Document:

Exhibit 10.34

 

SFX Holding Corporation

650 Madison Avenue, 15th Floor

New York, New York 10022

 

AMENDMENT TO SUBSCRIPTION AGREEMENT

 

August 15, 2012

 

Entertainment Events Funds LLC

c/o Och-Ziff Capital Investments LLC

9 West 57th Street

New York, NY 10019

 

Ladies and Gentlemen:

 

Reference is made to that certain (i) Subscription Agreement, dated June 6, 2012 (the “Subscription Agreement”), between Entertainment Events Funding LLC (the “Entertainment Events”) and SFX Entertainment Inc. (“SFX Entertainment”) and (ii) Assignment and Assumption Agreement, dated June 19, 2012, between SFX Entertainment and SFX Holding Corporation (the “Corporation,” and together with Entertainment Events, the “Parties”)  All capitalized terms used in this Amendment to the Subscription Agreement (the “Amendment”), but not otherwise defined herein, shall have the meanings ascribed to them in the Subscription Agreement.

 

In consideration of the mutual promises of the Corporation and Entertainment Events hereinafter set forth and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Corporation and Entertainment Events agree to amend the Subscription Agreement as follows, effective as of the date of this Amendment:

 

1.             Amendment to Section 6(c)(i) of the Subscription Agreement.  Section 6(c)(i) is hereby revised by deleting “August 15, 2012” and inserting “November 1, 2012” in its place.

 

2.             Amendment to Section 23 of the Subscription Agreement.  Section 23 is hereby deleted in its entirety and replaced with the following:

 

“23.  Liquidated Damages.  Notwithstanding anything to the contrary herein, if the Company fails to submit a registration statement to the SEC for its IPO by November 1, 2012, as required by Section 6(c) of this Agreement (a “Registration Failure”), then the Company shall be obligated to issue to Purchaser, at the Per Share Closing Price (as hereinafter defined), $16,967.21 in additional shares of Common Stock for each day following the Registration Failure (which equates to 6,786.89 additional shares of Common Stock per day) until the earlier of (a) such date as the Registration Failure is cured or (2) December 31, 2012 (such additional shares of Common Stock, in the aggregate, the “Additional Shares”).  In the event that a Registration Failure shall continue after December 31, 2012, beginning on January 1, 2013, the Company shall issue to Purchaser, at the Per Share Closing Price (as hereinafter defined), $7,500 in Additional Shares for each day that the Registration Failure continues (which equates to 3,000

 

 

Additional Shares per day); provided, however, that from and after March 31, 2013, Purchaser may, at its option and in lieu of receiving any further Additional Shares, require that the Company make a cash payment to Purchaser of $7,500 for each day following March 31, 2013, that the Registration Failure remains in effect (such cash payment, in the aggregate, the “Cash Penalty Amount”).  With respect to any month in which a Registration Failure has occurred, (a) the Additional Shares shall be issued to Purchaser within five (5) business days following the end of the prior month, and (b) the Cash Penalty Amount, if applicable, shall be paid to Purchaser within five (5) business days following the end of the prior month to an account designated in writing by Purchaser to the Company.  The parties agree that in the event of a Registration Failure occurs, Purchaser will suffer damages and the amount of such damages will be difficult to estimate.  Accordingly, each party agrees that the issuance of the Additional Shares at the Per Share Closing Price and/or the payment by the Company of the Cash Penalty Amount, if applicable, will constitute liquidated damages and that such liquidated damages are reasonable and shall be the sole measure of damages of Purchaser in the event that a Registration Failure occurs.  For purposes hereof, the “Per Share Closing Price” shall be the price paid by Purchaser on the Closing Date for each share of Common Stock.”

 

3.                                      Full Force and Effect.  Except as amended hereby, all of the terms and provisions of the Subscription Agreement shall remain in full force and effect.

 

4.                                      Miscellaneous.

 

a.                                      Separability of Provisions.  Each provision of this Amendment shall be considered separable and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality shall not impair the operation of or affect those portions of this Amendment which are valid, enforceable and legal.

 

b.                                      Entire Agreement.  This Amendment constitutes the entire agreement of the Corporation and Entertainment Events with respect to the subject matter hereof and amends the Subscription Agreement.

 

c.                                       Successors and Assigns.  The provisions of this Amendment shall be binding upon and inure to the benefit of the Corporation and Entertainment Events and their respective successors and assigns.

 

d.                                      Applicable Law; Dispute Resolution.  The terms of Section 18 of the Subscription Agreement are incorporated herein in their entirety.

 

e.                                       Counterparts.  This Amendment may be executed in any number of counterparts, each of which will be deemed an original and all of which taken together will constitute one and the same instrument. Each party is permitted to deliver this Amendment by means of delivery of one or more counterpart signature pages via facsimile or an attachment to an email in portable document format (.pdf). Any photographic copy, photocopy, or similar reproduction of this Amendment, any electronic file of this Amendment in portable document format (.pdf), or any copy of this Agreement delivered by facsimile transmission, in each case with all signatures reproduced on one or more sets of signature pages, will be considered as if it were manually executed.

 

[Signature page follows.]

 

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Very   truly yours,
    
	
 
    	
 
    
	
 
    	
SFX   HOLDING CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert F.X. Sillerman
    
	
 
    	
 
    	
Name:
    	
Robert   F.X. Sillerman
    
	
 
    	
 
    	
Title:
    	
President
    

 

 

Accept and agreed to:

 

ENTERTAINMENT EVENTS FUNDING LLC

 

 

	
By:
    	
/s/   Joel Frank
    	
 
    
	
 
    	
Name:   Joel Frank
    	
 
    
	
 
    	
Title:
    	
 
    

 

[Signature page to Amendment to Subscription Agreement]Exhibit 10.35

 

SFX ENTERTAINMENT, INC.

2013 SUPPLEMENTAL EQUITY COMPENSATION PLAN

 

The purpose of the SFX Entertainment, Inc. 2013 Supplemental Equity Compensation Plan (the “Supplemental Plan”) is to provide (i) designated employees of the SFX Entertainment, Inc. (the “Company”) and its parents and  subsidiaries; (ii) certain consultants and advisors who perform services for the Company or its parents or subsidiaries; and (iii) non-employee members of the Board of Directors of the Company (the “Board”) with the opportunity to receive grants of incentive stock options, nonqualified stock options and stock awards.  The Company believes that the Supplemental Plan will encourage the participants to contribute materially to the growth of the Company, thereby benefitting the Company’s shareholders, and will align the economic interests of the participants with those of the shareholders.

 

1.                                      Administration

 

(a)                                 Committee.  The Supplemental Plan shall be administered and interpreted by the Board or by a committee consisting of members of the Board, which shall be appointed by the Board.  After an initial public offering of the Company’s stock as described in Section 18(b) (a “Public Offering”), the Supplemental Plan shall be administered by a committee of Board members, which may consist of “outside directors” as defined under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and related Treasury regulations, and “non-employee directors” as defined under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The Board, however, may ratify or approve any grants as it deems appropriate, and the Board shall approve and administer all grants made to non-employee directors.  The committee may delegate authority to one or more subcommittees as it deems appropriate.  To the extent that a committee or subcommittee administers the Supplemental Plan, references in the Supplemental Plan to the “Board” shall be deemed to refer to the committee or subcommittee.

