Document:

exv10w1

 

EXHIBIT 10.1

THERMA-WAVE,
INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

(As Amended and Restated through August 18, 2005)

     The following constitute the provisions of the 2000 Employee Stock Purchase Plan of
Therma-Wave, Inc.

     1. Purpose. The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through
accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an
“Employee Stock Purchase Plan” under Section 423 of the Code. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner consistent with the
requirements of that section of the Code.

     2. Definitions.

          (a) “Board” means the Board of Directors of the Company.

          (b) “Code” means the Internal Revenue Code of 1986, as amended.

          (c) “Common Stock” means Company’s common stock, par value $0.01 per share.

          (d) “Company” means Therma-Wave, Inc., a Delaware corporation.

          (e) “Compensation” means all regular straight time gross earnings, and shall not
include commissions, payments for overtime, shift premium, incentive compensation, incentive
payments, bonuses and other compensation.

          (f) “Continuous Status As An Employee” means the absence of any interruption or
termination of service as an Employee. Continuous Status as an Employee shall not be considered
interrupted in the case of (i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Administrator, provided that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to Company policy adopted from time to time; or (iv) in the case
of transfers between locations of the Company or between the Company and its Designated
Subsidiaries.

          (g) “Contributions” means all amounts credited to the account of a participant
pursuant to the Plan.

          (h) “Corporate Transaction” means a sale of all or substantially all of the Company’s
assets, or a merger, consolidation or other capital reorganization of the Company with or into
another corporation.

          (i) “Designated Subsidiaries” means the Subsidiaries which have been designated by the
Board from time to time in its sole discretion as eligible to participate in the Plan; provided
however that the Board shall only have the discretion to designate Subsidiaries if the issuance of
options to such Subsidiary’s Employees pursuant to the Plan would not cause the Company to incur
adverse accounting charges.

          (j) “Employee” means any person, including an Officer, who is customarily employed for
at least twenty (20) hours per week and more than five (5) months in a calendar year by the Company
or one of its Designated Subsidiaries.

          (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (l) “Offering Date” means the first business day of Offering Period.

          (m) “Offering Period” means, effective with the first Offering Period commencing on
and after November 1, 2005, a period of twenty-four (24) months commencing on November 1, February
1, May 1 and August 1 of each year except as otherwise set forth in Section 11.

          (n) “Plan” means this Employee Stock Purchase Plan.

          (o) “Purchase Date” means the last day of each Purchase Period of the Plan.

          (p) “Purchase Period” means a period of three (3) months within an Offering Period;
provided, however, that the Purchase Period which commenced on July 1, 2005 shall end on September
30, 2005.

          (q) “Purchase Price” means with respect to a Purchase Period an amount equal to 85% of
the Fair Market Value (as defined in Section 7(b) below) of a Share of Common Stock on the Offering
Date or on the Purchase Date, whichever is lower; provided, however, that in the event (i) of any
increase in the number of Shares available for issuance under the Plan as a result of a
stockholder- approved amendment to the Plan, and (ii) all or a portion of such additional Shares
are to be issued with respect to one or more Offering Periods that are underway at the time of such
increase (“Additional Shares”), and (iii) the Fair Market Value of a Share of Common Stock on the
date of such increase (the “Approval Date Fair Market Value”) is higher than the Fair Market Value
on the Offering Date for any such Offering Period, then in such instance the Purchase Price with
respect to Additional Shares shall be 85% of the Approval Date Fair Market Value or the Fair Market
Value of a Share of Common Stock on the Purchase Date, whichever is lower.

          (r) “Share” means a share of Common Stock, as adjusted in accordance with Section 19
of the Plan.

 

 

          (s) “Subsidiary” shall mean a “subsidiary corporation,” whether now or hereafter
existing, as defined in Section 424(f) of the Code.

     3. Eligibility.

          (a) Any person who is an Employee as of the Offering Date of a given Offering Period shall be
eligible to participate in such Offering Period under the Plan, subject to the requirements of
Section 5(a) and the limitations imposed by Section 423(b) of the Code; provided however that
eligible Employees may not participate in more than one Offering Period at a time.

          (b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted
an option under the Plan (i) if, immediately after the grant, such Employee (or any other person
whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own
capital stock of the Company and/or hold outstanding options to purchase stock possessing five
percent (5%) or more of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the
Company, or (ii) if such option would permit his or her rights to purchase stock under all
employee stock purchase plans (described in Section 423 of the Code) of the Company and its
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of the Fair
Market Value (as defined in Section 7(b) below) of such stock (determined at the time such option
is granted) for each calendar year in which such option is outstanding at any time.

     4. Offering Periods and Purchase Periods.

          (a) Offering Periods. Effective for Offering Periods commencing on and after November
1, 2005, the Plan shall be implemented by a series of Offering Periods of twenty-four (24) months
duration, with new Offering Periods commencing on or about November 1, February 1, May 1 and August
1 of each year (or at such other time or times as may be determined by the Board of Directors).
The Plan shall continue until terminated in accordance with Section 20 hereof. The Board of
Directors of the Company shall have the power to change the duration and/or the frequency of
Offering Periods with respect to future offerings without stockholder approval if such change is
announced at least five (5) days prior to the scheduled beginning of the first Offering Period to
be affected.

          (b) Purchase Periods. Each Offering Period shall consist of eight (8) consecutive
Purchase Periods of three (3) months’ duration. The last day of each Purchase Period shall be the
“Purchase Date” for such Purchase Period. For the Purchase Period that commenced on July 1, 2005,
such Purchase Period shall end on September 30, 2005. Thereafter, a Purchase Period commencing on
November 1 shall end on the next January 31. A Purchase Period commencing on February 1 shall end
on the next April 30. A Purchase Period commencing on May 1 shall end on the next July 31. A
Purchase Period commencing on August 1 shall end on the next October 31. The Board of Directors of
the Company shall have the power to change the duration and/or frequency of Purchase Periods with
respect to future purchases without stockholder approval if such change is announced at least five
(5) days prior to the scheduled beginning of the first Purchase Period to be affected.

     5. Participation.

          (a) An eligible Employee may become a participant in the Plan by completing a subscription
agreement authorizing periodic payroll deductions on the form provided by the Company and filing it
with the Company’s payroll office prior to the applicable Offering Date, unless a later time for
filing the subscription agreement is set by the Board for all eligible Employees with respect to a
given Offering Period. The subscription agreement shall set forth the percentage of the
participant’s Compensation (subject to Section 6(a) below) to be paid as Contributions pursuant to
the Plan.

          (b) Payroll deductions shall commence on the first payroll following the Offering Date and
shall end on the last payroll paid on or prior to the last Purchase Period of the Offering Period
to which the subscription agreement is applicable, unless sooner terminated by the participant as
provided in Section 10.

     6. Method of Payment of Contributions.

          (a) A participant shall elect to have payroll deductions made on each payday during the
Offering Period in an amount not less than one percent (1%) and not more than fifteen percent (15%)
(or such greater percentage as the Board may establish from time to time before an Offering Date)
of such participant’s Compensation on each payday during the Offering Period. All payroll
deductions made by a participant shall
be credited to his or her account under the Plan. A participant may not make any additional
payments into such account.

          (b) A participant may discontinue his or her participation in the Plan as provided in Section
10, or, on one occasion only during a Purchase Period may increase and on one occasion only during
a Purchase Period may decrease the rate of his or her Contributions with respect to the Offering
Period by completing and filing with the Company a new subscription agreement authorizing a change
in the payroll deduction rate. The change shall be effective as of the beginning of the next
payroll period following the date of filing of the new subscription agreement, if the agreement is
filed at least ten (10) business days prior to such date and, if not, as of the beginning of the
next succeeding payroll period.

