written above.

 

 

	
   

  	
  WMG ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Robinson

  
	
   

  	
   

  	
  Name: Paul Robinson

  
	
   

  	
   

  	
  Title: SVP & Deputy General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  NONZERO LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Robinson

  
	
   

  	
   

  	
  Name: Paul Robinson

  
	
   

  	
   

  	
  Title: SVP & Deputy General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BIZ LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Robinson

  
	
   

  	
   

  	
  Name: Paul Robinson

  
	
   

  	
   

  	
  Title: SVP & Deputy General Counsel

  

 

 

4

 

 

	
   

  	
  WELLS FARGO BANK, NATIONAL

  ASSOCIATION, as Indenture Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffery Rose

  
	
   

  	
   

  	
  Name: Jeffery Rose

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  

 

5Exhibit 10.27

 

EMPLOYMENT
AGREEMENT

 

EMPLOYMENT AGREEMENT,
made as of May 19, 2005, between CKX, Inc., a Delaware corporation
(the “Employer”), and Michael G. Ferrel (the “Executive”).

 

WHEREAS,
the Employer desires to retain the Executive; the Executive affirms that no
obligation germane to the Executive presently precludes, or exists now and in
the future may preclude, the Executive’s entry into and full and faithful
performance of this Agreement; and the Executive desires to accept employment
with the Employer; and

 

WHEREAS,
the Board of Directors of the Employer (the “Board”) has determined that
it is in the Employer’s interest to enter into this Agreement with the
Executive in order to secure, and in the future to be assured of, the Executive’s
abilities, services, and judgment as a member of senior management of the
Employer, upon the terms and provisions and subject to the conditions stated in
this Agreement;

 

NOW,
THEREFORE, the Employer and the Executive agree as follows:

 

1.                                       Employment.  Upon the terms and subject to the conditions
of this Agreement, the Employer employs the Executive, and the Executive
accepts employment.

 

2.                                       Term;
Dates.  The term of the Executive’s
employment shall commence on the date of this Agreement and continue until February 7,
2010 (the “Employment Agreement Term”), unless earlier terminated or
renewed in accordance with this Agreement.

 

2.1                                 This
Agreement refers to the dates defined in this section, as follows:  (i) the date of commencement of
employment is the “Effective Date”; (ii) the period of time during which
the Executive is an employee of the Employer pursuant to and in accordance with
the terms and provisions of this Agreement is hereinafter referred to as the “Term”;
and (iii) the last date of employment is the “Expiration Date.”

 

3.                                       Executive’s
Position, Duties, and Authority.

 

3.1                                 The
Employer shall employ the Executive, and the Executive shall serve as the
President of the Employer, and in such other positions with the Employer and
its subsidiaries that are reasonably acceptable to the Executive.  The Executive shall have executive duties,
functions, authority, and responsibilities commensurate with the office or
offices he from time to time holds with the Employer in a corporation that is
public, subject, in accordance with applicable law, to the supervision and
direction of the Board.

 

3.2                                 During
the Term and prior to the Expiration Date, the Employer shall use its best
efforts to have the Executive nominated to serve on the Board or other
governing body of the Employer.  If the
Employer, including any successor, forms any Executive Committee of the Board,
Office of the Chairman, or similar senior management committee or group which
is approved or otherwise recognized by the Board during the Term, the Executive
shall be a member of such committee or group. 
The Executive shall have no obligation to serve or

 

 

continue to serve:  (i) on the Board or any committee of the
Board; or (ii) as an officer or director of any subsidiary or affiliate of
the Employer, in the event that the Employer or any such subsidiary or
affiliate of the Employer or any of their respective successors fails to
provide and maintain to and on behalf of the Executive indemnification rights
no less beneficial to the Executive than those provided by Section 10
of this Agreement and, to the extent more beneficial to the Executive now or in
the future, every right to indemnification and defense of an officer or
director of any entity formed and existing under the laws of the State of
Delaware.  The future occurrence of any
event described in the preceding sentence, or the Employer’s failure within a
reasonable time to reimburse the Executive for all expenses reasonably incurred
in the course of fulfilling his duties and responsibilities as a director
and/or officer of the Employer, any subsidiary or affiliate of the Employer or
any of their respective successors, additionally, and immediately, shall
constitute a Constructive Termination of the Executive without Cause as such
term is defined in this Agreement.

 

3.3                                 The
Executive agrees to tailor his conduct with the written employment policies
which the Employer generally applies to all of its employees, and additionally
agrees that the Employer may make necessary and reasonable amendments to its
policies from time to time during the Term, to the extent not inconsistent with
the terms of this Agreement.  The
Executive and the Employer agree that these policies supplement, but do not
amend or otherwise modify, the express terms of this Agreement in the manner
authorized by Section 17.5 of this
Agreement.

 

3.4                                 The
Executive acknowledges that during the Term, the Employer may, without the
necessity of obtaining the Executive’s consent, implement one or more corporate
reorganizations for financial, tax, or related business reasons which do not
constitute a Change in Control as such event is defined in Section 12.3
of this Agreement.  The Executive agrees
that, so long as any such reorganization does not constitute a Change in
Control, the reorganized Employer shall be deemed the Employer for all purposes
in connection with this Agreement, and without a requirement that additional
consideration be delivered to the Executive in connection with the
reorganization.

 

4.                                       Principal
Occupation.  The Executive shall devote
his working time to the business and affairs of the Employer and to the
fulfillment of his duties under this Agreement in a diligent and competent
fashion, consistent with industry standards.

 

4.1                                 The
Employer acknowledges and agrees that during the Term:

 

(a) the
Executive may wish to continue, or commence, service as a director and officer
(or in a similar capacity) on the governing body of other business entities
whose business is not competitive with that of the Employer or any of its
subsidiaries; and

 

(b) the
Executive agrees that his service as described in Section 4.1(a) shall
be subject to the approval of the Employer’s Board, so long as the Board’s
discretion is not applied unreasonably.

 

Where the Board
declines to approve the commencement of the Executive’s service or his
continued service, or the Board withdraws its approval for the continuation of
the Executive’s service as described in Section 4.1(a),
the Executive agrees that he will resign from such

 

2

 

position, or withdraw himself from consideration.  The Executive and Employer agree that nothing
in this Section 4.1 applies to the
Executive’s membership or contribution of his non-working time or services, in
a non-remunerative capacity, to any: charitable or educational organization,
foundation, or association; political organization or campaign; religious
group, foundation, or organization; or non-profit trade, professional,
community, or recreational organization or club, so long as the purpose or aim
of any such organization presents no conflict with the business of the
Employer, as determined by the Board.