 

(b)                                 Board Authority.  The Board shall have the sole authority to (i) determine the individuals to whom grants shall be made under the Supplemental Plan; (ii) determine the type, size, and terms of the grants to be made to each such individual; (iii) determine the time when the grants will be made and the duration of any applicable exercise or restriction period, including the criteria for exercisability and the acceleration of exercisability; (iv) amend the terms of any previously issued grant; and (v) deal with any other matters arising under the Supplemental Plan.

 

(c)                                  Board Determinations.  The Board shall have full power and authority to administer and interpret the Supplemental Plan, to make factual determinations and to adopt or amend such rules, regulations, agreements, and instruments for implementing the Supplemental Plan and for the conduct of its business as it deems necessary or advisable, in its sole discretion.  The Board’s interpretations of the Supplemental Plan and all determinations made by the Board pursuant to the powers vested in it hereunder shall be conclusive and binding on all persons having any interest in the Supplemental Plan or in any awards granted hereunder.  All powers of the Board shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Supplemental Plan and need not be uniform as to similarly situated individuals.

 

 

2.                                      Awards

 

Awards under the Supplemental Plan may consist of grants of incentive stock options as described in Section 5 (“Incentive Stock Options”), nonqualified stock options as described in Section 5 (“Nonqualified Stock Options”) (Incentive Stock Options and Nonqualified Stock Options are collectively referred to as “Options”), as stock awards as described in Section 6 (“Stock Awards”), and restricted stock units as described in Section 6 (“RSUs”) (hereinafter collectively referred to as “Awards”).  All Awards shall be subject to the terms and conditions set forth herein and to such other terms and conditions consistent with the Supplemental Plan as the Board deems appropriate and as are specified in writing by the Board to the individual in a grant instrument or an amendment to the grant instrument (the “Award Agreement”).  The Board shall approve the form and provisions of each Award Agreement.  Awards under a particular Section of the Supplemental Plan need not be uniform as among the grantees.

 

3.                                      Shares Subject to the Supplemental Plan

 

(a)                                 Shares Authorized.  Subject to adjustment as described below, the aggregate number of shares of common stock of the Company (“Company Stock”) that may be issued or transferred under the Supplemental Plan is 10,500,000, which shall include a maximum aggregate of 100,000 shares that may be issued as Incentive Stock Options.  After a Public Offering, the maximum aggregate number of shares of Company Stock that shall be subject to Awards made under the Supplemental Plan to any individual during any calendar year shall be 10,500,000 shares, subject to adjustment as described below.  The shares may be authorized but unissued shares of Company Stock or reacquired shares of Company Stock, including shares purchased by the Company on the open market for purposes of the Supplemental Plan.  If and to the extent Options granted under the Supplemental Plan terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised or if any Stock Awards or RSUs (including restricted stock received upon the exercise of Options) are forfeited, the shares subject to such Awards shall be available again for purposes of the Supplemental Plan.

 

(b)                                 Adjustments.  If there is any change in the number or kind of shares of Company Stock outstanding (i) by reason of a stock dividend, spinoff, recapitalization, stock split, or combination or exchange of shares; (ii) by reason of a merger, reorganization, or consolidation; (iii) by reason of a reclassification or change in par value; or (iv) by reason of any other extraordinary or unusual event affecting the outstanding Company Stock as a class without the Company’s receipt of consideration, or if the value of outstanding shares of Company Stock is substantially reduced as a result of a spinoff or the Company’s payment of an extraordinary dividend or distribution, the maximum number of shares of Company Stock available for Awards, the maximum number of shares of Company Stock that any individual participating in the Supplemental Plan may be granted in any year, the number of shares covered by outstanding Awards, the kind of shares issued under the Supplemental Plan, and the price per share of such Awards shall be adjusted by the Board to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Company Stock to preclude the enlargement or dilution of rights and benefits under such Awards; provided, however, that any fractional shares resulting from such adjustment shall be eliminated.  Any adjustments determined by the Board shall be final, binding, and conclusive.

 

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4.                                      Eligibility for Participation

 

(a)                                 Eligible Persons.  All employees of the Company and its parents or subsidiaries (“Employees”), including Employees who are officers or members of the Board, and members of the Board who are not Employees (“Non-Employee Directors”) shall be eligible to participate in the Supplemental Plan.  Consultants and advisors who perform services for the Company or any of its parents or subsidiaries (“Key Advisors”) shall be eligible to participate in the Supplemental Plan if the Key Advisors render bona fide services to the Company or its parents or subsidiaries, the services are not in connection with the offer and sale of securities in a capital-raising transaction, and the Key Advisors do not directly or indirectly promote or maintain a market for the Company’s securities.

 

(b)                                 Selection of Grantees.  The Board shall select the Employees, Non-Employee Directors, and Key Advisors to receive Awards and shall determine the number of shares of Company Stock subject to a particular Award in such manner as the Board determines.  Employees, Key Advisors, and Non-Employee Directors who receive Awards under the Supplemental Plan shall hereinafter be referred to as “Grantees.”

 

5.                                      Granting of Options

 

The Company may grant Options to purchase shares of Company Stock to Employees, Non-Employee Directors, and Key Advisors.  The following provisions are applicable to Options.

 

(a)                                 Number of Shares.  The Board shall determine the number of shares of Company Stock that shall be subject to each Award of Options.

 

(b)                                 Type of Option and Price.

 

(i)                                     The Board may grant Incentive Stock Options that are intended to qualify as “incentive stock options” within the meaning of section 422 of the Code or Nonqualified Stock Options that do not qualify as Incentive Stock Options. Incentive Stock Options may be granted only to employees of the Company or its parents or subsidiaries, as defined in section 424 of the Code.

 

(ii)                                  The purchase price (the “Exercise Price”) of Company Stock subject to an Option shall be determined by the Board and may be equal to or greater than the Fair Market Value (as defined below) of a share of Company Stock on the date the Option is granted; provided, however, the Board in its sole discretion may set the Exercise Price of any Option at less than Fair Market Value prior to the time of a Public Offering.  An Incentive Stock Option may not be granted to an Employee who, at the time of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary of the Company, unless the Exercise Price per share is not less than 110% of the Fair Market Value of Company Stock on the date of grant.

 

(iii)                               If the Company Stock is publicly traded, the Fair Market Value per share shall be determined as follows: (x) if the principal trading market for the Company Stock is a national securities exchange or the Nasdaq National Market, the last reported sale price thereof

 

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on the relevant date or (if there were no trades on that date) the latest preceding date upon which a sale was reported, or (y) if the Company Stock is not principally traded on such exchange or market, the mean between the last reported “bid” and “asked” prices of Company Stock on the relevant date, as reported on Nasdaq or, if not so reported, as reported by the National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as applicable and as the Board determines.

 

(iv)                              If the Company Stock is not publicly traded or, if publicly traded, is not subject to reported transactions or “bid” or “asked” quotations as set forth above, the Fair Market Value per share shall be as determined by the Board.  The Board shall determine the Fair Market Value based upon the application of a reasonable valuation method that considers all material information available to the Board.  The Board may engage outside advisors, valuation experts and counsel to assist the Board in making a determination of Fair Market Value for purpose of the Supplemental Plan.

 

(c)                                  Option Term.  The Board shall determine the term of each Option.  The term of any Option shall not exceed ten years from the date of grant.  An Incentive Stock Option that is granted to an Employee who, at the time of grant, owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company, or any parent or subsidiary of the Company, however, may not have a term that exceeds five years from the date of grant.

