Common use of Management and Operation of the Company Clause in Contracts

Management and Operation of the Company. The following provisions will apply only upon occurrence of the Exercise: · The Company’s board (the “Board”) will be composed initially of five individuals. The Buyer will be entitled to appoint one more than a majority of the Board members and the Sellers will be entitled to appoint one less than a majority of Board members. SFX, on behalf of the Buyer, hereby designates ▇▇▇▇▇▇ FX Sillerman , ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ as the Buyer’s initial designated Board members and the Sellers hereby designate ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ as the Sellers’ initial designated Board members. · Majority board approval shall be required for the following actions: (i) To the extent that the Board has unanimously determined that third party debt financing of the Company is required, the Board, by majority approval shall have the right to determine the nature and terms of any such financing (whether provided by SFX or by an independent third party), provided that any such financing is on terms that are reasonably consistent with terms that would reasonably be expected to be available from a third party financing source); (ii) The approval of the gross budget (meaning the company’s overall annual spend); provided that (a) unanimous approval of the Board shall be required for approval of line items in Event budgets, and (b) the gross budget may not be decreased from the prior year’s gross budget without the unanimous consent of the Board, unless the Company’s EBITDA declined compared to the prior year, in which case the gross budget may be reasonably adjusted to reduce expenses; and (iii) The hiring and firing of personnel; provided that unanimous approval of the Board shall be required for hiring and firing of key employees set forth on Exhibit E, Stutterheim, Tavecchio and the M Design Employees. All other actions shall require unanimous board approval. · The following persons shall initially be the senior management of the Company, and shall be subject to the direction of the Board: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Bas Meijer. · The Company will, in the course of seeking profitable operations, act to preserve and expand the existing ID&T brands and develop new brands and opportunities. · SFX shall use its reasonable efforts to avoid promoting Events which would reasonably be expected to diminish or interfere with the use of the Company brands, in particular, by virtue of the timing and location of performances. · Individuals who are currently employed by or otherwise affiliated with ID&T will be responsible for creative control of the Company, including creative control over Events that the Company promotes or produces, spending with respect to Events, and the use of brands in connection with the promotion and production of Events. · SFX will have primary responsibility and oversight of the non-Event, non-promotion aspects of the Company’s operations, including financial planning, non-Event budget, and general oversight of the Company’s operations. The Company will be managed within overall budget guidelines that are established annually by the Board as described above (the “Budget”). If the Board is unable to agree on a Budget and until such time as the Budget is agreed, the Company shall operate on the basis of the prior year’s gross budget. Further, if the Board is unable to agree on such an allocation of the gross Budget, the Company shall operate on the basis of the prior year’s budget taking into account proportional changes in each line item therein to account for the approved change in the gross budget. · One Co-CEO and the CFO of the Company will be appointed by SFX. ▇▇▇▇▇▇ ▇▇▇▇▇▇ (“▇▇▇▇▇▇”) will serve initially as the JV’s Co-CEO appointed by SFX. If ▇▇▇▇▇▇ resigns from, is removed from, or otherwise no longer serves in his position as a Co-CEO, then SFX will be entitled to appoint a replacement Co-CEO, but only if such appointee is reasonably acceptable to ID&T. It is agreed that ID&T may withhold such approval if the replacement Co-CEO is a competitor of ID&T, ID&T has had prior dealings with such person that were unsatisfactory to ID&T or if ID&T perceives that such person may have a conflict of interest, including due to such person’s work for another subsidiary of SFX. · One Co-CEO and the Chief Creative Officer of the JV will be appointed by ID&T, subject to SFX’s approval, which will not be withheld except where based on clear evidence of: conflict, inability to competently perform the functions of the office, criminal history or public opprobrium. · Other than with respect to ID&T employees and members of ID&T management providing services through M Design, as of the Effective Date, ID&T employees (“Retained Employees”) will continue to be employed by ID&T (or by the applicable ID&T subsidiary, as applicable) on the same terms as they were previously employed prior to the Effective Date; except that, to the extent permitted by law, instead of receiving benefits and being eligible for ID&T equity incentive plans, Retained Employees and M Design employees (as provided for in the M Design Contract) will be eligible to participate in benefit plans and equity incentive plans in which SFX’s employees are generally eligible to participate, including SFX’s stock option plan. · To the extent not financed by one or more third-party financing arrangements, SFX or one or more of SFX’s subsidiaries (other than the Company and the Company’s subsidiaries) (as the case might be, the “SFX Funding Entity”) will provide debt financing to the Company on terms approved by the Board (including reasonable market-based interest rates for such loans). If the SFX Funding Entity incurs indebtedness in connection with providing such financing, including pursuant to a credit facility to which multiple SFX entities are loan parties, then (a) the Company will enter into appropriate documentation that joins the Company as a loan party under the loan documents governing such indebtedness, to the extent necessary to guaranty as a primary obligor the portion of such indebtedness that is incurred in order to provide such financing, (b) Buyer will be permitted to pledge its interest in the Company, and (c) the Company will enter into such documentation and take such actions as are necessary to provide such guaranty. In the event the SFX Funding Entity elects not to provide such financing, the Company may enter into third-party financing arrangements on terms approved by the Board (as described above. In either case, the SFX Funding Entity (as applicable) and the Company shall use commercially reasonable efforts to provide that any such financing arrangement allows for yearly cash distributions of the annual profits of the Company to shareholders of the Company. SFX BOARD OBSERVER Commencing one week following the Effective Date, Seller will have the right to appoint and dismiss an observer to the SFX board who will have full rights to observe and participate in meetings, subject to customary restrictions relating to conflicts and privilege, including notice of meetings. The parties agree that this right supersedes and replaces Seller’s right to appoint a board observer pursuant to the NAJV Term Sheet, and the NAJV Term Sheet shall be deemed amended to remove ID&T’s right to appoint a board observer. DISTRIBUTIONS TO COMPANY SHAREHOLDERS: Provisions regarding distributions (including, if the Company is a pass-through entity for tax purposes, tax distributions) will be reflected in the Company Shareholders’ Agreement. The parties agree that after Exercise, annual profits as reported in the Company’s consolidated financial statements for the year as approved by the Board will be distributed in cash to the Company Shareholders, taking into account appropriate reserves as determined by the Board, as well as the Budget and the Company’s contractual obligations (including covenant compliance under debt facilities).