 

4.2                                 The
Employer acknowledges and agrees that during the Term, the Executive may devote
a portion of his business time to personal investments and outside business
commitments, provided, however
that: (a) such activities do not conflict with the business of Employer, (b) such
activities do not interfere, directly or indirectly, with the performance by
the Executive of his obligations under this Agreement, and (c) such
activities do not result in a breach by the Employer of any non-competition or
any other similar type of agreement to which the Employer, or its officers or
directors, may be a party.

 

4.3                                 No
provision of this Agreement shall be construed to prohibit the Executive’s:  (a) acquisition, ownership, or trading,
including without limitation the Executive’s indirect ownership, of less than
five percent (5%) of the issued and outstanding stock (or comparable bonds,
options, derivatives, or negotiable instruments) of a business entity having
securities publicly traded anywhere in the world; or (b) passive ownership
of stock, partnership interests, or comparable ownership interests or
securities in any for-profit private business entity that is not directly
competitive with the business of the Employer or any of its subsidiaries.  The Employer additionally agrees that nothing
in this Agreement shall operate to prohibit the Executive’s acceptance of a
testamentary gift, bequest, or its equivalent, nor the Executive’s retention of
any such gift, bequest, or its equivalent following its delivery, so long as
the Executive retains the interest(s) solely for investment purposes.

 

5.                                       Location
of Employment.

 

(a)                                  Unless
the Executive otherwise consents in writing, the usual place for the
performance of his services shall be the Employer’s principal office located in
the Borough of Manhattan, New York, New York, or such other location within
Manhattan, New York, as established by the Employer.  Employer shall maintain an office for the
Executive at its principal New York office similar to the offices provided to
other senior executives of the Employer.

 

(b)                                 Notwithstanding
the foregoing,  the Executive may, from
time to time, perform his duties and responsibilities to the Employer under
this Agreement from Massachusetts or Florida, subject to the prior approval of
the Chief Executive Officer of Employer. 
While providing services from locations outside of New York, New York,
the Executive shall be deemed to have satisfied his duties and responsibilities
under this Agreement so long as the Executive (i) makes himself available
for meetings as reasonably requested by the Employer or deemed necessary by the
Executive and (ii) maintains telephonic and e-mail communications required
to perform his duties and responsibilities under this Agreement.

 

6.                                       Base
Salary.  During the Term, the
Employer shall pay or cause to be paid to the Executive an initial annualized
base salary, payable in equal installments during each year of the

 

3

 

Term (the “Base Salary”) equal to (x) Six Hundred Fifty Thousand
Dollars ($650,000) (the “Base Amount.”) 
less (y) the value of all fringe benefits, perquisites or other
amounts (“Perquisites”) that the Employer and the Executive agree at the
beginning of each year will be provided to Executive for such year (whether or
not paid in cash) and that the Employer is required
to report as compensation to the Executive on Form W-2.  If the total of the Base Salary plus the
Perquisites received by the Executive in any year of the Term exceed the Base
Amount, an amount equal to the excess compensation received by the Executive
for such year shall be deducted on a pro-rata basis from the Executive’s Base
Salary during the fist six months of the following year.  The Base Amount shall be increased upon each
anniversary of the date of this Agreement by an amount equal to the greater of:  (a) five percent (5%) of the Base Amount
then in effect; or (b) the product derived by multiplying:  (i) the Base Amount then in effect; by (ii) the
percentage increase in the Consumer Price Index published by the federal Bureau
of Labor Statistics for the New York, New York metropolitan area during the
previous twelve (12) full calendar months. 
The Board additionally shall review the Executive’s Base Amount at least
annually and the Board may increase, but not decrease, the Base Amount in an
amount greater than the increase required by the preceding sentence.

 

6.1                                 The
Executive authorizes the Employer to deduct from the Base Salary and any other
consideration payable in cash to the Executive pursuant to this Agreement all
tax withholdings, tax related deductions, or other governmentally imposed
charges against income as may be required by law.

 

6.2                                 The
Executive acknowledges that his attendance and participation in executive
retreats, seminars, motivational or instructional programs, and business,
corporate, and employee relations training may be requested by the Employer
during the Employment Agreement Term.  In
such event, the Executive agrees that he in good faith will make reasonable
efforts to attend and participate in such events, provided that the Executive
will not be required to attend or participate in more than two such events in
any calendar year.

 

6.3                                 The
Executive shall be eligible to accrue the equivalent of six (6) weeks
vacation during each full year of the Term, in accordance with the accrual
methodology and vacation day accrual limitations in the vacation leave policy
applied by the Employer to its employees, except  that the
Employer will credit the Executive for his full annual accrual at the
commencement of each full year of the Term, i.e., not on a proportional
basis during the course of each year of the Term.  The Executive additionally shall be entitled
to remain away from work for as many or as few days as required by the
Executive due to the Executive’s bona fide illness, subject to the provisions
of Section 13 of this Agreement.  The Executive may observe any legal holidays,
other holidays recognized by the Employer, and religious holidays that the
Executive deems appropriate, in the sound exercise of his business judgment.

 

7.                                       Bonus
and Option Grants.

 

7.1                                 The
Executive shall be eligible to receive an annual discretionary bonus payable in
any combination of cash, stock or restricted stock, stock options, and/or other
consideration beneficial to the Executive during the continuance of the
Executive’s employment hereunder (the “Bonus”), after and pursuant to
the affirmative recommendation of the Compensation Committee of the Board.  The Employer’s decision to make or to not
make a discretionary bonus payment to

 

4

 

the Executive in any year
(including, without limitation, the consideration to be received or methodology
applied by the Employer to a discretionary bonus eligibility determination in
any year) shall have no bearing on the Executive’s eligibility to earn a bonus
in any succeeding year, nor shall the amount, form, or payment timing of any
such discretionary bonus in any year have any bearing on any aspect of a
discretionary bonus determination in any subsequent year.

 

8.                                       Expenses.

 

8.1                                 The
Employer shall reimburse the Executive for all reasonable expenses actually
incurred or paid by the Executive during the Term in the performance of the
Executive’s services.  The Employer shall
make reimbursement within a reasonable time following the Executive’s
presentation of expense statements, vouchers, receipts, or such other
supporting information as the Employer reasonably may require from the
Executive.  The Executive acknowledges
that the Employer’s policies regarding the documentation of expenses for which
reimbursement is sought may change from time to time, and the Executive agrees
that he will comply with the Employer’s reasonable documentation requirements.

 

8.2                                 The
Executive at all times shall be entitled to: 
travel in first class seating (or its equivalent) when the Executive
travels by air in connection with the Employer’s business; to hotel
accommodations while outside New York on business at a full-service hotel
offering a hotel room with sufficient space, furnishings, and technological
facilities and appointments for the Executive’s comfortable and productive work
in the room; and private car service when required to travel in connection with
the Employer’s business, attend business meetings, or work or attend functions
outside of normal business hours or on weekends or holidays.