 

(d)                                 Exercisability of Options.  Options shall become exercisable in accordance with such terms and conditions, consistent with the Supplemental Plan, as may be determined by the Board and specified in the Award Agreement.  The Board may accelerate the exercisability of any or all outstanding Options at any time for any reason.  The Board may provide in an Award Agreement that the Grantee may elect to exercise part or all of an Option before it otherwise has become exercisable.  Any shares so purchased shall be restricted shares and shall be subject to a repurchase right in favor of the Company during a specified restriction period, with the repurchase price equal to the lesser of (A) the Exercise Price or (B) the Fair Market Value of such shares at the time of repurchase, and (C) any other restrictions determined by the Company.

 

(e)                                  Termination of Employment, Disability, or Death.

 

(i)                                     Except as provided below, an Option may only be exercised while the Grantee is employed by, or providing service to, the Employer (as defined below) as an Employee, Key Advisor, or member of the Board.  In the event that a Grantee ceases to be employed by, or provide service to, the Employer for any reason other than Disability, death, or termination for Cause, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within 90 days after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Board), but in any event no later than the date of expiration of the Option term.  Except as otherwise provided by the Board or in the Award Agreement, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

 

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(ii)                                  In the event the Grantee ceases to be employed by, or provide service to, the Employer on account of a termination for Cause by the Employer, any Option held by the Grantee shall terminate as of the date the Grantee ceases to be employed by, or provide service to, the Employer.  In addition, notwithstanding any other provisions of this Section 5, if the Board determines that the Grantee has engaged in conduct that constitutes Cause at any time while the Grantee is employed by, or providing service to, the Employer or after the Grantee’s termination of employment or service, any Option held by the Grantee shall immediately terminate, and the Grantee shall automatically forfeit all shares underlying any exercised portion of an Option for which the Company has not yet delivered the share certificates, upon refund by the Company of the Exercise Price paid by the Grantee for such shares.  Upon any exercise of an Option, the Company may withhold delivery of share certificates pending resolution of an inquiry that could lead to a finding resulting in a forfeiture.

 

(iii)                               In the event the Grantee ceases to be employed by, or provide service to, the Employer because the Grantee is Disabled, any Option which is otherwise exercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Board), but in any event no later than the date of expiration of the Option term.  Except as otherwise provided by the Board, any of the Grantee’s Options which are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

 

(iv)                              If the Grantee dies while employed by, or providing service to, the Employer or within 90 days after the date on which the Grantee ceases to be employed or provide service on account of a termination specified in Section 5(f)(i) above (or within such other period of time as may be specified by the Board), any Option that is otherwise exercisable by the Grantee shall terminate unless exercised within one year after the date on which the Grantee ceases to be employed by, or provide service to, the Employer (or within such other period of time as may be specified by the Board), but in any event no later than the date of expiration of the Option term.  Except as otherwise provided by the Board, any of the Grantee’s Options that are not otherwise exercisable as of the date on which the Grantee ceases to be employed by, or provide service to, the Employer shall terminate as of such date.

 

(v)                                 For purposes of this Supplemental Plan:

 

(A)                               The term “Employer” shall mean the Company and its parent and subsidiary corporations or other entities, as determined by the Board.

 

(B)                               “Employed by, or provide service to, the Employer” shall mean employment or service as an Employee, Key Advisor, or member of the Board (so that, for purposes of exercising Options and satisfying conditions with respect to Stock Awards or RSUs, a Grantee shall not be considered to have terminated employment or service until the Grantee ceases to be an Employee, Key Advisor, or member of the Board), unless the Board determines otherwise.

 

(C)                               “Disability” shall mean a Grantee’s becoming disabled within the meaning of section 22(e)(3) of the Code, within the meaning of the Employer’s long-

 

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term disability plan applicable to the Grantee, or as otherwise determined by the Board.

 

(D)                               “Cause” shall mean, except to the extent specified otherwise by the Board or as defined in any other agreement between the Grantee and the Company, a finding by the Board that the Grantee has  (i) been convicted of a felony or crime involving moral turpitude; (ii) disclosed trade secrets or confidential information of the Employer to persons not entitled to receive such information; (iii) breached any written noncompetition or nonsolicitation agreement between the Grantee and the Employer; or (iv) engaged in willful and continued negligence in the performance of the duties assigned to the Grantee by the Employer, after the Grantee has received notice of and failed to cure such negligence.

 

(f)                                   Exercise of Options.  A Grantee may exercise an Option that has become vested and exercisable, in whole or in part, by delivering a notice of exercise to the Company.  The Grantee shall pay the Exercise Price for an Option by the Board (i) in cash; (ii) by delivering shares of Company Stock owned by the Grantee (including Company Stock acquired in connection with the exercise of an Option, subject to such restrictions as the Board deems appropriate) and having a Fair Market Value on the date of exercise equal to the Exercise Price or by attestation (on a form prescribed by the Board) to ownership of shares of Company Stock having a Fair Market Value on the date of exercise equal to the Exercise Price; (iii) after a Public Offering, payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board; or (iv) by such other method as the Board may approve.  In addition, the Grantee may elect to settle the Option on a “net basis” by taking delivery of the number of Company Stock equal to Fair Market Value of the shares subject to any Option less the exercise price, any tax (or other governmental obligation) or other administration fees due. Shares of Company Stock used to exercise an Option shall have been held by the Grantee for the requisite period of time to avoid adverse accounting consequences to the Company with respect to the Option.  The Grantee shall pay the Exercise Price and the amount of any withholding tax due (pursuant to Section 7) as specified by the Board.

 

(g)                                  Limits on Incentive Stock Options.  Each Incentive Stock Option shall provide that, if the aggregate Fair Market Value of the stock on the date of the grant with respect to which Incentive Stock Options are exercisable for the first time by a Grantee during any calendar year, under the Supplemental Plan or any other stock option plan of the Company or a parent or subsidiary, exceeds $100,000, then the Option, as to the excess, shall be treated as a Nonqualified Stock Option.  An Incentive Stock Option shall not be granted to any person who is not an Employee of the Company or a parent or subsidiary (within the meaning of section 424(f) of the Code) of the Company.

 

6.                                      Stock Awards and RSUs

 

The Company may issue or transfer shares of Company Stock to an Employee, Non-Employee Director, or Key Advisor under a Stock Award or RSU, upon such terms as the Board deems appropriate.  The following provisions are applicable to Stock Awards and RSUs:

 

(a)                                  General Requirements.  Shares of Company Stock issued or transferred pursuant to Stock Awards may be issued or transferred for consideration or for no consideration, and

 

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subject to restrictions or no restrictions, as determined by the Board.  The Board shall determine the number of shares of Company Stock subject to a Stock Award and the number of RSUs to be granted to a Grantee, the duration of the period during which, and the conditions, if any, under which, the Stock Award and RSUs may vest or may be forfeited to the Company and the other terms and conditions of such Awards.  The Board may require different periods of service or different performance goals and objectives with respect to different Participants holding different Stock Awards or RSUs or to separate, designated portions of shares constituting Stock Awards.

 

(b)                                 Transfer Restrictions and Legend on Stock Certificate. Stock Awards and RSUs may not be sold, assigned, transferred, pledged or otherwise encumbered except as provided in the Supplemental Plan or as may be provided in the applicable Award Agreement; provided, however, that the Board may determine that Stock Awards and RSUs may be transferred by the Grantee. Each certificate for Stock Awards shall contain a legend giving appropriate notice of the restrictions in the Award.  The Grantee shall be entitled to have the legend removed from the stock certificate covering the shares subject to restrictions when all restrictions on such shares have lapsed.  The Board may determine that the Company shall not issue certificates for Stock Awards until all restrictions on such shares have lapsed, or that the Company shall retain possession of certificates for Stock Awards until all restrictions on such shares have lapsed. Upon the lapse of the restrictions applicable to a Stock Award, the Company or other custodian, as applicable, shall deliver such certificates to the Grantee or the Grantee’s legal representative.

