Document:

EX-10.1

 

Exhibit 10.1

 STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of January 3, 2008, by and
among FX Real Estate and Entertainment Inc., a Delaware corporation (the “Company”), and
Barry A. Shier (the “Purchaser”).

RECITALS

     WHEREAS, the Company and the Purchaser have entered into that certain employment agreement,
dated as of December 31, 2007 (the “Employment Agreement”), pursuant to which the Purchaser
serves as the chief operating officer of the Company and the chief executive officer of each of FX
Luxury Realty, LLC, a Delaware limited liability company and a direct subsidiary of the Company,
and BP Parent, LLC, a Delaware limited liability company and an indirect subsidiary of the Company;
and

     WHEREAS, as an inducement for the Purchaser to enter into the Employment Agreement, the
Company has agreed to sell to the Purchaser 500,000 shares of common stock, par value $0.01 per
share, of the Company (the “Shares”) at a price of $5.14 per share for an aggregate
purchase price of $2,570,000, under the terms and subject to the conditions set forth in this
Agreement.

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

1. Sale and Delivery of Shares Upon the terms and subject to the conditions set forth in
this Agreement on the date hereof, the Company shall issue and sell to the Purchaser the Shares,
and the Purchaser shall purchase from the Company the Shares (the “Purchase”) at a price of
$5.14 per share for an aggregate purchase price of $2,570,000 in cash by wire transfer to an
account designated in writing by the Company (the “Purchase Price”). The Company shall
deliver to Purchaser a certificate representing the Shares, registered in the name of the
Purchaser, against payment to the Company of the Purchase Price, which certificate shall bear
legends reflecting the restraints on alienation described in Sections 3(a) and 4(a) below. The
Purchase shall be consummated immediately upon the execution and delivery of this Agreement by each
of the parties hereto.

2. Representations and Warranties of the Company. The Company hereby represents and
warrants to the Purchaser:

     (a) Power and Authorization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware. The Company has all
requisite capacity, power and authority to execute, deliver and perform this Agreement. The
execution, delivery, and performance of this Agreement have been duly authorized by the Company.

     (b) Valid Issuance of Shares. Upon issuance of the Shares in accordance with the terms
of this Agreement, the Shares will be duly authorized, validly issued, fully paid and nonassessable
and free and clear of all security interests, claims, liens, pledges, options, encumbrances,
charges, agreements and other arrangements or restrictions whatsoever (“Encumbrances”),
other than restrictions on transfer imposed by applicable U.S. federal, state or foreign securities
laws and specified in Section 4(a) below.

     (c) Binding Obligation. This Agreement constitutes a valid and binding obligation of
the Company, enforceable in accordance with its terms, except as enforceability may be limited by

 

 

bankruptcy, insolvency, reorganization, moratorium, or other laws affecting creditors’ rights
generally and limitations on the availability of equitable remedies.

     (d) No Breach. The execution and delivery by the Company of this Agreement, the
offering and sale of the Shares hereunder, and the compliance with the terms hereof by the Company,
do not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in the creation of any Encumbrance upon the Shares
pursuant to, (iv) give any third party the right to modify, terminate, or accelerate any obligation
under, (v) result in a violation of, or (vi) require any authorization, consent, approval,
exemption, or other action by or notice to any court or administrative or governmental body
pursuant to, (A) the Company’s Certificate of Incorporation or bylaws, (B) any law, statute, rule,
or regulation to which the Company is subject, or (C) any agreement, instrument, order, judgment,
or decree to which the Company or any subsidiary of the Company is subject or by which any of their
respective assets are bound, except with respect to clause (B) as is not reasonably likely to have
a material adverse effect on the Company’s ability to consummate the transactions contemplated
hereby.

3. Representations and Warranties of Purchaser. The Purchaser hereby represents and
warrants to the Company:

     (a) Own Account. The Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Shares as principal for his own account and not with a view to
or for distributing or reselling the Shares or any part thereof in violation of the Securities Act
of 1933, as amended (the “Securities Act”) or any applicable state securities law, has no
present intention of distributing any of the Shares in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of the Shares (this representation
and warranty not limiting the Purchaser’s right to sell the Shares pursuant to an effective
registration statement registering such shares or otherwise in compliance with applicable federal
and state securities laws subject to the restrictions on alienation specified in Section 4(a)
below) in violation of the Securities Act or any applicable state securities law.

     (b) Purchaser Status. At the time the Purchaser was offered the Shares, he was, and
as of the date hereof he is an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act.

     (c) Experience of the Purchaser. The Purchaser has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks
of the prospective investment in the Shares, and has so evaluated the merits and risks of such
investment. The Purchaser is able to bear the economic risk of an investment in the Shares and, at
the present time, is able to afford a complete loss of such investment.

     (d) General Solicitation. The Purchaser is not purchasing the Shares as an inducement
for entering into the Employment Agreement and not as a result of any advertisement, article,
notice or other communication regarding the Shares published in any newspaper, magazine or similar
media or broadcast over television or radio or presented at any seminar or any other general
solicitation or general advertisement.

     (e) Purchaser Obligations. This Agreement constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, or other
laws affecting creditors’ rights generally and limitations on the availability of equitable
remedies.

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     (f) No Breach. The execution and delivery by the Purchaser of this Agreement, the
offering and sale of the Shares hereunder, and the compliance with the terms hereof by the
Purchaser, do not (i) conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in the creation of any Encumbrance upon the
Shares pursuant to, (iv) give any third party the right to modify, terminate, or accelerate any
obligation under, (v) result in a violation of, or (vi) require any authorization, consent,
approval, exemption, or other action by or notice to any court or administrative or governmental
body pursuant to, (A) any law, statute, rule, or regulation to which the Purchaser is subject, or
(B) any agreement, instrument, order, judgment, or decree to which the Purchaser is subject or by
which any of his assets or properties are bound, except with respect to clause (A) as is not
reasonably likely to have a material adverse effect on the Purchaser’s ability to consummate the
transactions contemplated hereby.