 

8.3                                 In
the event that the Employer’s business requirements cause or require the
Executive to cancel personal vacation or travel plans for which the Executive
or any member of his family is unable to obtain a full refund of any deposit or
comparable amount expended by the Executive in advance, the Employer agrees
that it will reimburse to the Executive the full amount not refunded or
refundable to the Executive or any such family member.

 

9.                                       Benefits.

 

9.1                                 During
the Term, the Executive shall be eligible to participate in any pension, profit
sharing, incentive stock option, stock purchase, stock grant program or plan,
and retirement savings program or plan established by the Employer or any of
its subsidiaries for which the Executive provides services hereunder (“Participating
Subsidiaries”), including, without limitation, any such program or plan
offered by the Employer or Participating Subsidiaries to its executive or
non-executive employees.  The Executive
additionally shall be eligible to participate in any group life insurance,
hospitalization, medical, health and accident, dental, disability, or similar
plan or program made available by the Employer or Participating Subsidiaries to
its executive or non-executive employees. 
The Executive acknowledges that his participation in any benefit plan
described in this Section 9.1
may require, where required from other senior executives of the Employer or
Participating Subsidiaries, the Executive’s co-payment of a

 

5

 

periodic premium as a
deduction from the Base Salary payable to him. 
The Executive additionally acknowledges that the Executive’s actual
ability to participate in any program, plan, or other benefit opportunity in
which the Executive otherwise is eligible to participate ultimately may be
determined and governed by the terms and conditions of a third-party provider’s
plan or program, and the Executive affirms that any third-party’s decision
denying the Executive’s participation in a particular program or plan, the
provision of coverage or a benefit in respect of a particular circumstance or
expense, or a comparable decision adversely affecting the Executive shall not
constitute a breach of this Agreement by the Employer, so long as the Employer
does not offer, designate, or select a program or plan with the actual
intention of excluding the Executive’s eligibility or participation in the
opportunity.

 

9.2                                 The
Executive acknowledges that the Employer may, as it deems appropriate, seek,
obtain, and maintain during all or part of the Term insurance connected with
the life of the Executive, and for the benefit of the Employer.  In the event that the Employer elects to do
so, the Executive agrees: to provide any medical information required by the
insurer issuing such coverage; to submit no more frequently than semi-annually
to any medical examination required by the insurer in connection with the
granting or renewal of such coverage; and to otherwise cooperate reasonably
with the Employer’s attempts to obtain such coverage.  Any insurer’s rejection of an application
submitted by the Employer connected with this Section 9.2
in no event shall constitute a breach of this Agreement by the Executive, and
the Employer shall not request nor in another manner seek any information from
the Executive, the insurer, or any other person(s) connected with the
rejection.

 

9.3                                 The
Employer agrees that in the event of the Executive’s death during the Term, the
Employer will pay to the Executive’s estate the following, which shall be distributed
in accordance with the Executive’s will or testamentary plan, as directed by
any court having jurisdiction over such estate, or as directed by any duly
appointed administrator or executor of the Executive’s estate:

 

(a)                                  all
earned but unpaid Base Salary at the time of the Executive’s death, plus
an amount equal to three (3) times the Base Salary in effect at the time
of the Executive’s death;

 

(b)                                 the
full costs relating to the continuation of any group health, dental, and life
insurance program or plan provided through the Employer in which the Executive
participated at the time of his death, and through which coverage was provided
to any dependent(s) of the Executive at the time of the Executive’s death, for
a period of three (3) years following his death, without regard to the
availability or expiration of any continuation option or feature provided by
the program(s) or plan(s), or as otherwise provided to a lesser extent by
applicable law at the time of the Executive’s death; and

 

(c)                                  the
Employer additionally shall cause any stock options, restricted stock or other
equity-based instruments that previously were issued to the Executive to vest
fully and shall take all action necessary to cause the assignment or transfer
of such options, securities or other instruments as directed by the Executive’s
will or testamentary plan, or as directed by any duly appointed administrator
or executor of the Executive’s estate.

 

6

 

The Executive
acknowledges that the Employer at its option may, in the sole exercise of its
discretion, acquire and maintain a current whole life
insurance policy (“Policy”) on the life of the Executive from a
reputable carrier which provides substantially equivalent benefits on behalf of
the Executive in respect of the amounts provided in Sections 9.3(a) and
(b). 
Such Policy, if acquired and maintained, is intended to meet the
Employer’s obligations to the Executive pursuant to Sections
9.3(a) and (b).  The Executive shall have no preferred claim
on, or any beneficial ownership interest in, the Policy which will be subject
to the claims of the Executive’s general creditors under federal and state law
in the event of insolvency.  While the
Executive is an employee of the Employer, the Employer shall be the named
beneficiary of the Policy and the Policy shall not be assignable.  However, upon termination without Cause,
Constructive Termination without Cause or termination following a Change in
Control (all as defined in Section 12
below), the Employer shall assign the Policy to the Executive and, upon the
assignment, the Executive shall have all rights with respect to the
Policy.  Where the Employer elects to
seek such insurance coverage, the Executive agrees to provide any medical
information required by the insurer issuing such coverage; to submit to any
medical examination required by the insurer in connection with the granting or
renewal of such coverage; and to otherwise cooperate reasonably with the
Employer’s attempts to obtain such coverage. 
Any insurer’s rejection of an application submitted by the Employer in
connection with this Section 9.3
in no event shall relieve the Employer of any of its obligations hereunder.

 

10.                                 Indemnification.  The Employer shall indemnify the Executive
against all losses, claims, expenses, or other liabilities of any nature
arising by reason of the fact that he:  (a) is
or was a director, officer, employee, or agent of the Employer or any of its
subsidiaries or affiliates; or (b) while a director, officer, employee or
agent of the Employer or any of its subsidiaries or affiliates, is or was
serving at the request of the Employer as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of
another corporation, partnership, joint venture, trust, employee benefit plan
or other entity, in each case to the fullest extent permitted under the
Delaware General Corporation Law, as the same exists or may hereafter be
amended.  Without limiting the generality
of the foregoing, the Executive shall be entitled in connection with his
employment and in connection with his services as an officer and director of
the Employer to the benefit of the provisions relating to indemnification and
advancement of defense costs and expenses contained in the bylaws and
certificate of incorporation of the Employer, as the same in the future may be
amended (not including any amendments or additions that limit or narrow, but
including any that add to or broaden, the protection afforded to the Executive),
to the fullest extent permitted by applicable law.  The Employer shall advance to the Executive
all costs of investigation or defense incurred by the Executive in connection
with any pending or threatened claim for which the Executive may be entitled to
indemnification hereunder, provided that the Executive shall agree to
return to the Employer any such reimbursed amounts, without interest, if it is
determined in a final, non-appealable judgment by a Court of competent
jurisdiction that the Executive is not entitled to indemnification by the
Employer for losses incurred in connection with such claim.  The indemnification obligations of the
Employer shall survive from the Effective Date of this Agreement and continue
until three (3) months after the expiration of any applicable statute of
limitations with respect to any claim made against the Executive for which the
Executive is or may be entitled to indemnification (the “Survival Period”),
and shall survive after the Survival Period with respect to any indemnification
claim as to which the Employer has received notice on or prior to the end of
the Survival Period.  The Employer’s
belief regarding a statute of limitations applicable to a claim, any position
taken by