 

(c)                                  Payment/Lapse of Restrictions. Each RSU shall be granted with respect to one share of Company Stock or shall have a value equal to the Fair Market Value of one share of Company Stock. RSUs shall be paid in cash, shares of Company Stock, other securities, other Awards or other property, as determined in the sole discretion of the Board, upon the lapse of restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement. The amount payable as a result of the vesting of an RSU shall be distributed as soon as practicable following the vesting date and in no event later than the fifteenth date of the third calendar month of the year following the vesting date of the RSU (or as otherwise permitted under Section 409A of the Code).

 

(d)                                 Termination of Employment or Service. Except as otherwise set forth in the Award Agreement, if the Grantee ceases to be employed by, or provide service to, the Employer (as defined in Section 5(e)), any Stock Award or RSUs held by the Grantee that are subject to the transfer restrictions set forth in Section 6(b) above at such time shall be forfeited. The Board may, however, provide for complete or partial exceptions to this requirement as it deems appropriate.

 

(e)                                  No Right to Vote and to Receive Dividends.  Prior to the lapse of the transfer restrictions set forth in Section 6(b) above, the Grantee shall not have the right to vote shares subject to Stock Awards or to receive any dividends or other distributions paid on such shares, subject to any restrictions deemed appropriate by the Board.

 

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7.                                      Withholding of Taxes

 

(a)                                 Required Withholding.  All Awards under the Supplemental Plan shall be subject to applicable federal (including FICA), state, and local tax withholding requirements.  The Employer may require that the Grantee or other person receiving or exercising Awards pay to the Employer the amount of any federal, state, or local taxes that the Employer is required to withhold with respect to such Awards, or the Employer may deduct from other wages paid by the Employer the amount of any withholding taxes due with respect to such Awards.

 

(b)                                 Election to Withhold Shares.  If the Board so permits, a Grantee may elect to satisfy the Employer’s income tax withholding obligation with respect to an Award by having shares withheld up to an amount that does not exceed the Grantee’s minimum applicable withholding tax rate for federal (including FICA), state, and local tax liabilities.  The election must be in a form and manner prescribed by the Board and may be subject to the prior approval of the Board.

 

8.                                      Transferability of Awards

 

(a)                                 Nontransferability of Awards.  Except as provided below, only the Grantee may exercise rights under an Award during the Grantee’s lifetime.  A Grantee may not transfer those rights except (i) by will or by the laws of descent and distribution or (ii) with respect to Awards other than Incentive Stock Options, if permitted in any specific case by the Board, pursuant to a domestic relations order or otherwise as permitted by the Board.  When a Grantee dies, the personal representative or other person entitled to succeed to the rights of the Grantee may exercise such rights.  Any such successor must furnish proof satisfactory to the Company of his or her right to receive the Award under the Grantee’s will or under the applicable laws of descent and distribution.

 

(b)                                 Transfer of Nonqualified Stock Options.  Notwithstanding the foregoing, the Board may provide, in an Award Agreement, that a Grantee may transfer Nonqualified Stock Options to family members, or one or more trusts or other entities for the benefit of or owned by family members, consistent with applicable securities laws, according to such terms as the Board may determine; provided that the Grantee receives no consideration for the transfer of an Option and the transferred Option shall continue to be subject to the same terms and conditions as were applicable to the Option immediately before the transfer.

 

9.                                      Right of First Refusal; Repurchase Right

 

(a)                                 Offer.  Prior to a Public Offering, if at any time an individual desires to sell, encumber, or otherwise dispose of shares of Company Stock that were distributed to him or her under the Supplemental Plan and that are transferable, the individual may do so only pursuant to a bona fide written offer, and the individual shall first offer the shares to the Company by giving the Company written notice disclosing:  (i) the name of the proposed transferee of the Company Stock; (ii) the certificate number and number of shares of Company Stock proposed to be transferred or encumbered; (iii) the proposed price; (iv) all other terms of the proposed transfer; and (v) a written copy of the proposed offer.  Within 60 days after receipt of such notice, the Company shall have the option to purchase all or part of such Company Stock at the price and

 

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on the terms described in the written notice; provided that the Company may pay such price in installments over a period not to exceed four years, at the discretion of the Board.

 

(b)                                 Sale.  In the event the Company (or a shareholder, as described below) does not exercise the option to purchase Company Stock, as provided above, the individual shall have the right to sell, encumber, or otherwise dispose of the shares of Company Stock described in subsection (a) at the price and on the terms of the transfer set forth in the written notice to the Company, provided such transfer is effected within 15 days after the expiration of the option period.  If the transfer is not effected within such period, the Company must again be given an option to purchase, as provided above.

 

(c)                                  Assignment of Rights.  The Board, in its sole discretion, may waive the Company’s right of first refusal and repurchase right under this Section 9.  If the Company’s right of first refusal or repurchase right is so waived, the Board may, in its sole discretion, assign such right to the remaining shareholders of the Company in the same proportion that each shareholder’s stock ownership bears to the stock ownership of all the shareholders of the Company, as determined by the Board.  To the extent that a shareholder has been given such right and does not purchase his or her allotment, the other shareholders shall have the right to purchase such allotment on the same basis.

 

(d)                                 Purchase by the Company.  Prior to a Public Offering, if a Grantee ceases to be employed by, or provide service to, the Employer, the Company shall have the right to purchase, within 60 days of the date that Grantee ceases to be employed by, or provide services to, the Employer, all or part of any Company Stock distributed to Grantee under the Supplemental Plan at the Fair Market Value (as defined in Section 5(b)) on the date that Grantee ceases to be employed by, or provide services to, the Employer (or at such other price as may be established in the Award Agreement); provided, however, that such repurchase shall be made in accordance with applicable accounting rules to avoid adverse accounting treatment.

 

(e)                                  Public Offering.  On and after a Public Offering, the Company shall have no further right to purchase shares of Company Stock under this Section 9.

 

(f)                                   Shareholder’s Agreement.  Notwithstanding the provisions of this Section 9, if the Board requires that a Grantee execute a shareholder’s agreement with respect to any Company Stock distributed pursuant to the Supplemental Plan, which contains a right of first refusal or repurchase right, the provisions of this Section 9 shall not apply to such Company Stock.

 

10.                               Change of Control of the Company

 

As used herein, a “Change of Control” shall be deemed to have occurred if:

 

(a)                                 Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange Act) (other than persons who are shareholders on the effective date of the Supplemental Plan) becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of the voting power of the then outstanding securities of the Company; provided that a Change of Control shall not be deemed to occur as a result of a change of ownership resulting from the death of a shareholder,

 

9

 

and a Change of Control shall not be deemed to occur as a result of a transaction in which the Company becomes a subsidiary of another corporation and in which the shareholders of the Company, immediately prior to the transaction, will beneficially own, immediately after the transaction, shares entitling such shareholders to more than 50% of all votes to which all shareholders of the parent corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); or

 

(b)                                 The consummation of (i) a merger or consolidation of the Company with another corporation where the shareholders of the Company, immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling such shareholders to more than 50% of all votes to which all shareholders of the surviving corporation would be entitled in the election of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); (ii) a sale or other disposition of all or substantially all of the assets of the Company; or (iii) a liquidation or dissolution of the Company.