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          (c) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and Section 3(b) hereof, a participant’s payroll deductions may be decreased by the
Company to 0% at any time during a Purchase Period. Payroll deductions shall re-commence at the
rate provided in such participant’s subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the following calendar year, unless terminated by the
participant as provided in Section 10. In addition, a participant’s payroll deductions may be
decreased by the Company to 0% at any time during a Purchase Period in order to avoid unnecessary
payroll contributions as a result of application of the maximum share limit set forth in Section
7(a), in which case payroll deductions shall re- commence at the rate provided in such
participant’s subscription agreement at the beginning of the next Purchase Period, unless
terminated by the participant as provided in Section 10.

     7. Grant of Option.

          (a) On the Offering Date of each Offering Period, each eligible Employee participating in such
Offering Period shall be granted an option to purchase on each Purchase Date a number of Shares of
the Company’s Common Stock determined by dividing such Employee’s Contributions accumulated prior
to such Purchase Date and retained in the participant’s account as of the Purchase Date by the
applicable Purchase Price; provided however that the maximum number of Shares an Employee may
purchase during any Purchase Period shall be 600 Shares (subject to any adjustment pursuant to
Section 19 below), and provided further that such purchase shall be subject to the limitations set
forth in Sections 3(b) and 13.

          (b) The fair market value of the Company’s Common Stock on a given date (the “Fair Market
Value”) shall be determined by the Board in its discretion based on the closing sales price of the
Common Stock for such date (or, in the event that the Common Stock is not traded on such date, on
the immediately preceding trading date), as reported by the National Association of Securities
Dealers Automated Quotation (Nasdaq) National Market or, if such price is not reported, the mean of
the bid and asked prices per share of the Common Stock as reported by Nasdaq or, in the event the
Common Stock is listed on a stock exchange, the Fair Market Value per share shall be the closing
sales price on such exchange on such date (or, in the event that the Common Stock is not traded on
such date, on the immediately preceding trading date), as reported in The Wall Street Journal. For
purposes of the Offering Date under the first Offering Period under the Plan, the Fair Market Value
of a share of the Common Stock of the Company shall be the Price to Public as set forth in the
final prospectus filed with the Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act of 1933, as amended.

     8. Exercise of Option. Unless a participant withdraws from the Plan as provided in
Section 10, his or her option for the purchase of Shares will be exercised automatically on each
Purchase Date of an Offering Period, and the maximum number of full Shares subject to the option
will be purchased at the
applicable Purchase Price with the accumulated Contributions in his or her account. No
fractional Shares shall be issued. The Shares purchased upon exercise of an option hereunder shall
be deemed to be transferred to the participant on the Purchase Date. During his or her lifetime, a
participant’s option to purchase Shares hereunder is exercisable only by him or her.

     9. Delivery. As promptly as practicable after each Purchase Date of each Offering
Period, the Company shall arrange the delivery to each participant, as appropriate, the Shares
purchased upon exercise of his or her option. No fractional Shares shall be purchased; any payroll
deductions accumulated in a participant’s account which are not sufficient to purchase a full Share
shall be retained in the participant’s account for the subsequent Purchase Period or Offering
Period, subject to earlier withdrawal by the participant as provided in Section 10 below. Any other
amounts left over in a participant’s account after a Purchase Date shall be returned to the
participant.

     10. Voluntary Withdrawal; Termination of Employment.

          (a) A participant may withdraw all but not less than all the Contributions credited to his or
her account under the Plan at any time prior to each Purchase Date by giving written notice to the
Company. All of the participant’s Contributions credited to his or her account will be paid to him
or her promptly after receipt of his or her notice of withdrawal and his or her option for the
current period will be automatically terminated, and no further Contributions for the purchase of
Shares will be made during the Offering Period.

          (b) Upon termination of the participant’s Continuous Status as an Employee prior to the
Purchase Date of an Offering Period for any reason, including retirement or death, the
Contributions credited to his or her account will be returned to him or her or, in the case of his
or her death, to the person or persons entitled thereto under Section 14, and his or her option
will be automatically terminated.

          (c) In the event an Employee fails to remain in Continuous Status as an Employee of the
Company for at least twenty (20) hours per week during the Offering Period in which the employee is
a participant, he or she will be deemed to have elected to withdraw from the Plan and the
Contributions credited to his or her account will be returned to him or her and his or her option
terminated.

          (d) A participant’s withdrawal from an offering will not have any effect upon his or her
eligibility to participate in a succeeding offering or in any similar plan which may hereafter be
adopted by the Company

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     11. Automatic Withdrawal. If the Fair Market Value of the Shares on any Purchase Date
of an Offering Period is less than the Fair Market Value of the Shares on the Offering Date for
such Offering Period, then every participant shall automatically (i) be withdrawn from such
Offering Period at the close of such Purchase Date and after the acquisition of Shares for such
Purchase Period, and (ii) be enrolled in an Offering Period commencing on such Purchase Date and
extending for 24 months and one day and containing Purchase Periods which end on April 30, July 31,
October 31 and January 31 of each year; provided, however, that any Offering Period that would
otherwise have commenced on the first business day subsequent to such Purchase Date shall also
commence on such Purchase Date and be extended for 24 months and one day.

     12. Interest. No interest shall accrue on the Contributions of a participant in the
Plan.

     13. Stock.

          (a) Subject to adjustment as provided in Section 19, the maximum number of Shares which shall
be made available for sale under the Plan shall be 3,500,000 Shares or such lesser number of Shares
as is determined by the Board. If the Board determines that, on a given Purchase Date, the number
of shares with respect to which options are to be exercised may exceed (i) the number of shares of
Common Stock that were available for sale under the Plan on the Offering Date of the applicable
Offering Period, or (ii) the number of shares available for sale under the Plan on such Purchase
Date, the Board may in its sole discretion provide (x) that the Company shall make a pro rata
allocation of the Shares of Common Stock available for purchase on such Offering Date or Purchase
Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in
its sole discretion to be equitable among all participants exercising options to purchase Common
Stock on such Purchase Date, and continue all Offering Periods then in effect, or (y) that the
Company shall make a pro rata allocation of the shares available for purchase on such Offering Date
or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants exercising options to
purchase Common Stock on such Purchase Date, and terminate any or all Offering Periods then in
effect pursuant to Section 20 below. The Company may make pro rata allocation of the Shares
available on the Offering Date of any applicable Offering Period pursuant to the preceding
sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the
Company’s stockholders subsequent to such Offering Date.

          (b) The participant shall have no interest or voting right in Shares covered by his or her
option until such option has been exercised.

          (c) Shares to be delivered to a participant under the Plan will be registered in the name of
the participant or in the name of the participant and his or her spouse.

     14. Administration. The Board, or a committee named by the Board, shall supervise and
administer the Plan and shall have full power to adopt, amend and rescind any rules deemed
desirable and appropriate for the administration of the Plan and not inconsistent with the Plan, to
construe and interpret the Plan, and to make all other determinations necessary or advisable for
the administration of the Plan.

     15. Designation of Beneficiary.

          (a) A participant may file a written designation of a beneficiary who is to receive any Shares
and cash, if any, from the participant’s account under the Plan in the event of such participant’s
death subsequent to the end of a Purchase Period but prior to delivery to him or her of such Shares
and cash. In addition, a participant may file a written designation of a beneficiary who is to
receive any cash from the participant’s account under the Plan in the event of such participant’s
death prior to the Purchase Date of an Offering Period. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required for such designation to
be effective.

          (b) Such designation of beneficiary may be changed by the participant (and his or her spouse,
if any) at any time by written notice. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the time of such
participant’s death, the Company shall deliver such Shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such
Shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.

     16. Transferability. Neither Contributions credited to a participant’s account nor
any rights with regard to the exercise of an option or to receive Shares under the Plan may be
assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution, or as provided in Section 15) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect, except that the Company
may treat such act as an election to withdraw funds in accordance with Section 10.

     17. Use of Funds. Contributions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be obligated to segregate
such Contributions.

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     18. Reports. Individual accounts will be maintained for each participant in the Plan.
Statements of account will be given to participating Employees at least annually, which statements
will set forth the amounts of Contributions, the per Share Purchase Price, the number of Shares
purchased and the remaining cash balance, if any.

