Document:

Exhibit 10.5

 

SHARE EXCHANGE AGREEMENT

 

This Share Exchange Agreement (this “Agreement”) is dated as of June 19, 2012, by and among SFX Holding Corporation, a Delaware corporation (“Acquiror”), SFX ENTERTAINMENT INC., a Delaware corporation (“SFX”), and each registered stockholder of SFX signatory hereto (each a “Stockholder” and, collectively, the “Stockholders”).

 

WHEREAS, SFX is in the business of live entertainment (the “Business”);

 

WHEREAS, each Stockholder owns of record that number of shares of common stock, par value $0.001 per share, of SFX (“SFX Shares”) set forth on such Stockholder’s signature page hereto;

 

WHEREAS, the SFX Shares held by the Stockholders constitute all of the issued and outstanding capital stock of SFX;

 

WHEREAS, the Stockholders desire to contribute to Acquiror all outstanding SFX Shares in exchange for an equal number of shares of common stock, par value $0.001 per share, of Acquiror (“Acquiror Shares”), with SFX continuing as a wholly owned subsidiary of Acquiror (the “Exchange”);

 

WHEREAS, as of the date hereof, Acquiror and/or certain wholly owned limited liability company subsidiaries of Acquiror entered into one or more asset contribution agreements or other binding agreements (each, an “Other Acquisition Agreement”) with one or more other individuals or entities engaged in businesses that are synergistic with those of SFX and Acquiror (the “Other Parties”), pursuant to which Acquiror or a wholly owned limited liability company subsidiary of Acquiror will, on the terms and subject to the conditions set forth therein, acquire certain assets and assume certain liabilities thereof with a view to combining and expanding the overall business activities of Acquiror and SFX in the field of live entertainment, in all cases, as part of an overall plan (the “Plan”) to enter into this Agreement and the Other Acquisition Agreements; and

 

WHEREAS, the parties hereto and each of the parties to the Other Acquisition Agreements intend to consummate the transactions contemplated hereby and thereby in accordance with the Plan such that the transactions contemplated by this Agreement and the Other Acquisition Agreements will, for U.S. federal income tax purposes, qualify as a transaction described in Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

 

ARTICLE 1

CONTRIBUTION

 

1.1          Contribution of SFX Shares.  On the terms and subject to the conditions of this Agreement, at the Closing, each Stockholder shall contribute, sell, transfer, convey, assign and 

 

 

deliver to Acquiror, and Acquiror shall purchase, accept and acquire from each Stockholder, free and clear of any liens, that number of SFX Shares set forth on such Stockholder’s signature page hereto, which SFX Shares, in the aggregate, constitute all of the issued and outstanding capital stock of SFX.

 

1.2          Consideration. Upon the terms and subject to the conditions contained in this Agreement, as consideration for the contribution, sale, transfer, conveyance, assignment and delivery of the SFX Shares by each Stockholder and in full payment therefor, Acquiror shall issue to each Stockholder, free and clear of any liens, that number of Acquiror Shares set forth on such Stockholder’s signature page hereto (collectively, the “Consideration”).

 

1.3          Tax Treatment.  The parties hereto and each of the parties to the Other Acquisition Agreements intend to consummate the transactions contemplated hereby and thereby in accordance with the Plan such that the transactions contemplated by this Agreement and the Other Acquisition Agreements will, for U.S. federal income tax purposes, qualify as a transaction described in Section 351 of the Code.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF SFX

 

As an inducement to Acquiror and each Stockholder to enter into this Agreement and to consummate the transactions contemplated herein, SFX makes the following representations and warranties to Acquiror, as of the date of this Agreement (except if another date is specified in the representation or warranty).

 

2.1          Corporate Existence.  SFX is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct its business as it is presently being conducted and to own and lease its properties and assets.  Copies of the Certificate of Incorporation and bylaws of SFX, and all amendments thereto, heretofore delivered to SFX (the “SFX Organization Documents”) are accurate and complete as of the date hereof.

 

2.2          Authorization.  SFX has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement, to consummate the transactions contemplated by this Agreement and to perform its obligations hereunder.  The execution and delivery by SFX of this Agreement, and the consummation by SFX of the transactions contemplated hereby, have been duly authorized and approved. This Agreement has been duly executed and delivered by SFX and is the legal, valid and binding obligations of SFX enforceable against SFX in accordance with its terms, except that such enforceability may be limited by bankruptcy,insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.

 

2.3          Capital Structure.  The authorized capital stock of SFX consists of 350,000,000 shares, 300,000,000 of which are SFX Shares and 50,000,000 of which are initially undesignated preferred stock, par value $0.001 per share, which have the rights, preferences, privileges and restrictions set forth in the SFX Organization Documents and applicable law.  Immediately prior to giving effect to the Exchange and the transactions contemplated by the Other Acquisition 

 

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Agreement, 41,750,000 SFX Shares were issued and outstanding.  The Stockholders are the record owners of one hundred percent (100%) of the issued and outstanding SFX Shares, free and clear of any liens.  All issued and outstanding SFX Shares have been duly authorized and validly issued in compliance with applicable laws.  There are no other SFX Shares, other shares of capital stock of SFX, or any options, warrants and other securities of SFX that are exercisable for or convertible into capital stock of SFX, outstanding.

 

2.4          Governmental Authorization.  The execution, delivery and performance by SFX of this Agreement requires no governmental authorization from any governmental authority other than (a) any governmental authorizations otherwise expressly referred to in this Agreement or any schedule hereto; (b) any filings required to be made by Acquiror in accordance with applicable law; (c) notice filings that are not material to the Business; and (d) governmental authorizations required by governmental authorities outside of the U.S. to effectuate or record the transfer of any SFX Shares.

 

2.5          Non-Contravention.  The execution, delivery and performance by SFX of this Agreement does not and will not (a) contravene or conflict with the SFX Organization Documents, true and correct copies of which have been delivered to Acquiror and each Stockholder by SFX (b) contravene or conflict with or constitute a violation of any provision of any applicable law binding upon SFX, the Business or any of the SFX Shares; (c) result in the creation or imposition of any lien on any of the SFX Shares; or (d) contravene, conflict with or constitute a violation or breach of any agreement to which SFX is a party or by which SFX has any obligation to third parties.