 

11.                               Consequences of a Change of Control

 

(a)                                 Notice and Acceleration.  Upon a Change of Control, unless the Board determines otherwise, (i) the Company shall provide each Grantee with outstanding Awards written notice of such Change of Control; (ii) all outstanding Options shall automatically accelerate and become fully vested and exercisable; (iii) all outstanding Stock Awards shall become vested and deliverable in accordance with Section 6(b); and (iv) all outstanding RSUs shall become vested and deliverable in accordance with Section 6(c).

 

(b)                                 Assumption of Awards.  Upon a Change of Control where the Company is not the surviving corporation (or survives only as a subsidiary of another corporation), unless the Board determines otherwise, all outstanding Options that are not exercised shall be assumed by, or replaced with comparable options by, the surviving corporation (or a parent or subsidiary of the surviving corporation).

 

(c)                                  Other Alternatives.  Notwithstanding the foregoing, in the event of a Change of Control, the Board may take one or both of the following actions:  the Board may (i) require that Grantees surrender their outstanding Options in exchange for a payment by the Company, in cash or Company Stock as determined by the Board, in an amount equal to the amount by which the then Fair Market Value of the shares of Company Stock subject to the Grantee’s unexercised Options exceeds the Exercise Price of the Options; or (ii) after giving Grantees an opportunity to exercise their outstanding Options, terminate any or all unexercised Options at such time as the Board deems appropriate.  Such surrender or termination shall take place as of the date of the Change of Control or such other date as the Board may specify.

 

12.                               Requirements for Issuance or Transfer of Shares

 

(a)                                 Shareholder’s Agreement.  The Board may require that a Grantee execute a shareholder’s agreement, with such terms as the Board deems appropriate, with respect to any Company Stock issued or distributed pursuant to the Supplemental Plan.

 

10

 

(b)                                 Limitations on Issuance or Transfer of Shares.  No Company Stock shall be issued or transferred in connection with any Award hereunder unless and until all legal requirements applicable to the issuance or transfer of such Company Stock have been complied with to the satisfaction of the Board.  The Board shall have the right to condition any Award made to any Grantee hereunder on such Grantee’s undertaking in writing to comply with such restrictions on his or her subsequent disposition of such shares of Company Stock as the Board shall deem necessary or advisable, and certificates representing such shares may be legended to reflect any such restrictions.  Certificates representing shares of Company Stock issued or transferred under the Supplemental Plan shall be subject to such stop-transfer orders and other restrictions as may be required by applicable laws, regulations, and interpretations, including any requirement that a legend be placed thereon.

 

(c)                                  Lock-Up Period.  If so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any underwritten offering of securities of the Company under the Securities Act of 1933, as amended (the “Securities Act”), a Grantee (including any successor or assigns) shall not sell or otherwise transfer any shares or other securities of the Company during the 30-day period preceding and the 180-day period following the effective date of a registration statement of the Company filed under the Securities Act for such underwriting (or such shorter period as may be requested by the Managing Underwriter and agreed to by the Company) (the “Market Standoff Period”).  The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

 

13.                               Amendment and Termination of the Supplemental Plan

 

(a)                                 Amendment.  The Board may amend or terminate the Supplemental Plan at any time; provided, however, that the Board shall not amend the Supplemental Plan without shareholder approval if such approval is required in order to comply with the Code or other applicable laws or, after a Public Offering, to comply with applicable stock exchange requirements.

 

(b)                                 Termination of Supplemental Plan.  The Supplemental Plan shall terminate on the day immediately preceding the tenth anniversary of its effective date, unless the Supplemental Plan is terminated earlier by the Board or is extended by the Board with the approval of the shareholders.

 

(c)                                  Termination and Amendment of Outstanding Awards.  A termination or amendment of the Supplemental Plan that occurs after an Award is made shall not materially impair the rights of a Grantee unless the Grantee consents or unless the Board acts under Section 19(b).  The termination of the Supplemental Plan shall not impair the power and authority of the Board with respect to an outstanding Award.  Whether or not the Supplemental Plan has terminated, an outstanding Award may be terminated or amended under Section 19(b) or may be amended by agreement of the Company and the Grantee consistent with the Supplemental Plan.

 

(d)                                 Governing Document.  The Supplemental Plan shall be the controlling document.  No other statements, representations, explanatory materials or examples, oral or

 

11

 

written, may amend the Supplemental Plan in any manner.  The Supplemental Plan shall be binding upon and enforceable against the Company and its successors and assigns.

 

14.                               Funding of the Supplemental Plan

 

The Supplemental Plan shall be unfunded.  The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Awards under the Supplemental Plan.  In no event shall interest be paid or accrued on any Award, including unpaid installments of Awards.

 

15.                               Rights of Participants

 

Nothing in the Supplemental Plan shall entitle any Employee, Key Advisor, Non-Employee Director, or other person to any claim or right to be granted an Award under the Supplemental Plan.  Neither the Supplemental Plan nor any action taken hereunder shall be construed as giving any individual any rights to be retained by or in the employ of the Employer or any other employment rights.  No Fractional Shares

 

16.                               No Fractional Shares

 

No fractional shares of Company Stock shall be issued or delivered pursuant to the Supplemental Plan or any Award.  The Board shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

 

17.                               Headings

 

Section headings are for reference only.  In the event of a conflict between a title and the content of a Section, the content of the Section shall control.

 

18.                               Effective Date of the Supplemental Plan

 

(a)                                 Effective Date.  The Supplemental Plan shall be effective on April 23, 2013.

 

(b)                                 Public Offering.  The provisions of the Supplemental Plan that refer to a Public Offering, or that refer to, or are applicable to persons subject to, section 16 of the Exchange Act or section 162(m) of the Code, shall be effective, if at all, upon the initial registration of the Company Stock under section 12(g) of the Exchange Act, and shall remain effective thereafter for so long as such stock is so registered.

 

19.                               Miscellaneous

 

(a)                                 Awards in Connection with Corporate Transactions and Otherwise.  Nothing contained in the Supplemental Plan shall be construed to (i) limit the right of the Board to make Awards under the Supplemental Plan in connection with the acquisition, by purchase, lease, merger, consolidation, or otherwise, of the business or assets of any corporation, firm or association, including Awards to employees thereof who become Employees, or for other proper corporate purposes; or (ii) limit the right of the Company to grant stock options or make

 

12

 

other awards outside of the Supplemental Plan.  Without limiting the foregoing, the Board may make an Award to an employee of another corporation who becomes an Employee by reason of a corporate merger, consolidation, acquisition of stock or property, reorganization, or liquidation involving the Company, the Parent, or any of their subsidiaries in substitution for a stock option, stock award or other type of applicable equity grants made by such corporation.  The terms and conditions of the substitute grants may vary from the terms and conditions required by the Supplemental Plan and from those of the substituted stock incentives.  The Board shall prescribe the provisions of the substitute grants.