4. Lock-Up and Registration Rights.

     (a) Lock-Up Agreement. The Purchaser hereby agrees that he shall not sell or
otherwise dispose of any of the Shares for a period of two (2) years from the date of purchase of
the Shares, except for estate planning purposes subject to the advance written consent of the
Company (which consent shall not be unreasonably withheld, delayed or conditioned).

     (b) Registration Rights. On the second anniversary of this Agreement or as soon
thereafter as the Company is eligible to use a Form S-3 registration statement (or any successor
registration statement then in effect), the Employer shall register with the Securities and
Exchange Commission the Shares for resale on such a registration statement.

5. Use of Proceeds. The Company agrees that the entire amount of the Purchase Price will
be utilized solely for the purpose of working capital for the Company and its consolidated
subsidiaries.

6. General Provisions.

     (a) Notices. Any notice, request, instruction, or other document to be given
hereunder by a party hereto shall be in writing and shall be deemed to have been given, (i) when
received if given in person, (ii) on the date of transmission if sent by telex, telecopy, or other
wire transmission (with answer back confirmation of such transmission), (iii) upon delivery, if
delivered by a nationally known commercial courier service providing next day delivery service
(such as Federal Express), or (iv) upon delivery, or refusal of delivery, if deposited in the U.S.
mail, certified or registered mail, return receipt requested, postage prepaid:

     If to the Company, to it at:

FX Real Estate and Entertainment Inc.

650 Madison Avenue

15th Floor

New York

New York 10022

Attention: Mitchell J. Nelson

Facsimile: 1 212 750 3034

     If to Purchaser, to it at:

Barry A. Shier

1641 Enclave Court

Las Vegas, Nevada 89134

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     (b) Complete Agreement. This Agreement (together with the Employment Agreement)
embody the complete agreement and understanding among the parties hereto and supersede and preempt
any prior understandings, agreements or representations by or among the parties, written or oral,
with respect to the subject matter hereof. The recitals to this Agreement are true and correct and
by this reference are incorporated herein and made a part hereof.

     (c) Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein.

     (d) Counterparts. This Agreement may be executed simultaneously in three or more
counterparts (including by means of facsimile machine or e-mail), any one of which need not contain
the signatures of more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.

     (e) Successors and Assigns. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written consent of each of the other
parties hereto. Except as otherwise provided herein, this Agreement shall bind and inure to the
benefit of and be enforceable by any of the parties hereto and their respective successors and
permitted assigns.

     (f) Descriptive Headings; Interpretation. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this Agreement. The use of the
word “including” in this Agreement shall be by way of example rather than by limitation.

     (g) Choice of Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.

     (h) Third-Party Beneficiary. The provisions hereof are solely for the benefit of the
parties hereto and will not give rise to any rights in any other third party.

     (i) Remedies. Each of the parties to this Agreement will be entitled to enforce its
rights under this Agreement specifically, to recover damages and costs (including attorneys’ fees)
caused by any breach of any provision of this Agreement and to exercise all other rights existing
in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party in its sole discretion
may apply to any court of competent jurisdiction (without proof of damages or posting any bond or
deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.

     (j) Amendment and Waiver. The provisions of this Agreement may be amended only with
the prior written consent of the parties hereto. No waiver by any party hereto of any provision of
this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be valid unless the same shall be in writing and signed by the
party against whom such waiver is sought to be enforced nor shall such waiver be deemed to extend
to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

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     (k) Further Assurance. Subject to the terms and conditions of this Agreement, after
the date hereof, each of the Company and the Purchasers will use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to give full effect to transactions
contemplated by this Agreement.

     (l) Delivery by Facsimile; E-mail. This Agreement and any amendments hereto, to the
extent signed and delivered by means of a facsimile machine or e-mail, shall be treated in all
manner and respects as an original signed version thereof delivered in person. At the request of
any party hereto each other party hereto shall re-execute original forms thereof and deliver them
to all other parties. No party hereto shall raise the use of a facsimile machine or e-mail to
deliver a signature or the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine or e-mail as a defense to the formation or
enforceability of a contact and each such party forever waives any such defense.

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          IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase Agreement on the date
first written above.

	 	 	 	 	 
	 	FX REAL ESTATE AND ENTERTAINMENT

INC.

 	 
	 	By:  	/s/ Mitchell J. Nelson
 	 
	 	Name:  	Mitchell J. Nelson 	 
	 	Title:  	Executive Vice President and General Counsel 	 
	 
	 	 	 
	 	/s/ Barry A. Shier
 	 
	 	Barry A. ShierEX-10.2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (this “Agreement”) is made as of January 7, 2008, between FX
Real Estate and Entertainment Inc., a Delaware corporation (the “Employer”), and Robert F.X.
Sillerman (the “Executive”).

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

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

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

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

     2. Term; Dates.

          2.1 The term of the Executive’s employment shall commence on the Effective Date (as defined
below) and continue until the fifth annual anniversary thereof (the “Employment Agreement Term”),
unless earlier terminated in accordance with this Agreement.

          2.2 This Agreement refers to the dates defined in this section, as follows: (i) the date of
commencement of employment is the “Effective Date”, which date shall mean the earlier of (x) the
date on which the acquisition of CKX, Inc. (“CKX”) by 19X, Inc. (“19X”) is consummated or (y) the
date on which the merger agreement between 19X and CKX is terminated; provided,
however, this Agreement shall not take effect unless and until the Executive’s employment
agreement with CKX or 19X, as the case may be, is amended to acknowledge the terms of this
Agreement and allow for the performance of the Executive’s obligations hereunder; (ii) the period
of time during which the Executive is an employee of the Employer pursuant to and in accordance
with the terms and provisions of this Agreement is hereinafter referred to as the “Term”; and (iii)
the last date of employment is the “Expiration Date.”