 

7

 

the Employer in response
to a claim, or the determination of any judicial, quasi-judicial, or arbitral
body in connection with a claim and any statute of limitations applicable to a
claim(s) shall in no event relieve the Employer from its obligation to
indemnify the Executive.  The Employer
shall prepay in full, and maintain fully during the Survival Period for the
benefit of the Executive, on an “occurrence” basis, a directors and officers
errors and omissions insurance policy, or a similar insurance policy(ies),
providing coverage from a financially reputable carrier, in form and substance
reasonably acceptable to the Executive. 
Anything in this Agreement to the contrary notwithstanding, this Section 10 shall survive the termination of this Agreement
for any reason.

 

11.                                 Confidential
Information.  The Executive
acknowledges that his employment will fully familiarize the Executive with the
trade secrets and confidential and proprietary information of the Employer (the
“Confidential Information”). 
Examples of the Employer’s Confidential Information include, without
limitation, information regarding the Employer’s costs, profits, markets,
sales, products, key personnel, operational methods, technical processes,
business strategies, and other information which the Employer engages in
efforts to protect from disclosure or discovery by its competitors, actual and
prospective clients, and other third parties.  
The Executive further acknowledges that the unintentional or intentional
disclosure of the Employer’s Confidential Information would have a material
adverse effect on the operations and development of the Employer’s
business.  The Executive therefore
covenants and agrees as set forth below:

 

11.1                           The
Executive will during the Term and for one (1) year thereafter, keep
secret all Confidential Information, and will not intentionally disclose
Confidential Information to anyone outside of the Employer and its subsidiaries
and affiliates and their respective advisors, directors, officers, employees, agents,
consultants, financing sources and other representatives, other than in
connection with the Executive’s performance of his duties under this Agreement
except with the Employer’s consent, provided that:  (i) the Executive shall have no such
obligation to the extent Confidential Information is or becomes publicly known,
other than as a result of the Executive’s breach of his obligations hereunder;
and (ii) the Executive may, after giving prior notice to the Employer to
the extent practicable under the circumstances, disclose such matters to the
extent required by applicable laws or governmental regulations or judicial or
regulatory process; provided, however, that if the Executive is required (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
Confidential Information pursuant to the foregoing clause (ii), he agrees to
use reasonable efforts to provide the Employer with prompt notice of each such
request so that the Employer may seek an appropriate protective order or waive
compliance by the Executive with the provisions of this Agreement or both; provided,
further, that if, absent the entry of a protective order or the receipt
of a waiver under this Agreement, the Executive is, in the opinion of his
counsel, legally compelled to disclose such Confidential Information under pain
of liability for contempt or other censure or penalty (civil or criminal), the
Executive may disclose such information to the persons and to the extent
required without liability under this Agreement.  In such event, the Executive shall give the
Employer written notice of such disclosure, in reasonable detail, as soon as
possible, but in any event not later than concurrently with making such
disclosure, and the Executive shall exercise his reasonable commercial efforts
to obtain reliable assurances that confidential treatment will be accorded any
such Confidential Information so disclosed.

 

8

 

11.2                           The
Executive will, at his option:  (i) deliver
promptly to the Employer at the termination of his employment by the Employer,
or at any other time the Employer may so request, all memoranda, notes,
records, reports, and other documents (including, without limitation, drafts,
whole or partial copies, and information stored or maintained electronically,
magnetically, in a computer, or through any other medium invented in the
future) relating to the Employer’s business, which he obtained while employed
by, or otherwise serving or acting on behalf of, the Employer and which he may
then possess or have under his control (the “Records”); or (ii) in
lieu of subclause (i) above, the Executive shall destroy all of the
Records, return all tangible property of the Employer containing any Records
which is possessed by the Executive, and shall deliver to the Employer a signed
affirmation to that effect.

 

11.3                           The
Executive’s duties may require that he enter into confidentiality agreements,
nondisclosure agreements, or comparable agreements with third parties, and a
third party may require the Executive’s entry into such an agreement(s)
personally and on behalf of the Employer. In any such event, the Executive
agrees to engage in reasonable efforts to perform any such agreement.

 

11.4                           During
the Term, the Employer may adopt or implement additional Confidential
Information policies, procedures, or requirements in connection with the
Employer’s business, and any such policies, procedures, or requirements will
supplement this Section 11, without
additional consideration from the Employer to the Executive, except to the
extent, if any, that they conflict with this Agreement, in which event this
Agreement shall control and govern.

 

12.                                 Termination.  The following definitions shall apply to the
use of such terms in this Agreement:

 

12.1                           “Cause”
means:

 

(a)                                  the
Executive is convicted of, or enters a no contest plea to (i) a felony
involving moral turpitude, or (ii) a misdemeanor involving moral turpitude
which would render the Executive unable to perform his duties set forth in this
Agreement;

 

(b)                                 the
Executive engages in conduct that constitutes willful gross neglect or willful
gross misconduct in carrying out his duties under this Agreement, resulting in
material economic harm to the Employer; or

 

(c)                                  the
Executive’s disloyalty, willful non-performance or willful misconduct or
neglect (whether the neglect arises from an act(s) or failure(s) to act) of his
duties under this Agreement after:  (i) written
notice to the Executive from either the Board or the Chairman of the Board,
with reasonable specification of the matter(s) giving rise to the notice,
including notice of the Employer’s intent to terminate the Executive’s
employment due to the matter(s) described in such notice, and further stating
the Board’s or the Chairman of the Board’s reasoned conclusion that it is
impossible for the Executive to cure the matter(s) giving rise to the notice
within thirty (30) days from the notice; (ii) the opportunity for the
Executive to respond in writing to the written notice, with the assistance of
any counsel deemed appropriate by the Executive (but at the Executive’s
expense) not sooner than ten (10) regular business days after delivery of
the written

 

9

 

notice; (iii) the
opportunity for the Executive to be heard and to orally present his position
during a confidential meeting of the entire Board within ten (10) business
days after the Executive’s delivery to the Employer of the Executive’s written
response to the written notice; and (iv) a vote of not less than 66 2/3%
of all members of the Board (not including the Executive’s vote), finding that
the matter(s) specified in the written notice constitute “Cause” for purposes
of this Agreement; or

 

(d)                                 any
finding by the Securities and Exchange Commission pertaining to the Executive
which, in the opinion of independent counsel selected by the Employer, could
reasonably be expected to impair or impede the Employer’s ability to register,
list, or otherwise offer its stock to the public, or following any Initial
Public Offering, to maintain itself as a publicly-traded company.

