Document:

EX-10.1

EXHIBIT 10.1

FX REAL ESTATE AND ENTERTAINMENT INC.

SUBSCRIPTION AGREEMENT

	 	 	 
	SUBSCRIBER:

	 	[                                        ]
	 
	 	 
	SECURITIES SUBSCRIBED FOR:

	 	[                    ]
units consisting of [                    ] shares
of Common Stock and Common Stock Purchase
Warrants to purchase up to
[                    ] shares
of Common Stock
	 
	 	 
	AGGREGATE PURCHASE PRICE:

	 	$[                                        ]

 

     This SUBSCRIPTION AGREEMENT (this “Agreement”), dated as of July ___, 2008, is made by
and between FX Real Estate and Entertainment Inc., a Delaware corporation (the “Company”),
and the undersigned subscriber (the “Subscriber”).

     1. Subscription. The Subscriber hereby irrevocably subscribes for and agrees to
purchase the securities of the Company specified above (the “Securities”) for the aggregate
purchase price specified above (the “Aggregate Purchase Price”). The Subscriber has
simultaneously herewith made full payment of the Aggregate Purchase Price in immediately available
funds by wire transfer in accordance with instructions from the Company. Upon the Company’s receipt
of the entire Aggregate Purchase Price, the Company shall (a) cause The Bank of New York Mellon
Corporation, as its transfer agent (the “Transfer Agent”), to issue to the Subscriber a
statement evidencing ownership of the Shares (as defined in Section 2 below), free and clear of all
restrictions (except as expressly provided in Section 6 below), and registration thereof in the
Subscriber’s name on the Transfer Agent’s records in book-entry form under The Direct Registration
System and (b) issue the Warrants (as defined in Section 2 below) in the name of the Subscriber.

     2. Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated:

               “Shares” means the shares of common stock, $0.01 par value, of the Company comprising
a portion of the Securities being subscribed for and purchased by the Subscriber hereunder.

               “Warrants” means the Common Stock Purchase Warrant of the Company to purchase Warrant
Shares at an exercise price of $4.50 per share, in substantially the form attached hereto as
Exhibit A, and the Common Stock Purchase Warrant to purchase Warrant Shares at an exercise
price of $5.50 per share, in substantially the form attached hereto as Exhibit B,
comprising a portion of the Securities being subscribed for and purchased by the Subscriber
hereunder.

               “Warrant Shares” means the shares of common stock, $0.01 par value, of the Company
issuable upon exercise of the Warrants.

     3. Offering Materials. The Subscriber represents and warrants that it is in receipt
of and that it has carefully read the following periodic reports filed by the Company with the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended,
(collectively, the “Offering Materials”): (a) the Company’s Annual Report on Form 10-K for
the fiscal year ended

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December 31, 2007 (the “Form 10-K”); (b) the Company’s Amendment No.
1 to the Form 10-K; (c) the Company’s Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2008; and (d) the Company’s Current Reports on Form 8-K dated May 13, 2008 and July 3,
2008.

     4. Representations and Warranties of the Company. The Company represents and warrants
that: (a) it is a corporation duly organized and validly existing and in good standing under the
laws of the State of Delaware, with full power and authority to carry on its business as currently
conducted; (b) it, by appropriate corporate action, has, or will have prior to the issuance of the
Securities, duly authorized the execution, delivery and performance of this Agreement and all of
the transactions contemplated hereby, including the issuance and delivery of the Securities; (c)
neither the Shares nor Warrant Shares are subject to preemptive or other rights of any stockholders
of the Company and when issued in accordance with the terms of this Agreement and the Warrants, the
Shares and Warrant Shares, as applicable, will be validly issued, fully paid and non-assessable;
and (d) the Company’s performance of this Agreement and the Warrants and compliance with the
provisions hereof and thereof will not violate any provision of any applicable law or of its
charter and bylaws (as currently in effect), and will not conflict with or result in any breach of
any of the terms, conditions or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon, any of its material properties or
assets, pursuant to the terms of any material indenture, mortgage or other agreement or instrument
binding upon it or any of its subsidiaries, other than such breaches, defaults or liens which would
not have a material adverse effect on the Company and its subsidiaries taken as a whole.