     3. Executive’s Position, Duties, and Authority. The Employer shall employ the Executive, and
the Executive shall serve as Chief Executive Officer of the Employer and Chairman of the Board, and
in such other positions with the Employer and its subsidiaries that are reasonably acceptable to
the Executive. The Executive shall have executive duties, functions, authority, and
responsibilities commensurate with the office or offices he from time to time holds with the
Employer, subject, in accordance with applicable law, to the supervision and direction of the
Board.

 

 

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

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

          3.3 The Executive acknowledges that during the Term, the Employer may, without the necessity
of obtaining the Executive’s consent, implement one or more corporate reorganizations for
financial, tax, or related business reasons which do not constitute a Change in Control as such
event is defined in Section 12.2 of this Agreement. The Executive agrees that, so long as any such
reorganization does not constitute a Change in Control, the reorganized Employer shall be deemed
the Employer for all purposes in connection with this Agreement, and without a requirement that
additional consideration be delivered to the Executive in connection with the reorganization.

     4. Principal Occupation. The Executive shall devote not less than fifty percent (50%) of his
working time to the business and affairs of the Employer and to the fulfillment of his duties under
this Agreement in a diligent and competent fashion, consistent with industry standards.

          4.1 The Employer acknowledges and agrees that during the Term:

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

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

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     Where the Board declines to approve the commencement of the Executive’s service or his
continued service, or the Board withdraws its approval for the continuation of the Executive’s
service as described in Section 4.1(a), the Executive agrees that he will resign from such
position, or withdraw himself from consideration. The Executive and Employer agree that nothing in
this Section 4.1 applies to the Executive’s membership or contribution of his non-working time or
services, in a non-remunerative capacity, to any: charitable or educational organization,
foundation, or association; political organization or campaign; religious group, foundation, or
organization; or non-profit trade, professional, community, or recreational organization or club,
so long as the purpose or aim of any such organization presents no conflict with the business of
the Employer, as reasonably determined by the Board.

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

          4.3 No provision of this Agreement shall be construed to prohibit the Executive’s: (a) passive
acquisition, ownership, or trading, including without limitation the Executive’s direct or indirect
ownership, of less than five percent (5%) of the issued and outstanding stock (or comparable bonds,
options, derivatives, negotiable instruments or securities) of a business entity that is directly
or indirectly competitive with the business of the Employer and whose securities are publicly
traded anywhere in the world or registered under the Investment Company Act of 1940, as amended; or
(b) passive ownership of stock, partnership interests, or comparable ownership interests or
securities in any for-profit private business entity that is not directly competitive with the
business of the Employer or any of its subsidiaries. The Employer additionally agrees that
nothing in this Agreement shall operate to prohibit the Executive’s acceptance of a testamentary
gift, bequest or its equivalent, nor the Executive’s retention of any such gift, bequest, or its
equivalent following its delivery so long as the Executive retains the interest(s) solely for
investment purposes.

          4.4 Notwithstanding anything contained in this Section 4, the Employer acknowledges and agrees
that, during the Term, Executive will be party to an employment agreement with CKX or 19X, pursuant
to which he will serve as Chief Executive Officer, Chairman or Executive Chairman, as the case may
be, and which will require him to devote not less than 50% of his working time to the business and
affairs of such company and to the fulfillment of his duties under such agreement, consistent with
industry standards.

          4.5 Notwithstanding anything contained in this Section 4, the Employer acknowledges and agrees
that the Executive shall be entitled to continue to participate in the investments and activities
set forth on Schedule 4.5 attached hereto.

     5. Location of Employment. Unless the Executive otherwise consents in writing, the usual place
for the performance of his services shall be the Employer’s principal office located in

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the Borough of Manhattan, New York, New York, or such other location within Manhattan or
Nassau County, New York, as established by the Employer. In addition, the Executive may perform his
services in Southampton, New York, provided, that there is no additional cost to the Employer
beyond those that would otherwise be reimbursed pursuant to Section 8 hereof.

     6. Base Salary. During the Term, the Executive shall not receive any base salary (“Base
Salary”) under this Agreement, unless such arrangement is changed by mutual agreement of the
Executive and the Board. The Employer shall be provided all fringe benefits, perquisites or other
amounts that the Employer and the Executive agree at the beginning of each year will be provided
to the Executive for such year (whether or not paid in cash) and that the Employer will be required
to report as compensation to the Executive on Form W-2. The Board additionally shall review the
Executive’s compensation arrangements at least annually; and the Board may determine to provide
some compensation to Executive.

          6.1 Notwithstanding Section 6 above, the Employer shall provide the Executive with a full time
driver; provided, however, the Executive shall reimburse the Employer for 50% of
the costs of such full-time driver. In addition, the Employer shall provide the Executive with
full-time protection services; provided, however, the Executive shall reimburse the
Employer for 50% of the costs for such full-time protection services. The Executive acknowledges
that the Employer may, but is not obligated to, retain a consultant to recommend a company-wide
security plan for the Employer and that the protection services to be provided to the Executive
hereunder would be provided subject to the terms and conditions of such plan, as so adopted and in
effect from time to time during the Term.

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

     7. Bonus and Option Grants

          7.1 The Executive shall be eligible to receive an annual discretionary bonus payable in any
combination of cash, stock or restricted stock, stock options, and/or other consideration
beneficial to the Executive during the continuance of the Executive’s employment hereunder (the
“Bonus”), after and as determined by the Compensation Committee of the Board (the “Compensation
Committee”). The Compensation Committee’s decision to cause the Employer to make or to not make
a discretionary bonus payment to the Executive in any year (including, without limitation, the
consideration to be received or methodology applied by the Compensation Committee to a
discretionary bonus eligibility determination in any year) shall have no bearing on the Executive’s
eligibility to earn a bonus in any succeeding year, nor shall

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the amount, form, or payment timing of any such discretionary bonus in any year have any
bearing on any aspect of a discretionary bonus determination in any subsequent year.