 

2.6          Litigation.  There are no actions that have been brought by or against or before any governmental authority or any other person pending or, to the knowledge of SFX, threatened, nor has SFX received any correspondence regarding any such pending or threatened actions, with respect to SFX that seeks to enjoin or rescind the transactions contemplated by this Agreement, and there are no existing actions, orders, judgments or decrees against or binding upon SFX or any of the SFX Shares, or that would prevent the performance by SFX of the transactions contemplated by this Agreement.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS

 

As an inducement to Acquiror to enter into this Agreement and to consummate the transactions contemplated herein, each Stockholder, severally and not jointly, represents and warrants to Acquiror (as to himself, herself or itself), as of the date of this Agreement (except if another date is specified in the representation or warranty), as follows:

 

3.1          Authorization.  Such Stockholder has the right, power and authority, and has taken all action necessary, to execute and deliver this Agreement, to consummate the transactions contemplated hereby and to perform his obligations hereunder.  The execution and delivery by such Stockholder of this Agreement, and the consummation by such Stockholder of the transactions contemplated hereby, have been duly authorized and approved by such Stockholder.  No other proceedings on the part of such Stockholder are necessary to authorize this Agreement and the transactions contemplated hereby.  This Agreement has been duly 

 

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executed and delivered by such Stockholder and is the legal, valid and binding obligations of such Stockholder enforceable against such Stockholder in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.

 

3.2          Ownership.   Such Stockholder is the record owner of the SFX Shares indicated as being owned by such Stockholder on such Stockholder’s signature page hereto, free and clear of all liens.

 

3.3          Securities Law Matters.  The offer and sale of the Acquiror Shares comprising the Consideration to SFX is being made as a private placement pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Regulation D thereunder, and is not being registered under the Securities Act.  Each of the Stockholders hereby acknowledges that the Acquiror Shares comprising the Consideration have not been registered under the Securities Act, or registered or qualified for sale under any state securities laws, and cannot be resold without registration thereunder or exemption therefrom.  Each of the Stockholders is an “accredited investor,” as such term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D of the Securities Act, and will acquire the Acquiror Shares comprising the Consideration for his, her or its own account and not with a view to a sale or distribution thereof in violation of the Securities Act, and the rules and regulations thereunder, any applicable state “blue sky” laws or any other applicable securities laws.  Each of the Stockholders has sufficient knowledge and experience in financial and business matters to enable him or it to evaluate the risks of investment in the Acquiror Shares comprising the Consideration, is acquiring the Acquiror Shares comprising the Consideration with a full understanding of all of the terms, conditions and risks thereof, and at the Closing Date (as defined below) will bear and has the ability to bear the economic risk of this investment for an indefinite period of time.  Each of the Stockholders understands and agrees to the terms and conditions under which the Acquiror Shares comprising the Consideration are being offered.

 

3.4          Legends.  Each of the Stockholders acknowledges that, to the extent applicable, each certificate evidencing the Acquiror Shares comprising the Consideration shall be endorsed with a legend substantially in the form set forth below, as well as any additional legend imposed or required by applicable securities laws:

 

“THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR THE SECURITIES LAWS OF ANY STATE AND HAVE BEEN SOLD IN RELIANCE ON EXEMPTIONS THEREFROM. THESE SECURITIES MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.”

 

3.5          Restricted Securities.  Each of the Stockholders acknowledges that the Acquiror Shares comprising the Consideration are “restricted securities” (as such term is defined in Rule 144 under the Securities Act) and must be held indefinitely unless subsequently registered under the Securities Act or any applicable state securities laws or an exemption from such registration is available.

 

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ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF ACQUIROR

 

As an inducement to each Stockholder to enter into this Agreement and to consummate the transactions contemplated herein, Acquiror represents and warrants to each Stockholder as of the date of this Agreement (except if another date is specified in the representation or warranty), as follows:

 

4.1          Corporate Existence and Power.  Acquiror is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct its business as it is presently being conducted.  Copies of the Articles of Incorporation and bylaws of Acquiror, and all amendments thereto, heretofore delivered to each Stockholder and SFX (the “Acquiror Organization Documents”) are accurate and complete as of the date hereof.

 

4.2          Authorization.  Acquiror has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement, to consummate the transactions contemplated by this Agreement and to perform its obligations hereunder.  The execution and delivery by Acquiror of this Agreement, and the consummation by Acquiror of the transactions contemplated hereby, have been duly authorized and approved.  No other corporate proceedings on the part of Acquiror are necessary to authorize this Agreement and the transactions contemplated hereby.  This Agreement has been duly executed and delivered by Acquiror and is the legal, valid and binding obligations of Acquiror enforceable against Acquiror in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally, and is subject to general principles of equity.

 

4.3          Capital Structure.  The authorized capital stock of Acquiror consists of 400,000,000 shares, 300,000,000 of which are Acquiror Shares and 100,000,000 of which are initially undesignated preferred stock, par value $0.001 per share, which have the rights, preferences, privileges and restrictions set forth in the Acquiror Organization Documents and applicable law (such preferred stock, the “Acquiror Preferred Stock”).  After giving effect to the Exchange and the transactions contemplated by the Other Acquisition Agreement, the authorized capital stock of the Acquiror shall consist of 400,000,000 shares, 42,750,000 of which shall be issued and outstanding Acquiror Shares.   All issued and outstanding Acquiror Shares have been duly authorized and validly issued in compliance with applicable laws.  There are no other Acquiror Shares, other shares of capital stock of Acquiror, or any options, warrants and other securities of Acquiror that are exercisable for or convertible into capital stock of Acquiror, outstanding.

 

4.4          Governmental Authorization.  The execution, delivery and performance by Acquiror of this Agreement requires no governmental authorization from any governmental authority other than (a) any governmental authorizations otherwise expressly referred to in this Agreement or any schedule hereto; (b) any filings required to be made by SFX in accordance with applicable law; (c) notice filings that are not material; and (d) governmental authorizations required by governmental authorities outside of the U.S. to effectuate or record the transfer of any Acquiror Shares.

 

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4.5          Non-Contravention.  The execution, delivery and performance by Acquiror of this Agreement does not and will not (a) contravene or conflict with the Acquiror Organization Documents, true and correct copies of which have been delivered to SFX by Acquiror (b) contravene or conflict with or constitute a violation of any provision of any applicable law binding upon Acquiror or any of the Acquiror Shares; (c) result in the creation or imposition of any lien on any of the Acquiror Shares; or (d) contravene, conflict with or constitute a violation or breach of any agreement to which Acquiror is a party or by which Acquiror has any obligation to third parties.

 

4.6          Litigation.  There are no actions that have been brought by or against or before any governmental authority or any other person pending or, to the knowledge of Acquiror, threatened, nor has Acquiror received any correspondence regarding any such pending or threatened actions, with respect to Acquiror that seeks to enjoin or rescind the transactions contemplated by this Agreement, and there are no existing actions, orders, judgments or decrees against or binding upon Acquiror or any of the Acquiror Shares, or that would prevent the performance by Acquiror of the transactions contemplated by this Agreement.