     5. Representations and Warranties of Subscriber. The Subscriber hereby represents and
warrants that: (a) it has the full legal right and power and all authority and approval required to
execute, deliver and perform its obligations under this Agreement; (b) it is acquiring the
Securities solely for its own account, for present investment and not with a view toward resale or
other distribution within the meaning of the Securities Act of 1933, as amended (the
“Securities Act”), in violation of the Securities Act; provided, however,
that by making the representations herein, Subscriber does not agree to hold any of the Securities
for any minimum or other specific term and Subscriber reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act; (c) it is an “accredited investor,” within the meaning of Rule 501(a) of
Regulation D under the Securities Act; (d) it, either alone or together its representatives, has
such knowledge, sophistication and experience in business, financial and investment matters that it
is capable of evaluating the merits and risks of an investment in the Securities, and has so
evaluated the merits and risk of such investment; (e) it understands that it must bear the economic
risk of this investment in the Securities indefinitely, and is able to bear such risk and is able
to afford a complete loss of such investment; (f) it has received and reviewed the Offering
Materials and has been afforded the opportunity to ask questions of, and receive answers from
representatives of the Company concerning the terms and conditions of the offering of the
Securities and the merits and risks of investing in the Securities and to obtain any additional
information necessary to verify the accuracy of any information provided by the Company, and in
general had access to all information about the Company it deemed necessary to make an informed
investment decision with respect to the purchase of the Securities. The Subscriber further
represents and warrants that it has consulted with such legal, tax
and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Securities.

     6. Restrictions on Transfer. Subscriber acknowledges that (a) the offer and sale of
the Securities has not been registered under the Securities Act, or applicable state securities
laws, and the Securities may not be sold, transferred, pledged, or otherwise disposed of unless
subsequently so registered or unless the Subscriber delivers to the Company an opinion of counsel
reasonably satisfactory to the Company that such sale, transfer, pledge or disposition is exempt
from the registration requirements of the Securities Act; (b) the Company is under no obligation to
register or facilitate any resale of the Shares, the Warrants or the Warrant Shares; and (c) the
Shares and, upon issuance, the Warrant Shares

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registered in the name of the Subscriber on the
Transfer Agent’s records in book-entry form under The Direct Registration System shall contain the
following notation:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

     The Subscriber further agrees that certificates or other instruments evidencing the Warrants
shall bear the foregoing notation as a legend thereon.

     7. Miscellaneous.

     7.1. Any and all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed to be sufficiently given or served for
all purposes by being sent as registered or certified mail, return receipt requested, postage
prepaid or overnight courier or facsimile, in the case of the Company, addressed to it at FX Real
Estate and Entertainment Inc., 650 Madison Avenue, New York, New York 10022, Attention: General
Counsel, Facsimile: (212) 980-4455, Telephone: (212) 838-3100; and in the case of the Subscriber to
the address and other contact information for correspondence set forth on the signature page
hereof.

     7.2. No provision of this Agreement may be waived or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Subscriber or, in the case of a waiver,
by the party against whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right.

     7.3. This Agreement shall be governed and construed in all respects in accordance with the
laws of the State of New York without giving effect to conflicts of laws principles thereof. Each
party consents to the personal jurisdiction in that State and voluntarily submits to the exclusive
jurisdiction of the courts of that State located in New York City in any action or proceeding with respect to
this Agreement, including the federal courts located in New York City. The headings used in this
Agreement are for convenience of reference only and do not define, limit or effect the provisions
hereof. The word “it” when used in this Agreement to refer to the Subscriber shall mean the
Subscriber whether a natural person or an entity.

     7.4. This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. If any provision of this Agreement is invalid or
unenforceable under any applicable law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed to be modified to conform with such law.
Any provision hereof that may prove invalid or unenforceable under any applicable law shall not
affect the validity or enforceability of any other provision hereof.

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     7.5. This Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or email attachment, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or email-attached signature page were an original thereof.

     7.6. This Agreement, together with Exhibits A and B hereto, constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and supersedes any prior
agreements and understandings, oral or written, between the parties regarding the subject matter
hereof. The representations and warranties, agreements and covenants contained herein shall
survive consummation of the sale of the Securities hereunder.