          7.2 Simultaneous with the execution of this Agreement, the Employer shall grant to the
Executive a stock option to purchase up to 6,000,000 shares of common stock, par value $.01 per
share, of the Employer (the “Executive Stock Options”). The exercise price for the
Executive Stock Options shall be $20 per share. The Executive Stock Options shall be approved by
the Compensation Committee (or the Board) in accordance with Rule 16b-3 promulgated under the
Exchange Act (as defined in Section 12.2 below), and vest ratably over the five year period
following the Effective Date (1/5th on each anniversary of the Effective Date). The
Executive Stock Options shall contain cashless exercise provisions permitting payment of any
portion of the exercise price (x) pursuant to broker-assisted “cashless” exercise procedures, (y)
by the withholding of shares issuable upon exercise of the Options and/or (z) by the delivery of
shares held by the Executive to the extent held for such period of time, if any, required to avoid
a charge to the earnings of the Employer for financial accounting purposes, and otherwise be
governed by the provisions of a stock option agreement substantially in the same form as is used
for option grants to its other senior executives. As soon as practicable after the Effective Date,
Employer shall register with the Securities and Exchange Commission (the “SEC”) the shares
of Common Stock issuable upon exercise of the Executive Stock Options on a Form S-8 registration
statement (or any successor registration form then in effect).

     8. Expenses.

          8.1 The Employer shall reimburse the Executive for all reasonable expenses actually incurred
or paid by the Executive during the Term in the performance of the Executive’s services. The
Employer shall make reimbursement within a reasonable time following the Executive’s presentation
of expense statements, vouchers, receipts, or such other supporting information as the Employer
reasonably may require from the Executive. The Executive acknowledges that the Employer’s policies
regarding the documentation of expenses for which reimbursement is sought may change from time to
time, and the Executive agrees that he will comply with the Employer’s reasonable documentation
requirements. In no event shall expenses be reimbursed later than the end of the first quarter of
the calendar year immediately after the calendar year in which the expenses were incurred by the
Executive.

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

          8.3 In the event that the Employer’s business requirements cause or require the Executive to
cancel personal vacation or travel plans for which the Executive or any member

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of his family is unable to obtain a full refund of any deposit or comparable amount expended
by the Executive or any such family member in advance, the Employer agrees that it will reimburse
to the Executive the full amount not refunded or refundable to the Executive or any such family
member. In no event shall such amounts be reimbursed later than the end of the calendar year
immediately after the calendar year in which the amounts were incurred by Executive or such family
member.

          8.4 Subject to the Executive providing the Employer with advanced written notice, the Employer
shall pay all fees and expenses associated with the Executive’s application for any license or
approval required by the Nevada Gaming Authorities and other governmental authorities from whom
approval, if any, is required under the laws of the State of Nevada and/or any other state or
jurisdiction in which the Employer intends to conduct gaming operations. Alternatively, the
Executive may seek reimbursement from the Employer for such expenses pursuant to the terms of
Section 8.1.

     9. Benefits.

          9.1 During the Term, the Executive shall be eligible to participate in any pension, profit
sharing, incentive stock option, non qualified stock option, deferred share, performance share and
performance unit, stock purchase, stock grant program or plan, and retirement savings program or
plan established by the Employer or any of its subsidiaries for which the Executive provides
services hereunder (“Participating Subsidiaries”), including, without limitation, any such
program or plan offered by the Employer or Participating Subsidiaries to its executive or
non-executive employees. The Executive additionally shall be eligible to participate in any group
life insurance, hospitalization, medical, health and accident, dental, disability, or similar plan
or program made available by the Employer or Participating Subsidiaries to its executive or
non-executive employees. The Executive acknowledges that his participation in any benefit plan
described in this Section 9.1 may require, where required from other senior executives of the
Employer or Participating Subsidiaries, the Executive’s co-payment of a periodic premium as a
deduction from the Base Salary payable to him or, in the event that the Employer does not then pay
the Executive a Base Salary, paid directly by the Employer. The Executive additionally
acknowledges that the Executive’s actual ability to participate in any program, plan, or other
benefit opportunity in which the Executive otherwise is eligible to participate ultimately may be
determined and governed by the terms and conditions of a third-party provider’s plan or program,
and the Executive affirms that any third-party’s decision denying the Executive’s participation in
a particular program or plan, the provision of coverage or a benefit in respect of a particular
circumstance or expense, or a comparable decision adversely affecting the Executive shall not
constitute a breach of this Agreement by the Employer, so long as the Employer does not offer,
designate, or select a program or plan with the actual intention of excluding the Executive’s
eligibility or participation in the opportunity.

          9.2 The Executive acknowledges that the Employer may, as it deems appropriate, seek, obtain,
and maintain during all or part of the Term insurance connected with the life of the Executive, and
for the benefit of the Employer. In the event that the Employer elects to do so, the Executive
agrees: to provide any medical information required by the insurer issuing such coverage; to submit
no more frequently than semi-annually to any medical examination required by the insurer in
connection with the granting or renewal of such coverage;

6

 

and to otherwise cooperate reasonably with the Employer’s attempts to obtain such coverage.
Any insurer’s rejection of an application submitted by the Employer connected with this Section 9.2
in no event shall constitute a breach of this Agreement by the Executive, and the Employer shall
not request nor in another manner seek any information from the Executive, the insurer, or any
other person(s) connected with the rejection.