     19. Adjustments Upon Changes in Capitalization, Corporate Transactions.

          (a) Adjustment. Subject to any required action by the stockholders of the Company, the
number of Shares covered by each option under the Plan which has not yet been exercised and the
number of Shares which have been authorized for issuance under the Plan but have not yet been
placed under option (collectively, the “Reserves”), as well as the maximum number of shares of
Common Stock which may be purchased by a participant in a Purchase Period, the number of shares of
Common Stock set forth in Section 13(a) above, and the price per Share of Common Stock covered by
each option under the Plan which has not yet been exercised, shall be proportionately adjusted for
any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock (including any such
change in the number of Shares of Common Stock effected in connection with a change in domicile of
the Company), or any other increase or decrease in the number of Shares effected without receipt of
consideration by the Company; provided however that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of consideration.” Such
adjustment shall be made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price of Shares subject
to an option.

          (b) Corporate Transactions. In the event of a dissolution or liquidation of the
Company, any Purchase Period and Offering Period then in progress will terminate immediately prior
to the consummation of such action, unless otherwise provided by the Board. In the event of a
Corporate Transaction, each option outstanding under the Plan shall be assumed or an equivalent
option shall be substituted by the successor corporation or a parent or Subsidiary of such
successor corporation. In the event that the successor corporation refuses to assume or substitute
for outstanding options, each Purchase Period and Offering Period then in progress shall be
shortened and a new Purchase Date shall be set (the “New Purchase Date”), as of which date any
Purchase Period and Offering Period then in progress will terminate. The New Purchase Date shall
be on or before the date of consummation of the transaction and the Board shall notify each
participant in writing, at least ten (10) days prior to the New Purchase Date, that the Purchase
Date for his or her option has been changed to the New Purchase Date and that his or her
option will be exercised automatically on the New Purchase Date, unless prior to such date he or
she has withdrawn from the Offering Period as provided in Section 10. For purposes of this Section
19, an option granted under the Plan shall be deemed to be assumed, without limitation, if, at the
time of issuance of the stock or other consideration upon a Corporate Transaction, each holder of
an option under the Plan would be entitled to receive upon exercise of the option the same number
and kind of shares of stock or the same amount of property, cash or securities as such holder would
have been entitled to receive upon the occurrence of the transaction if the holder had been,
immediately prior to the transaction, the holder of the number of Shares of Common Stock covered by
the option at such time (after giving effect to any adjustments in the number of Shares covered by
the option as provided for in this Section 19); provided however that if the consideration received
in the transaction is not solely common stock of the successor corporation or its parent (as
defined in Section 424(e) of the Code), the Board may, with the consent of the successor
corporation, provide for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in Fair Market Value to the per Share
consideration received by holders of Common Stock in the transaction.

          The Board may, if it so determines in the exercise of its sole discretion, also make provision
for adjusting the Reserves, as well as the price per Share of Common Stock covered by each
outstanding option, in the event that the Company effects one or more reorganizations,
recapitalizations, rights offerings or other increases or reductions of Shares of its outstanding
Common Stock, and in the event of the Company’s being consolidated with or merged into any other
corporation.

     20. Amendment or Termination.

          (a) The Board may at any time and for any reason terminate or amend the Plan. Except as
provided in Section 19, no such termination of the Plan may affect options previously granted,
provided that the Plan or an Offering Period may be terminated by the Board on a Purchase Date or
by the Board’s setting a new Purchase Date with respect to an Offering Period and Purchase Period
then in progress if the Board determines that termination of the Plan and/or the Offering Period is
in the best interests of the Company and the stockholders or if continuation of the Plan and/or the
Offering Period would cause the Company to incur adverse accounting charges as a result of a change
after the effective date of the Plan in the generally accepted accounting rules applicable to the
Plan. Except as provided in Section 19 and in this Section 20, no amendment to the Plan shall make
any change in any option previously granted which adversely affects the rights of any participant.
In addition, to the extent necessary to comply with Rule 16b-3

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under the Exchange Act, or under
Section 423 of the Code (or any successor rule or provision or any applicable law or regulation),
the Company shall obtain stockholder approval in such a manner and to such a degree as so required.

          (b) Without stockholder consent and without regard to whether any participant rights may be
considered to have been adversely affected, the Board (or its committee) shall be entitled to
change the Offering Periods and Purchase Periods, limit the frequency and/or number of changes in
the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount
designated by a participant in order to adjust for delays or mistakes in the Company’s processing
of properly completed withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each participant properly correspond with amounts withheld from the participant’s
Compensation, and establish such other limitations or
procedures as the Board (or its committee) determines in its sole discretion advisable which
are consistent with the Plan.

     21. Notices. All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly given when received in the
form specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof.

     22. Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an
option unless the exercise of such option and the issuance and delivery of such Shares pursuant
thereto shall comply with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, applicable state securities laws and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the approval of counsel
for the Company with respect to such compliance.

          As a condition to the exercise of an option, the Company may require the person exercising
such option to represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.

     23. Term of Plan; Effective Date. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the shareholders of the Company.
It shall continue in effect until terminated under Section 20 hereof.

     24. Additional Restrictions of Rule 16b-3. The terms and conditions of options
granted hereunder to, and the purchase of Shares by, persons subject to Section 16 of the Exchange
Act shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to
contain, and such options shall contain, and the Shares issued upon exercise thereof shall be
subject to, such additional conditions and restrictions as may be required by Rule 16b-3 to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.

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EXHIBIT A

THERMA-WAVE,
INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

FORM OF SUBSCRIPTION AGREEMENT

___New Election

___Change of Election

	1.	 	I, ______, hereby elect to participate in the Therma- Wave, Inc. 2000
Employee Stock Purchase Plan (the “Plan”) for the Offering
Period ______, ______ to
______, ______, and subscribe to purchase shares of the Company’s Common Stock in
accordance with this Subscription Agreement and the Plan.
	 
	2.	 	I authorize payroll deductions from each paycheck in the amount of ___% of my Compensation,
as those terms are defined in the Plan, applied to this purchase. I understand that this
amount must not be less than 1% and not more than 15% of my Compensation during the Offering
Period. (Please note that no fractional percentages are permitted).
	 
	3.	 	I understand that all payroll deductions made by me shall be credited to my account under the
Plan and that I may not make any additional payments into such account.
	 
	4.	 	I understand that all payments made by me shall be accumulated for the purchase of shares of
Common Stock at the applicable purchase price determined in accordance with the Plan. I
further understand that, except as otherwise set forth in the Plan, shares will be purchased
for me automatically on the Purchase Date of each Offering Period unless I otherwise withdraw
from the Plan by giving written notice to the Company for such purpose.
	 
	5.	 	I understand that I may discontinue at any time prior to the Purchase Date my participation
in the Plan as provided in Section 10 of the Plan. I also understand that I can increase or
decrease the rate of my Contributions on one occasion only with respect to any increase and
one occasion only with respect to any decrease during any Purchase Period by completing and
filing a new Subscription Agreement with such increase or decrease taking effect as of the
beginning of the calendar month following the date of filing of the new Subscription
Agreement, if filed at least ten (10) business days prior to the beginning of such month.
Further, I may change the rate of my Contributions for future Offering Periods by filing a new
Subscription Agreement, and any such change will be effective as of the beginning of the next
Offering Period. In addition, I acknowledge that, unless I discontinue my participation in
the Plan as provided in Section 10 of the Plan, my election will continue to be effective for
each successive Offering Period.
	 
	6.	 	I have received a copy of the complete “Therma-Wave, Inc. 2000 Employee Stock Purchase Plan.”
I understand that my participation in the Plan is in all respects subject to the terms of the
Plan.
	 