 

(b)                                 Compliance with Law.  The Supplemental Plan, exercise of Options, restrictions of Stock Awards and obligations of the Company to issue or transfer shares of Company Stock under Awards shall be subject to all applicable laws and to approvals by any governmental or regulatory agency as may be required.  With respect to persons subject to section 16 of the Exchange Act, after a Public Offering, it is the intent of the Company that the Supplemental Plan and all transactions under the Supplemental Plan comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act.  In addition, it is the intent of the Company that the Supplemental Plan and applicable Awards under the Supplemental Plan comply with the applicable provisions of sections 162(m), 409A and 422 of the Code.  To the extent that any legal requirement of section 16 of the Exchange Act or sections 162(m), 409A or 422 of the Code as set forth in the Supplemental Plan ceases to be required under section 16 of the Exchange Act or sections 162(m), 409A or 422 of the Code, that Supplemental Plan provision shall cease to apply.  The Board may revoke any Award if it is contrary to law or modify an Award to bring it into compliance with any valid and mandatory government regulation.  The Board may also adopt rules regarding the withholding of taxes on payments to Grantees.  The Board may, in its sole discretion, agree to limit its authority under this Section.

 

(c)                                  Employees Subject to Taxation Outside the United States.  With respect to Grantees who are subject to taxation in countries other than the United States, the Board may make Awards on such terms and conditions as the Board deems appropriate to comply with the laws of the applicable countries, and the Board may create such procedures, addenda, and subplans and make such modifications as may be necessary or advisable to comply with such laws.

 

(d)                                 Governing Law.  The validity, construction, interpretation, and effect of the Supplemental Plan and Award Agreements issued under the Supplemental Plan shall be governed and construed by and determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof.

 

13

 

SFX ENTERTAINMENT, INC.

 

2013 SUPPLEMENTAL EQUITY COMPENSATION PLAN

 

NONQUALIFIED STOCK OPTION

 

SFX Entertainment, Inc. (the “Company”) has granted you a Nonqualified Stock Option (the “Option”) under the SFX Entertainment, Inc. 2013 Supplemental Equity Compensation Plan (the “Plan”).  The terms of the grant are set forth in the Nonqualified Stock Option Award Agreement provided to you (the “Agreement”).  The following provides a summary of the key terms of the grant; however, you should read the entire Agreement, along with the terms of the Plan, to fully understand the grant.

 

SUMMARY OF NONQUALIFIED STOCK OPTION AWARD

 

	
Grantee:
    	
[     ]
    
	
 
    	
 
    
	
Date   of Grant:
    	
[     ]
    
	
 
    	
 
    
	
Vesting   Schedule:
    	
[     ]
    
	
 
    	
 
    
	
Exercise   Price Per Share:
    	
$[     ]
    
	
 
    	
 
    
	
Total   Number of Options Granted:
    	
[     ]
    
	
 
    	
 
    
	
Term/Expiration   Date:
    	
[     ]
    

 

The above is a summary description of certain provisions of the Agreement and is not intended to be complete.  In the event any aspect of this summary conflicts with the terms of the Agreement, the terms of the Agreement shall govern.

 

 

SFX ENTERTAINMENT, INC.

 

2013 SUPPLEMENTAL EQUITY COMPENSATION PLAN

 

NONQUALIFIED STOCK OPTION AWARD AGREEMENT

 

This NONQUALIFIED STOCK OPTION AWARD AGREEMENT (the “Agreement”), dated as of [          ] (the “Date of Grant”), is delivered by SFX Entertainment, Inc. (the “Company”) to [            ] (the “Grantee”).

 

RECITALS

 

A.            The SFX Entertainment, Inc. 2013 Supplemental Equity Compensation Plan (the “Plan”) provides for the grant of options to purchase shares of common stock of the Company.  The Company has decided to make a stock option award as an inducement for the Grantee to promote the best interests of the Company and its stockholders.  A copy of the Plan is attached.

 

B.            The Plan is administered and interpreted by the Compensation Committee of the Board of Directors of the Company (the “Board”) (or a subcommittee thereof), or such other committee of the Board (including, without limitation, the full Board) to which the Board has delegated power to act under or pursuant to the provisions of the Plan (the “Committee”). The Committee may delegate authority to one or more subcommittees as it deems appropriate.  If a subcommittee is appointed, all references in this Agreement to the “Committee” shall be deemed to refer to the committee.

 

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

 

1.             Grant of Option.  Subject to the terms and conditions set forth in this Agreement and in the Plan, the Company hereby grants to the Grantee a Nonqualified Stock Option (the “Option”) to purchase [        ] shares of common stock of the Company (“Shares”) at an exercise price of $[        ] per Share.

 

The Option shall become vested and exercisable according to Paragraph 2 below.

 

2.             Vesting.  Unless an earlier vesting date is provided for in a Company-sponsored plan, policy or arrangement, or any agreement to which the Company is a party, the Option shall become vested and exercisable, according to the following vesting schedule, if the Grantee continues to be employed by, or provide service to, the Employer (as defined in the Plan) from the Date of Grant until the applicable vesting date:

 

	
Vesting Date
    	
 
    	
% of Option Vested
    	
 
    
	
[   ]
    	
 
    	
[   ]
    	
 
    
	
[   ]
    	
 
    	
[   ]
    	
 
    
	
[   ]
    	
 
    	
[   ]
    	
 
    

 

1

 

The vesting of the Option shall be cumulative, but shall not exceed 100% of the shares subject to the Option granted above.  If the foregoing schedule would produce fractional shares, the portion of the Option that vests shall be rounded down to the nearest whole share.

 

3.             Term of Option.

 

(a)           The Option shall have a term of 7 years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.

 

(i)            The expiration of the original 7 year term if the Grantee ceases to be employed for any reason other than Grantee’s termination by the Company for Cause (as defined in the “Addendum” attached hereto) or the voluntary termination by Grantee (which shall not include by reason of Grantee’s death, Disability, Constructive Termination or Change of Control).

 

(ii)           One year after the date on which the Grantee ceases to be employed by the Company on account of a termination by the Company for Cause or because the Grantee voluntarily resigned his position at the Company.  In addition, notwithstanding the prior provisions of this Paragraph 3, if the Company determines that the Grantee has engaged in conduct that constitutes Cause at any time while the Grantee is employed by the Company or after the Grantee’s termination of employment, the Option shall terminate as of one year after the date on which such Cause first occurred.

 

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is immediately before the tenth anniversary of the Date of Grant.  In the event of Death, Disability, or Constructive Termination, or the termination by the Company for any reason other than Cause, all unvested options shall immediately vest and be exercisable.  Any portion of the Option that is unvested at the time the Grantee ceases to be employed by the Company as a result of the Grantee voluntarily ceasing to do so or as a result of being terminated for Cause shall immediately terminate.

 

4.             Exercise Procedures

 

(a)           Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the vested or exercisable Option by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised.  At such time as the Committee shall determine, the Grantee shall pay the exercise price (i) in cash, (ii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, or (iii) by such other method as the Company may approve.  The Company may impose from time to time such limitations as it deems appropriate on the use of Shares of the Company to exercise the Option.

 

(b)           The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Company, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and

 

2

 

regulations.  The Company may require that the Grantee (or other person exercising the Option after the Grantee’s death) represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view to or for sale in connection with any distribution of the Shares, or such other representation as the Company deems appropriate.

 

(c)           All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable.  Subject to Committee approval, the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Option by having Shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.

 

5.             Right of First Refusal; Repurchase Right; Shareholder’s Agreement.  As a condition of receiving this Option, the Grantee hereby agrees that all Shares issued under the Plan shall be subject to a right of first refusal and repurchase right as described in the Plan, and the Committee may require that the Grantee (or other person exercising the Option) execute a shareholder’s agreement, in such form as the Committee determines, with respect to all Shares issued upon the exercise of the Option before the initial public offering of the Company’s Common Stock (as described in the Plan).