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

               (a) $3 million;

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

               (c) the cash portion of all declared but unpaid Bonus through the time of the Executive’s
death;

               (d) all reimbursable business expenses incurred by the Executive through the time of his
death; and

               (e) the Employer additionally shall cause any stock options, restricted stock or other
equity-based instruments (collectively “Equity Awards”) that previously were issued by the
Employer or any of the Participating Subsidiaries to the Executive to vest fully and/or cause any
Equity Awards that were approved for issuance by the Employer or any of the Participating
Subsidiaries to the Executive and not so issued through the time of the Executive’s death to be
issued and fully vested. The Employer shall take all action necessary to cause the assignment or
transfer of such Equity Awards as directed by the Executive’s will or testamentary plan, or as
directed by any duly appointed administrator or executor of the Executive’s estate.

The Executive acknowledges that the Employer at its option may, in the sole exercise of its
discretion, acquire and maintain a current whole life or term insurance policy (“Policy”)
on the life of the Executive from a reputable carrier which provides substantially equivalent
benefits on behalf of the Executive in respect of the amounts provided in Sections 9.3(a) and (b).
Such Policy, if acquired and maintained, is intended to meet the Employer’s obligations to the
Executive pursuant to Sections 9.3(a) and (b). The Executive shall have no preferred claim on, or
any beneficial ownership interest in, the Policy which will be subject to the claims of the
Employer’s general creditors under federal and state law in the event of insolvency. While the
Executive is an employee of the Employer, the Employer shall be the named beneficiary of the Policy
and the Policy shall not be assignable. However, upon termination without Cause,

7

 

Constructive Termination without Cause or termination following a Change in Control (all as defined
in Section 12 below), the Employer shall assign the Policy to the Executive within thirty (30) days
following his termination of employment and, upon the assignment, the Executive shall have all
rights with respect to the Policy. Where the Employer elects to seek such insurance coverage, the
Executive agrees to provide any medical information reasonably required by the insurer issuing such
coverage; to submit to any medical examination reasonably required by the insurer in connection
with the granting or renewal of such coverage; and to otherwise cooperate reasonably with the
Employer’s attempts to obtain such coverage. Any insurer’s rejection of an application submitted by
the Employer in connection with this Section 9.3 in no event shall relieve the Employer of any of
its obligations hereunder.

     10. Indemnification. The Employer shall indemnify the Executive against all losses, claims,
expenses, or other liabilities of any nature arising by reason of the fact that he: (a) is or was a
director, officer, employee, or agent of the Employer or any of its subsidiaries or affiliates; or
(b) while a director, officer, employee or agent of the Employer or any of its subsidiaries or
affiliates, is or was serving at the request of the Employer as a director, officer, partner,
venturer, proprietor, trustee, employee, agent or similar functionary of another corporation,
partnership, joint venture, trust, employee benefit plan or other entity, in each case to the
fullest extent permitted under the Delaware General Corporation Law, as the same exists or may
hereafter be amended. Without limiting the generality of the foregoing, the Executive shall be
entitled in connection with his employment and in connection with his services as an officer and
director of the Employer to the benefit of the provisions relating to indemnification and
advancement of defense costs and expenses contained in the bylaws and certificate of incorporation
of the Employer, each as in effect as of the Effective Date and thereafter as may be amended from
time to time (not including any amendments or additions that limit or narrow, but including any
that add to or broaden, the protection afforded to the Executive), to the fullest extent permitted
by applicable law. The Employer shall advance to the Executive all costs of investigation or
defense incurred by the Executive in connection with any pending or threatened claim for which the
Executive may be entitled to indemnification hereunder, provided that the Executive shall agree to
return to the Employer any such advanced amounts, without interest, if it is determined in a final,
non-appealable judgment by a Court of competent jurisdiction that the Executive is not entitled to
indemnification by the Employer for losses incurred in connection with such claim. The
indemnification obligations of the Employer shall survive from the Effective Date of this Agreement
and continue until three (3) months after the expiration of any applicable statute of limitations
with respect to any claim made against the Executive for which the Executive is or may be entitled
to indemnification (the “Survival Period”), and shall survive after the Survival Period with
respect to any indemnification claim as to which the Employer has received notice on or prior to
the end of the Survival Period. The Employer’s belief regarding a statute of limitations applicable
to a claim, any position taken by the Employer in response to a claim, or the determination of any
judicial, quasi-judicial, or arbitral body in connection with a claim and any statute of
limitations applicable to a claim(s) shall in no event relieve the Employer from its obligation to
indemnify the Executive. The Employer shall prepay in full, and maintain fully during the Survival
Period for the benefit of the Executive, on an “occurrence” basis, a directors and officers errors
and omissions insurance policy, or a similar insurance policy(ies), providing coverage from a
financially reputable carrier, in form and substance reasonably acceptable to the Executive.
Anything in this Agreement to the contrary notwithstanding, this Section 10 shall survive the
termination of this Agreement for any reason.

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

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

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

9

 

return all tangible property of the Employer containing any Records which is possessed by the
Executive, and shall deliver to the Employer a signed affirmation to that effect.

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

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

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

          12.1 “Cause” means:

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

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

               (c) the Executive’s disloyalty, willful non-performance or willful misconduct or neglect
(whether the neglect arises from an act(s) or failure(s) to act) of his duties under this Agreement
after: (i) written notice to the Executive from the Board, with reasonable specification of the
matter(s) giving rise to the notice, including notice of the Employer’s intent to terminate the
Executive’s employment due to the matter(s) described in such notice, and further stating the
Board’s reasoned conclusion that it is impossible for the Executive to cure the matter(s) giving
rise to the notice within thirty (30) days from the notice; (ii) the opportunity for the Executive
to respond in writing to the written notice, with the assistance of any counsel deemed appropriate
by the Executive (but at the Executive’s expense) not sooner than ten (10) regular business days
after delivery of the written notice; (iii) the opportunity for the Executive to be heard and to
orally present his position, with the assistance of any counsel deemed appropriate by the Executive
(but at the Executive’s expense) during a confidential meeting of the entire Board within ten (10)
business days after the Executive’s delivery to the Employer of the Executive’s written response to
the written notice; and (iv) a vote of not less than 66 2/3% of all members of the Board (not
including the Executive’s vote), finding that the matter(s) specified in the written notice
constitute “Cause” for purposes of this Agreement;