     7.7 This Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person or entity. The Subscriber may not assign in whole or in part this
Agreement without the prior written consent of the Company.

[INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement as of the date
first set forth above.

	 	 	 	 	 	 	 	 	 
	 	 	SUBSCRIBER:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Name of Subscriber

[Please Print]	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Name and Title of Authorized Signatory

[Please Print]	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address; phone and facsimile numbers:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Tax Identification Number:	 	 	 	 
	 

	 	 	 	 

	 	 	 	 

The Company hereby acknowledges, agrees to

and accepts the terms of the foregoing

Subscription Agreement as of the date first

set forth above:

	 	 	 	 	 
	FX Real Estate and Entertainment Inc.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

1EX-10.2

EXHIBIT 10.2

COMMON STOCK PURCHASE WARRANT

NEITHER THE WARRANT REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE
SKY LAWS.

FX REAL ESTATE AND ENTERTAINMENT INC.

			
	No. [        ]
	 	[        ] Shares

     THIS CERTIFIES that, for value received, [                    ], a [                    ] (the
“Holder”), is entitled to subscribe for and purchase from FX Real Estate and Entertainment
Inc., a Delaware corporation (the “Company”), upon the terms and conditions set forth
herein, at any time after the date hereof (the “Initial Issue Date”), and before 5:00 p.m.,
New York City time, on July [        ], 2015 (the “Exercise Period”), subject to extension as
provided in Section 18 hereof, up to [                                        ] ([                    ]) shares, $0.01 par
value, of the Company (“Common Stock”), at an exercise price of $4.50 per share (the
“Exercise Price”). As used herein the term “this Warrant” shall mean and include
this Warrant and any Warrant or Warrants hereafter issued as a consequence of the exercise or
transfer of this Warrant in whole or in part.

     The number of shares of Common Stock issuable upon exercise of the Warrant (the “Warrant
Shares”) and the Exercise Price may be adjusted from time to time as hereinafter set forth.

     1. This Warrant may be exercised, at any time and from time to time, during the Exercise
Period or, if applicable, the Extended Exercise Period (as defined in Section 18 hereof), as to the
whole or any lesser number of the respective whole Warrant Shares, as follows:

          (a) by the surrender of this Warrant (with the Form of Election at the end hereof duly
executed) to the Company at its office as set forth in the Form of Election attached hereto, or at
such other place as is designated in writing by the Company, together with payment to the Company
of an amount equal to the then applicable Exercise Price multiplied by the number of respective
Warrant Shares for which this Warrant is being exercised. Such payment may be made by certified or
bank cashier’s check payable to the order of the Company or by wire transfer of immediately
available funds to an account or accounts specified in advance by the Company; or

 

          (b) by surrender of this Warrant (with the Notice of Cashless Exercise at the end hereof duly
executed) to the Company at its office as set forth in the Notice of Cashless Exercise attached
hereto, or at such other place as is designated in writing by the Company, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as follows:

X = Y (A-B)/A

     where:

X = the number of Warrant Shares to be issued to the Holder.

Y = the number of Warrant Shares with respect to which this Warrant is being
exercised.

A = the last sale price of the Common Stock for the trading day immediately
prior to the date of exercise, as reported on any national securities
exchange, market or quotation system on which the Common Stock is then
listed for trading or quoted.

B = the Exercise Price.

     2. Upon the exercise of the Holder’s rights to purchase Warrant Shares, either pursuant to
Section 1(a) or 1(b) above, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of the Company shall
then be closed or instruments representing such Warrant Shares shall not then have been actually
delivered to the Holder. For purposes of Rule 144 promulgated under the Securities Act of 1933, as
amended (the “Act”), it is intended, understood and acknowledged that the Warrant Shares
issued in a cashless exercise transaction pursuant to Section 1(b) above shall be deemed to have
been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the issue date of this Warrant. As soon as practicable after the exercise of this
Warrant either pursuant to Section 1(a) or 1(b) above, the Company shall cause a statement from its
transfer agent and registrar for the Common Stock (the “Transfer Agent”) evidencing
ownership of the Warrant Shares issuable upon such exercise, registered in the name of the Holder
or its designee on the Transfer Agent’s records in book-entry form under The Direct Registration
System, to be issued by the Transfer Agent to the Holder. If the Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver
a new Warrant evidencing the right of the Holder to purchase the balance of the Warrant Shares (or
portions thereof) subject to purchase hereunder.