 

For purposes of this Section 12.1, no act, or failure to act, by the
Executive shall be “willful” unless committed without a reasonable belief that
the act or omission was in the best interest of the Employer.

 

12.2                           A “Change
in Control” shall mean the occurrence of any of the following, as
supplemented by the defined terms in Section 12.2(g) of
this Agreement:

 

(a)                                  any
“person,” or “group” of related persons for purposes of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(other than the Principal or a Related Party of the Principal), shall become,
directly or indirectly, a “beneficial owner,” as such term is used in Rule 13d-3
promulgated under the Exchange Act, of Voting Stock representing more than
thirty-five percent (35%) of the total voting power of all Voting Stock of the
Employer on a fully-diluted basis;

 

(b)                                 all
or substantially all of the assets or business of the Employer are disposed of
through the consummation of a merger, consolidation, sale of assets or other
transaction (unless the shareholders of the Employer immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
indirectly, Voting Stock representing fifty percent (50%) or more of the voting
power of the outstanding Voting Stock of the entity or entities, if any, that
succeed to the business of the Employer, determined on a fully-diluted basis);

 

(c)                                  the
Employer combines with another entity and is the surviving corporation but,
immediately after the combination, the shareholders of the Employer immediately
prior to the combination beneficially own, directly or indirectly, less than
fifty percent (50%) of the voting power of the outstanding Voting Stock of the
combined company, determined on a fully-diluted basis;

 

(d)                                 the
majority of the Board consists of individuals other than “Incumbent Directors,”
which term means members of the Board as of the date of this Agreement, 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;

 

10

 

(e)                                  there
shall be consummated any consolidation or merger of the Employer in which the
Employer is not the continuing or surviving entity or pursuant to which the
common stock of the Employer would be converted into cash, securities, or other
property, other than a merger or consolidation of the Employer in which the
shareholders of the Employer immediately prior to the merger or consolidation
beneficially own, directly or indirectly, fifty percent (50%) or more of the
voting power of the outstanding Voting Stock of the combined company,
determined on a fully-diluted basis; or

 

(f)                                    the
approval of the shareholders or the Board of Directors of the Employer of any
plan or proposal for the liquidation or dissolution of the Employer.

 

(g)                                 For
purposes of this Section 12.2, (i) ”Voting
Stock” means, with respect to any person, securities of any class or classes of
capital stock in such person, entitling the holders thereof to vote under
ordinary circumstances in the election of members of the board of directors or
other governing body of such person; (ii) ”Principal” means Robert F.X.
Sillerman; and (iii) ”Related Party” means, with respect to the Principal,
(x) any spouse or immediate family member of the Principal, (y) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or persons beneficially holding a fifty-one percent (51%) or
more controlling interest of which consist of the Principal and/or such other
persons referred to in the immediately preceding clause (x) or (z) the trustees
of any trust referred to in the immediately preceding clause (y).

 

12.3                           “Constructive
Termination without Cause” means the termination of the Executive’s
employment at his initiative after, without the Executive’s prior written
consent, one or more of the following events:

 

(a)                                  a
reduction in the Base Salary, or the uncured failure by the Employer to fulfill
its obligations under this Agreement within thirty (30) days after written
notice thereof from the Executive to the Employer;

 

(b)                                 the
failure to elect the Executive to any of the positions described in Section 3.1; any material diminution or adverse change
in the duties, authority, responsibilities, or positions of the Executive; or
any attempt to remove the Executive from any executive management position in a
manner contrary to this Agreement or the Employer’s then effective certificate
of incorporation or by-laws;

 

(c)                                  the
assignment to the Executive of duties or responsibilities which are materially
inconsistent or different from those customarily performed by a person holding
the executive management positions to be held by the Executive pursuant to Section 3.1;

 

(d)                                 the
failure of the Employer to obtain the assumption in writing of its obligation
to perform this Agreement by any successor to all or substantially all of the
assets or business of the Employer after a merger, consolidation, sale, or
similar transaction; or

 

(e)                                  the
commencement by or against the Employer or any of its material subsidiaries of
a voluntary or involuntary proceeding seeking liquidation, reorganization or
other relief under any bankruptcy, insolvency or other similar law now or
hereafter in effect; or seeking the

 

11

 

appointment of a trustee,
receiver, liquidator, or custodian of it or any substantial part of its
property, and consent by the Employer or any such material subsidiary to
any such relief; or the making of a general assignment for the benefit of
creditors, or failure generally to pay its debts as they become due; or taking
any corporate action to authorize any of the foregoing.

 

(f)                                    The
Executive agrees that each of the following must occur before the Executive may
assert the existence of a Constructive Termination without Cause (other than
with respect to Section 12.3(e)):  (i) the Executive must provide written
notice to the Board or the Chairman of the Board, with reasonable specification
of the matter(s) giving rise to the notice; (ii) the Employer must have
the opportunity, through the Chairman or a Board member designated by him, to
respond in writing to the written notice, with the assistance of any counsel
deemed appropriate by the Employer (at its expense) not sooner than ten (10) business
days after delivery of the written notice; and (iii) the Board must have
the opportunity, acting collectively or through a designee, to investigate,
inquire, and otherwise inform itself of the assertion, followed by a hearing
before the Board during which the Executive is
allowed the opportunity to orally present his position during a confidential
meeting of the entire Board, and the Employer is allowed to respond, within ten
(10) business days after the Employer delivers to the Executive its
written response to the Executive’s written notice.

 

12.4                           Termination
by the Employer for Cause.  If the
Employer terminates this Agreement for Cause, the Executive shall be paid all
earned but unpaid Base Salary through the date of termination.  In the event the Employer terminates the
Executive’s employment for Cause, the Executive shall have no further
obligation or liability to the Employer in connection with his performance of
this Agreement (except the continuing obligations specified in Section 11).