 

4.7          No Advertising or Solicitation.  Neither the Acquiror nor anyone acting on behalf of the Acquiror has engaged in any general advertising or solicitation in contravention of the Securities Act for the offer and sale of the Acquiror Shares or any other shares of common stock.  Assuming the accuracy each Stockholder’s representations contained in this Agreement, the offer, sale, issuance and delivery of the Acquiror Shares are exempt from registration under the Securities Act and all action required to be taken prior to the offer or sale of the Acquiror Shares has been taken under applicable state securities laws.

 

4.8          Purpose of Formation.  The Acquiror is a newly organized entity formed for the purpose of acquiring the Other Parties and to operate in such related businesses and, as of the date hereof, has no operating history and has incurred no material liabilities other than in connection with consummating the Exchange, or in connection with the acquisition of the Other Parties, none of which have been acquired prior to the Closing Date.

 

4.9          Compliance with Law.  The Acquiror is in material compliance with all laws, ordinances, and rules and regulations of governmental authorities applicable to or affecting it, its properties or its business, and the Acquiror has not received notice of any claimed violation or default with respect to any of the foregoing which would reasonably be expected to have a material adverse effect on the Acquiror.

 

4.10        Anti-Money Laundering.  The operations of the Acquiror are, and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Acquiror or with respect to the Money Laundering Laws is pending or, to the best knowledge of the Acquiror, threatened. Neither the Acquiror nor, to the knowledge of the Acquiror, any of its current officers, has on behalf of the Acquiror or in connection with its 

 

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business: (a) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; or (b) violated or is in violation of in any material respect any provision of the United States Foreign Corrupt Practices Act of 1977, as amended.

 

ARTICLE 5

COVENANTS OF THE PARTIES

 

5.1          Further Assurances.  The parties hereto agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement on a timely basis the transactions contemplated by this Agreement.  In addition, at such times and from time to time on and after the Closing Date, upon reasonable request by any of Acquiror or SFX, each Stockholder will execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, deeds, assignments, transfers, conveyances, licenses, powers of attorney, and assurances that may reasonably be required for the better conveying, transferring, assigning, delivering and confirming ownership to, or reducing to the possession of, Acquiror all of the SFX Shares and to otherwise carry out the purposes of this Agreement.

 

5.2          Certain Filings. Without limiting the generality of Section 5.1, the parties hereto shall cooperate with one another in determining whether any action by or in respect of, or filing with, any governmental authority is reasonably necessary or appropriate, or any action, consent, approval or waiver from any party to any of the contracts being transferred hereunder is reasonably necessary or appropriate, in connection with the consummation of the transactions contemplated by this Agreement.  Subject to the terms and conditions of this Agreement, in taking such actions or making any such filings, the parties hereto shall furnish information reasonably required in connection therewith and seek timely to obtain any such actions, consents, approvals or waivers.

 

5.3          Assignment and Assumption of SFX Obligations.  Acquiror, SFX and each Stockholder shall execute the Assignment and Assumption Agreement, substantially in the form attached hereto as Exhibit A, pursuant to which Acquiror will assume all of the obligations of SFX under those certain subscription agreements entered into by SFX and the respective Stockholders.

 

5.4          Tax Indemnity.  Each of SFX and Acquiror agrees, subject to the other terms and conditions of this Agreement, to indemnify each Stockholder and their respective affiliates, officers, directors, employees, members, successors and assigns from and against, and hold each Stockholder harmless to the extent of, any taxes imposed on such Stockholder by any governmental authority upon the contribution of SFX Shares in exchange for Acquiror Shares pursuant to the Exchange and/or any other damages, losses, penalties, liabilities, reasonable costs and reasonable expenses incurred by the Stockholder in connection with the Exchange.

 

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ARTICLE 6
 CLOSING

 

6.1          Closing Date.  The Closing shall take place on the date hereof (the “Closing Date”).

 

6.2          Closing Deliveries.  At Closing or as soon as reasonably practicable thereafter, each Stockholder shall deliver, or cause to be delivered, to Acquiror an original stock certificate evidencing the SFX Shares owned by such Stockholder as set forth on such Stockholder’s signature page hereto.  At such time, Acquiror shall deliver to each Stockholder an original stock certificate evidencing the Acquiror Shares to be received by such Stockholder as Consideration.

 

ARTICLE 7
 MISCELLANEOUS

 

7.1          Notices.  All notices, requests and other communications to either party hereunder shall be in writing (including facsimile, PDF or e-mail) and shall be given,

 

	
If   to the Acquiror or SFX, to:
    
	
 
    
	
SFX   Entertainment Inc.
    
	
650   Madison Avenue
    
	
New   York, NY 10022
    
	
Attention:  Mitchell Nelson, Esq.
    
	
Fax:  (212) 750-3034
    
	
 
    
	
With   a copy to:
    
	
 
    
	
Reed   Smith LLP
    
	
599   Lexington Avenue
    
	
26th Floor
    
	
New   York, NY 10022
    
	
Attention:    Aron Izower, Esq.
    
	
Fax:  (212) 524-5450
    
	
 
    
	
If   to a Stockholder, to:
    
	
 
    
	
The   address set forth on such Stockholder’s signature page hereto.
    

 

7.2          Amendments; No Waivers.  Any provisions of this Agreement may be amended or waived prior to the Closing if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the parties hereto, in the case of a waiver, by the party against whom the waiver is to be effective.  No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial 

 

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exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

7.3          Expenses.  Except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense.

 

7.4          Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

7.5          Governing Law.  This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to the conflicts of law rules of such state.

 

7.6          Consent to Jurisdiction; Venue; Service of Process.

 

(a)           Each party hereto, by its execution hereof, (i) hereby irrevocably submits to the exclusive jurisdiction of any New York federal court sitting in the Borough of Manhattan of The City of New York for the purpose of any action among the parties arising in whole or in part under or in connection with this Agreement; provided, however, that if such federal court does not have jurisdiction over such action, such action shall be heard and determined exclusively in any New York state court sitting in the Borough of Manhattan of The City of New York, (ii) hereby waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than one of the above-named courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by such court, and (iii) hereby agrees to commence any such action only before one of the above-named courts.  Notwithstanding the immediately preceding sentence, a party may commence any action in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.

 

(b)           Each party hereby agrees that service of any process, summons, notice or document by U.S. registered mail, return receipt requested, at its address specified pursuant to Section 7.1 shall constitute good and valid service of process in any action among the Parties arising in whole or in part under or in connection with this Agreement, and each party hereby waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such action any claim that service of process made in accordance with this Section 7.6(b) does not constitute good and valid service of process.