     3. The Company shall register this Warrant, upon records to be maintained by the Company for
that purpose (the “Warrant Register”), in the name of the record holder from time to time.
The Company shall be entitled to treat the registered holder of any Warrant on the Warrant Register
as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person, and shall not be liable
for any registration or transfer of Warrants which are registered or to be registered in the name
of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary
or nominee is committing a breach of trust in requesting such

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registration or transfer, or with the knowledge of such facts that its participation therein
amounts to bad faith. This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney or representative,
or accompanied by proper evidence of succession, assignment, or authority to transfer. In all cases
or transfer by an attorney, executor, administrator, guardian, or other legal representative, duly
authenticated evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall promptly deliver a new Warrant or Warrants to the person entitled
thereto. The Company shall have no obligation to cause Warrants to be transferred on its books to
any person if, in the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Act, and the rules and regulations promulgated thereunder.

     4. The Company shall at all times reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of providing for the exercise of the rights to
purchase all Warrant Shares granted pursuant to this Warrant, such number of shares of Common Stock
as shall, from time to time, be sufficient therefor. The Company covenants that all shares of
Common Stock issuable upon exercise of this Warrant, upon receipt by the Company of the full
Exercise Price therefor if such exercise is pursuant to Section 1(a) above, or upon receipt by the
Company of the Notice of Cashless Exercise duly executed if such exercise is pursuant to Section
1(b) above, shall be duly authorized, validly issued, fully paid, nonassessable, and free of
preemptive rights.

     5. (a) In case the Company shall at any time after the date this Warrant was first issued (i)
declare a dividend on the outstanding shares of its Common Stock payable in shares of its capital
stock, (ii) subdivide the outstanding shares of its Common Stock, (iii) combine the outstanding
shares of its Common Stock into a smaller number of shares, or (iv) issue any shares of its capital
stock by reclassification of the Common Stock (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing corporation), then, in each
case, the Exercise Price, and the number of Warrant Shares issuable upon exercise of this Warrant,
in effect at the time of the record date for such dividend or of the effective date of such
subdivision, combination, or reclassification, shall be proportionately adjusted so that the Holder
after such time shall be entitled to receive the aggregate number and kind of shares which, if such
Warrant had been exercised immediately prior to the record date therefor, he would have owned upon
such exercise and been entitled to receive by virtue of such dividend, subdivision, combination, or
reclassification. Such adjustment shall be made successively whenever any event listed above shall
occur.

          (b) No adjustment in the Exercise Price shall be required if such adjustment is less than
$.01; provided, however, that any adjustments which by reason of this Section 5 are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 5 shall be made to the nearest cent or to the
nearest one-thousandth of a share, as the case may be.

          (c) In any case in which this Section 5 shall require that an adjustment in the Exercise Price
be made effective as of a record date for a specified event, the Company may elect to defer, until
the occurrence of such event, issuing to the Holder, if the Holder exercised this Warrant after
such record date, the shares of Common Stock, if any, issuable upon such exercise over and above
the shares of Common Stock, if any, issuable upon such exercise on the

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basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other appropriate
instrument evidencing the Holder’s right to receive such additional shares upon the occurrence of
the event requiring such adjustment.

          (d) Whenever there shall be an adjustment as provided in this Section 5, the Company shall
promptly cause written notice thereof to be sent by registered mail, postage prepaid, to the
Holder, at its address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer’s certificate setting forth the number of Warrant Shares purchasable upon
the exercise of this Warrant and the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment and the computation thereof, which officer’s
certificate shall be conclusive evidence of the correctness of any such adjustment absent manifest
error.

     6. (a) In case of any consolidation with or merger of the Company with or into another entity
(other than a merger or consolidation in which the Company is the surviving or continuing entity),
or in case of any sale, lease, or conveyance to another entity of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such successor, leasing, or
purchasing entity, as the case may be, shall (i) execute with the Holder an agreement providing
that the Holder shall have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash, or any combination thereof
receivable upon such consolidation, merger, sale, lease, or conveyance by a holder of the number of
shares of Common Stock for which this Warrant might have been exercised immediately prior to such
consolidation, merger, sale, lease, or conveyance and (ii) take or cause to be taken all necessary
equityholder and corporate action, including amending its Certificate of Incorporation or
otherwise, required to effect such agreement. Such agreement shall provide for adjustments which
shall be as nearly equivalent as practicable to the adjustments in Section 5.

