Professional Documents
Culture Documents
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Docket
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Chapter 11
Debtors.
(Jointly Administered)
Hearing Date: April 5, 2016 at 10:30 a.m.
Objection Deadline: March 29, 2016 at 4:00 p.m.
The Debtors in these Chapter 11 Cases, along with the last four (4) digits of each Debtors federal tax identification
number, if applicable, are: 430R Acquisition LLC (7350); Beatport, LLC (1024); Core Productions LLC (3613); EZ
Festivals, LLC (2693); Flavorus, Inc. (7119); ID&T/SFX Mysteryland LLC (6459); ID&T/SFX North America LLC
(5154); ID&T/SFX Q-Dance LLC (6298); ID&T/SFX Sensation LLC (6460); ID&T/SFX TomorrowWorld LLC
(7238); LETMA Acquisition LLC (0452); Made Event, LLC (1127); Michigan JJ Holdings LLC (n/a); SFX
Acquisition, LLC (1063); SFX Brazil LLC (0047); SFX Canada Inc. (7070); SFX Development LLC (2102); SFX
EDM Holdings Corporation (2460); SFX Entertainment, Inc. (0047); SFX Entertainment International, Inc. (2987);
SFX Entertainment International II, Inc. (1998); SFX Intermediate Holdco II LLC (5954); SFX Managing Member
Inc. (2428); SFX Marketing LLC (7734); SFX Platform & Sponsorship LLC (9234); SFX Technology Services, Inc.
(0402); SFX/AB Live Event Canada, Inc. (6422); SFX/AB Live Event Intermediate Holdco LLC (8004); SFX/AB
Live Event LLC (9703); SFX-94 LLC (5884); SFX-Disco Intermediate Holdco LLC (5441); SFX-Disco Operating
LLC (5441); SFXE IP LLC (0047); SFX-EMC, Inc. (7765); SFX-Hudson LLC (0047); SFX-IDT N.A. Holding II
LLC (4860); SFX-LIC Operating LLC (0950); SFX-IDT N.A. Holding LLC (2428); SFX-Nightlife Operating LLC
(4673); SFX-Perryscope LLC (4724); SFX-React Operating LLC (0584); Spring Awakening, LLC (6390); SFXE
Netherlands Holdings Coperatief U.A. (6812); SFXE Netherlands Holdings B.V. (6898). The Debtors business
address is 902 Broadway, 15th Floor, New York, NY 10010.
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Artist Carve Out Agreement), 2 (ii) assuming the Artist Agreements set forth on Exhibit B to
the Artist Carve Out Agreement (the Assumed Agreements) and pay the cure associated with
such assumption as set forth on Exhibit B to the Artist Carve Out Agreement (the Cure
Payment), and (iii) granting related relief. In support of the Motion, the Debtors respectfully
represent as follows:
Preliminary Statement
1.
The value of the Debtors estates and their ongoing business depends on their
continued successful festivals, events and club shows (the Shows). The profitability of these
Shows hinges, in significant part, on the Artists performing and their ability to attract large
numbers of fans. The pool of Artists that can reliably attract large numbers of fans to the Shows
is extremely limited and the vast majority of them are represented by the Agents. Thus, the
Debtors relationship with the Agents and their represented Artists are vital to a successful
reorganization.
2.
Since the Petition Date, the Debtors have been negotiating with Agents to ensure
that the Artists they represent will continue to perform at SFXs Shows. The Agents and Artists
have required adequate assurance that the Debtors will satisfy their obligations under the Artist
Agreements. Without such assurance, the Artists have stated they will refuse to perform at
upcoming SFX festivals and the Agents have refused to book Artists for future Shows. The
Agents and the Artists have required 100% payment cash in advance of Shows and in certain
instances 100% payment prior to permitting the Debtors announcement of a particular Artist as
part of the line up for a Show.
3.
In order to provide the Agents and Artists adequate assurance, the Debtors
Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Artist Carve Out
Agreement.
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negotiated with their DIP Lenders to provide a carve-out (the Operational Carve Out) for
certain postpetition amounts owed by the Debtors to artists, talent agents and credit card
processors in an aggregate amount not to exceed $15 million. The Operational Carve Out,
approved by the Court in the DIP Order (defined below), provides for a carve-out from the liens
and superpriority claims of the DIP Lenders upon an event of default and subsequent liquidation
of the DIP Collateral (as defined in the DIP Order) for payments that are set forth in the then
Approved Budget and certified by the Debtors CRO as an Operational Carve Out Payment.
In order to fully document the specific Artist Agreements that will be included in the Operational
Carve Out, the mechanics by which such agreements will be included in the Operational Carve
Out, and certain other agreements between the parties described below, the Debtors and the
Agents have negotiated the Artist Carve Out Agreement.