	7.	 	Shares purchased for me under the Plan should be issued in the name(s) of (name of employee
or employee and spouse only):
	 
	8.	 	In the event of my death, I hereby designate the following as my beneficiary:

	 	 	 	 	 	 	 	 	 	 	 
	 	 	NAME: (Please print)	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	(First)
	 	(Middle)
	 	(Last)	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 
 	 	 	 	 
	 

	 	Relationship	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 
 	 	 	 	 
	 	 	Percentage Benefit	 	(Address)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	NAME: (Please print)	 	 
	 	 	 
	 

	 	 	 	(First)
	 	(Middle)
	 	(Last)	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 
 	 	 	 	 
	 

	 	Relationship	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 
 	 	 	 	 
	 

	 	Percentage Benefit	 	(Address)	 	 

	9.	 	I understand that if I dispose of any shares received by me pursuant to the Plan within 2
years after the Offering Date (the first day of the Offering Period during which I purchased
such shares) or within 1 year after the Purchase Date, I will be treated for federal income
tax purposes as having received ordinary compensation income at the time of such disposition
in an amount equal to the excess of the fair market value of the shares on the Purchase Date
over the price which I paid for the shares, regardless of whether I disposed of the shares at
a price less than their fair market value at the Purchase Date. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or loss. I
hereby agree to notify the Company in writing within 30 days after the date of any such
disposition, and I will make adequate provision for federal, state or other tax withholding
obligations, if any, which arise upon the disposition of the Common Stock. The Company may,
but will not be obligated to, withhold from my compensation the amount necessary to meet any
applicable withholding obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to the sale or early disposition of Common
Stock by me.
	 
	10.	 	If I dispose of such shares at any time after expiration of the 2-year and 1-year holding
periods, I understand that I will be treated for federal income tax purposes as having
received compensation income only to the extent of an amount equal to the lesser of (1) the
excess of the fair market value of the shares at the time of such disposition over the
purchase price which I paid for the shares under the option, or (2) 15% of the fair market
value of the shares on the Offering Date. The remainder of the gain or loss, if any,
recognized on such disposition will be treated as capital gain or loss. I understand that
this tax summary is only a summary and is subject to change. I further understand that I
should consult a tax advisor concerning the tax implications of the purchase and sale of stock
under the Plan.
	 
	11.	 	I hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription
Agreement is dependent upon my eligibility to participate in the Plan.

	 	 	 	 	 	 	 
	 

	 	Signature:
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	Print Name:
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	Social Security #:
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	Date:
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	Spouse’s Signature:
	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	(necessary if beneficiary is not spouse)	 	 	 	 
	 

	 	Print Name:
	 	 
	 	 
	 

	 	 	 	 	 	 

 

 

EXHIBIT
B

THERMA-WAVE, INC.

2000 EMPLOYEE STOCK PURCHASE PLAN

NOTICE OF WITHDRAWAL

I, ______, hereby elect to withdraw my participation in the Therma-Wave,
Inc. 2000 Employee Stock Purchase Plan (the “Plan”) for the Offering Period that began on ______
______, ______. This withdrawal covers all Contributions credited to my account and is effective on
the date designated below.

I understand that all Contributions credited to my account will be paid to me within ten (10)
business days of receipt by the Company of this Notice of Withdrawal and that my option for the
current period will automatically terminate, and that no further Contributions for the purchase of
shares can be made by me during the Offering Period.

The undersigned further understands and agrees that he or she shall be eligible to participate
in succeeding offering periods only by delivering to the Company a new Subscription Agreement.

	 	 	 	 	 	 	 
	 	 	Name and Address of Participant:	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Signature:	 	 
	 	 	 	 	 
	 	 	 	 	 
	 

	 	Date:<PAGE>

Exhibit 10.1

            Employment Agreement between SFX Entertainment, Inc., d/b/a Clear
            Channel Entertainment and Michael Rapino, dated August 17, 2005.

                              EMPLOYMENT AGREEMENT

      This Employment Agreement is entered into this 17th day of August 2005,
between SFX Entertainment, Inc., d/b/a Clear Channel Entertainment (the
"Company") and Michael Rapino (the "Employee"), and effective on the date signed
by the Company (Effective Date").

      WHEREAS, the Company and the Employee desire to enter into an employment
relationship under the terms and conditions set forth in this Agreement;

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

1.    TERM OF EMPLOYMENT.

The Employee's term of employment starts on the Effective Date of this Agreement
and ends on the close of business on August 31, 2007 (the "Employment Period" or
"Term of Employment"). However, beginning on August 31, 2007, the Employment
Period shall be automatically extended from day to day for twelve months, so
that commencing on September 1, 2007 and continuing for so long thereafter as
Employee is employed hereunder, there will always be exactly one year remaining
in the Term of Employment hereunder, until either party terminates in accordance
with Section 7. The term "Employment Period" or "Term of Employment" shall refer
to the Employment Period if and as so extended. Upon the closing of the proposed
spin-off of the Entertainment business from Clear Channel Communications, Inc.,
as announced on April 29, 2005, this Agreement shall be automatically assigned
by SFX Entertainment, Inc. to, and assumed by, CCE Spinco, Inc. (or other name
as such entity may assume, and referred to herein as "CCE Spinco"), the parent
entity for the newly independent, publicly traded company, and Employee shall
then report to the Chairman of the Board of Directors of such entity.

2.    TITLE AND DUTIES.

      (a) DUTIES. The Employee's title is President and CEO, SFX Entertainment,
Inc., d/b/a Clear Channel Entertainment. The Employee will perform job duties
that are usual and customary for this position, and will perform additional
services and duties that the Company may from time to time designate that are
consistent with the usual and customary duties of this position. The Employee
will report to President and CEO, Clear Channel Communications, Inc., currently
Mark P. Mays. The Employee will devote his full working time and efforts to the
business and affairs of Company.

      (b) EXCLUSIVE SERVICES. During employment with the Company, Employee shall
not be employed elsewhere, nor shall he engage in any competitive activity and,
except as set forth in the preceding clause (a) of this Section 2, Employee
shall not render any services to any other

                                       1
<PAGE>

person or business, or acquire any interest of any type in any other business
which is in competition with Company, provided, however, that the foregoing
shall not be deemed to prohibit Employee from acquiring, solely as an
investment, (i) up to 10% of any securities of a partnership, trust, corporation
or other entity so long as Employee remains a passive investor in such entity
and such entity is not, directly or indirectly, in competition with Company or
(ii) up to 5.0% of the outstanding equity interests of any publicly held
company.

3.    COMPENSATION AND BENEFITS

      (a) BASE SALARY. The Company will pay the Employee an annual base salary
of $550,000.00. Company agrees that the salary will not be decreased in the
future. All payments of base salary will be made in installments according to
the Company's regular payroll practice, prorated monthly or weekly where
appropriate, and subject to any increases that are determined to be appropriate
by the Compensation Committee of the Company's Board of Directors ("Compensation
Committee").

      (b) PERFORMANCE BONUS. No later than March 31 of each year, Employee will
be eligible to receive a performance bonus for the prior year. Employee is not
required to be employed by Company on the date of the bonus payment in order to
receive it. The amount of annual bonus for any partial year of this Agreement
will be prorated monthly unless Employee is terminated for Cause. The potential
performance bonus for calendar year 2005 is stated on the attached Exhibit A.
The 2005 bonus shall not be prorated and shall be in lieu of any other prior
bonus agreement. For calendar years 2006, 2007, and any additional years under
this Agreement, any performance bonus shall be at the discretion of the
Compensation Committee; however, the Company shall not set incentive performance
criteria for 2006 and 2007 that are more stringent or less favorable to Employee
than the requirements stated in Exhibit A.

      (c) EMPLOYMENT BENEFIT PLANS. The Employee will be entitled to participate
in all pension, profit sharing, and other retirement plans, all incentive
compensation plans, and all group health, hospitalization and disability or
other insurance plans, paid vacation, sick leave and other employee welfare
benefit plans in which other similarly situated employees of the Company may
participate as stated in the Employee Guide.