               (d) any finding by the SEC pertaining to the Executive which, in the opinion of independent
counsel selected by the Employer, could reasonably be expected to

10

 

impair or impede the Employer’s ability to register, list, or otherwise offer its stock to the
public to maintain itself as a publicly-traded company; or

               (e) the Gaming Authorities of the State of Nevada or any other state or jurisdiction in which
the Employer shall conduct gaming operations shall determine or indicate in writing to the Employer
that the Executive’s continued employment as an executive would adversely impact the Employer’s
licensing status or gaming operations in any jurisdiction in which it is seeking to be licensed or
is so licensed.

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

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

               (a) any “person,” or “group” of related persons for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) (other than the Principal or a
Related Party of the Principal), shall become, directly or indirectly, a “beneficial owner,” as
such term is used in Rule 13d-3 promulgated under the Exchange Act, of Voting Stock representing
more than thirty-five percent (35%) of the total voting power of all Voting Stock of the Employer
on a fully-diluted basis; provided, however, the acquisition of beneficial
ownership of more than thirty-five percent (35%) of the total voting power of all Voting Stock of
the Employer on a fully-diluted basis in connection with a primary issuance of Voting Stock by the
Employer that has been approved by the Board shall not constitute a Change in Control for purposes
of this Agreement;

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

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

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

11

 

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

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

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

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

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

               (b) the failure to elect the Executive to any of the positions described in Section 3.1;

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

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

               (e) the failure of the Employer to obtain the assumption in writing of its obligation to
perform this agreement by any successor to all or substantially all of the assets or business of
the Employer after a merger, consolidation, sale, or similar transaction, provided that such
transaction does not constitute a “Change of Control”; or

12

 

               (f) the commencement by or against the Employer or any of its material subsidiaries of a
voluntary or involuntary proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect; or seeking the appointment
of a trustee, receiver, liquidator, or custodian of it or any substantial part of its property, and
consent by the Employer or any such material subsidiary to any such relief, provided that such
relief does not constitute a “Change of Control”; or

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

          12.4 If the Employer terminates this Agreement for Cause, the Executive shall be paid (x) all
earned but unpaid Base Salary through the date of termination, (y) the cash portion of all declared
but unpaid Bonus through the date of termination and (z) all reimbursable business expenses
incurred by the Executive through the date of termination. In the event the Employer terminates
the Executive’s employment for Cause, the Executive shall have no further obligation or liability
to the Employer in connection with his performance of this Agreement (except the continuing
obligations specified in Sections 11 and 14 hereof).

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

               (a) $3 million;

               (b) the cash portion of all declared but unpaid Bonus through the date of termination;

               (c) all reimbursable business expenses incurred by the Executive through the date of
termination;

               (d) the Employer additionally shall cause any Equity Awards that previously were issued by the
Employer or any of the Participating Subsidiaries to the Executive to vest fully and/or cause any
Equity Awards that were approved for issuance by the Employer or

13

 

any of the Participating Subsidiaries to the Executive and not so issued through the date of
termination to be issued and fully vested;

               (e) all benefits provided in Section 9 for the lesser of (i) three (3) years or (ii) the
remaining portion of the Employment Agreement Term following such termination (except that if
providing any such benefit under the terms of a plan is not permissible under the terms of the plan
or would cause an adverse tax effect, the Employer shall reimburse the Executive’s expenses
incurred in obtaining similar coverage on his own with such reimbursement being paid no later than
the end of the calendar year such expenses are incurred by Executive); and

               (f) the Executive shall have no further obligation or liability to the Employer in connection
with his performance of this Agreement (except the continuing obligations specified in Section 11
hereof).

          12.6 Additional Rights Following a Change in Control. In the event of a Change in Control,
the Executive shall be entitled: (a) at the Executive’s option, to accelerate this Agreement’s
Expiration Date to the date of the actual closing of any transaction which constitutes a Change in
Control (the “Change in Control Closing Date”); and (b) to all payments and benefits provided in
Section 12.5 in respect of a Constructive Termination without Cause. The payments and benefits
provided under Section 12.5, together with a bona fide, good faith estimate of any amounts that may
be payable pursuant to Section 12.7, (i) shall be paid to the Executive in a lump sum on or prior
to the Change in Control Closing Date (or such later date as may be necessary to avoid any adverse
tax consequences under Section 409A of the Internal Revenue Code as described in Section 12.8
below), without any discount or reduction for the present value of any monetary amount(s) payable;
and (ii) in the case of non-monetary consideration or stock options or comparable consideration,
delivered to the Executive on or prior to the Change in Control Closing Date. Upon a Change in
Control, all granted but unvested shares of restricted stock and all options to purchase the
Employer’s capital stock or similar instruments granted to or held, directly or indirectly, by the
Executive shall vest fully and immediately in the Executive and all options and similar securities
held, directly or indirectly, by the Executive shall remain exercisable for the full maximum term
of the original option grant or ten (10) years from the Change in Control Closing Date, whichever
is greater. In addition, Section 14 of this Agreement immediately, and without additional action,
shall be deemed and rendered null, void, and without any effect as against the Executive upon the
actual closing of any transaction which constitutes a Change in Control. The Executive shall
forfeit any rights granted pursuant to this Section 12.6 if the Executive, in his sole and absolute
discretion and without any obligation whatsoever to do so, accepts in writing a written offer to
remain with the surviving company in an executive position with equivalent duties, authority, and
responsibilities as the Executive held immediately prior to the transaction resulting in the Change
in Control.