 

12.5                           Termination
without Cause or Constructive Termination without Cause. In the event the
Executive’s employment is terminated without Cause, other than due to
disability or death, there is a Constructive Termination without Cause or the
Executive exercises his Executive Termination Right, the Executive shall be
entitled to be paid by the Employer:

 

(a)                                  the
Base Salary through the date of termination;

 

(b)                                 the
cash equivalent of the Base Salary, at the rate in effect on the date of
termination (or in the event a Base Salary reduction is the basis for a
Constructive Termination without Cause, the Base Salary in effect immediately
prior to such a reduction) for three (3) years following such termination
(the “Salary Payment”), with the pro rata equivalent of such amount
payable from the Employer to the Executive on the Employer’s ordinary paydays,
but not less frequently than once per month; or, at the Executive’s option, the
Employer shall pay to him the present value of the Salary Payment in a lump sum
within thirty (30) days of the effective date of such termination (using as the discount rate seventy-five percent of the
prime rate (as published by The Wall Street Journal) on the first business day
of the month in which such termination occurs);

 

(c)                                  for
each partial or full year remaining in the then unexpired Employment Agreement
Term, a cash bonus in full and complete satisfaction of any form of cash bonus
or cash incentive compensation amounts equal to the average of all Bonuses paid
by the Employer to the Executive during the Term prior to termination,
provided, however, that if no Bonus has

 

12

 

been paid prior to
termination, the amount shall be $100,000 (the “Base Bonus Amount”).  The Base Bonus Amount shall be payable in
full on each anniversary of this Agreement for the remainder of the Employment
Agreement Term; provided that, at the Executive’s option, the Employer shall
pay to him the present value of the aggregate Base Bonus Amounts in a lump sum
within thirty (30) days of the effective date of such termination (using as the
discount rate of seventy-five percent of the prime rate (as published by The
Wall Street Journal) for the first business day of the month in which such
termination occurs);

 

(d)                                 all
benefits provided in Sections 8 and 9 (except that if
providing any such benefit under the terms of a plan would cause an adverse tax
effect, the Employer may provide the Executive with equivalent cash payments
outside of the plan) until the end of the Employment Agreement Term,
with no additional cost or charge payable by the Executive; and

 

(e)                                  in
the event payment becomes due to the Executive as provided in Sections 12.5(b) or (c),
the Executive’s election to receive either the Salary Payment or the Base Bonus
Amount in a lump sum shall not preclude the Executive’s election to receive the
other payment(s) over time.

 

12.6                           Additional
Rights Following a Change in Control. 
In the event of a Change in Control, the Executive shall be
entitled:  (a) at the Executive’s
option, to accelerate this Agreement’s Expiration Date to the date of the
actual closing of any transaction which constitutes a Change in Control (the “Change
in Control Closing Date”); and (b) to all payments and benefits
provided in Section 12.5 in respect of a
Constructive Termination without Cause. 
The payments and benefits provided under Section 12.5,
together with a bona fide, good faith estimate of
any amounts that may be payable pursuant to Section 12.5,
(i) shall be paid to the Executive in a lump sum on or prior to the Change
in Control Closing Date, without any discount or reduction for the present
value of any monetary amount(s) payable; and (ii) in the case of
non-monetary consideration or stock options or comparable consideration,
delivered to the Executive on or prior to the Change in Control Closing
Date.  Upon a Change in Control, all
granted but unvested shares of restricted stock and all options to purchase the
Employer’s capital stock or similar instruments granted to or held, directly or
indirectly, by the Executive shall vest fully and immediately in the Executive
and all options and similar securities held, directly or indirectly, by the
Executive shall remain exercisable for the full maximum term of the original option
grant or ten (10) years from the Change in Control Closing Date, whichever
is greater.  In addition, Section 14 of this Agreement immediately, and without
additional action, shall be deemed and rendered null, void, and without any
effect as against the Executive upon the actual closing of any transaction
which constitutes a Change in Control. 
The Executive shall forfeit any rights granted pursuant to this Section 12.6 if the Executive, in his sole and absolute
discretion and without any obligation whatsoever to do so, accepts in writing a
written offer to remain with the surviving company in an executive position
with equivalent duties, authority, and responsibilities as the Executive held
immediately prior to the transaction resulting in the Change in Control.

 

12.7                           Payment
Following a Change in Control.  In
the event that the aggregate of all payments or benefits made or provided to
the Executive under this Agreement and under all other plans and programs of
the Employer (the “Aggregate Payment”) is determined to constitute a
Parachute Payment, as such term is defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”),
the Employer shall pay to the Executive,

 

13

 

prior to the time any
excise tax imposed by Section 4999 of the Internal Revenue Code (“Excise
Tax”) is payable with respect to such Aggregate Payment, an amount (the “Gross-Up
Payment”) which, after the imposition of all excise, federal, state and local
income taxes on the Aggregate Payment and the Gross-Up Payment, enables the
Executive to retain a total amount equal to the Aggregate Payment.  The determination of whether the Aggregate
Payment constitutes a Parachute Payment and, if so, the amount to be paid to
the Executive and the time of payment pursuant to this subsection shall be
made by an independent auditor (the “Auditor”) jointly selected by the
Employer and the Executive and paid by the Employer.  The Auditor shall be a nationally recognized
United States public accounting firm which has not, during the two years
preceding the date of its selection, acted in any way on behalf of the Employer
or any affiliate thereof.  If the
Executive and the Employer cannot agree on the firm to serve as the Auditor,
then the Executive and the Employer shall each select one accounting firm and
those two firms shall jointly select the accounting firm to serve as the
Auditor.

 

12.8                           Voluntary
Termination.  (a) In the event
of the termination of this Agreement at the conclusion of the Employment
Agreement Term, or by the Executive on his own initiative other  than:  (i) a termination due to death or
disability; (ii) a Constructive Termination without Cause; (iii) a
Change in Control; or (iv) pursuant to Section 12.8
(b), the Executive shall have the same entitlements as provided in Section 12.4 for a termination for Cause.  A voluntary termination of employment by the
Executive shall be effective upon reasonable written notice to the
Employer.  Written notice need not be
provided in the event of a termination due to death or disability or the
consummation of a Change in Control.

 

(b)                                 If,
prior to or at the next annual meeting of the Company’s shareholders, (i) the
Executive is not nominated to serve as a director on the Board or (ii) the
number of directors on the Board is increased to 17 or more and the Executive
is not appointed to serve as a director on the Board, then the Executive may,
no later than the date of the next annual meeting of the Company’s shareholders,
terminate this Agreement upon written notice to the Employer.  If the Executive terminates this Agreement
pursuant to this Section 12.8(b),
then the Executive shall be entitled to receive his Base Salary through the
date of termination and the cash equivalent of the Base Salary, at the rate in
effect on the date of termination, for one (1) year following such
termination (the “Salary Payment”), with the pro rata equivalent of such
amount payable from the Employer to the Executive on the Employer’s ordinary
paydays, but not less frequently than once per month; or, at the Executive’s
option, the Employer shall pay to him the present value of the Salary Payment
in a lump sum within thirty (30) days of the effective date of such termination (using as the discount rate seventy-five percent of the
prime rate (as published by The Wall Street Journal) on the first business day
of the month in which such termination occurs.