 

7.7          Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION 

 

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ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY. ANY ACTION WHATSOEVER AMONG THEM RELATING TO THIS AGREEMENT, OR ANY OF THE CONTEMPLATED TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

7.8          Counterparts; Effectiveness.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto were upon the same instrument.  This Agreement shall become effective when each party shall have received a counterpart hereof signed by the other parties.

 

7.9          Entire Agreement.  This Agreement and the ancillary agreements related thereto constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement.

 

7.10        Titles and Headings; Construction.  The titles and headings to Sections herein and to the Exhibits and Schedules hereto are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or other rule requiring construction hereof against the party causing this Agreement to be drafted. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and shall be deemed to be followed by the words “without limitation”. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. All references herein to a Section, Article, Exhibit or Schedule are to a Section, Article, Exhibit or Schedule of or to this Agreement, unless otherwise indicated.

 

7.11        Severability.  If any provision of this Agreement is held invalid, unenforceable or void by a court of competent jurisdiction, the remaining provisions shall not for that reason alone be unenforceable or invalid. In such case, the parties agree to negotiate in good faith to create an enforceable contractual provision to achieve the purpose of the invalid provision. Further, if any provision is held to be overbroad as written, such provision shall be deemed amended to narrow its application to the extent necessary to make the provision enforceable according to applicable law and shall be enforced as amended.

 

7.12        No Third Party Beneficiaries.  Except as set forth in Section 5.4, this Agreement shall be binding upon and inure solely to the benefit of the parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity, including any union or any employee or former employee of SFX, any 

 

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legal or equitable right, benefit or remedy of any nature whatsoever, including any rights of employment for any specified period, under or by reason of this Agreement.

 

7.13        Specific Performance.  The Stockholders acknowledge and agree that Acquiror and SFX would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms and that any breach of this Agreement by any of the Stockholders could not be adequately compensated in all cases by monetary damages alone.  Accordingly, in addition to any other right or remedy to which Acquiror and SFX may be entitled, at law or in equity, they shall be entitled to enforce and provision of this Agreement by a decree of specific performance and to temporary, preliminary and permanent injunctive relief to prevent breaches or threatened breaches of any of the provisions of this Agreement, without posting any bond or other undertaking.

 

7.14        Several Obligations.  Notwithstanding anything to the contrary contained in this Agreement, the obligations and liabilities of each Stockholder shall be several and not joint and several and shall, where applicable, be limited to such Stockholder’s pro rata ownership percentage in SFX.

 

[Signature page follows.]

 

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IN WITNESS WHEREOF, the parties hereto executed, or caused this Agreement to be duly executed by their respective authorized officers, as of the date first written above.

 

	
 
    	
SFX   HOLDING CORPORATION
    
	
 
    	
 a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SFX   ENTERTAINMENT INC.
    
	
 
    	
 a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

[Signature Page to SFX Exchange Agreement]

 

 

	
 
    	
STOCKHOLDERS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[                ]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
Address:
    

 

[Signature Page to SFX Exchange Agreement]

 

 

EXHIBIT A

 

Assignment and Assumption Agreement

 

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) entered into by and between SFX Holding Corporation, a Delaware corporation (“Acquiror”), and SFX ENTERTAINMENT INC., a Delaware corporation (“SFX”), dated as of June 19, 2012.

 

WHEREAS, the Acquiror, SFX, and certain stockholders of SFX, have entered into the Share Exchange Agreement, dated as of June 19, 2012 (the “Exchange Agreement”); and

 

WHEREAS, in accordance with the terms of the Exchange Agreement, the Acquiror desires to accept as of the date hereof (the “Effective Date”), the assignment of all of SFX’s rights, interests, duties, obligations and liabilities in, to and under that certain Subscription Agreement, entered into on or about                , 2012, by SFX and the undersigned stockholder (the “Subscription Agreement”).

 

NOW, THEREFORE, in consideration of the foregoing and of other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

 

1.             Assignment of Subscription Agreement.  SFX hereby sells, grants, assigns, transfers, delivers, sets over and conveys to the Acquiror all of its rights, interests, duties, obligations and liabilities in, to and under the Subscription Agreement as of the Effective Date.

 

2.             Assumption of Subscription Agreement. From and after the Effective Date, the Acquiror hereby accepts the assignment contained in Section 1 and assumes all of the duties, obligations and liabilities of SFX in, to and under the Subscription Agreement. The Assignee hereby agrees to be bound by the terms and provisions of the Subscription Agreement and accepts all of the SFX’s rights, interests, duties, obligations and liabilities thereunder.

 

3.             Governing Law.  This Agreement shall in all respects be governed by, and construed in accordance with, the internal substantive laws of the State of New York, including all matters of construction, validity or interpretation of this Assignment.

 

4.             Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts shall constitute one and the same instrument.

 

5.             Binding Nature.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns.

 

[Signature page follows.]

 

 

IN WITNESS WHEREOF, the parties hereto executed, or caused this Agreement to be duly executed by their respective authorized officers, as of the date first written above.

 

	
 
    	
SFX   HOLDING CORPORATION
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SFX   ENTERTAINMENT INC.
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    

 

 

	
Acknowledged   and Agreed to by Stockholder:
    
	
 
    
	
[          ]
    
	
 
    
	
 
    
	
By:
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    
	
Title:
    

 

[Signature Page to Assignment and Assumption Agreement]Exhibit 10.6

 

SFX Entertainment Inc.

650 Madison Avenue, 15th Floor

New York, New York 10022

 

SUBSCRIPTION AGREEMENT

 

SFX Entertainment Inc., a Delaware corporation (the “Company”), is hereby privately offering 500,000 shares (the “Shares”) of common stock, $0.001 par value per share, of the Company (the “Common Stock”) at an aggregate purchase price of $2,500,000 (the “Purchase Price”) to the undersigned, in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Rule 506 of Regulation D under the Securities Act.

 

The Company will use the proceeds from this offering (this “Offering”) to fund its short-term working capital requirements in order to develop (initially through acquisitions) a live entertainment enterprise engaged in production and marketing of electronic dance music, live music, sporting, and other entertainment events around the world (the “Business”) and to pay expenses incurred in connection therewith.  The Company, through the efforts of Robert F.X. Sillerman, its Chairman, has been negotiating with the owners of various companies in the Business for the acquisition of all or a portion of their businesses (such businesses, the “Targets”) and will use a portion of the proceeds of this Offering, together with additional funds anticipated to be raised, to acquire such Targets.

 

1.                                      Subscription. Subject to the terms and conditions of this subscription agreement (“Subscription Agreement”), the undersigned (including its permitted assignees (to the extent applicable), “Purchaser”) hereby agrees to be legally bound to purchase the Shares subscribed for hereunder, and upon written notice from the Company, subject to the terms of this Subscription Agreement, Purchaser and the Company shall hold a closing (the “Closing”) at which Purchaser shall fulfill its subscription by paying the Purchase Price by wire transfer in immediately available funds to an account designated by the Company as consideration for the issuance by the Company of the Shares.  Original certificates reflecting the Shares shall be provided to Purchaser following the Closing.