          (b) In case of any reclassification or change of the shares of Common Stock issuable upon
exercise of this Warrant (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change in the shares into
two or more classes or series of shares), or in case of any consolidation or merger of another
entity into the Company in which the Company is the continuing entity and in which there is a
reclassification or change (including a change to the right to receive cash or other property) of
the shares of Common Stock (other than a change in par value, or from no par value to a specified
par value, or as a result of a subdivision or combination, but including any change in the shares
into two or more classes or series of shares), the Holder shall have the right thereafter to
receive upon exercise of this Warrant solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon such reclassification,
change, consolidation, or merger by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for adjustments which
shall be as nearly equivalent as practicable to the adjustments in Section 5.

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          (c) In the event that the Company (i) issues as a dividend or other similar distribution (an
“Extraordinary Dividend”) on all of its then outstanding Common Stock, (A) securities of
the Company of a class other than Common Stock, (B) rights, warrants or options (individually, a
“Right” and collectively, the “Rights”) to acquire any securities of the Company
(including Common Stock) or (C) evidences of its indebtedness or assets, or (ii) issues any
dividend or other similar distribution (a “Secondary Extraordinary Dividend”) on any such
securities in the form of securities of the Company (including Common Stock) (any securities (other
than Rights) issued as an Extraordinary Dividend or Secondary Extraordinary Dividend or issued upon
exercise of any Rights issued as an Extraordinary Dividend or Secondary Extraordinary Dividend
shall be referred to as “Dividend Securities”):

               (x) this Warrant shall thereafter be exercisable for (1) the original number of shares of
Common Stock (subject to adjustment as herein provided), (2) such Dividend Securities and Rights as
would theretofore have been issued in respect of such shares (adjusted as herein provided) had such
shares been outstanding at the time of such Extraordinary Dividend, and (3) any Dividend Securities
that would theretofore have been issued as a Secondary Extraordinary Dividend in respect of such
Dividend Securities had such Dividend Securities been outstanding at the time of such Secondary
Extraordinary Dividend; and

               (y) any Right issued as an Extraordinary Dividend or a Secondary Extraordinary Dividend shall
(1) expire upon the later of (a) the original expiration date of such Right or (b) the 180th day
following the exercise of this Warrant, and (2) be exercisable for (a) the Dividend Securities
issuable upon exercise of such Right and (b) any property theretofore issued as a Secondary
Extraordinary Dividend in respect of such Dividend Securities.

          (d) In the event that at any time while this Warrant is outstanding, the Company shall offer
to sell to all of the holders of Common Stock as a class, rights or options to purchase Common
Stock or rights or options to purchase any stock or securities convertible into or exchangeable for
Common Stock (such exchangeable or convertible stock or securities being herein called
“Convertible Securities”), whether or not such rights or options are immediately
exercisable, and the price per share for which Common Stock is issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible Securities (determined by
dividing (i) the total amount received or receivable by the Company upon issuance and sale of such
rights or options, plus the aggregate amount of additional consideration payable to the Company
upon the exercise of all such rights or options, plus, in the case of rights or options which
relate to Convertible Securities, the aggregate amount of additional consideration, if any, payable
upon the conversion or exchange of all such Convertible Securities, by (ii) the total maximum
number of shares of Common Stock issuable upon the exercise of all such rights or options or upon
the conversion or exchange of all such Convertible Securities issuable upon the exercise of all
such rights or options) shall be less than the Exercise Price in effect immediately prior to the
initial sale of any such rights or options, the Company shall offer to sell to the Holder, at the
price and upon the terms at which such rights or options are offered to holders of its Common
Stock, such number of such rights or options as the Holder would have been entitled to purchase had
the Holder exercised this Warrant immediately prior to the commencement of the offering of such
rights or options.

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          (e) The above provisions of this Section 6 shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive consolidations, mergers,
sales, leases, or conveyances.