 

12.9                           Stock
Options and Restricted Stock.  (a) 
Upon termination of the Executive’s employment with the Employer without Cause
or as a result of a Constructive Termination without Cause, all restrictions on
any restricted stock, stock options or other equity-based instruments,
including any transferability or vesting restrictions, immediately shall
lapse.  The Executive additionally shall
have the immediate right to exercise any Employer stock options in full
(without regard to any restriction on the underlying stock, and whether granted
under this Agreement or otherwise), whether or not any such option is fully
exercisable on the date of termination, for the remainder of the original full
maximum term of each such stock option. 
In addition, in the event that the Executive’s employment is terminated
for any reason within one (1)

 

14

 

year preceding or
following the consummation of a Change in Control (including, without
limitation, the date of the consummation) then the Executive shall be entitled,
at the Executive’s option and without the preclusion or reduction of any
benefit otherwise available to him under this Agreement (pursuant to Section 12.6 or otherwise), to exercise all options
granted previously to the Executive during the longest period permissible under
the terms of the plan under which such options were issued from the Change in
Control Closing Date, and additionally to freely transfer any options held,
directly or indirectly, by the Executive as of the Change in Control Closing
Date.

 

(b)                                 Option
Grant Terms.  The Employer agrees
that it will cause the terms and conditions of any options to purchase the
Employer’s shares of capital stock or any other equity-based instruments
granted to the Executive during the Employment Agreement Term to conform with
the provisions of this Agreement.  Where
the terms of any grant Agreement with the Executive or any stock incentive plan
or stock option plan adopted by the Employer conflict with this Agreement, the
Employer agrees that the terms of this Agreement shall control, apply to and
determine the terms of the grant to the fullest extent permitted by applicable
law.

 

12.10                     No
Mitigation or Offset.  At any
termination of the Executive’s employment, the Executive shall have no
obligation to seek other employment. 
There shall be no offset against amounts due the Executive under this
Agreement on account of any remuneration attributable to any later employment,
consultancy, partnership, or other remunerative activity connected with the
Executive.  However, the Employer may
offset any amounts owed by the Executive to the Employer or any of its
subsidiaries or affiliates against amounts due to the Executive under this
Agreement

 

13.                                 Disability.

 

13.1                           If
during the Executive’s active employment the Executive becomes physically or
mentally disabled, whether totally or partially, so that he is prevented from
performing his duties for a period of six consecutive months, the Employer
shall pay to the Executive his full Base Salary and Bonus in respect of the
period ending on the last day of the sixth consecutive month of disability (the
“Disability Date”), and the additional provisions set forth below shall
apply:

 

13.2                           If the
Executive has not resumed his usual duties on or prior to the Disability Date,
the Expiration Date of this Agreement automatically shall accelerate to the
Disability Date, and the Employer shall pay to the Executive, or as directed by
any properly appointed guardian of the Executive, seventy-five percent (75%) of
his Base Salary from the Disability Date through the end of the Employment Agreement
Term (without giving effect to any early termination provisions contained in
this Agreement) and, the Employer shall have no obligation to pay any Bonus,
discretionary bonus, or other form of compensation or consideration to the
Executive in respect of periods after the Disability Date, unless applicable
law requires the Employer to do so.  Any
Base Salary payable pursuant to this section shall be reduced by the
amount of any benefits payable to the Executive under any group or individual
disability insurance plan or policy, where the premiums for such plan or policy
are paid primarily by the Employer;

 

13.3                           Unless
the Employer voluntarily exercises its option under Section 13.4
to restore the Executive to his full compensation, duties, functions, authority
and responsibilities, the

 

15

 

Executive shall
have no obligations to the Employer from and after the Disability Date (except
for his obligations under Section 11,
which shall survive); and

 

13.4                           If
during the Employment Agreement Term and after a Disability Date, the Executive
shall recover fully from a disability, the Employer, by action of the Board,
shall have the right (exercisable within sixty (60) days after notice from the
Executive of such recovery), but not the obligation, to restore the Executive
to employment, full compensation, and his full level of duties, functions,
authority and responsibilities hereunder.

 

14.                                 Non-competition.

 

Except as set forth in
this Agreement, during the Employment Agreement Term the Executive will not,
without the prior written approval of the Board, (a) become employed by,
or become an officer, director, or general partner of, any partnership,
corporation or other entity in the media or entertainment sectors (each a “Prohibited
Business”) or (b) directly or indirectly, purchase, invest or
otherwise participate in any significant manner, in investments, businesses or
commercial operations in a Prohibited Business, unless such purchase,
investment or participation is conducted by and through Employer or its
subsidiaries.  Nothing in this Section 14
shall prohibit the Executive from continuing to fulfill his obligations as an
officer, director or partner of companies or entities identified in Section 4.

 

15.                                 Notices.
All notices, requests, consents and other communications, required or permitted
to be given hereunder, shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by prepaid telegram, or mailed first
class, postage prepaid, by registered or certified mail, as follows (or to such
other or additional address as either party shall designate by notice in
writing to the other in accordance herewith):

 

If to the Employer:

 

CKX, Inc.

650 Madison Avenue

New York, New York  10022

 

Attention:  Board of Directors

 

If to the Executive:

 

 

 

 

 

Copies of all
communications given hereunder to the Employer shall also be delivered or sent,
in like fashion, to:  Alan Annex, Esq.,
Greenberg Traurig, 200 Park Avenue, New York, New York  10166; telephone: (212) 801-9323;
facsimile: (212) 805-9323.

 

16

 

16.                                 Disputes.

 

16.1                           Arbitration
of Monetary Disputes.  Any action or
claim seeking monetary damages arising between the parties to this Agreement
(including, without limitation, the Executive’s representative following his
death and any successor to the Employer), whether based on contract,
negligence, intentional tort, fraud or misrepresentation, statutorily
prohibited discrimination, including employment discrimination, or breach of
other legal duty arising from or connected in any manner with this Agreement or
its performance shall be resolved exclusively through final and binding
arbitration, as follows:

 

(a)                                  The
arbitration shall proceed in accordance with the National Rules for the
Resolution of Employment Disputes (the “Rules”) of the American
Arbitration Association (the “AAA”) in effect when the claim or dispute
arose between the parties, or in the event that the AAA no longer follows the
National Rules for the Resolution of Employment Disputes, then the AAA’s
Commercial Arbitration Rules (if applicable, the “Rules”) in effect on the
date of this Agreement.  Either party
may, but neither party must, file or docket the dispute for administration by
the AAA, so long as the dispute proceeds in accordance with this Section 16.1 and the applicable Rules.

 

(b)                                 The
arbitrator(s) shall be selected as follows: 
Each party shall by written notice to the other have the right to
appoint one arbitrator.  If, within
thirty (30) days following the giving of such notice by one party, the other
shall not, by written notice, appoint another arbitrator, the first arbitrator
shall be the sole arbitrator.  If two
arbitrators are so appointed, they shall appoint a third arbitrator.  If thirty (30) days elapse after the
appointment of the second arbitrator and the two arbitrators are unable to
agree upon the third arbitrator, then either party may, in writing, request
that the AAA appoint the third arbitrator.