 

6.             Restrictions on Exercise.  Except as the Company may otherwise permit pursuant to the Plan, only the Grantee may exercise the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is vested or exercisable pursuant to this Agreement.

 

7.             Adjustments.  The provisions of the Plan applicable to Adjustments (as described in Section 3 of the Plan) shall apply to the Option.

 

8.             Grant Subject to Plan Provisions.  This grant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The grant and exercise of the Option are subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the registration, qualification or listing of the Shares, (iii) changes in capitalization of the Company and (iv) other requirements of applicable law.  The Committee shall have the authority to interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

 

9.             No Employment or Other Rights.  The grant of the Option shall not confer upon the Grantee any right to be retained by or in the employ or service of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment or service at any time.  The right of the Company to terminate at will the Grantee’s employment or service at any time for any reason is specifically reserved.

 

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10.          No Shareholder Rights.  Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of a shareholder with respect to the Shares subject to the Option, until certificates for Shares have been issued upon the exercise of the Option.

 

11.          Assignment and Transfers.  Except as the Committee may otherwise permit pursuant to the Plan, the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by the laws of descent and distribution.  In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.

 

12.          Applicable Law.  The validity, construction, interpretation and effect of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof.

 

13.          Notice.  Any notice to the Company provided for in this Agreement shall be addressed to the Company in care of the Committee, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.  Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

 

4

 

IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

 

	
 
    	
SFX   Entertainment, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan, the applicable stockholder’s agreement or investor’s rights agreement or other similar agreement and this Agreement.  I hereby further agree that all the decisions and determinations of the Committee shall be final and binding.

 

	
 
    	
Grantee:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
 
    

 

5

 

ADDENDUM

 

For the purposes of this Nonqualifed Stock Option Award Agreement, the following terms shall be defined as follows:

 

“Cause” shall mean that you have:

 

1.             falsified or omitted information provided in connection with any background check performed for or on behalf of the Company;

 

2.             committed an act which, as set forth in any employment handbook promulgated by the Company, may lead to termination of your employment or your providing services to the Company, unless curable, in which case such cure shall not have been completed within five (5) days following the Company’s notice to you;

 

3.             engaged in any intentional act of fraud against the Company;

 

4.             engaged in willful malfeasance or gross negligence in the performance of this letter agreement or capacity as an employee or provider of services of the Company;

 

5.             refused to perform the duties required or requested consistent with your obligations under any employment agreement or agreement to provide services you now have or will have in the future with the Company or under law, which refusal continues for more than five (5) days following the Company’s written notice of such refusal;

 

6.             been convicted of a felony or entering a plea of nolo contendre to a felony charge;

 

7.             materially breached any employment agreement or agreement to provide services you now have or will have in the future with the Company; or

 

8.             engaged in an act which leads to a finding by the Securities and Exchange Commission, which, in the opinion of independent counsel selected by the Company, could reasonably be expected to impair or impede the Company’s ability to register, list, or otherwise offer its stock to the public, or to maintain itself as a publicly-traded company in good standing with the Securities and Exchange Commission.

 

“Change in Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

1.             Any “person” (as such term is used in Section 13(d) and Section 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (an “Exchange Act Person”) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing more than thirty-five percent (35%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction, provided that, notwithstanding the foregoing, a Change in Control shall not be deemed to occur (a) if the Principal or a Related

 

6

 

Party of his (a “Principal Controlled Entity”) beneficially own more than such thirty-five percent (35%) at any time; or (b) solely because the level of ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided further that if a Change in Control would occur (but for the operation of this proviso) as a result of the acquisition of voting securities by the Company, and after such share acquisition, any such Subject Person (so long as not a Principal Controlled Entity) becomes the owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities owned by such Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;

 

2.             There is consummated a merger, consolidation or similar transaction involving (directly or indirectly) the Company if, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not own, directly or indirectly, either (a) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (b) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction;

 

3.             Implementation of any plan for the liquidation or dissolution of the Company;

 

4.             There is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportion as their ownership of the Company immediately prior to such sale, lease, license or other disposition; or

 

5.             During any period of 12 consecutive months, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof unless the election, or the nomination for election by stockholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of the period.

 

For purposes of this definition, “Principal” means Robert F.X. Sillerman; and “Related Party” means, with respect to the principal, (a) any spouse or immediate family member of the Principal, (b) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or persons beneficially holding a fifty-one percent (51%) or more controlling interest of which consist of the Principal and/or such other persons referred to in the immediately preceding clause (a); or (b) the trustees of any trust referred to in the immediately preceding clause (b).

 

7

 

“Constructive Termination” shall mean the termination of your employment at your initiative after, without your prior written consent, one or more of the following events:

 

1.             any material diminution in your authority, duties or responsibilities;

 

2.             a material breach by the Company of any employment agreement or agreement to provide services you now have or will have in the future with the Company;

 

3.             a material reduction in (a) your base salary under any employment agreement you now have or will have in the future with the Company (unless such reduction is part of an overall and nondiscriminatory reduction by the Company to the base salaries of all similarly situated employees of the Company and such reduction is proportional in amount to the reductions suffered by all of such other employees) or (b) compensation under any agreement to provide services you now have or will have in the future with the Company (unless such reduction is part of an overall and nondiscriminatory reduction by the Company to the base salaries of all similarly situated service providers to the Company and such reduction is proportional in amount to the reductions suffered by all of such other service providers) or (c) the uncured failure by the Company to fulfill its obligations under this Agreement within thirty (30) days after written notice thereof from you to the Company; or

 

4.             relocating your principal place of work outside of the Tri-State New York Metropolitan area.

 

For purposes of this Agreement, Constructive Termination without Cause shall not be deemed to exist unless the termination of your employment or provision of services for Constructive Termination without Cause occurs within ninety (90) days following the initial existence of one of the conditions specified in clauses (1) through (4) above, you provide the Company with written notice of the existence of such condition within sixty (60) days after the initial existence of the condition, and the Company fails to remedy the condition within thirty (30) days after its receipt of such notice.

 

“Disability” shall mean your inability, or failure, to perform the essential functions of your position, with or without reasonable accommodation, for any period of six (6) consecutive months or more, by reason of any medically determinable physical or mental impairment.

 

8

 

SFX ENTERTAINMENT, INC.

 

2013 SUPPLEMENTAL EQUITY COMPENSATION PLAN

 

RESTRICTED STOCK AWARD AGREEMENT

 

SFX Entertainment, Inc. (the “Company”) has determined to grant to you a restricted stock award of common stock (“Stock Award”) of the Company under the SFX Entertainment, Inc. 2013 Supplemental Equity Compensation Plan (the “Plan”).  The terms of the grant are set forth in the attached Restricted Stock Award Agreement (the “Agreement”).  The following provides a summary of the key terms of the Agreement; however, you should read the entire Agreement along with the terms of the Plan, to fully understand the Agreement.

 

SUMMARY OF RESTRICTED STOCK AWARD AGREEMENT

 

	
Grantee:
    	
 
    	
[                               ]
    
	
 
    	
 
    	
 
    
	
Date   of Grant:
    	
 
    	
[                               ]
    
	
 
    	
 
    	
 
    
	
Vesting   Schedule:
    	
 
    	
[                               ]
    
	
 
    	
 
    	
 
    
	
Total   Number of Restricted Shares Granted:
    	
 
    	
[                               ]
    

 

 

RESTRICTED STOCK AWARD AGREEMENT

 

This RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”), dated as of [                                ] (the “Date of Grant”) is delivered by SFX Entertainment, Inc. (the “Company”), to [                         ] (the “Grantee”).