4.
To further provide the Artists and Agents assurance that the Artists will be
compensated for their postpetition performances, the Debtors have also agreed to assume the
Assumed Agreements, which are Artist Agreements entered into prior to the Petition Date for
performances after the Petition Date, and the counterparties to those Assumed Agreements have
consented to such assumption. Within five (5) Business Days of entry of the order approving
this Motion, the Debtors will pay as the Cure Payment the amounts necessary to cure any
prepetition defaults and any unpaid amounts which became due postpetition and will continue to
pay any additional amounts as they come due under the Assumed Agreements.
5.
Approval of the Artist Carve Out Agreement and assumption of the Assumed
Agreements provides a meaningful benefit to the Debtors estates and is a sound exercise of their
business judgment. In recognition of the benefits of the approval of the Artist Carve Out
Agreement and assumption of the Assumed Agreements, relief sought herein, both the DIP
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Lenders and the Committee (defined below) have consented to the relief sought herein.
Status of the Case
6.
On February 1, 2016 (the Petition Date), the Debtors commenced these cases
(the Chapter 11 Cases) by filing voluntary petitions for relief under chapter 11 of the
Bankruptcy Code.
7.
The Debtors have continued in possession of their properties and are operating
and managing their businesses as debtors-in-possession pursuant to sections 1107(a) and 1108 of
the Bankruptcy Code.
8.
9.
The Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and
1334. Venue is proper in this district pursuant to 28 U.S.C. 1408 and 1409. This matter is
core within the meaning of 28 U.S.C. 157(b)(2).
11.
The statutory predicates for the relief sought herein are sections 105(a), 363(b),
and 365 of the Bankruptcy Code and Bankruptcy Rules 6004 and 6006.
Background
A. General Background
12.
The Debtors along with their non-Debtor affiliates (collectively, SFX) are a
leading producer of live events and digital entertainment content focused exclusively on
electronic music culture. The Debtors commenced material operations in 2012 with the intent of
acquiring and operating companies within the electronic dance music (EDM) industry,
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specifically those engaged in the promotion and production of live music events, festivals and
digital offerings attractive to EDM fans in the United States and abroad. Over the next three
years, the Debtors acquired a number of leading EDM brands, such as TomorrowWorld,
Beatport, Mysteryland, Sensation and Electric Zoo, and expanded operations worldwide.
13.
Today, the Debtors are actively engaged in the production and promotion of EDM
festivals and events both domestically and abroad. In addition, Debtors manage large,
event-driven nightclubs that serve as venues for performances by key electronic music talent.
The Debtors also offer an online platform for EDM DJs, artists and fans to purchase, share and
stream music components and to connect with each other.
14.
The Debtors and their 120 non-Debtor subsidiaries operate a business that spans
the globe, with operations in over 34 countries. The Debtors constitute substantially all of the
domestic companies comprising SFXs business as well as select foreign subsidiaries. The
Debtors have more than 325 employees and, together with the non-Debtor entities, have more
than 625 employees.
15.
The Debtors capital structure is highly levered. In 2015, the Debtors began to
face significant liquidity issues. While the Debtors attempted to enhance liquidity through a
September 2015 financing and potential sales of non-strategic assets, the Debtors concluded that
they needed to restructure their liabilities through a bankruptcy process.
16.
the events precipitating the commencement of these Chapter 11 Cases, is more fully set forth in
the Declaration of Michael Katzenstein in Support of the Debtors Chapter 11 Petitions and
Requests for First Day Relief (the First Day Declaration) [Docket No. 13], which was filed
on the Petition Date and incorporated herein by reference.
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On March 8, 2016, the Court entered the Final Order Pursuant to 11 U.S.C.
105, 361, 362, 363, 364, 503 and 507 (I) Authorizing the Debtors to Obtain Senior Secured
Priming Superpriority Postpetition Financing, (II) Authorizing Use of Cash Collateral,
(III) Granting Liens and Providing Superpriority Administrative Expense Status, (IV) Granting
Adequate Protection, (V) Modifying the Automatic Stay, and (VI) Granting Related Relief (as
may be amended, the DIP Order) [Docket No. 203].
B. Artist Carve Out Agreements and Artist Agreements
18.
The Debtors do business with the Artists pursuant to short term agreements,
without long-term agreements governing their relationships. Since the commencement of the
Chapter 11 Cases, the Agents, and the Artists they represent, have been unwilling to enter into
agreements with the Debtors without 100% payment in advance and without assurance that their
agreements with the Debtors will be honored. This has caused disruption in the Debtors
working capital as well as in their ability to promptly announce the Artist line-up at their Shows.
To address this problem, the Debtors negotiated with the DIP Lenders for a carve out from the
DIP Lenders liens and claims to provide security to the Agents and Artists.