     7. In case at any time the Company shall propose:

          (a) to pay any dividend or make any distribution on shares of Common Stock in shares of Common
Stock or make any other distribution (other than regularly scheduled cash dividends which are not
in a greater amount per share than the most recent such cash dividend) to all holders of Common
Stock; or

          (b) to issue any rights, warrants, or other securities to all holders of Common Stock
entitling them to purchase any additional shares of Common Stock or any other rights, warrants, or
other securities; or

          (c) to effect any reclassification or change of outstanding shares of Common Stock, or any
consolidation, merger, sale, lease, or conveyance, described in Section 6; or

          (d) to effect any liquidation, dissolution, or winding-up of the Company; or

          (e) to take any other action which under the express terms of this Warrant would cause an
adjustment to the Exercise Price;

then, and in any one or more of such cases, the Company shall give written notice thereof, by
registered mail, postage prepaid, to the Holder at the Holder’s address as it shall appear in the
Warrant Register, mailed at least 30 days prior to (i) the date as of which the holders of record
of shares of Common Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any such
reclassification, change of outstanding shares of Common Stock, consolidation, merger, sale, lease,
conveyance, liquidation, dissolution, or winding-up is expected to become effective, and the date
as of which it is expected that holders of record of shares of Common Stock shall be entitled to
exchange their shares for securities or other property, if any, deliverable upon such
reclassification, change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution, or winding-up, or (iii) the date of such action which would
require an adjustment to the Exercise Price.

     8. The issuance of any Warrant Shares or other securities upon the exercise of this Warrant,
and the delivery of certificates or other instruments representing such shares or other securities,
shall be made without charge to the Holder for any tax or other charge in respect of such issuance.
The Company shall not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of any certificate or other instrument in a name other
than that of the Holder and the Company shall not be required to issue or deliver any such
certificate or instrument unless and until the person or persons requesting the issue thereof shall
have paid to the Company the amount of such tax or shall have established to the satisfaction of
the Company that such tax has been paid.

6

 

     9. Any certificate evidencing the Warrant Shares issued upon exercise of the Warrant and
registered in the name of the Holder or its designee on the Transfer Agent’s records in book-entry
form under The Direct Registration System shall contain the following notation:

“THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES
LAWS OR BLUE SKY LAWS.”

     10. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and
upon reimbursement of the Company’s reasonable incidental expenses, the Company shall execute and
deliver to the Holder thereof a new Warrant of like date, tenor, and denomination.

     11. The Holder of any Warrant shall not have, solely on account of such status, any rights of
a stockholder of the Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in this Warrant.

     12. Any notice or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested or sent by Federal Express,
Express Mail, or similar overnight delivery or courier service or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the party to whom it
is to be given, if sent to the Company, at: 650 Madison Avenue, New York, NY 10022, Attention:
Corporate Secretary; or if sent to the Holder, at the Holder’s address as it shall appear on the
Warrant Register; or to such other address as the party shall have furnished in writing in
accordance with the provisions of this Section 12. Any notice or other communication given by
certified mail shall be deemed given five days after the time of certification thereof, except for
a notice changing a party’s address which will be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 12 shall be deemed given at the time of
receipt thereof.

     13. This Warrant shall be binding upon the Company and its successors and assigns and shall
inure to the benefit of the Holder and its successors and assigns.

     14. This Warrant shall be construed in accordance with the laws of the State of New York
applicable to contracts made and performed within such State, without regard to principles

7

 

of conflicts of law, except to the extent that the Delaware General Corporation Law may govern
by virtue of the fact that the Company is incorporated under the laws of the State of Delaware.

     15. The Company irrevocably consents to the jurisdiction of the US District Court for the
Southern District of New York and courts located in New York County in connection with any action
or proceeding arising out of or relating to this Warrant, any document or instrument delivered
pursuant to, in connection with or simultaneously with this Warrant, or a breach of this Warrant or
any such document or instrument. In any such action or proceeding, the Company waives personal
service of any summons, complaint or other process.

     16. The Company shall not be required to issue or cause to be issued fractional Warrant Shares
on the exercise of this Warrant. If any fraction of a Warrant Share would, except for the
provisions of this Section, be issuable upon exercise of this Warrant, the number of Warrant Shares
to be issued will be rounded up to the nearest whole share.