      (d) VACATION. Employee will be entitled to accrue twenty days of paid
vacation per calendar year, with such accrual pro-rated for partial years and
suspended for periods of unpaid leave, and subject to the Company's policy
regarding maximum vacation accrual.

      (e) EXPENSES. The Company will pay or reimburse the Employee for all
normal and reasonable travel and entertainment expenses incurred by the Employee
in connection with the Employee's responsibilities to the Company upon
submission of proper vouchers in accordance with the Company's expense
reimbursement policy. The Company's obligation to provide reimbursement for
expenses incurred during the Employee's employment by the Company shall survive
any termination of the Employee's employment. The Company will provide the
Employee with access to a credit card, subject to the approval of the credit
card company and based on the Employee's credit history, and which should only
be used for business purposes. Payment is the responsibility of the Employee.

                                       2
<PAGE>

      (f) MISCELLANEOUS. During full-time employment under this Agreement, the
Company will have a laptop computer and cellular phone available for Employee to
use for business purposes. Employee will also be provided with Assistant
services. Employee will be provided with the use of an office befitting his
position as an Executive of the Company.

      (g) STOCK OPTIONS. Employee shall receive a grant of 120,000 stock options
for shares of common voting stock in CCE Spinco. Such grant shall be contingent
on the closing of the spin-off of the Company from its current parent, Clear
Channel Communications, Inc. and issued at the time of the spin-off of the
Company. The option price shall be the fair market value on the grant date,
which shall be on the 3rd day following the closing of the anticipated spin-off
of the Company from its current parent, Clear Channel Communications, Inc. Any
further stock option grants for shares of voting common stock will be granted
based upon the performance of the Employee, which will be assessed in the sole
discretion of the Compensation Committee of the Board. Options shall be issued
in a manner consistent with the current vesting schedule for Clear Channel
Communications, Inc. or as subsequently amended by the Board of CCE Spinco;
however, subsequent amendments to the vesting schedule shall be no less
favorable to Employee unless he agrees to such amendment. Of the options that
are granted, ISOs shall be granted to the extent allowed by law; otherwise,
non-qualified options shall be granted. If the Compensation Committee determines
that Employee's performance merits issuance of options, then such options shall
be issued as stated on the attached Exhibit A for calendar year 2005. For future
years, any grant of options shall be determined in the discretion of the
Compensation Committee; however, for 2006 and 2007, the Company shall not set
incentive performance criteria that are more stringent or less favorable to
Employee than the requirements stated in Exhibit A. All option grants shall be
made under the terms and conditions set forth in the applicable Stock Option
Plan under which they are issued. The Company reserves the right to modify any
future Company stock option plan with respect to the change of control or any
other provision of said plan. The Company's obligations under this Section are
conditioned upon and subject to the Company's decision, in its sole discretion,
to alter, suspend or discontinue its stock option grant program, but if the
Company does so, it shall replace the program with an alternative form or method
of compensation which would yield equal compensation to Employee for the same
level of performance.

4.    NONDISCLOSURE OF CONFIDENTIAL INFORMATION.

      During the course of the Employee's employment with the Company, the
Company will provide the Employee with access to certain confidential
information, trade secrets, and other matters which are of a confidential or
proprietary nature, including but not limited to the Company's customer lists,
pricing information, production and cost data, compensation and fee information,
strategic business plans, budgets, financial statements, and other information
the Company treats as confidential or proprietary (collectively the
"Confidential Information"). The Company provides on an ongoing basis such
Confidential Information as the Company deems necessary or desirable to aid the
Employee in the performance of his duties. The Employee understands and
acknowledges that such Confidential Information is confidential and proprietary,
and agrees not to disclose such Confidential Information to anyone outside the
Company except to the extent that (i) the Employee deems such disclosure or use
reasonably necessary or appropriate in connection with performing his duties on
behalf of the Company; (ii) the Employee is required by order of a court of
competent jurisdiction (by subpoena or similar

                                       3
<PAGE>

process) to disclose or discuss any Confidential Information, provided that in
such case, the Employee shall promptly inform the Company of such event, shall
cooperate with the Company in attempting to obtain a protective order or to
otherwise restrict such disclosure, and shall only disclose Confidential
Information to the minimum extent necessary to comply with any such court order;
(iii) the Employee may disclose Confidential Information to his attorneys and
financial advisors, provided Employee advises his attorneys and financial
advisors that such Confidential Information is confidential and that by
receiving such Confidential Information such attorneys and financial advisors
are agreeing to be bound by this Section; or (iv) such Confidential Information
becomes generally known to and available for use in the industries in which the
Company does business, other than as a result of any action or inaction by the
Employee. The Employee further agrees that he will not during employment and/or
at any time thereafter use such Confidential Information in competing, directly
or indirectly, with the Company. At such time as the Employee shall cease to be
employed by the Company, he will immediately turn over to the Company all
Confidential Information, including papers, documents, writings, electronically
stored information, other property, and all copies of them, provided to or
created by him during the course of his employment with the Company, provided
however, that Employee shall be entitled to retain a copy of his personal
rolodex. This nondisclosure covenant is binding on the Employee, as well as his
heirs, successors, and legal representatives, and will survive any expiration or
termination of this Agreement, or the end of employment, regardless of the
reason or circumstance.

5.    NONSOLICITATION OF COMPANY EMPLOYEES OR VENDORS.

      To further preserve the rights of the Company pursuant to the
nondisclosure covenant discussed above, and for the consideration promised by
the Company under this Agreement, during the term of the Employee's employment
with the Company and for a period of 12 months thereafter, regardless of the
reason for the termination or end of employment, the Employee will not, directly
or indirectly, (i) hire any current or prospective employee or vendor of the
Company, or any subsidiary or affiliate of the Company (including, without
limitation, any current employee or vendor of the Company within the 6-month
period preceding the Employee's last day of employment with the Company or
within the 12-month period of this covenant) who worked, works, or has been
offered employment by the Company; (ii) solicit or encourage any such employee
to terminate their employment or any vendor to terminate its business
relationship with the Company, or any subsidiary or affiliate of the Company; or
(iii) solicit or encourage any such employee or vendor to accept employment or a
contract with any business, operation, corporation, partnership, association,
agency, or other person or entity with which the Employee may be associated.
This Nonsolicitation Covenant is binding on the Employee and will survive the
expiration or termination of this Agreement, or the end of employment for any
reason.

6.    NON-COMPETITION DURING TERM.

      To further preserve the rights of the Company pursuant to the
nondisclosure covenant stated above, and for the consideration promised by the
Company under this Agreement, during the Employee's employment with the Company
the Employee will not, directly or indirectly, as an owner, director, principal,
agent, officer, employee, partner, consultant, servant, or otherwise, carry on,
operate, manage, control, or become involved in any manner with any business,

                                       4
<PAGE>

operation, corporation, partnership, association, agency, or other person or
entity which is in the same business as the Company in any location in which the
Company, or any parent, subsidiary or affiliate of the Company, operates or has
plans or has projected to operate during the Employee's employment with the
Company, including any area within a 50-mile radius of any such location. The
foregoing shall not prohibit the Employee from owning up to 5.0% of the
outstanding stock of any publicly held company.

      The Company and the Employee agree that the restrictions contained in this
noncompetition covenant are reasonable in scope and duration and are necessary
to protect the Company's business interests and Confidential Information.

7.    TERMINATION.

      The Employee's employment with the Company may be terminated under the
following circumstances:

      (a) DEATH. The Employee's employment with the Company shall terminate upon
his death.

      (b) DISABILITY. The Company may terminate the Employee's employment with
the Company if, as a result of the Employee's incapacity due to physical or
mental illness, the Employee is unable to perform his duties under this
Agreement on a substantially full-time basis for more than 90 days in any 12
month period, as determined by a mutually designated physician.