19.
Paragraph 29 of the DIP Order provides that the term Carve Out includes:
(v) postpetition amounts owed by the Debtors to artists, talent
agents and credit card processors that are provided for in the
Approved Budget and separately approved in writing and
designated by the Debtors Chief Restructuring Officer as an
Operational Carve Out Payment, in an aggregate amount not to
exceed $15 million.
The Artist Carve Out Agreement is the product of over a month of negotiations
between the Debtors and the Agents over the terms by which the Operational Carve Out will
apply to the Artist Agreements for Artists represented by the Agents. In addition to the security
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being provided to the Artists and Agents through the Operational Carve Out, the Artist Carve
Out Agreement also provides benefits to the Debtors in that the Agents have agreed to
reasonable Payment Terms for Artist Agreements during the Chapter 11 Cases and the remaining
term of the Artist Agreement after consummation of a plan of reorganization for the Debtors.
The Agents have further agreed (subject to certain conditions set forth in the Artist Carve Out
Agreement), on behalf of their represented Artists to the assumption and/or assignment of the
Artist Agreements in a sale or reorganization.
21.
The Artist Carve Out Agreement thus provides a comprehensive solution for a
going forward business relationship in these Chapter 11 Cases between and among the Debtors,
the Artists and the Agents.
Relief Requested
22.
By this Motion, the Debtors seek the entry of an order authorizing the Debtors to
enter into the Artist Carve Out Agreement and assume the Assumed Agreements in connection
therewith, and granting such other relief as is just and proper.
Basis for Relief Requested
23.
The Debtors seek approval of the Artist Carve Out Agreement and authority to
assume the Assumed Agreements pursuant to sections 363(b) and 365(a) of the Bankruptcy
Code, which provide that the Debtors may enter into outside the ordinary course transactions and
assume executory contracts, respectively, provided that the Debtors articulate a valid business
justification. As discussed below, the Debtors submit the Artist Carve Out Agreement and
assumption of Assumed Agreements are critical to the Debtors business operations and a proper
exercise of their business judgment.
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estate property outside the ordinary course of business after notice and a hearing. 11 U.S.C.
363(b)(1). A debtors decision to enter into an outside the ordinary course transaction is
protected by the business judgment rule. [T]he business judgment rule is a presumption that in
making a business decision, the board of directors acted on an informed basis, in good faith and
in the honest belief that the action taken was in the best interests of the company. Solomon v.
Armstrong, 747 A.2d 1098, 1111 (Del. Ch. 1999) (quoting Aronson v. Lewis, 473 A.2d 805, 812
(1984)).
25.
The business judgment rule has vitality in chapter 11 cases and shields a debtors
Entering into Artist Carve Out Agreement is a sound exercise of the Debtors
business judgment. The Artists are an integral part of the Debtors successful reorganization.
These Artists cannot timely or efficiently be replaced given the highly unique nature of the
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Artists popularity and the services they provide. As noted above, the Artists are the driving
force behind the Debtors Shows; they drive EDM fans to purchase tickets and attend the Shows.
The inability to enter into Artist Agreements during these Chapter 11 Cases or to maintain
payment terms with the Artists and Agents would severely and negatively impact the Debtors
ability to survive.
27.
Chapter 11 Cases. It provides assurances to the Artists and Agents of the Debtors commitment
to honor obligations under the Artist Agreements, which in turn instills confidence in the SFX
brand. It moreover mitigates against the risk of Artist cancellation or loss of Artist contracts to
SFXs competitors.
28.
The Artist Carve Out Agreement also provides consent from the Artists for future
The Debtors further seek authority, pursuant to section 365(a) of the Bankruptcy
Code, to assume the Assumed Agreements. Section 365(a) of the Bankruptcy Code provides that
a debtor-in-possession, subject to the courts approval, may assume or reject an executory
contract or unexpired lease of the debtor. 11 U.S.C. 365(a). The purpose behind allowing
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the assumption or rejection of executory contracts is to permit the trustee or debtor in possession
to use valuable property of the estate and to renounce title to and abandon burdensome
property. Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4
F.3d 1095, 1098 (2d Cir. 1993) (quoting 2 Collier on Bankruptcy 365.01[1] (15th ed. 1993)).
30.
to review under the same business judgment standard as discussed above. If a debtor has
exercised reasonable business judgment, the court should approve the proposed contract
assumption. See In re Mkt. Square Inn, Inc., 978 F.2d 116, 121 (3d Cir. 1992) (the resolution of
[the] issue of assumption or rejection will be a matter of business judgment by the bankruptcy
court); Comput. Sales Intl, Inc. v. Fed. Mogul (In re Fed. Mogul Global, Inc.), 293 B.R. 124,
126 (Bankr. D. Del. 2003) (explaining that under the business judgment standard, a court should
defer to a debtors contract rejection, unless that decision is the product of bad faith or a gross
abuse of discretion).