     17. Put Option.

          (a) If a Cash Transaction occurs, the Holder hereof shall have the option (the “Put
Option”) to sell to the Company all of the shares of Common Stock represented by this Warrant,
for a purchase price equal to the product of (i) the number of shares of Common Stock represented
by this Warrant multiplied by (ii) (A) the per share cash amount paid to each holder of Common
Stock in respect of such Cash Transaction minus (B) the Exercise Price per Warrant Share.

               For purposes of this Section 17, a “Cash Transaction” means (i) a consolidation or
merger to which the Company is a party (other than a Primary Merger), (ii) any sale or other
conveyance of all or substantially all of the assets of the Company, or (iii) any cash tender offer
or similar transaction for all or part of the Common Stock, and in each such case all of the
consideration paid to the holders of Common Stock in respect of such transaction is comprised of
cash.

               For purposes of this Section 17, a “Primary Merger” is any consolidation or merger in
which the Company is the surviving corporation other than any such consolidation or merger in which
the persons who held Common Stock immediately prior to the approval of such transaction by the
Company’s shareholders do not continue to hold a majority of such Common Stock after such
transaction becomes effective.

          (b) The Company shall provide the Holder hereof with notice of any Cash Transaction at the
same time and in the same manner that notice thereof is provided to holders of Common Stock;
provided that if the Company provides notice to the holders of Common Stock of such Cash
Transaction less than twenty (20) calendar days prior to the effective date thereof, the Company
shall be required to provide the Holder hereof with notice of such Cash Transaction at least twenty
(20) calendar days prior to the effective date thereof. If the Holder hereof exercises the Put
Option, it shall provide notice thereof to the Company no less than ten (10) calendar days prior to
the consummation of such Cash Transaction.

          (c) Payment for the Put Option shall be paid to the Holder hereof at the same time and in the
same manner as the holders of Common Stock receive their distributions of cash

8

 

with respect to such Cash Transaction. In the event that the amount of the cash payment to
any holder of Common Stock in respect of any Cash Transaction increases after the initial payment
in respect thereof, the Company shall pay the ratable amount of such increase attributable to this
Warrant to the Holder hereof. Any payment required pursuant to this Section 16 may, at the option
of the Holder, be made by check payable to the order of the Holder hereof duly mailed or delivered
to its registered address or, if requested by the Holder hereof, by wire transfer of federal or
other immediately available funds to its account at any bank or trust company in the United States
of America.

          (d) In the event that (i) any consolidation or merger in respect of which the Put Option shall
have been exercised does not become effective, (ii) shares of securities into which this Warrant is
exercisable are not purchased pursuant to any tender offer in respect of which the Put Option shall
have been exercised, or (iii) any holder of securities into which this Warrant is exercisable shall
have the right to withdraw securities deposited pursuant to any tender offer in respect of which
the Put Option shall have been exercised (any such event specified in clause (i), (ii) or (iii)
being hereinafter referred to as a “Withdrawal”), within sixty (60) days after the
occurrence of such Withdrawal, the Holder hereof shall have the right to rescind the exercise of
the Put Option.

     18. If, within thirty (30) calendar days following the Initial Issue Date, the Company
consummates a Qualified Transaction (as defined below) and the Equivalent Common Stock Purchase
Warrants (as defined below) issued pursuant thereto are exercisable for a term longer than the
Exercise Period of this Warrant, then the Exercise Period of this Warrant shall automatically be
extended by an amount of time equal to the difference between (x) the term of exercise of such
Equivalent Common Stock Purchase Warrants and (y) the Exercise Period of this Warrant, such that
the Exercise Period of this Warrant as so extended (the “Extended Exercise Period”) and the
term of exercise of such Equivalent Common Stock Purchase Warrants shall be co-terminis with
respect to the year in which they expire and terminate (but not with respect to the calendar month
and day, which for purposes of the Extended Exercise Period shall continue to be as specified in
the Exercise Period).

     For purposes of this Section 18, a “Qualified Transaction” shall mean any issuance of
Common Stock and Common Stock Purchase Warrants by the Company to any other person or persons in
one or a series of related private placements.