 

2.                                      Conditions to Subscription.  Subject to other applicable provisions of this Subscription Agreement (including without limitation Sections 5, 11, and 18 hereof), Purchaser understands and agrees that this subscription is made subject to the following terms and conditions:

 

(a)                                 This subscription shall be deemed to be accepted by the Company only when it is signed by the Company;

 

(b)                                 Subscriber may not revoke, cancel or terminate this subscription unless the Company cancels or terminates the Offering; and

 

(c)                                  Subscriber has executed and delivered this Subscription Agreement and hereby agrees to tender the Purchase Price at Closing in accordance with the terms hereof.

 

If this subscription is rejected by the Company in its sole and absolute discretion or because the Company terminates or cancels the Offering, this Subscription Agreement shall thereafter be of no further force or effect.

 

3.                                      Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to, and agrees with, the Company as of (i) the date Purchaser executes this Subscription Agreement and (ii) as of the Closing Date (as hereinafter defined), as follows:

 

(a)                                 (i)                                     Purchaser has received and has read and fully understands this Subscription Agreement.

 

(ii)                                  Purchaser or its advisor(s) have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the

 

 

Company and the Offering and all such questions have been answered to the full satisfaction of Purchaser.

 

(iii)                               No oral or written representations have been made other than as stated in this Subscription Agreement.

 

(iv)                              Purchaser has such knowledge and experience in financial, tax and business matters so as to enable it to utilize the information made available to it in connection with the Offering, to evaluate the merits and risks of an investment in the Shares and to make an informed decision with respect thereto; Purchaser acknowledges that there is a significant risk of loss of all or a portion of Purchaser’s investment in the Shares.

 

(v)                                 Purchaser is not subscribing for the Shares pursuant to a general solicitation or general advertisement by the Company.

 

(b)                                 Purchaser is an “accredited investor” within the meaning of Rule 501(a), as promulgated under the Securities Act, because Purchaser (i) had individual income (exclusive of any income attributable to Purchaser’s spouse) of more than $200,000 in each of the most recent two years or joint income with Purchaser’s spouse in excess of $300,000 in each of such years and reasonably expects to have income of at least the same level for the current year, or (ii) has an individual net worth, or a combined net worth with Purchaser’s spouse, in excess of $1,000,000.  For purposes of this Subscription Agreement, “individual net worth” means the excess of total assets at fair market value, including personal property and real estate, cash, short-term investments, stock and securities, over total liabilities; provided, that the fair market value of such person’s primary residence is excluded from the calculation of net worth and, if the amount of the debt or other indebtedness secured by such person’s primary residence exceeds its fair market value, such excess liability must be deducted from such person’s net worth. Purchaser must also include as a liability any increase in the amount of debt secured by Purchaser’s primary residence incurred within 60 days prior to the date of Purchaser’s subscription hereunder unless such debt is incurred in connection with the acquisition of the primary residence.

 

(c)                                  Purchaser’s overall commitment to investments which are not readily marketable is not excessive in relation to its net worth.

 

(d)                                 (A)  Purchaser has all requisite power and authority to execute and deliver this Subscription Agreement, (B) the execution and delivery by Purchaser of this Subscription Agreement and the performance by it of its obligations hereunder have been duly authorized by all necessary action of Purchaser, (C) this Subscription Agreement has been duly and validly executed and delivered by Purchaser and constitutes legal, valid and binding obligations of Purchaser, and (D) this Subscription Agreement is enforceable against Purchaser in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws affecting generally the enforcement of creditors’ rights and the relief of debtors.

 

(e)                                  Purchaser acknowledges and understands that an investment in the Company will involve substantial risks.  Purchaser further acknowledges and understands that the following list of risk factors does not purport to be a complete enumeration or explanation of the risks involved in an investment in the Company and additional risks or uncertainties may adversely affect the Company or the value of an investment in the Company:

 

(i)                                     Mr. Robert F.X. Sillerman, as the beneficial owner of a majority of the Company’s outstanding Common Stock, is the controlling stockholder of the Company and has the ability to exert significant control over the Company’s management and affairs requiring stockholder approval, including the approval of significant corporate transactions and the ability to elect and remove directors.

 

(ii)                                  The Company is a development stage company and its prior operating history will not be germane to future operations.  The Company’s prospects must be evaluated in light of

 

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the risks and uncertainties frequently encountered by a company in the early stage of development. The Business in which the Company intends to operate is highly competitive and makes these risks and certainties particularly pronounced.  The Company may not succeed in developing a viable business and may never become profitable.

 

(iii)                               The Company has significant capital requirements to develop its business and will need to raise additional capital for the foreseeable future, which may occur through equity and/or debt financings. There can be no assurance that the Company will be able to raise such capital when needed or on terms and conditions acceptable to the Company, or at all.  To the extent the Company raises additional capital by issuing equity securities, but subject to Section 6, the Company’s stockholders will experience dilution in their ownership of the Common Stock of the Company.

 

(iv)                              At Closing, the Company will initially acquire various businesses in the Business with whom it has been negotiating, after which the Registration Statement will be submitted to the Securities and Exchange Commission on Form S-1 to register for resale the Shares purchased by the Subscriber, together with those shares of Common Stock of other investors or businesses acquired for which shares of the Company’s Common Stock are given as consideration and any shares of Common Stock offered for sale by the Company. Except as set forth herein, there are no assurances as to the timing of the effectiveness of the Registration Statement.

 

(v)                                 The loss of the services of Mr. Sillerman or one or more key members of management or other key employees of the Company could have a material adverse effect upon the Company’s business, operating results or financial condition.  In addition, the future success of the Company will depend in large part upon its ability to attract and retain additional management and personnel.  There can be no assurance that the Company will be successful in attracting and retaining such personnel, and the failure to do so would have a material adverse effect on the Company’s business, operating results and financial condition.

 

(vi)                              The Shares are “restricted securities” as defined in Rule 144 under the Securities Act and have not been registered under the Securities Act or any state securities laws.  The Shares are highly illiquid.  Until the Registration Statement is declared effective, the Shares to be issued will not be registered under the Securities Act or any state securities laws and, thus, will not be freely tradable or eligible for resale, unless an exemption from the registration requirements of the Securities Act, including Rule 144, is available.  Purchaser will not be able to rely on Rule 144 to sell the Shares unless the sale complies with the conditions of that rule, including satisfaction of Purchaser’s holding period.  An active public market for the Company’s Common Stock may not develop or be sustained. In addition, the number of unrestricted shares of the Company in the public float may represent only a small percentage of the shares of Company Common Stock outstanding.