31.
sound business judgment. Assuming the Assumed Agreements maintains the existing business
relationships and secures the Artists performances for upcoming SFX Shows. The Debtors
cannot afford any risk that Artists will not perform at SFX festivals, as such may result in festival
cancelation or SFX signing lesser-known artists. Assumption of the Assumed Agreements
counteracts these risks, and allows the Shows to go on. Assuming the Artist Agreements will
thus preserve and maximize the value of the Debtors estates and is supported by the Debtors
business judgment.
32.
Certain of the Assumed Agreements required payments prior to the Petition Date
that remained unpaid as of the Petition Date. In addition, although the Debtors have continued to
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honor their Artist Agreements in the ordinary course since the Petition Date, some of the
Assumed Agreements have payments that have become due after the Petition Date that have not
yet been paid. In connection with the assumption of the Assumed Agreements the Debtors will
pay the Cure Payment set forth on Exhibit B to the Artist Carve Out Agreement for each
Assumed Agreement.
33.
Ultimately, the Debtors inability to maintain relationships with the Artists, their
most critical creditors, during the pendency of these Chapter 11 Cases, would irreparably harm
the Debtors businesses, and damage the Debtors going concern value. Accordingly, entry into
the Artist Carve Out Agreement and assumption of the related Assumed Agreements are a sound
exercise of the Debtors business judgment and therefore authorized pursuant to sections 363(b)
and 365 of the Bankruptcy Code.
Relief from Bankruptcy Rules 6004(h) and 6006(d)
34.
To the extent Bankruptcy Rules 6004(h) and 6006(d) apply, the Debtors submit
that cause exists to waive the stays imposed by these Bankruptcy Rules. The Debtors need
immediate access to Artist talent and cannot afford delays in announcing headline acts. As
discussed in more detail above, the identities of the Artists are a significant factor that dictates a
festivals profitability. A further delay in contracting with Artists impacts ticket sales for SFX
festivals and creates more financial risk that a Show will be unprofitable. Accordingly, the
Debtors submit that cause exists to waive the stays imposed by Bankruptcy Rules 6004(h) and
6006(d).
Consent to Jurisdiction
35.
Procedure of the United States Bankruptcy Court for the District of Delaware, the Debtors
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consent to the entry of a final judgment or order with respect to this Motion if it is determined
that the Court would lack Article III jurisdiction to enter such final order or judgment absent
consent of the parties.
Notice
36.
Notice of this Motion has been given to the following parties or, in lieu thereof, to
their counsel, if known: (a) the Office of the United States Trustee for the District of Delaware;
(b) counsel to the DIP Lenders and counsel to the Ad Hoc Group; (c) counsel to the Committee;
(d) those parties requesting notice pursuant to Bankruptcy Rule 2002; and (e) counsel to the
Agents. The Debtors submit that, in light of the nature of the relief requested, no other or further
notice need be given.
No Prior Request
37.
No prior motion for the relief requested herein has been filed in this or any other
court; provided however that the relief sought herein relates to the Operational Carve Out which
was approved by the Court in the DIP Order.
Conclusion
WHEREFORE, the Debtors respectfully request that this Court enter an order,
substantially in the form attached hereto, granting the relief requested herein and granting the
Debtors such other and further relief as is just and proper.
Dated: March 17, 2016
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Chapter 11
Debtors.
(Jointly Administered)
Objection Deadline: March 29, 2016 at 4:00 p.m.
Hearing Date: April 5, 2016 at 10:30 a.m.
NOTICE OF MOTION
PLEASE TAKE NOTICE that the above-captioned debtors and debtors-in-possession
(collectively, the Debtors) filed the Motion of the Debtors for Entry of an Order (I) Approving
Artist Carve Out Agreement with Agencies, (II) Authorizing the Assumption of Certain Artist
Agreements, and (III) Granting Related Relief (the Motion) with the United States Bankruptcy
Court for the District of Delaware (the Court).
PLEASE TAKE FURTHER NOTICE that any response or objection to the relief
sought in the Motion must be filed with the Court, 824 North Market Street, 3rd Floor,
Wilmington, Delaware 19801 on or before MARCH 29, 2016, AT 4:00 P.M. PREVAILING
EASTERN TIME.