      (c) TERMINATION BY THE COMPANY. The Company may terminate the Employee's
employment with the Company without Cause at any time after August 31, 2007. The
Company may also terminate his employment for Cause, based upon reasonable
determinations by the Company's Board of Directors. For purposes of this
Agreement, "Cause" shall mean: (i) conduct by the Employee constituting a
material act of willful misconduct in connection with the performance of his
duties, including, without limitation, violation of the Company's policy on
sexual harassment, misappropriation of funds or property of the Company or any
of its affiliates other than the occasional, customary and de minimis use of
Company property for personal purposes, or other willful misconduct; (ii)
continued, willful and deliberate non-performance by the Employee of his duties
hereunder (other than by reason of the Employee's physical or mental illness,
incapacity or disability); (iii) the Employee's refusal or failure to follow
lawful and material directives consistent with his title and position and the
terms of this Agreement; (iv) conviction of the Employee for, or a plea of nolo
contendere by the Employee to, any felony, or lesser crime involving fraud,
embezzlement or misappropriation of the property of the Company, or other
conduct by the Employee that, as reasonably determined by the Board, has
resulted in, or would result in if he were retained in his position with the
Company, material injury to the reputation of the Company; (v) a breach by the
Employee of any of the provisions contained in this Agreement regarding
Nondisclosure of Confidential Information and NonSolicitation (other than an
inadvertent disclosure resulting in no harm to Company) ; or (vi) a material
violation by the Employee of the Company's employment policies of which he had
notice. The Employee will be given a reasonable opportunity (30 days maximum, in
the discretion of the Company) to

                                       5
<PAGE>

cure any of the "Cause" provisions that the Company's Board of Directors deem to
be susceptible to cure, if the conduct has not been the subject of a prior cure.

      (d) TERMINATION BY THE EMPLOYEE WITHOUT CAUSE. The Employee may provide
notice at any time after August 31, 2007 of his intent to terminate the
Employee's employment with the Company without cause. Employee must provide the
Company with twelve (12) months advance written notice of his intent to
terminate the employment relationship. If Employee terminates under this
section, the Company may determine an earlier termination date on which
employment will end. The Company shall not be required to continue employment
during the notice period. If the Company elects to terminate prior to the
expiration of the twelve month notice period, such termination shall be deemed a
termination by Company without cause and Section 8(d) shall apply.

      (e) TERMINATION BY EMPLOYEE FOR GOOD REASON. The Employee may terminate
this Agreement at any time for Good Reason, which is defined as: (i) a repeated
failure of the Company to comply with a material term of the Agreement after
written notice by the Employee specifying the alleged failure; or (ii) a
substantial and unusual change in Employee's position, resulting in significant
and unusual additional duties, responsibilities, and authority, without an offer
of additional reasonable compensation as determined by Company in light of
compensation levels for similarly situated employees; (iii) a substantial and
unusual reduction in Employee's duties, responsibilities and authority; (iv)
Company's requirement that Employee move from or render his services primarily
in a location outside of the Los Angeles metropolitan area; (v) if Employee is
not appointed to the Board of Directors of CCE Spinco, Inc. (or other name as
such entity may assume) before, or within three months from, the closing of the
spin-off transaction; (vi) Change of Control (as defined in section 9), or (vii)
if there is no spin-off (as contemplated by the announcement on April 29, 2005)
and no Change in Control (as defined in section 9) prior to December 31, 2006.
If Employee elects to terminate for Good Reason under (i), (ii), (iii), or (iv),
Company shall have thirty (30) days after written notice within which to cure.

8.    COMPENSATION UPON TERMINATION.

      (a) DEATH. If the Employee's employment with the Company terminates by
reason of his death, the Company will, within 30 days, pay in a lump sum amount
to such person as the Employee shall designate in a notice filed with the
Company or, if no such person is designated, to the Employee's estate, the
Employee's accrued and unpaid base salary, vacation pay, and prorated bonus, if
any (See Exhibit A), unreimbursed expenses, and any payments to which the
Employee's spouse, beneficiaries, or estate may be entitled under any applicable
employee benefit plan (according to the terms of such plans and policies).

      (b) DISABILITY. If the Employee's employment with the Company terminates
by reason of his disability, the Company shall, within 30 days, pay in a lump
sum amount to the Employee his accrued and unpaid base salary, vacation pay, and
prorated bonus, if any (See Exhibit A), unreimbursed expenses, and any payments
to which he may be entitled under any applicable employee benefit plan
(according to the terms of such plans and policies).

                                       6
<PAGE>

      (c) TERMINATION BY THE COMPANY FOR CAUSE. If the Employee's employment
with the Company is terminated by the Company for Cause, the Company will,
within 30 days, pay in a lump sum amount to the Employee his accrued and unpaid
base salary, vacation pay, unreimbursed expenses and any payments to which he
may be entitled under any applicable employee benefit plan (according to the
terms of such plans and policies).

      (d) TERMINATION BY COMPANY WITHOUT CAUSE; TERMINATION BY EMPLOYEE FOR GOOD
REASON - SEVERANCE AND CONSULTING OPTION: If employment is terminated by the
Company without Cause (and other than for death or disability) or if this
Agreement is terminated by Employee for Good Reason, the Company will, within 30
days, pay in a lump sum amount to the Employee his accrued and unpaid base
salary through the date of termination and any payments to which he may be
entitled under any applicable employee benefit plan (according to the terms of
such plans and policies). Additionally, in lieu of a termination of employment,
Employee has the option of continuing employment by electing, within ten days
from notice by Company, to become a part-time consultant to Company in exchange
for severance pay. In that event, Company will pay Employee the Employee's base
salary ("severance pay") as set forth in Section 3(a) for a twelve month period,
in periodic payments in accordance with ordinary payroll practices and
deductions, provided that Employee: (i) will serve as an exclusive part-time
consultant during the severance payout period; (ii) agrees not to compete with
Company, directly or indirectly, during the payment and consulting period in
accordance with Section 2(b); and (iii) agrees to and signs a general release of
all claims (other than executory termination obligations of the Company) in a
form and manner satisfactory to the Company. However, if Employee terminates for
Good Reason under Section 7(e)(vii), the severance pay during the consulting
period shall be $1,000,000 in addition to the salary stated in Section 3(A). If
Company terminates Without Cause, and if Employee opts to continue as a
part-time consultant in accordance with this Section, then Employee shall be
entitled, at the end of his employment as a consultant, to accelerated vesting
of a pro rata portion of outstanding options. The pro rata portion of
outstanding options that shall vest immediately will be determined by applying a
Vesting Factor to each option grant. The "Vesting Factor" shall be calculated by
dividing the number of months since the option was granted by the total months
contained in the original vesting period.

      (e) EFFECT OF COMPLIANCE WITH COMPENSATION UPON TERMINATION PROVISIONS.
Upon complying with Subparagraphs 8(a) through 8(d) above, as applicable, the
Company will have no further obligations to the Employee except as otherwise
expressly provided under this Agreement, provided that such compliance will not
adversely affect or alter the Employee's rights under any employee benefit plan
of the Company in which the Employee has a vested interest, unless otherwise
provided in such employee benefit plan or any agreement or other instrument
attendant thereto.