 

(vii)                           The Company does not anticipate paying dividends on its Common Stock in the foreseeable future.  In addition, the terms of future debt financings may prohibit the payment of cash dividends on the Common Stock.

 

(f)                                   Purchaser acknowledges (to the extent applicable):

 

(i)                                     Purchaser, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or other entity for whom Purchaser is executing this Subscription Agreement, and such individual, ward, partnership, trust, estate, corporation, or other entity has full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company;

 

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(ii)                                  Purchaser consents to the placement of the following legend on any certificate or other document evidencing the Shares:

 

THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND HAVE BEEN SOLD IN RELIANCE UPON EXEMPTIONS THEREFROM. THESE SECURITIES MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM.

 

(iii)                               The representations, warranties, and agreements of Purchaser contained herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Shares; and

 

(iv)                              In connection with any Transfer (as hereinafter defined) or attempted Transfer of Shares pursuant to an exemption from the registration requirements of the Act, the Company shall be permitted to require in its sole discretion an opinion of counsel reasonably satisfactory to the Company that such Transfer is exempt from registration.

 

4.                                      Representations and Warranties of the Company. The Company hereby represents and warrants to, and agrees with, Purchaser as of (i) the date the Company executes this Subscription Agreement and (ii) as of the date of the Closing (the “Closing Date”), as follows:

 

(a)                                 The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to conduct its business as currently conducted.

 

(b)                                 The Company has all requisite power and authority to execute, deliver and perform this Subscription Agreement and to carry out and consummate the transactions contemplated hereby. The execution, delivery and performance of this Subscription Agreement by the Company has been duly authorized by all requisite corporate action, and this Subscription Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization or similar laws affecting generally the enforcement of creditors’ rights and the relief of debtors.

 

(c)                                  The execution, delivery and performance of this Subscription Agreement  by the Company will not violate, conflict with, result in any breach of, result in the creation of any lien, security interest, charge or encumbrance upon any of the properties, assets or outstanding shares of the Company or constitute a default under, any provision of law, any rule or regulation of any governmental authority, any judgment, decree or order of any court binding on the Company, or any of the unwaived terms, conditions or provisions under its Certificate of Incorporation or By Laws or any indenture, mortgage, lease, agreement or other instrument to which the Company is a party or by which it or any of its properties is bound or affected.

 

(d)                                 The Shares, when so issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and nonassessable.  The authorized capital stock of the Company consists of 300,000,000 shares of Common Stock. As of the Closing Date (but not including the Shares or any shares issued in the acquisitions of Targets or to other investors on or prior to such Closing Date), there will be 40,000,000 shares of Common Stock issued and outstanding and such shares have been duly and validly issued and are fully paid and nonassessable.

 

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(e)                                  Neither the Company nor anyone acting on behalf of the Company has engaged in any general advertising or solicitation in contravention of the Securities Act for the offer and sale of the Shares or any other shares of Common Stock.  Assuming the accuracy of Purchaser’s representations contained in this Subscription Agreement, the offer, sale, issuance and delivery of the Shares are exempt from registration under the Securities Act and all action required to be taken prior to the offer or sale of the Shares has been taken under applicable state securities laws.

 

(f)                                   The Company was formed for the purpose of acquiring the Targets and to operate in such related businesses and, prior to the acquisition of any Targets, had no operating history and has incurred no material liabilities other than in connection with financing and consummating the acquisition of the Targets.

 

(g)                                  The Company is in material compliance with all laws, ordinances, and rules and regulations of governmental authorities applicable to or affecting it, its properties or its business, and the Company has not received notice of any claimed violation or default with respect to any of the foregoing which would reasonably be expected to have a material adverse effect on the Company.

 

(h)                                 The operations of the Company are, and have been conducted at all times, in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar applicable rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened. Neither the Company nor, to the knowledge of the Company, any of its current officers, has on behalf of the Company or in connection with its business: (a) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; or (b) violated or is in violation of in any material respect any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended.

 

(i)                                     The representations, warranties, and agreements of Company contained herein shall survive the execution and delivery of this Subscription Agreement and the sale of the Shares.

 

5.                                     Conditions to the Obligations of Purchaser.  The obligation of Purchaser to purchase Shares at the Closing is subject to the fulfillment, or the waiver by Purchaser, of the following conditions on or before the Closing:

 

(a)                                 Each representation and warranty contained in Section 4 shall be true and complete on and as of the Closing Date with the same effect as though such representation and warranty had been made on and as of that date.

 

(b)                                 The Company shall have delivered to Purchaser a certificate, executed by the Chief Executive Officer of the Company, dated the Closing Date, certifying to the fulfillment of the conditions specified in Section 5(a) of this Subscription Agreement.

 

(c)                                  All registrations, qualifications, permits and approvals required under applicable state and Federal securities laws for the lawful execution and delivery of this Agreement and the offer, sale, issuance and delivery of the Shares shall have been obtained, except for the notices required or permitted to be filed after the Closing with certain Federal and state securities commissions, which notices the Company will file on a timely basis.

 

(d)                                 The Company will have acquired or will acquire on the Closing Date one or more Targets.

 

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6.                                      Affirmative Covenants of the Company.  The Company covenants and agrees that, beginning upon the date the Company executes this Subscription Agreement and ceasing immediately prior to the time the Securities and Exchange Commission (“SEC”) declares effective a registration statement on Form S-1 (the “Registration Statement”) which registers the resale of the Company’s Common Stock or the sale by the Company of its Common Stock, in each case, including without limitation, the Shares (in either event, an “IPO”), the Company shall:

 

(a)                                 Use its reasonable best efforts to acquire by August 15, 2012 Targets with a purchase price based on commercially reasonable multiples under current market conditions using a combination of cash and shares of Common Stock.

 

(b)                                 Not issue shares of Common Stock or a derivative security containing a right to purchase Common Stock at a price per share that implies a valuation of the Company of less than $250,000,000.

 

(c)                                  (i) Submit a registration statement to the SEC for its IPO by August 15, 2012, (ii) use its reasonable best efforts to have such registration statement declared effective under the Securities Act as soon as practicable thereafter, and (iii) use its reasonable best efforts to qualify as an “emerging growth company”. The Company covenants that such registration statement shall seek to register for resale some or all shares that are held by the Company’s shareholders (including the Shares issued to Purchaser).  The Company further covenants it shall use its commercially reasonable efforts to include in such registration statement all shares requested to be included by Non-management Holders (as hereinafter defined) as is practicable, subject to market conditions.