 

The Company has determined to provide the Grantee a restricted stock award under the SFX Entertainment, Inc. 2013 Supplemental Equity Compensation Plan (the “Plan”) and in accordance with the terms and conditions set forth in this Agreement.  Capitalized terms that are used but not defined herein shall have the respective meanings accorded to such terms in the Plan.

 

The Company and Grantee, intending to be legally bound hereby, agree as follows:

 

1.                                      Grant of Restricted Stock Award.

 

The Company grants to Grantee [                ] shares of common stock of the Company, subject to the restrictions set forth below and in the Plan (the “Stock Award”).  The Stock Award may not be transferred by the Grantee or subjected to any security interest until the shares have become vested pursuant to this Agreement and the Plan.

 

2.                                      Vesting and Nonassignability of Stock Award.

 

(a)                                 The shares from the Stock Award shall become vested, and the restrictions described in Section 2(c) shall lapse, according to the following vesting schedule, if the Grantee continues to be employed by, or provide service to, of the Employer (as defined in the Plan) from the Date of Grant until the applicable vesting date:

 

	
Applicable Vesting Date
    	
 
    	
% of Vested Shares
    
	
[                ]
    	
 
    	
[        ]
    

 

(b)                                 In the event of the Grantee’s death, Disability, Constructive Termination or the termination by the Employer for any reason other than Cause (Disability, Constructive Termination and Cause as defined in the employment agreement between Grantee and the Company dated October 18, 2012) before the Stock Award is fully vested, the Stock Award shall become fully vested and the restrictions described in Section 2(c) shall lapse, If the Grantee’s employment or service with the Employer terminates before the Stock Award is fully vested due to the Grantee’s voluntary resignation or termination by the Employer for Cause, the shares from the Stock Award that are not then vested shall be forfeited and must be immediately returned to the Company.

 

 

(c)                                  During the period before the shares from the Stock Award vest (the “Restriction Period”), the non-vested shares from the Stock Award may not be assigned, transferred, pledged or otherwise disposed of by the Grantee.  Any attempt to assign, transfer, pledge or otherwise dispose of the shares contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the shares, shall be null, void and without effect.

 

(d)                                 The Grantee will be entitled to exercise voting rights with respect to the unvested shares held under this Agreement.

 

3.                                      Issuance of Certificates.

 

(a)                                 Stock certificates representing the Stock Award may be issued by the Company and held in escrow by the Company until the Stock Award vests, or the Company may hold non-certificated shares until the Stock Award vests.

 

(b)                                 When the Grantee obtains a vested right to shares from the Stock Award, a certificate representing the vested shares shall be issued to the Grantee, free of the restrictions under Section 2 of this Agreement.

 

(c)                                  The obligation of the Company to deliver shares upon the vesting of the Stock Award shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriately to comply with relevant securities laws and regulations.

 

4.                                      Notices.

 

Any notice to be given to Company under the terms of this Agreement shall be addressed to the Company, at the attention of the Board, at its principal place of business, and any notice to be given to Grantee may be sent to Grantee’s address as it appears in the payroll records of the Company, or at such other addresses as either party may designate in writing to the other.

 

5.                                      Change in Control.

 

The provisions of the Plan applicable to a Change of Control shall apply to the Stock Award, and, in the event of a Change of Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

 

6.                                      Withholding.

 

The Grantee shall be required to pay to the Company, or make other arrangements satisfactory to the Company to provide for the payment of, any federal, state, local or other taxes that the Employer is required to withhold with respect to the grant or vesting of the Stock Award.  Subject to Board approval, the Grantee may elect to satisfy any tax withholding obligation of the Employer with respect to the Stock Award by having shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, local and other tax liabilities.

 

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7.                                      Other Restrictions on Sale or Transfer of Shares.

 

(a)                                 The Grantee is acquiring the shares underlying this grant solely for investment purposes, with no present intention of distributing or reselling any of the shares or any interest therein.  The Grantee acknowledges that the shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)                                 The Grantee is aware of the applicable limitations under the Securities Act and under the Plan relating to a subsequent sale, transfer, pledge or other assignment or encumbrance of the shares.  The Grantee further acknowledges that the shares must be held indefinitely unless they are subsequently registered under the Securities Act and applicable state securities laws or an exemption from such registration is available.

 

(c)                                  The Grantee will not sell, transfer, pledge, donate, assign, mortgage, hypothecate or otherwise encumber the shares underlying this grant unless (i) the shares are registered under the Securities Act or (ii) the Company is given an opinion of counsel reasonably acceptable to the Company that such registration is not required under the Securities Act.

 

(d)                                 The Grantee realizes that there is no public market for the shares underlying this grant, that no market may ever develop for them, and that they have not been approved or disapproved by the Securities and Exchange Commission or any governmental agency.

 

9.                                      Miscellaneous.

 

(a)                                 No Right to Employment.  The grant of the Stock Award shall not be construed as giving the Grantee the right to be retained by or in the employ of the Employer or any other employment right.

 

(b)                                 Stock Award Subject to Plan.  By entering into this Agreement the Grantee agrees and acknowledges that the Grantee has received and read a copy of the Plan.  The Stock Award is subject to the Plan.  The terms and provisions of the Plan, as they may be amended from time to time, are hereby incorporated herein by reference.  In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

(c)                                  Board Authority.  By entering into this Agreement the Grantee agrees and acknowledges that all decisions and determinations of the Board shall be final and binding on the Grantee, his or her beneficiaries and any other person having or claiming and interest in the Stock Award.

 

(d)                                 Severability.  If any provision of this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify this Agreement or the Stock Award under any applicable law, such provision shall be construed or deemed amended to conform to applicable law (or if such provision cannot be so construed or deemed amended without materially altering the purpose or intent of this Agreement and the grant of the Stock Award hereunder, such provision shall be stricken as to such jurisdiction and the remainder of this Agreement and the award shall remain in full force and effect).

 

(d)                                 Notices.  Any notice to be given to Company under the terms of this Agreement shall be addressed to the Company, at the attention of the Board, at its principal place of

 

3

 

business, and any notice to be given to Grantee may be sent to Grantee’s address as it appears in the payroll records of the Company, or at such other addresses as either party may designate in writing to the other.

 

(e)                                  Governing Law. The validity, construction, interpretation and effect of this Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof

 

(f)                                   Interpretation.  The Grantee accepts the Stock Award subject to all the terms and provisions of this Agreement and the terms and conditions of the Plan.

 

(g)                                  Headings.  Headings are given to the paragraphs and subparagraphs of this Agreement solely as a convenience to facilitate reference.  Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision thereof.

 

(h)                                 Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.  Facsimile or other electronic transmission of any signed original document or retransmission of any signed facsimile or other electronic transmission will be deemed the same as delivery of an original.

 

(i)                                     Complete Agreement.  Except as otherwise provided for herein, this Agreement and those agreements and documents expressly referred to herein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.  The terms of this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Grantee.

 

[Signature Page Follows]

 

4

 

IN WITNESS WHEREOF, the Company and Grantee have executed this Agreement as of the grant date shown above.

 

	
 
    	
SFX   Entertainment, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
 
    	
GRANTEE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[                                             ]
    

 

(Signature Page to Restricted Stock Award Agreement)

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