PLEASE TAKE FURTHER NOTICE that at the same time, you must also serve a
copy of the response or objection upon: (i) the Debtors, 902 Broadway, 15th Floor, New York,
NY 10010 (Attn: Michael Katzenstein); (ii) the Debtors counsel, (a) Greenberg Traurig, LLP,
The Nemours Building, 1007 North Orange Street, Suite 1200, Wilmington, DE 19801 (Attn:
1
The Debtors in these Chapter 11 Cases, along with the last four (4) digits of each Debtors federal tax identification number,
if applicable, are: 430R Acquisition LLC (7350); Beatport, LLC (1024); Core Productions LLC (3613); EZ Festivals, LLC
(2693); Flavorus, Inc. (7119); ID&T/SFX Mysteryland LLC (6459); ID&T/SFX North America LLC (5154); ID&T/SFX QDance LLC (6298); ID&T/SFX Sensation LLC (6460); ID&T/SFX TomorrowWorld LLC (7238); LETMA Acquisition
LLC (0452); Made Event, LLC (1127); Michigan JJ Holdings LLC (n/a); SFX Acquisition, LLC (1063); SFX Brazil LLC
(0047); SFX Canada Inc. (7070); SFX Development LLC (2102); SFX EDM Holdings Corporation (2460); SFX
Entertainment, Inc. (0047); SFX Entertainment International, Inc. (2987); SFX Entertainment International II, Inc. (1998);
SFX Intermediate Holdco II LLC (5954); SFX Managing Member Inc. (2428); SFX Marketing LLC (7734); SFX Platform
& Sponsorship LLC (9234); SFX Technology Services, Inc. (0402); SFX/AB Live Event Canada, Inc. (6422); SFX/AB Live
Event Intermediate Holdco LLC (8004); SFX/AB Live Event LLC (9703); SFX-94 LLC (5884); SFX-Disco Intermediate
Holdco LLC (5441); SFX-Disco Operating LLC (5441); SFXE IP LLC (0047); SFX-EMC, Inc. (7765); SFX-Hudson LLC
(0047); SFX-IDT N.A. Holding II LLC (4860); SFX-LIC Operating LLC (0950); SFX-IDT N.A. Holding LLC (2428);
SFX-Nightlife Operating LLC (4673); SFX-Perryscope LLC (4724); SFX-React Operating LLC (0584); Spring Awakening,
LLC (6390); SFXE Netherlands Holdings Coperatief U.A. (6812); SFXE Netherlands Holdings B.V. (6898). The Debtors
business address is 902 Broadway, 15th Floor, New York, NY 10010.
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Dennis Meloro, Esq.) and (b) Greenberg Traurig, LLP, The Metlife Building, 200 Park Avenue,
38th Floor, New York, NY 10166 (Attn: Nancy A. Mitchell, Esq., Maria J. DiConza, Esq. and
Nathan A. Haynes, Esq.); (iii) counsel for the DIP Lenders and DIP Agent, (a) Stroock &
Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038 (Attn: Kristopher M. Hansen,
Esq., Jonathan D. Canfield, Esq., and Joshua M. Siegel, Esq.) and (b) Young Conaway Stargatt
& Taylor, LLP, 1000 N. King Street, Wilmington, DE 19801 (Attn: Matthew Lunn, Esq. and
Robert Poppiti, Esq.); (iv) the Office of the U.S. Trustee, 844 King Street, Suite 2207, Lockbox
35, Wilmington, DE 19801 (Attn: Hannah McCollum, Esq.); and (v) proposed counsel to the
Official Committee of Unsecured Creditors, (a) Pachulski Stang Ziehl & Jones LLP, 150
California Street, 15th Floor, San Francisco, CA 94111 (Attn: Debra I. Grassgreen, Esq. and
Joshua M. Fried, Esq.) and (b) Pachulski Stang Ziehl & Jones LLP, 919 N. Market Street, 17th
Floor, Wilmington, DE 19801 (Attn: Bradford J. Sandler, Esq. and Colin R. Robinson, Esq.).
PLEASE TAKE FURTHER NOTICE THAT A HEARING TO CONSIDER THE
RELIEF SOUGHT IN THE MOTION WILL BE HELD ON APRIL 5, 2016 AT 10:30 A.M.
PREVAILING EASTERN TIME BEFORE THE HONORABLE MARY F. WALRATH AT
THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE,
824 MARKET STREET, 5TH FLOOR, COURTROOM NO. 4, WILMINGTON, DELAWARE
19801.
Dated: March 17, 2016
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Chapter 11
Debtors.
(Jointly Administered)
The Debtors in these Chapter 11 Cases, along with the last four (4) digits of each Debtors federal tax
identification number, if applicable, are: 430R Acquisition LLC (7350); Beatport, LLC (1024); Core
Productions LLC (3613); EZ Festivals, LLC (2693); Flavorus, Inc. (7119); ID&T/SFX Mysteryland LLC
(6459); ID&T/SFX North America LLC (5154); ID&T/SFX Q-Dance LLC (6298); ID&T/SFX Sensation LLC
(6460); ID&T/SFX TomorrowWorld LLC (7238); LETMA Acquisition LLC (0452); Made Event, LLC (1127);
Michigan JJ Holdings LLC (n/a); SFX Acquisition, LLC (1063); SFX Brazil LLC (0047); SFX Canada Inc.