     For purposes of this Section 18, “Common Stock Purchase Warrants” shall mean (i)
Equivalent Common Stock Purchase Warrants (as defined below) and (ii) warrants of the Company
entitling the holder(s) thereof to purchase Common Stock at $5.50 per share (without giving effect
to any adjustments for stock splits, subdivisions, dividends, reclassifications, distributions or
similar events affecting the Common Stock) for a term of ten (10) years from the initial issuance
date of such warrants.

     For purposes of this Section 18, “Equivalent Common Stock Purchase Warrants” shall
mean warrants of the Company entitling the holder(s) thereof to purchase Common Stock at $4.50 per
share (without giving effect to any adjustments for stock splits, subdivisions, dividends,
reclassifications, distributions or similar events affecting the Common Stock).

9

 

[Signature page follows]

10

 

	 	 	 	 	 
	Dated:  July  [        ], 2008 	FX REAL ESTATE AND ENTERTAINMENT INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[WARRANT SIGNATURE PAGE]

 

FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the attached Warrant.)

     FOR VALUE RECEIVED,                                          hereby sells, assigns, and transfers
unto                                          a Warrant to purchase shares of common stock, $0.01 par value,
of FX Real Estate and Entertainment Inc., a Delaware corporation (the “Company”), together
with all right, title, and interest therein, and does hereby irrevocably constitute and appoint
                                         attorney to transfer such Warrant on the books of the Company, with
full power of substitution.

	 	 	 	 	 
	Dated:

	 	 
 

	 	 

	 	 	 	 	 
	 

	 	Signature	 	 
	 

	 	 	 	 

NOTICE

     The signature on the foregoing Assignment must correspond to the name as written upon the face
of this Warrant in every particular, without alteration or enlargement or any change whatsoever.

12

 

	 	 	 
	To:

	 	 FX Real Estate and Entertainment Inc.
	 

	 	 650 Madison Avenue, New York, NY 10022
	 

	 	 Attention: Corporate Secretary

ELECTION TO EXERCISE

     The undersigned hereby exercises its rights to purchase                      Warrant Shares covered
by the within warrant and tenders payment herewith in the amount of $                     in accordance with
the terms thereof, and requests that such Warrant Shares be issued and registered in the name of
the person specified below on the Transfer Agent’s records in book-entry form under The Direct
Registration System:

      

      

      

(Print Name, Address and Social Security

or Tax Identification Number)

and, if such number of Warrant Shares shall not be all the Warrant Shares covered by the within
Warrant, that a new Warrant for the balance of the Warrant Shares covered by the within Warrant be
registered in the name of, and delivered to, the undersigned at the address stated below.

	 	 	 	 	 	 	 	 	 
	Dated:
 

	 	Name
	 	 
 

(Print)

	Address:
	 	 	 	 	 	 	 	 
	 

	 	 
	 
	 	 	 	 	 
	 

	 	 	 	 	 	(Signature)	 	 

13

 

	 	 	 
	To:

	 	 FX Real Estate and Entertainment Inc.
	 

	 	 650 Madison Avenue, New York, NY 10022
	 

	 	 Attention: Corporate Secretary

NOTICE
OF CASHLESS EXERCISE

(To be executed upon exercise of Warrant

pursuant to Section 1(b))

     The
undersigned hereby irrevocably elects to exchange its Warrant for
         Warrant
Shares pursuant to the cashless exercise provisions of the within Warrant, as provided for in
Section 1(b) of such Warrant, and requests that a certificate or certificates for such Warrant
Shares be issued in the name of and delivered to:

      

      

      

(Print Name, Address and Social Security

or Tax Identification Number)

and, if such number of Warrant Shares shall not be all the Warrant Shares which the undersigned is
entitled to purchase in accordance with the within Warrant, that a new Warrant for the balance of
the Warrant Shares covered by the within Warrant be registered in the name of, and delivered to,
the undersigned at the address stated below.

	 	 	 	 	 	 	 	 	 
	Dated:
 

	 	Name
	 	 
 

(Print)

	Address:
	 	 	 	 	 	 	 	 
	 

	 	 
	 
	 	 	 	 	 
	 

	 	 	 	 	 	(Signature)	 	 

14

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