 

(c)                                  Each
party exclusively shall bear all costs, fees, and other expenses charged by or
associated with the arbitrator appointed by him or it, and the parties equally
shall pay the costs and expenses of any third appointed arbitrator.  All proceedings connected with the
arbitration, including hearings, shall be held in New York, New York, and where
a party appoints an arbitrator who principally conducts his or her business
outside of New York, New York, the appointing party exclusively shall bear that
arbitrator’s travel, temporary lodging, and related costs and expenses.  The general counsel of the AAA or his or her
designee, after the filing of the dispute with the AAA, exclusively shall have
the jurisdiction and the authority, after written application filed by a party
with the AAA and the opportunity for the other party to respond in writing, to
inequitably allocate between the parties the AAA’s pre-hearing filing and
administrative fees and the fees and expenses of any appointed arbitrator(s),
subject to reallocation among the parties by the arbitrator(s) in any final
award (or decision).

 

(d)                                 All
proceedings, hearings, testimony, documents, or writings related to the
arbitration shall be confidential, i.e., not disclosed by a party, a
party’s representative(s), or any testifying witnesses to a person or entity
not a party to, or interested in, the arbitration.  The parties
further agree, without regard to any AAA rule to the contrary, that where
a written reasoned award(s) is made by the arbitrator(s), the arbitrator(s)
also shall issue a one-page award (or decision) in a form which
permits a future need by any party to judicially enforce the award, but that
the written reasoned award shall not be disclosed by the parties to any person
or body not connected directly with the arbitration.

 

17

 

(e)                                  The
arbitrator(s) appointed exclusively shall have jurisdiction to determine any
claim, including the arbitrability of any claim, submitted to him, her, or
them.  Each party shall bear its or his
own arbitration costs and expenses, including, without limitation, the costs
and expenses associated with any attorney or other expert or representative
retained by the party in connection with a claim, without regard to any
pre-award application by the AAA of the last sentence of Section 16.1(c).  The interpretation and enforceability of the
arbitration agreement memorialized in this section shall be determined in
accordance with the United States Federal Arbitration Act (9 U.S.C. §1, et
seq.) (the “FAA”), unless the New York State Arbitration Act (the
“New York Act”) (CPLR §7501, et  seq.) would make
enforceable this Agreement after an appointed arbitrator(s) finds it
unenforceable under the FAA, in which case the New York Act shall be applied.  Any process required or desirable in
connection with any arbitration under this Section 16.1
shall be issued and served as authorized by the FAA, the New York Act, or any
treaty to which the United States is a signatory, and upon a party by personal
or permitted substitute service anywhere in the world.  The substantive law applied by the
arbitrator(s) to the determination of any claim or defense not connected with
the enforceability of this arbitration agreement shall be the internal laws of
the State of New York, without reference to conflicts of law principles.

 

(f)                                    The
parties agree that the appointed arbitrator(s) shall have no power or authority
to make awards or issue orders of any kind, except as authorized by the FAA and
the internal laws of the State of New York. 
Any monetary award made shall be payable promptly in United States
dollars, free of any tax, offset, or deduction (unless required by law), and
any costs, fees, or taxes incident to enforcing the award shall, to the maximum
extent permitted by law, be charged against the party resisting enforcement.

 

 16.2    
Claims for Equitable Relief. 
Any action or proceeding initiated by any party to this Agreement
seeking any form of temporary or preliminary injunctive relief, including,
without limitation, specific performance, connected with this Agreement or its
performance may be brought against any other party in the courts of the State
of New York or, if the party has or can acquire jurisdiction, in the United
States District Court for the Southern District of New York, and each of the
parties consents to the jurisdiction of such courts in any such action or
proceeding, and each party waives any objection to venue laid therein.  Process in any action or proceeding referred
to in the preceding sentence may be served on any party anywhere in the
world.  The parties agree that the
pursuit of any relief described in this Section 16.2
in no way may or shall diminish, defeat, or otherwise impair the agreement
expressed in Section 16.1.

 

18

 

17.                                 General.

 

17.1                           Governing
Law.  This Agreement shall be
interpreted, construed, and enforced in accordance with the internal laws of
the State of New York, without regard to conflicts of law principles.

 

17.2                           Captions.  This Agreement contains section headings
for reference only.  The headings in no
way affect the meaning or interpretation of this Agreement.

 

17.3                           Entire
Agreement.  This Agreement fully
memorializes the agreement and understanding of its parties relating to its
subject matter, and supersedes all prior or contemporaneous agreements,
arrangements and understandings, written or oral, between the parties with
respect to such subject matter

 

17.4                           Successors
and Assigns.  This Agreement, and the
Executive’s rights and obligations hereunder, may not be assigned by the
Executive, except as set forth in Section 9.3,
and any prohibited assignment attempted by the Executive is void.  This Agreement shall be binding on any
successor to the Employer, whether by merger, acquisition of substantially all
of the Employer’s assets, or otherwise, as fully as if such successor were a
signatory hereto and the Employer shall cause such successor to, and such
successor shall, expressly assume the Employer’s obligations hereunder.  Notwithstanding anything else herein
contained, the term “Employer” as used in this Agreement, shall include all
such successors.

 

17.5                           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 or its Compensation Committee
and the consent in writing of the Executive and the 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.

 

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

 

17.7                           Reformation.  The Executive and the Employer agree that any
provision of this Agreement deemed unenforceable or invalid may be reformed to
permit enforcement of the objectionable provision to the fullest permissible
extent.  Any provision of this Agreement
deemed unenforceable after modification shall be deemed stricken from this
Agreement, with the remainder of the agreement being given its full force and
effect.

 

17.8                           Full
Negotiation.  The Executive and the
Employer each independently have made all inquiries regarding the
qualifications of the other which he or it deems necessary.  The

 

19

 

Executive and the Employer affirm that he or it fully understands this
Agreement’s meaning and effect.  Each
party has participated fully and equally in the negotiation and drafting of
this Agreement.  Each party assumes the
risk of any misrepresentation or mistaken understanding or belief relied upon
by him or it in entering into this Agreement.

 

17.9                           Currency.  Each and every reference to a monetary amount
in this Agreement means United States dollars.

 

[SIGNATURE PAGE FOLLOWS]

 

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

 

	
   

  	
  CKX, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Howard J. Tytel

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Howard J. Tytel

  
	
   

  	
   

  	
  Title: 

  	
  Senior Executive Vice President

  
	
   

  	
   

  	
   

  	
  Director of Legal and Governmental Affairs

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Michael G. Ferrel

  	
   

  
	
   

  	
   

  	
  Michael G. Ferrel

  
					

 

21

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