 

Any and all fees, costs and expenses incident to the registration and the IPO shall be borne by the Company.  If the managing underwriter in the IPO advises the Company in writing that in its opinion, the shares of Common Stock proposed to be included in the registration exceeds the number of shares that can be sold in such offering, the Company shall include in such registration the number of shares of Common Stock to be sold by Non-management Holders (as hereinafter defined) that such managing underwriter advises can be sold.  In such event, the Company shall allocate that number of shares of Common Stock pro rata among the Non-management Holders (as hereinafter defined) of such shares of Common Stock.  In no event, in connection with any indemnification obligations by any holder of shares of Common Stock that are incident to the registration of such holder’s shares, shall such holder’s liability exceed its proportionate amount of any such indemnity and the net amounts received by such holder from the sale of its shares of Common Stock pursuant to the Registration Statement.

 

(d)                                 Furnish to Purchaser:

 

(i)                                     As soon as available and in any event within 90 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company, a consolidated statement of operations of the Company, and consolidated statements of cash flows and stockholders’ equity of the Company as of the close of such fiscal year, all of the foregoing financial statements to be certified by independent public accountants and accompanied by a complete set of notes;

 

(ii)                                  As soon as available and in any event within forty-five (45) days after the end of each fiscal quarter of the Company, a consolidated balance sheet and consolidated statements of operations, cash flows and stockholders’ equity, showing the financial condition of the Company; and

 

(iii)                               Such other reasonably requested documents and records of the Company.

 

(e)                                  Use the proceeds from this Offering to fund the acquisitions of the Targets and to pay the expenses of its professionals (including auditor and attorney fees) in connection with the acquisitions of the Targets, this Offering and other capital raising transactions, and the IPO.

 

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7.                                      Tag Along Right.  Beginning upon the date the Company executes this Subscription Agreement and ceasing immediately prior to the IPO, if Robert F.X. Sillerman and/or his affiliates (the “Selling Stockholder”) propose to sell or transfer, whether directly or indirectly (a “Transfer”), any shares of Common Stock to an unaffiliated third party (the “Proposed Transferee”), Purchaser shall be permitted to participate in such Transfer (a “Tag-along Sale”) on the terms and conditions set forth in this Section 7.  Robert F.X. Sillerman shall acknowledge his agreement to comply with this Section 7 by executing the signature page hereof.  The Selling Stockholder shall deliver to Purchaser a written notice of the proposed Transfer (the “Tag Notice”) no more than five business days after the execution and delivery by all the parties thereto of the definitive agreement entered into with respect to the Tag-along Sale and, in any event, no later than ten business days prior to the closing date of the Tag-along Sale.  Purchaser shall be permitted to exercise its right to participate in the Tag-along Sale by delivering to the Selling Stockholder a written notice stating its election to do so and specifying the number of shares of Common Stock to be sold by it no later than five business days after receipt of the Tag Notice. Purchaser shall have the right to Transfer in a Transfer subject to this Section 7 the number of shares of Common Stock equal to the product obtained by multiplying (x) the number of shares of Common Stock held by Purchaser by (y) a fraction (A) the numerator of which is equal to the number of shares of Common Stock the Selling Stockholder proposes to Transfer to the Proposed Transferee and (B) denominator of which is equal to the number of shares of Common Stock then owned by such Selling Stockholder. If the Selling Stockholder is unable to cause the proposed transferee in the Tag-along Sale to purchase all of the shares of Common Stock proposed to be Transferred by Purchaser, then the number of shares of Common Stock that each such participating holder is entitled to Transfer shall be scaled back pro rata based on the number of shares of Common Stock held by such participating holder relative to the number of shares of Common Stock held by all participating holders in the Tag-along Sale.  The Selling Stockholder shall have a period of 180 days after the expiration of the five business day period following the receipt of the Tag Notice to Transfer all of the shares of Common Stock agreed to be Transferred to the transferee, on the same terms specified in the Tag Notice.  In connection with any Tag-along Sale in which Purchaser participates, Purchaser shall only be required to make or provide representations, warranties, covenants, indemnities and agreements customary for a minority stockholder selling in a Tag-along Sale similar to that described herein.

 

8.                                      Other Protective Provisions.   Beginning upon the Closing Date and ceasing immediately prior to the IPO, the Company shall not, without first obtaining the prior written consent or affirmative vote of non-management holders holding a majority of the shares of Common Stock (for avoidance of doubt, Sillerman and his affiliates shall be deemed to be management holders of shares of Common Stock) (“Non-management Holders”):

 

(a)                                 amend, alter or repeal any provision of the Certificate of Incorporation of the Company or the By-Laws of the Company in a manner that adversely effects the rights, preferences, and privileges of any class of capital stock;

 

(b)                                 enter into any transaction with any affiliate of the Company (other than pursuant to a compensation arrangement approved pursuant to Section 8(f) hereof;

 

(c)                                  issue, declare or make any dividends, distributions or redemptions other than on a pro rata basis;

 

(d)                                 effect any material change in the nature of the Company’s business from the Business;

 

(e)                                  effectuate any change in control of the Company resulting in Robert F.X. Sillerman (and his affiliates) no longer controlling the Company; or

 

(f)                                   approve the payment for or make any payment in respect of compensation (including equity awards) to any senior officer of the Company unless such compensation amounts or terms are approved by the compensation committee of the board of directors.

 

9.                                      Governance.   Following the closing of the IPO, the Company shall comply, as if it were a Nasdaq listed company, with the corporate governance rules of The Nasdaq Stock Market LLC,  including but not limited to, shareholder approval, related party transactions, and board independence requirements (subject to any phase-in periods that would be applicable to a company listing on the exchange).

 

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10.                               Current Public Information.   From and after the date in which the SEC declares the Registration Statement effective and for so long as Purchase owns Shares, the Company covenants to (i) timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company pursuant to the Exchange Act, even if the Company is not then subject to the reporting requirements of the Exchange Act, and (ii) maintain the listing or quotation of the Common Stock on the NASDAQ (if so listed).  Concurrently with the IPO, the Company shall apply to list all of the shares of Common Stock, including without limitation, the Shares, on the NASDAQ and use its reasonable best efforts to secure the listing of such shares on the NASDAQ. Beginning on the sixth month anniversary of the Closing Date, if the Company has not submitted the Registration Statement to the SEC or has abandoned its previously submitted Registration Statement, then Purchaser shall have the right to require the Company to prepare and furnish to Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for Purchaser to sell the Shares at any time Purchaser owns Shares.  The Company further covenants that it will take such further action as Purchaser may reasonably request, to the extent required from time to time to enable Purchaser to sell the Shares without registration under the Securities Act.