(7070); SFX Development LLC (2102); SFX EDM Holdings Corporation (2460); SFX Entertainment, Inc.
(0047); SFX Entertainment International, Inc. (2987); SFX Entertainment International II, Inc. (1998); SFX
Intermediate Holdco II LLC (5954); SFX Managing Member Inc. (2428); SFX Marketing LLC (7734); SFX
Platform & Sponsorship LLC (9234); SFX Technology Services, Inc. (0402); SFX/AB Live Event Canada, Inc.
(6422); SFX/AB Live Event Intermediate Holdco LLC (8004); SFX/AB Live Event LLC (9703); SFX-94 LLC
(5884); SFX-Disco Intermediate Holdco LLC (5441); SFX-Disco Operating LLC (5441); SFXE IP LLC
(0047); SFX-EMC, Inc. (7765); SFX-Hudson LLC (0047); SFX-IDT N.A. Holding II LLC (4860); SFX-LIC
Operating LLC (0950); SFX-IDT N.A. Holding LLC (2428); SFX-Nightlife Operating LLC (4673); SFXPerryscope LLC (4724); SFX-React Operating LLC (0584); Spring Awakening, LLC (6390); SFXE
Netherlands Holdings Coperatief U.A. (6812); SFXE Netherlands Holdings B.V. (6898). The Debtors
business address is 902 Broadway, 15th Floor, New York, NY 10010.
Capitalized terms used but not defined herein shall have the meanings given to them in the Motion.
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February 29, 2012; and due and adequate notice of the Motion having been given; and it
appearing that no other or further notice need be provided; and the Court having heard the
statements of counsel regarding the Motion and having determined that the legal and factual
bases set forth in the Motion establish just cause for the relief granted herein; and it appearing
that the relief requested by this Motion is in the best interests of the Debtors estates, their
creditors and other parties in interest; and after due deliberation and sufficient cause appearing
therefor,
IT IS HEREBY ORDERED THAT:
1.
2.
The Debtors are authorized to enter into the Artist Carve Out Agreement,
substantially in the form annexed hereto as Exhibit 1, which immediately shall be binding on the
parties upon execution. The failure to describe specifically or include any particular provision of
the Artist Carve Out Agreements or related documents in the Motion or this Order shall not
diminish or impair the effectiveness of such provision.
3.
The Artist Agreements identified on Exhibit B to the Artist Carve Out Agreement
are hereby deemed assumed, effective upon entry of this Order. The Assumed Agreements shall
be binding and enforceable against the parties thereto in accordance with their terms.
4.
Within five (5) business days of entry of this Order, the Debtors shall pay the
Cure Payment and any unpaid amounts which became due postpetition through entry of the
Order. The Debtors execution of the Artist Carve Out Agreement and payments set forth in this
paragraph shall satisfy the requirements of section 365 of the Bankruptcy Code for cure of all
defaults under the Assumed Agreement and provide adequate assurance of future performance of
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the Assumed Agreements. After entry of this Order the Debtors shall continue to pay any
additional amounts as they come due under the Assumed Agreements.
5.
to be made, and authorization contained in this Order shall be subject to the requirements
imposed on the Debtors under any approved debtor-in-possession financing facility, any order
regarding the Debtors postpetition financing or use of cash collateral, and any budget in
connection therewith.
6.
The terms and the conditions of this Order shall be immediately effective and
The Debtors are hereby authorized and empowered to take all actions necessary to
This Court shall retain jurisdiction with respect to all matters arising from or
related to the implementation and/or interpretation of this Order, the DIP Order, and the Artist
Carve Out Agreement.
Dated: _____________________, 2016
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Exhibit 1
Artist Carve Out Agreement
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the proposed assignment of any Artist Agreement (unless such advance notice is impractical
under the circumstances in which case the Company shall use best efforts to provide as much
advance notice as possible), and (z) the Counterparty cannot articulate a commercially
reasonable basis for refusal to agree to perform for the proposed assignee; provided, however,
that in the event the Counterparty does not consent to such assignment, the remaining payments
under applicable Artist Agreement (including, but not limited to, any and all rejection damages)
will no longer be subject to the Operational Carve Out. In addition, the Counterparties to the
Artist Agreements listed on Exhibit B consent to the assumption by the Debtors of such
agreements.
3.