          12.7 Payment Following a Change in Control.

               (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Employer to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise in connection with or arising out of, the Executive’s

14

 

employment with the Employer or a change in ownership or effective control of the Employer or
a substantial portion of its assets (a “Payment”), would be nondeductible by the Employer
for Federal income tax purposes under the rules set forth in Section 280G of the Internal Revenue
Code of 1986, as amended (the “Code”), as in effect on the Effective Date (the
“Effective Date Section 280G Rules”), then the aggregate present value of amounts payable
or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments
or distributions pursuant to this Agreement are hereinafter referred to as “Agreement
Payments”) shall be reduced to the Reduced Amount. The “Reduced Amount” shall be an amount
expressed in present value which maximizes the aggregate present value of Agreement Payments and
that would not cause any Payment to be nondeductible by the Employer under the Effective Date
Section 280G Rules. Anything to the contrary notwithstanding, if the Reduced Amount is zero and it
is determined further that any Payment which is not an Agreement Payment under the Effective Date
Section 280G Rules would nevertheless be nondeductible by the Employer under the Effective Date
Section 280G Rules, then the aggregate present value of Payments which are not Agreement Payments
shall also be reduced (but not below zero) to an amount expressed in present value which maximizes
the aggregate present value of Payments without causing any Payment to be nondeductible by the
Employer under the Effective Date Section 280G Rules. For purposes of this Section 12.7(a),
present value shall be determined in accordance with Section 280G(d)(4) of the Code and the
Treasury Regulations promulgated thereunder, under the Effective Date Section 280G Rules. The
Executive shall determine which and how much of the Payments shall be eliminated or reduced
consistent with the requirements of this Section 12.7(a), provided that, if the Executive does not
make such determination within ten business days of the receipt of the calculations made by the
Accounting Firm (as defined below), the Employer shall elect which and how much of the Payments
shall be eliminated or reduced consistent with the requirements of this Section 12.7(a) and shall
notify the Executive promptly of such election. Within five business days thereafter, or at such
later time as such amounts otherwise would be payable under this Agreement, the Employer shall pay
to or distribute to or for the benefit of the Executive such amounts as are then due to the
Executive under this Agreement.

               (b) If after any reduction pursuant to paragraph (a) of this Section 12.7, it shall be
determined that any Payment would be subject to the excise tax imposed by Section 4999 of the Code
as in effect at the time such Payment is to be made, or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Employer
shall make a payment to the Executive (a “Gross-Up Payment”) in an amount such that after
payment by the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up Payment,
the Executive retains (or has had paid to the Internal Revenue Service on his behalf) an amount of
the Gross-Up Payment equal to the sum of (i) the Excise Tax imposed upon the Payments and (ii) the
product of any deductions disallowed because of the inclusion of the Gross-Up Payment in the
Executive’s adjusted gross income and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to (x) pay federal
income taxes at the highest marginal rates of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made, and (y) pay applicable state and local income taxes at
the highest marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.

15

 

               (c) Any initial determinations required pursuant to this Agreement shall be made at the
Employer’s expense by the Employer’s regular outside auditors (the “Accounting Firm”). The
Accounting Firm shall provide its determination (the “Determination”), together with
detailed supporting calculations and documentation, to the Employer and the Executive within ten
days of the Termination Date, if applicable, or promptly upon request by the Employer or by the
Executive (provided the Executive reasonably believes that any of the Payments may be subject to
the Excise Tax) and if the Accounting Firm determines that there is a Reduced Amount or that no
Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the
Executive with an opinion reasonably acceptable to the Executive that supports its
Determination[s]. Within ten days of the delivery of the Determination to the Executive, the
Executive shall have the right to dispute the Determination (the “Dispute”). The Reduced
Amount, if any, and the Gross-Up Payment, if any, as determined pursuant to this Section 12.7(b)
shall be paid by the Employer to the Executive, within ten days of the receipt of the Accounting
Firm’s determination notwithstanding the existence of any Dispute, or in the case of the Reduced
Amount, such later dates as the Payments comprising the Reduced Amounts otherwise would have been
payable pursuant to this Agreement. If there is no Dispute, the Determination shall be binding,
final and conclusive upon the Employer and the Executive subject to the application of clause (iii)
below. The Employer and the Executive shall resolve any Dispute in accordance with the terms of
this Agreement. Notwithstanding the foregoing, in no event shall payment of the Gross-Up Payment
occur later than the end of the Executive’s taxable year following the Executive’s taxable year in
which the Executive pays the taxes giving rise to the Gross-Up Payment.

               (d) Notwithstanding anything contained in this Agreement to the contrary, in the event that,
according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the
Employer shall pay to the applicable government taxing authorities as Excise Tax withholding, the
amount of the Excise Tax that the Employer has actually withheld from the Payment or Payments or
the Gross Up Payment.

          12.8 Impact of Section 409A. Notwithstanding the foregoing, if any amount payable to the
Executive under this Agreement on account of the Executive’s termination of employment constitutes
a “deferral of compensation” within the meaning of United States Treasury Regulation (“Treasury
Regulation”) Section 1.409A-1(b) (“Deferred Compensation”), the payment of such Deferred
Compensation shall commence no later than 90 days after Executive incurs a Separation from Service
(as defined below); provided, however, if on the date of the Executive’s Separation from Service
(as defined below), the Executive is a “specified employee” within the meaning of Section 409A of
the Code, any Deferred Compensation payable under this Agreement on account of the Executive’s
Separation from Service and within the first six (6) months following the Executive’s Separation
from Service, shall instead be paid in a lump sum on the first business day of the seventh (7th)
month following the Executive’s Separation from Service. Each payment of Deferred Compensation
shall be considered a separate payment for purposes of Treasury Regulation Sections 1.409A-1(b)(4)
and 1.409A-2(b)(2). For purposes of this Agreement, “Separation from Service” shall have the
meaning set forth in Treasury Regulation Section 1.409A-1(h), and a Separation from Service will be
deemed to occur if the Employer and the Executive reasonably anticipate that Executive shall
perform no further services for the Employer (whether an employee or an independent contractor) or
that the level of bona fide services Executive will perform in the future (whether as an employee
or an

16

 

independent contractor) will permanently decrease to no more than 49 percent of the average
level of bona fide services performed (whether as an employee or independent contractor) over the
immediately preceding 36-month period.