9.    CHANGE OF CONTROL. In the event of a Change in Control, all of Employee's
stock options that are outstanding on the date of such Change in Control shall
become immediately and fully exercisable and any restricted stock shall no
longer be restricted. For purposes of this Agreement, "Change of Control" means:
(i) any "person," as such term is used in Sections 3(a)(9) and 13(d) of the
Securities Exchange Act of 1934 (other than the Executive or entities controlled
by the Executive), becomes a beneficial owner of 50% or more of the voting power
of

                                       7
<PAGE>

the Company; (ii) all or substantially all of the assets or business of the
Company are disposed of pursuant to a merger, consolidation, sale or other
transaction (unless the shareholders of the Company, immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the voting power
of the Company, all of the voting power or other ownership interests of the
entity or entities, if any, that succeed to the business of the Company; (iii)
the Company combines with another company and, immediately after such
combination, (A) the shareholders of the Company immediately prior to the
combination do not hold, directly or indirectly, more than 50% of the voting
power of the combined company or (B) the members of the Board immediately prior
to the Board's approval of the merger transaction do not constitute a majority
of the combined company's board of directors; or (iv) the liquidation or
dissolution of the Company. "Change of Control" does not include the spin-off of
the Company announced on April 29, 2005. However, if prior to December 31, 2006,
there is a Change of Control as defined above and no spin-off (as contemplated
by the announcement on April 29, 2005) has occurred prior to such Change in
Control, and if the successor does not assume this Agreement or offer to
Employee an agreement that is at least as favorable as this Agreement, or if
Employee chooses to decline such employment or other agreement with the
successor, then this Agreement shall terminate and Company shall pay $1,000,000
to Employee within 30 days of the transaction but only if Employee agrees to and
signs a general release of all claims (other than executory termination
obligations of the Company) in a form and manner satisfactory to the Company and
agrees that he shall not work for or provide his services to the successor,
whether directly or indirectly, and whether characterized as an employee, a
consultant, or otherwise, for a period of one year following the payment. Such
termination shall not entitle Employee to any further payments under Section 8
other than his accrued and unpaid base salary, vacation pay, and prorated bonus,
if any, unreimbursed expenses, and any payments to which he may be entitled
under any applicable employee benefit plan (according to the terms of such plans
and policies).

10.   PARTIES BENEFITED; ASSIGNMENTS.

This Agreement shall be binding upon the Employee, his heirs and his personal
representative or representatives, and upon the Company and its respective
successors and assigns. Neither this Agreement nor any rights or obligations
hereunder may be assigned by the Employee, other than by will or by the laws of
descent and distribution, without the Board's prior consent, and the Board shall
give good faith consideration to any such request made by Employee. The Company
may not assign or transfer this Agreement or any rights or obligations
hereunder; provided, however, that a transfer of this Agreement and the rights
and obligations hereunder to a successor or surviving entity in connection with
a sale or divestiture of all or substantially all the assets or any transaction
or series of related transactions (including, without limitation, any spin-off,
merger, reorganization, consolidation or purchase of outstanding equity
interests), shall not be considered an assignment or transfer.

11.   GOVERNING LAW.

      This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Texas without giving effect to any choice of law
or conflict provisions or rule (whether of the State of Texas any other
jurisdiction) that would cause the application of the laws

                                       8
<PAGE>

of any jurisdiction other than the State of Texas. The parties agree that the
Western District of Texas is a proper venue for any court filed dispute.

12.   DEFINITION OF COMPANY.

      As used in this Agreement, the term "Company" shall include SFX
Entertainment, Inc., d/b/a Clear Channel Entertainment and any of its past,
present and future divisions, parent, subsidiaries, and successors.

13.   LITIGATION AND REGULATORY COOPERATION.

      During and after the Employee's employment, the Employee shall reasonably
cooperate with the Company in the defense or prosecution of any claims or
actions now in existence or which may be brought in the future against or on
behalf of the Company which relate to events or occurrences that transpired
while the Employee was employed by the Company; provided, however, that such
cooperation shall not materially and adversely affect the Employee or expose the
Employee to an increased probability of civil or criminal litigation. The
Employee's cooperation in connection with such claims or actions shall include,
but not be limited to, being available to meet with counsel to prepare for
discovery or trial and to act as a witness on behalf of the Company at mutually
convenient times. During and after the Employee's employment, the Employee also
shall cooperate fully with the Company in connection with any investigation or
review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while
the Employee was employed by the Company. The Company will pay the Employee on
an hourly basis (to be derived from his base salary) for requested litigation
and regulatory cooperation that occurs after his termination of employment, and
reimburse the Employee for all costs and expenses incurred in connection with
his performance under this paragraph, including, but not limited to, reasonable
attorneys' fees and costs.

14.   INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES.

      The Company shall indemnify the Employee to the fullest extent permitted
by law, in effect at the time of the subject act or omission, and shall advance
to the Employee reasonable attorneys' fees and expenses as such fees and
expenses are incurred (subject to an undertaking from the Employee to repay such
advances if it shall be finally determined by a judicial decision which is not
subject to further appeal that the Employee was not entitled to the
reimbursement of such fees and expenses), and the Employee will be entitled to
the protection of any insurance policies that the Company may elect to maintain
generally for the benefit of its directors and officers against all costs,
charges and expenses incurred or sustained by him in connection with any action,
suit or proceeding to which he may be made a party by reason of his being or
having been a director, officer or employee of the Company or any of its
subsidiaries, or his serving or having served any other enterprise as a
director, officer or employee at the request of the Company (other than any
dispute, claim or controversy arising under or relating to this Agreement). The
Company covenants to maintain during the Employee's employment for the benefit
of the Employee (in his capacity as an officer and director of the Company)
Directors and Officers Insurance providing benefits to the Employee no less
favorable, taken as a whole, than

                                       9
<PAGE>

the benefits provided to the other similarly situated employees of the Company
by the Directors and Officers Insurance maintained by the Company on the date
hereof.

15.   ARBITRATION.

      The Company and Employee agree to arbitrate before a neutral Arbitrator
any and all disputes or claims arising from or relating to Employee's employment
with the Company, or the termination of that employment, including claims
against any current or former agent or employee of the Company, whether the
disputes or claims arise in tort, contract, or statute. The parties understand
and agree that arbitration shall be the sole and exclusive method of resolving
any and all disputes or claims arising out of Employee's employment with the
Company or the termination thereof. Such disputes or claims will not be subject
to trial by jury or by a court of any jurisdiction.

      The Company and Employee understand and agree that nothing in this
Agreement shall prevent either party from seeking from a court the remedy of an
injunction for a claimed misappropriation of a trade secret, patent right,
copyright, trademark, or any other intellectual or confidential property.
Nothing in this Agreement should be interpreted as restricting or prohibiting
the Employee from filing a charge or complaint of discrimination or retaliation
with a federal, state, or local administrative agency charged with investigating
and/or prosecuting complaints under any applicable federal, state or municipal
law or regulation. Any dispute or claim that is not resolved through the
federal, state, or local agency must be submitted to arbitration in accordance
with this Agreement. Either party to this Agreement may, if necessary, seek
judicial relief in order to enforce this agreement to arbitrate and/or seek
dismissal for the failure to honor this agreement to arbitrate. Any demand for
arbitration by either the Employee or the Company shall be submitted within the
statute of limitations that is applicable to the claim(s) upon which arbitration
is sought or required. Any failure to demand arbitration within this timeframe
shall constitute a waiver of all rights to raise any claims in any forum arising
out of any dispute that was subject to arbitration.

      A party seeking to initiate arbitration must submit a "Request For
Arbitration" in writing to the other party within the applicable statute of
limitations period if the matter had been brought in a court of law. If the
"Request For Arbitration" is not submitted in accordance with the aforementioned
time limitations, the initiating party will not be able to raise the claim in
arbitration or any other forum. The Request For Arbitration shall, unless
otherwise required by law, clearly state "Request For Arbitration" at the
beginning of the first page and include the following information: (i) a factual
description of the dispute in sufficient detail to advise the responding party
of the nature of the dispute; (ii) the names, work locations and telephone
numbers of any witnesses with knowledge relevant to the dispute; and (iii) the
relief requested.

      A Request for Arbitration from Employee must be submitted to the Company.
A Request for Arbitration from the Company must be mailed to Employee's last
known address or hand-delivered to Employee. The party to whom the Request for
Arbitration is directed will respond within 30 days so that the Parties can
begin the process of selecting an Arbitrator. Such response may include any
counterclaims.