As consideration for these promises by the undersigned, the Company represents and
warrants as follows: (i) all amounts due under each Artist Agreement which is included in the
Operational Carve Out, including, but not limited to, any and all rejection damages for
Operational Carve Out Payments related to contracts that are cancelled by the Company for any
reason or no reason, subject to the terms of the applicable Artist Agreement, are less than the
Operational Carve Out Cap, (ii) CRO shall (a) confirm in writing the amount remaining available
under the Operational Carve Out Cap (the Operational Carve Out Balance) 1 within fortyeight (48) hours of receipt of a request from one or more Counterparties for such information;
provided however, that the CRO shall not have to provide such information more than once per
week, and (b) provide to Counterparties that have Artist Agreements within the Operational
Carve Out notice by email within forty-eight (48) hours after determining that the Operational
Carve Out Balance is less than $1.5 million, (iii) the Company shall assume each and every prepetition Artist Agreement included in Exhibit B, and shall file a motion to assume no later than
ten (10) days after execution of this Agreement and diligently pursue its approval and make all
past due payments under such assumed Artist Agreement promptly upon receiving Bankruptcy
Court approval, (iv) in the event the Company seeks to assume and/or assign any Artist
Agreement to a third party, (x) the Company shall inform the Counterparty as soon as practicable
upon identifying the assignee, of the name of the proposed assignee(s), and provide any relevant
financial information to allow Counterparty to confirm adequate assurance of future performance
and (y) if reasonable under the circumstances, the Counterparty may demand adequate assurance
of future performance under such Artist Agreement.
4.
Each and every Artist Agreement shall contain the following language or the following
language shall be attached to each and every Artist Agreement included in the Operational Carve
Out:
The Operational Carve Out Balance shall be determined each time the CRO approves an Artist Agreement as an
Operational Carve Out Payment. In determining the Operational Carve Out Balance, the Company shall add all
Guarantee amounts for all Artist Agreements approved for inclusion in the Operational Carve Out to provide the
Counterparty assurance that the full unpaid Guarantee is included within the Operational Carve Out Cap even if the
performance included thereunder is in the future. New Artist Agreements and Guarantees must be viewed as later in
time than an already approved Artist Agreements/Guarantees, even if payment under the newly-presented Artist
Agreement is due earlier than the payment to be made under the prior-approved Artist Agreements. The Operational
Carve-Out Balance will be reduced automatically by the entire amount of the Guarantee, even if a portion of the
Guarantee is not yet due, and the Operational Carve-Out Balance will be increased automatically by any payment
made under any Artist Agreement that is an Operational Carve-Out Payment.
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I am the Chief Restructuring Officer of SFX Entertainment, Inc. and its related companies (the
"Debtors"), debtors in the bankruptcy cases entitled In re: SFX Entertainment, Inc., et al., Case
No. 16-10238. Pursuant to the Final DIP Order [Dkt No. 203], I affirm and certify, under
penalties of perjury, that the dollar amounts to be paid hereunder (the Guarantee) are
provided for in the Approved Budget, and have been hereby separately approved in writing and
designated by me, as CRO, as an Operational Carve Out Payment (as defined in the Final DIP
Order), and, to date, the aggregate amount of the Operational Carve Out Payments which remain
unpaid, inclusive of the payments under this Agreement, do not exceed $15 million. In addition,
on behalf of the estate of the undersigned Debtor, the terms of this Agreement [including the
attached Addendum A and Artist Rider] are approved.
5.
The Company shall use commercially reasonable efforts to review all new Artist
Agreements promptly to determine whether such Artist Agreement shall be included in the
Operational Carve Out and to provide the CRO certification no later than two (2) business days
of presentment of the applicable Artist Agreement.
6.
In the event any proposed post-Petition Date Artist Agreement is not approved as within
the Operational Carve Out and in the event the Company wishes to have the Artist Agreement
fulfilled, the Company shall remit full payment of the Guarantee on the earlier of (i) the
execution of the Artist Agreement, or (ii) the announcement of the performance described in the
Artist Agreement.
7.
Any dispute with respect to this Agreement, the DIP Order and/or the Operational Carve
Out shall be determined by the Bankruptcy Court.
8.
Signatories:
a.
The undersigned Agent hereby certifies that it is the duly authorized
representative of the Producer (f/s/o Artist) identified in each Artist Agreement submitted for
approval for the purpose of binding the Producer (f/s/o Artist) to the terms hereof.
b.
The undersigned CRO hereby certifies that he is the duly authorized
representative of the Company and the Estate in the Chapter 11 Cases for the purpose of
binding the Company and the Estate to the terms hereof.
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Exhibit A
Payment Terms
NOTE: The following payment terms are applicable to all Artist Agreements included in
the Operational Carve Out that did not have agreed Payment Terms prior to the Petition
Date. For those Post-Petition or Assumed Artist Agreements not included in the
Operational Carve Out, Producer (defined herein) shall be entitled to full payment on the
earlier of execution of the Artist Agreement or announcement of the performance.