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

          12.10 Stock Options and Restricted Stock. (a)Upon termination of the Executive’s employment
with the Employer without Cause or as a result of a Constructive Termination without Cause, all
restrictions on any Equity Award granted or issued by the Employer or any of the Participating
Subsidiaries to the Executive after the Effective Date, immediately shall lapse. The Executive
additionally shall have the immediate right to exercise any Employer stock options in full (without
regard to any restriction on the underlying stock, and whether granted under this Agreement or
otherwise), whether or not any such option is fully exercisable on the date of termination, for the
remainder of the original full maximum term of each such stock option. In addition, in the event
that the Executive’s employment is terminated for any reason within one (1) year following the
consummation of a Change in Control (including, without limitation, the date of the consummation)
then the Executive shall be entitled, at the Executive’s option and without the preclusion or
reduction of any benefit otherwise available to him under this Agreement (pursuant to Section 12.6
or otherwise), to exercise all options granted previously to the Executive during the longest
period permissible under the terms of the plan under which such options were issued from the Change
in Control Closing Date, and additionally to freely transfer any options held, directly or
indirectly, by the Executive as of the Change in Control Closing Date.

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

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

17

 

     13. Disability.

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

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

          13.3 Unless the Employer voluntarily exercises its option under Section 13.4 to restore the
Executive to his full compensation, duties, functions, authority and responsibilities, the
Executive shall have no obligations to the Employer from and after the Disability Date (except for
his obligations under Section 11, which shall survive); and

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

     14. Non-competition.

     Except as set forth in Section 12.5(f) or elsewhere in this Agreement, during the Employment
Agreement Term the Executive will not, without the prior written approval of the Board, (a) become
employed by, or become an officer, director, or general partner of, any partnership, corporation or
other entity in the residential, media, entertainment, luxury hotel or casino sectors (each a
“Prohibited Business”) or (b) directly or indirectly, purchase, invest or otherwise participate in
any significant manner, in investments, businesses or commercial operations in a Prohibited
Business, unless such purchase, investment or participation is permitted under Section 4 above or
conducted by and through Employer or its subsidiaries. Nothing in this Section 14 shall prohibit
the Executive from continuing to fulfill his obligations as an officer, director or partner of
companies or entities identified in Section 4 or from engaging in the activities listed on Schedule
4.5 to this agreement.

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

If to the Employer:

FX Real Estate and

Entertainment Inc.

650 Madison Avenue

New York, New York 10022

Attention: Board of Directors

If to the Executive:

Robert F.X. Sillerman

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

     16. Disputes.

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

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

               (b) The arbitrator(s) shall be selected as follows: Each party shall by written notice to the
other have the right to appoint one arbitrator. If, within thirty (30) days following the giving of
such notice by one party, the other shall not, by written notice, appoint another arbitrator, the
first arbitrator shall be the sole arbitrator. If two arbitrators are so

19

 

appointed, they shall appoint a third arbitrator. If thirty (30) days elapse after the
appointment of the second arbitrator and the two arbitrators are unable to agree upon the third
arbitrator, then either party may, in writing, request that the AAA appoint the third arbitrator.

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

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

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

               (f) The parties agree that the appointed arbitrator(s) shall have no power or authority to
make awards or issue orders of any kind, except as authorized by the FAA and the internal laws of
the State of New York. Any monetary award made shall be payable

20

 

promptly in United States dollars, free of any tax, offset, or deduction (unless required by
law), and any costs, fees, or taxes incident to enforcing the award shall, to the maximum extent
permitted by law, be charged against the party resisting enforcement.

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

     17. General.

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

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

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

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

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

21

 

further or continuing waiver of any such breach, or a waiver of the breach of any other term
or covenant contained in this Agreement.

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

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

          17.8 Full Negotiation. The Executive and the Employer each independently have made all
inquiries regarding the qualifications of the other which he or it deems necessary. The Executive
and the Employer affirm that he or it fully understands this Agreement’s meaning and effect. Each
party has participated fully and equally in the negotiation and drafting of this Agreement. Each
party assumes the risk of any misrepresentation or mistaken understanding or belief relied upon by
him or it in entering into this Agreement.

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

[SIGNATURE PAGE FOLLOWS]

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

	 	 	 	 	 
	 	FX REAL ESTATE AND ENTERTAINMENT INC.

 	 
	 	      By:  	/s/ Mitchell J. Nelson
 	 
	 	 	Name:  	Mitchell J. Nelson 	 
	 	 	Title:  	Executive Vice President and General Counsel	 
	 
	 	 	 
	 	      By:  	                                              /s/ Robert F.X. Sillerman
 	 
	 	 	Robert F.X. Sillerman 	 
	 	 	 	 
	 

23

 

Schedule 4.5

Executive’s Investments and Activities

Any and all theatrical or feature film production work or projects with Mel Brooks.

Ownership interests in certain minor league and major league baseball, basketball, hockey and
football teams and arenas (built or to be built).

Passive investments through private equity funds and other investments pursuant to which the
Principal beneficially owns less that 5% of the outstanding shares of a company and has no voting
control.

Responsibilities as a principal of MJX Asset Management, LLC.

Responsibilities as a principal of Flag Leisure Group, LLC/Flag Luxury Properties, LLC.

Investment activities currently underway through MJX Real Estate Ventures, LLC.

Participation in Temenos Anguilla and Pelican ventures in Anguilla, British West Indies.

24

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