                                       10
<PAGE>

      The Company and Employee understand and agree that all claims and disputes
will be resolved by a single Arbitrator mutually selected by the Company and
Employee. If the parties cannot agree on an Arbitrator within a reasonable
period of time, then a list of 7 Arbitrators, experienced in employment matters,
shall be obtained from the Federal Mediation and Conciliation Service. The
Arbitrator will be selected by the Parties, who will alternately strike names
from the list. A coin toss shall decide which party strikes the first name from
the list. The last name remaining on the list will be the Arbitrator selected to
resolve the dispute. Upon selection, the Arbitrator shall set an appropriate
time, date and place for the arbitration, after conferring with the parties. The
Company and Employee understand and agree that the arbitration shall be
conducted in accordance with the existing National Rules for the Resolution of
Employment Disputes of the American Arbitration Association; provided, however,
that the Arbitrator shall allow the parties all reasonable discovery authorized
by the Federal Rules of Civil Procedure or any other discovery provided by
applicable state law in arbitration proceedings. Also, to the extent that any of
the National Rules for the Resolution of Employment Disputes or anything in this
Agreement conflicts with any arbitration procedures required by applicable law,
the arbitration procedures required by applicable law shall govern. Employee and
the Company also agree that nothing in this Agreement relieves either of them
from any obligation they may have to exhaust certain administrative remedies
before arbitrating any claims or disputes under this Agreement. The arbitration
shall be conducted in Los Angeles, California, or such other location as agreed
by the Company and the Employee.

      The Arbitrator shall have authority to award any remedy that would be
available to the Company or Employee if the party brought the same claim in a
court of law. The Company and Employee understand and agree that the Arbitrator
shall issue a written award that sets forth the essential findings and
conclusions on which the award is based. The Arbitrator shall have the authority
only to determine the issue(s) submitted to him/her. The issue(s) must be
identifiable in the "Request For Arbitration" or counterclaim(s). Except as
required by law, any issue(s) not identifiable in those documents is/are outside
the scope of the Arbitrator's jurisdiction and any award involving such
issue(s), upon motion by a party, shall be vacated. The Arbitrator's award shall
be subject to correction, confirmation, or vacation, as provided by any
applicable law setting forth the standard of judicial review of arbitration
awards.

      The Company and Employee understand and agree that the Company will bear
the Arbitrator's fee, as well as any other type of expense or cost that Employee
would not be required to bear if he was free to bring the dispute or claim in
court and any other expense or cost that is unique to arbitration. The Company
and Employee shall each pay their own attorneys' fees incurred in connection
with the arbitration, and the Arbitrator shall have the authority to make an
award of attorneys' fees to the prevailing party. If there is a dispute as to
whether the Company or Employee is the prevailing party in the arbitration, the
Arbitrator will decide that issue.

      The Company and Employee understand and agree that this agreement to
arbitrate shall be governed by the Federal Arbitration Act.

16.   REPRESENTATIONS AND WARRANTIES OF THE EMPLOYEE.

                                       11
<PAGE>

      The Employee represents and warrants to the Company that he is under no
contractual or other restriction which is inconsistent with the execution of
this Agreement, the performance of his duties hereunder or the other rights of
Company hereunder. The Employee also represents and warrants to the Company that
he is under no physical or mental disability that would hinder the performance
of his duties under this Agreement.

17.   MISCELLANEOUS.

This Agreement contains the entire agreement of the parties relating to the
subject matter hereof. This Agreement supersedes any prior written or oral
agreements or understandings between the parties relating to the subject matter
hereof. No modification or amendment of this Agreement shall be valid unless in
writing and signed by or on behalf of the parties hereto. The failure of a party
to require performance of any provision of this Agreement shall in no manner
affect the right of such party at a later time to enforce any provision of this
Agreement. A waiver of the breach of any term or condition of this Agreement
shall not be deemed to constitute a waiver of any subsequent breach of the same
or any other term or condition. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations. If any provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be held invalid or unenforceable, such invalidity and
unenforceability shall not affect the remaining provisions hereof or the
application of such provisions to other persons or circumstances, all of which
shall be enforced to the greatest extent permitted by law. The headings in this
Agreement are inserted for convenience of reference only and shall not be a part
of or control or affect the meaning of any provision hereof.

18.   NOTICES.

      Any notice provided for in this Agreement will be in writing and will be
deemed to have been given when delivered or mailed by United States registered
or certified mail, return receipt requested, postage prepaid. If to the Board or
the Company, the notice will be sent to Mark P. Mays, President and Chief
Executive Officer of Clear Channel Communications, Inc., 200 E. Basse Rd., San
Antonio, Texas 78209. If to the Executive, the notice will be sent to Michael
Rapino, 7651 Willow Glen Road, Los Angeles, California, 90046. Such notices may
alternatively be sent to such other address as any party may have furnished to
the other in writing in accordance with this Agreement, except that notices of
change of address shall be effective only upon receipt.

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

                                    EMPLOYEE:

DATE: August 17, 2005               /S/ MICHAEL RAPINO
                                    ------------------------------------
                                    MICHAEL RAPINO

                                       12
<PAGE>

                                    SFX ENTERTAINMENT, INC., D/B/A CLEAR
                                    CHANNEL ENTERTAINMENT

DATE: August 17, 2005           BY: /S/ RANDALL MAYS
                                    ------------------------------------
                                    RANDALL MAYS
                                    INTERIM CEO

                                    CLEARCHANNEL COMMUNICATIONS, INC.

DATE: August 17, 2005           BY: /S/ MARK P. MAYS
                                    ------------------------------------
                                    MARK P. MAYS
                                    PRESIDENT AND CEO

                                       13
<PAGE>

                                    EXHIBIT A

BONUS FOR 2005

<TABLE>
<CAPTION>
                                     OPTION GRANTS FOR FIRST YEAR
                                     ----------------------------
PERCENTAGE              AGGREGATE    INITIAL    BONUS      TOTAL
 INCREASE               2005 BONUS    GRANT    OPTIONS    OPTIONS
----------              ----------   -------   -------   --------
<S>                     <C>          <C>       <C>       <C>
Trailing PF OIBDAN
   1.0%                 $   18,079   120,000        -     120,000

   2.0%                     38,517   120,000    5,000     125,000

   3.0%                     61,312   120,000   10,000     130,000

   4.0%                     86,466   120,000   15,000     135,000

   5.0%                    113,978   120,000   20,000     140,000

   6.0%                    143,848   120,000   25,000     145,000

   7.0%                    176,076   120,000   30,000     150,000

   8.0%                    210,663   120,000   35,000     155,000

   9.0%                    247,607   120,000   40,000     160,000

  10.0%                    286,910   120,000   45,000     165,000

  11.0%                    328,571   120,000   50,000     170,000

  12.0%                    372,590   120,000   55,000     175,000

  13.0%                    418,967   120,000   60,000     180,000

  14.0%                    467,703   120,000   65,000     185,000

  15.0%                    518,796   120,000   70,000     190,000

  16.0%                    569,890   120,000   75,000     195,000

  17.0%                    620,983   120,000   80,000     200,000

  18.0%                    672,077   120,000   85,000     205,000
</TABLE>

                                       14
<PAGE>

<TABLE>
<CAPTION>
                                     OPTION GRANTS FOR FIRST YEAR
                                     ----------------------------
PERCENTAGE              AGGREGATE    INITIAL    BONUS      TOTAL
 INCREASE              2005 BONUS     GRANT    OPTIONS    OPTIONS
----------             -----------   -------   -------    -------
<S>                    <C>           <C>       <C>        <C>
Trailing PF OIBDAN
   19.0%                   723,171   120,000    90,000    210,000

   20.0%                   774,264   120,000    95,000    215,000

   21.0%                   825,358   120,000   100,000    220,000

   22.0%                   876,451   120,000   105,000    225,000

   23.0%                   927,545   120,000   110,000    230,000

   24.0%                   978,638   120,000   115,000    235,000

   25.0%               $ 1,029,732   120,000   120,000    240,000
</TABLE>

      Bonus capped at 25% but can be increased at discretion of compensation
      committee. OIBDAN for 2005 will be measured BEFORE any special legal
      reserves.

BONUS FOR 2006

      To be determined by Compensation Committee

BONUS FOR 2007

      To be determined by Compensation Committee

                                       15

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