Festivals and Events (greater than 10,000 capacity):
Headliners
Deposits & Payments: Provided that Producer (defined as the Artist-loan out organization which is party
to the Artist Agreement), is not in breach of any of Producers material obligations and in consideration
for Producers furnishing the services of Artists performance (including, but not limited to: exclusivity
of Artists performance within a certain geographic area and during a certain time; advertising of the
performance (including use of Artists name, likeness, and image); solicitation of sponsorships and ticket
sales based upon Artists name, likeness, and image, and personal performance at the contracted-for
engagement) (collectively, the Event), Company shall pay the fee owed to Producer for Artists
performance (the Guarantee) as follows: 25% before announcement of the lineup; 50% thirty (30) days
before the Event Date (herein defined as the date on which the Festival or similar Event commences), and
25% not less than five (5) business days prior to the Event Date. Notwithstanding the foregoing, if
Producer fails to perform its obligations (unless such failure is explicitly excused hereunder or in the
Artist Agreement) or communicates its intention to not perform its obligations, Company has no
obligation to pay the Guarantee. In any event, Producer shall be entitled to a reasonable opportunity to
cure any alleged or actual breach (such cure to occur no later than within two (2) business days prior to
the Event Date). In the event the Company cancels a performance not otherwise excused under the Artist
Agreement, the Guarantee shall become due and payable in full immediately. The foregoing is subject to
the standard terms set forth in any Artist Agreement issued on behalf of Producer (including, without
limitation, payment in the event the performance or Event is cancelled due to a force majeure event or
inclement weather), such terms not to be materially altered or amended unless specifically agreed to in
writing.
Non-Headliners
Deposits & Payments: Provided that Producer is not in breach of any of Producers material obligations
and in consideration for Producer furnishing the services of Artists performance (including, but not
limited to: exclusivity of Artists performance within a certain geographic area and during a certain time;
advertising of the performance (including use of Artists name, likeness, and image); solicitation of
sponsorships and ticket sales based upon Artists name, likeness, and image, and personal performance at
the contracted-for engagement) (collectively, the Event), Company shall pay the fee owed to Producer
for Artists performance (the Guarantee) as follows: 15% before announcement of the lineup; 40%
thirty (30) days before the Event Date, and 45% not less than five (5) business days prior to the Event
Date. Notwithstanding the foregoing, if Producer fails to sufficiently perform its obligations (unless such
failure is explicitly excused hereunder or in any Artist Agreement) or communicates its intention to not
perform its obligations, Company has no obligation to pay the Guarantee. In any event, Producer shall be
entitled to a reasonable opportunity to cure any alleged or actual breach (such cure to occur not later than
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within two (2) business days prior to the Event Date). In the event the Company cancels a performance
not otherwise excused under the Artist Agreement, the Guarantee shall become due and payable in full
immediately. The foregoing is subject to the standard terms set forth in any Artist Agreement on behalf
of Producer (including, without limitation, payment in the event the performance or Event is cancelled
due to a force majeure event or inclement weather), such terms not to be materially altered or amended
unless specifically agreed to in writing.
Events (for venues of 10,000 capacity or less) or Club Shows:
Deposits & Payments: Provided that Producer is not in breach of any of Producers material obligations
and in consideration for Producers furnishing the services of Artists performance (including, but not
limited to: exclusivity of Artists performance within a certain geographic area and during a certain time;
advertising of the performance (including use of Artists name, likeness, and image); solicitation of
sponsorships and ticket sales based upon Artists name, likeness, and image, and personal performance at
the contracted-for engagement) (collectively, the Event), Company shall pay the fee owed to Producer
for Artists performance (the Guarantee) as follows: 20% before announcement of the lineup; 40%
thirty (30) days before the Event Date, and 40% not less than five (5) business days prior to the Event
Date. Notwithstanding the foregoing, if Producer fails to sufficiently perform his or her obligations
(unless such failure is explicitly excused hereunder or in any Artist Agreement) or communicates its
intention to not perform its obligations, Company has no obligation to pay the Guarantee. In any event,
Producer shall be entitled to a reasonable opportunity to cure any alleged or actual breach (such cure to
occur not later than within two (2) business days prior to the Event Date). In the event the Company
cancels a performance not otherwise excused under the Artist Agreement, the Guarantee shall become
due and payable in full immediately. The foregoing is subject to the standard terms set forth in the Artist
Agreement on behalf of the Producer (including, without limitation, payment in the event the performance
or Event is cancelled due to a force majeure event or inclement weather) such terms not to be materially
altered or amended unless specifically agreed to in writing.
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Exhibit B
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