 

11.                               Termination.  This Subscription Agreement may be terminated prior to Closing at the option of Purchaser, in its sole discretion, upon the earlier to occur of (i) the date that is the three month anniversary of the Company’s execution of this Subscription Agreement, if the Closing has not then occurred, and (ii) the date of any breach of this Subscription Agreement by the Company that is not cured within ten days after receipt of written notice from Purchaser of such breach.  Upon any election to terminate this Subscription Agreement by Purchaser in the manner set forth in this Section 11, Purchaser shall be relieved of its obligations with respect to purchasing all of the Shares subscribed for hereunder, without any liability to Purchaser.

 

12.                               Confidentiality.  Each party, agrees that they will not disclose, or cause to be disclosed, the fact of the existence or contents of this Subscription Agreement, to any third person other than (a) their attorneys, accountants, employees, affiliates and representatives, (b) as required by law, rule or regulation, (c) as necessary to enforce this Subscription Agreement, (d) with respect to Purchaser to Purchaser’s direct and indirect investors and potential investors, or (e) in connection with capital raising efforts of the Company.

 

13.                               Prohibitions on Cancellation, Termination, Revocation, Transferability, and Assignment. Purchaser hereby acknowledges and agrees that, except as may be specifically provided herein, or by applicable law, Purchaser is not entitled to cancel, terminate, or revoke this Subscription Agreement, absent mutual written agreement to do so by the parties.

 

14.                               Notices. All notices hereunder shall be sufficient upon receipt for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax, or other electronic transmission service to the appropriate address or number (a) if to the Company, at the address set forth above, or (b) if to Purchaser, at the address set forth on the signature page hereof (or, in either case, to such other address as the party shall have furnished in writing in accordance with the provisions of this Section 14).

 

15.                               Counterparts.  This Subscription Agreement may be executed through the use of separate signature pages or in any number of counterparts, and each of such counterparts shall, for all purposes, constitute one agreement binding on all of the parties, notwithstanding that all parties are not signatories to the same counterpart.  Execution and/or delivery by facsimile or electronic means shall constitute an original signature for all purposes.

 

16.                               Applicable Law. The internal laws of the State of New York (without giving effect to any choice or conflict of law provision or rule (whether of the State of York or any other jurisdiction) that would cause the application of laws of any other jurisdiction) shall govern all matters arising out of or relating to this Subscription Agreement, including its validity, interpretation, construction, performance and enforcement.  Any action or proceeding arising out of or relating to this Subscription Agreement must be brought in the courts of the State of New York, New York County, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York.  Each of the parties knowingly, voluntarily and irrevocably submits to the exclusive jurisdiction of each such court in any such action or proceeding and waives any objection it may now or hereafter have to venue or to convenience of forum. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ALL RIGHTS TO TRIAL BY

 

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JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT, OR ANY TRANSACTIONS CONTEMPLATED HEREBY.  EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT IN ACCORDANCE WITH THIS SECTION AND FURTHER WAIVES ANY CLAIM BASED ON FORUM NON CONVENIENS.

 

17.                               Disclosure Notices.

 

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. PURCHASERS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.

 

THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

 

18                                  Expiration.  The offer contained in this Subscription Agreement shall remain open for five days following the date of execution of this Subscription Agreement by Purchaser.  Notwithstanding anything to the contrary contained in this Subscription Agreement, if the Company shall not have signed this Subscription Agreement within such five day period, this offer shall terminate and Purchaser shall be relieved of its obligations with respect to purchasing all of the Shares subscribed for hereunder, without any liability to Purchaser.

 

19.                               Assignment.  Any assignment by either party of its rights and obligations under this Subscription Agreement shall require the prior written consent of the other party hereto; provided, however that Purchaser may assign its rights under this Subscription Agreement to one or more of its affiliates at any time prior to Closing.

 

20.                               Group Status.  Nothing contained in this Subscription Agreement shall in any way be construed as Purchaser acting in concert or as a group with any other person with respect to the purchase, disposition or voting of securities or otherwise.

 

[SUBSCRIPTION PAGE FOLLOWS]

 

9

 

SUBSCRIPTION PAGE

 

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement this 30th day of May, 2012.

 

	
Shares being purchased:
    	
 
    	
500,000   shares
    	
 
    
	
Purchase Price:
    	
 
    	
$2,500,000
    	
 
    

 

	
Wire   Transfer Purchase Price to:
    	
 
    
	
 
    	
 
    
	
Bank:
    	
               
    	
 
    
	
 
    	
               
    	
 
    
	
 
    	
               
    	
 
    
	
ABA:
    	
               
    	
 
    
	
Account   #:
    	
           
    	
 
    
	
Account   Name:
    	
             
    	
 
    
	
Reference:
    	
SFX   Entertainment Subscription
    	
 
    
					

 

TYPE OF OWNERSHIP (INITIAL ONE)

 

	
o            PARTNERSHIP (Please include a copy of the   statement of partnership of partnership agreement authorizing signature).
    	
 
    	
x          TRUST (Please include name of trust, name of   trustee, date trust was formed and copy of the trust agreement or other   authorization)
    
	
 
    	
 
    	
 
    
	
o            CORPORATION
    	
 
    	
o            LIMITED LIABILITY COMPANY
    
	
 
    	
 
    	
 
    
	
o            INDIVIDUAL
    	
 
    	
o            OTHER (Please include type of entity below)
    
	
 
    	
 
    	
 
    
	
/s/   Gordon Crawford, Trustee
    	
 
    	
 
    

 

Please print exact name (registration) that Purchaser

desires on records of the Company

 

	
The   Gordon & Dana Crawford Trust, UTD 8/23/77
    	
 
    	
 
    
	
###
    	
 
    	
 
    
	
###
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Telephone:   ###-###-####
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
###-###-####
    	
 
    	
 
    
	
Fax   Number
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
###-###-####
    	
 
    	
 
    
	
Social   Security or Taxpayer I.D. Number
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
California
    	
 
    	
 
    
	
State   of organization, if applicable
    	
 
    	
 
    

 

10

 

COMPANY’S ACCEPTANCE

 

This Subscription Agreement is only accepted as so acknowledged in writing by the Company.

 

ACCEPTED as to                                          Shares:

 

	
SFX   Entertainment Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Robert F.X. Sillerman
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
	
 
    	
 
    
	
Date:                                        ,   2012
    	
 
    
				

 

 

ACCEPTED AND AGREED TO ONLY WITH RESPECT

TO TAG-ALONG RIGHT SET FORTH IN SECTION 7 OF

SUBSCRIPTION AGREEMENT

 

 

	
/s/ Robert F.X. Sillerman
    	
 
    
	
Robert   F.X. Sillerman
    	
 
    

 

11

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